VGI and Regal Funds merger to create $6 billion investment manager

VGI and Regal Funds merger to create $6 billion investment manager

Short seller VGI Partners (ASX: VGI) today confirmed it is looking to merge with specialist investment manager Regal Funds Management (RFM) in a move that would create a firm with more than $6 billion in funds under management (FUM).

Announced today, in conjunction with the resignation of Jonathan Howie as CEO of VGI, the proposed merger would see the ASX-listed company acquire 100 per cent of RFM in consideration for new ordinary shares in VGI issued to Regal shareholders.

Confirmation of the deal comes after media speculation earlier this month, which forced VGI to let shareholders know it was in discussions with Regal about a possible merger.

The proposed deal still requires approval from VGI shareholders, and would see their ownership of the company diluted; post-merger 60 per cent of VGI would be owned by RFM shareholders, and 40 per cent by existing owners.

It is also proposed that the company would be renamed, and a new ticker introduced to better reflect the combined businesses post-transaction.

VGI, known for shorting Corporate Travel Management in 2018, claims there are several benefits in addition to the formation of a fund with more than $6 billion in FUM, including the bringing together of industry leaders Robert Luciano (VGI executive chairman) and Philip King (CIO at RFM).

Further, VGI says the merged entity will be “leveraging complementary client profiles and relationships across the combined group, including existing long-term relationships with high net worth individuals and family offices within VGI and Regal, alongside a combined retail investor base of over 20,000 investors across VGI Partners Global Investments (ASX:VG1), VGI Partners Asian Investments (ASX:VG8) and the Regal Investment Fund (ASX:RF1)”.

If approved, the proposed deal anticipates the final entity will have a board consisting of six directors, with two nominated by each of VGI and Regal - neither King nor Luciano will sit on the board.

The announcement comes alongside the resignation of VGI CEO Jonathan Howie who has “expressed his desire to pursue other opportunities”.

“However, he remains committed to assisting the business with activities related to the proposed merger with Regal Funds Management over the coming months,” VGI said.

Shares in VGI are up 5.50 per cent to $4.60 per share at 2.51pm AEDT.

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