Shares in VGI Partners Ltd (ASX: VGI) are soaring 26% higher at the time of writing to now trade at $4.50 apiece.
Investors are responding positively to an announcement released by the company regarding a proposed merger with an alternative investment manager.
VGI shares shot north immediately after the announcement and just nudged past their intraday high, as investors continue to pile in on tremendous volume at time of writing.
What did VGI announce?
Back in January VGI advised it had entered into exclusive talks for a potential merger with specialist alternative investment manager Regal Funds Management Pty Limited.
Regal is an alternative investments specialist and the investment manager of the publicly listed Regal Investment Fund (ASX: RF1).
Today VGI advised it had entered into a merger implementation deed with Regal Funds Management, whereby on completion of the merger, VGI will acquire 100% of the shares in Regal.
For their consideration, Regal shareholders will receive an issue of new VGI ordinary shares "to create a merged business," the company says.
"It is expected that immediately following implementation of the Merger existing VGI shareholders will represent approximately 33.3% and existing Regal shareholders approximately 66.7% of the Merged Entity," it added.
Speaking on the announcement, founder and CIO of VGI, Robert Luciano, said the opportunity was an "exciting development" for all those involved.
"Regal's long track record in hedge fund, private market and real asset investments really complements VGI's extensive capabilities in global long/short investing, with both businesses able to benefit from a centralised corporate platform, operational infrastructure and sales and marketing capability," he commented.
"For VGI shareholders, the transaction provides an attractive opportunity to gain access to a scalable, growing and well-diversified investment management business and really represents a new chapter of growth for shareholders of the merged group".
A merging of giants
VGI said it will likely be renamed and will remain publicly listed on the ASX, albeit with a new ticker. Plus, if successful, the move could create an alternative investment juggernaut, VGI says, forming part of an extensive "strategic rationale".
"The VGI Board of Directors believes that the Merger has the potential to deliver several attractive benefits to VGI shareholders," it remarked.
"The Merger will combine two of Australia's most recognised and successful hedge fund managers and is expected to create a market-leading provider of alternative investment strategies with total funds under management of approximately A$5.6 billion".
Not only that, but additional benefits include "exposure to a diversified and growing platform of hedge fund…deep industry experience, networks, and established investment track records of two industry leaders," the company notes.
This, alongside "accessing Regal's highly developed corporate platform…and providing an opportunity for Robert Luciano and the VGI investment team to leverage additional resources from the merged group," just to name a short few.
VGI shares have struggled this year to date and are down more than 5% in that time, but have snapped back hard in the previous month to trade 11% higher.
