Key points
- VGI Partners share price is lifting on new of a proposed merger with an alternative investments manager
- The proposed merger is with specialist alternative investment manager Regal Funds Management
- The merger would involve VGI acquiring 100% of Regal
- The company says it has the "potential to deliver several attractive benefits for VGI shareholders"
Shares in global equity manager VGI Partners Ltd (ASX: VGI) are surging higher today and now trade 10% in the green at $4.81 apiece.
The bulls have it today with VGI's share price following a company announcement regarding a proposed merger with an alternative investments manager.
According to VGI, the proposed merger would "combine two of Australia's most recognised and successful hedge fund managers and create a market-leading provider of alternative investment strategies".
A joining of titans
VGI advised it has entered exclusivity and signed a non-binding term sheet with specialist alternative investment manager Regal Funds Management.
It states that Regal Funds Management is a specialist alternatives investment manager "with a heritage built on long/short fundamental investing".
Regal was founded in 2004 and has offices located in Sydney and Singapore, whilst managing more than $3 billion in capital.
The merger would involve VGI acquiring 100% of Regal in consideration for the issue of new ordinary shares in VGI to existing Regal shareholders, the company says.
Collectively, a newly-amalgamated entity would see an alternative investment manager with a bolus of funds under management totalling more than $6 billion.
The anticipated shareholding of the merged entity would be approximately 60% current Regal shareholders and 40% current VGI shareholders (after adjustments) according to the announcement.
It is understood that VGI will be renamed and have a new ticker assigned to reflect the combined businesses once the transaction is completed.
The deal is still subject to a number of conditions, notwithstanding shareholder vote and the approvals of each of VGI and Regal's board of directors.
What are the benefits, according to VGI?
The company says a merger of the two companies has the "potential to deliver several attractive benefits for VGI shareholders".
For instance, it notes investors will have "exposure to a diversified and growing platform of hedge fund, private market and real asset investment strategies" both domestically and abroad.
VGI can also "leverage additional resources from the merged group, including Regal's extensive investment capability and track record investing in Asian equity markets and private unlisted investments".
The newly-formed entity will have a board of six directors, with two nominated by each of VGI and Regal in addition to the appointment of two external independent directors, per the release.
VGI shareholders are not currently required to take any action in relation to the Proposed Merger. It is understood that VGI has appointed Jefferies Australia as financial advisor and Allens as legal advisor for the deal.
"VGI has granted Regal a period of six weeks of exclusivity on customary binding terms which include no shop,
no talk, and no due diligence restrictions…and an obligation for VGI to notify Regal if it receives a competing proposal".
The VGI share price has gained 4% in the last month, however is trading less than 2% in the red since January 1.
