Platinum Asset Management Ltd (ASX: PTM) shares are having a day to forget.
In morning trade, the ASX 300 share is down almost 23% to $1.01.
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Why is this ASX 300 share crashing?
Investors have been hitting the sell button in a panic today in response to the release of an announcement out of the fund manager after the market close on Tuesday.
While that announcement was focused on its turnaround program, the company sneaked in a bombshell at the bottom.
According to the release, Platinum Investment Management expects to receive partial redemptions of at least $1.4 billion from its institutional and wholesale business over the coming month. In addition, one large client is indicating that it intends to rebalance its exposure away from benchmark agnostic global equity managers.
The company advised that it does not expect the account to close, instead it expects to see a reduction in mandate size. But how big the reduction and how much is currently under management is unclear.
These events, together with some other institutional account changes that are anticipated to take place over the coming months, are likely to result in a reduction in annualised fee revenue for the company of approximately $18 million.
During the first half of FY 2024, Platinum recorded fee revenue of $92.4 million. This annualises to $184.8 million, which means that the company is about to take an approximate 10% hit to its annualised fee revenue.
Productivity update
In other news, Platinum revealed that an initial review of its turnaround program has now been completed.
It has identified at least $25 million in targeted annualised run rate savings. This represents a 26% reduction in the company's annualised half year expense base of approximately $96 million.
Due to the timing of these savings, they are unlikely to generate a material impact on the ASX 300 share's reported FY 2024 profit. Management expects the bulk of savings to be progressively realised during FY 2025.
These savings will include both people and non-people costs, with one-off restructuring charges to be separately identified in its results.
It also highlights that expense reductions will come from the expected simplification of the company's product range, including the rationalisation of Platinum's offshore distribution efforts.
The ASX 300 share's CEO, Jeff Peters, said:
In late February we outlined a strategy to reset and position the business for future growth. I am pleased to be able to report that we are acting swiftly to implement the changes required as part of the reset phase. I would like to reiterate my firm belief that Platinum will emerge from this challenging phase as a revitalised business that is better able to leverage its strong brand and talented team for the benefit of its clients.
