Platinum Asset Management Merger Receives Analyst Support
Morningstar backs Platinum and L1 Capital deal citing benefits for shareholders
Morningstar analyst Shaun Ler has voiced support for the proposed merger between Platinum Asset Management and L1 Capital. Platinum is an ASX-listed fund manager, while L1 Capital is a Melbourne-based firm. The merged entity, pending shareholder approval on September 22, will operate under the name L1 Group, with L1 Capitals existing shareholders holding a 74 per cent stake and overseeing approximately $16 billion in assets. Platinum Asset Management provides investment solutions to institutional and retail clients. L1 Capital is an investment management firm focusing on global equities and long short strategies.
Ler noted that the merger is a strategic move for Platinum, which has been facing organic decline. He believes that combining with L1 Capital, which has demonstrated stronger performance and positive inflows, will stabilise Platinums earnings. Furthermore, the merger presents opportunities for cost reduction through personnel reductions, consolidation of middle and back-office operations, and streamlining infrastructure.
According to Ler, the deal is advantageous for Platinum shareholders, as the combined entity can distribute rising compliance and technology expenses across a larger asset base. The analyst also highlighted the increased asset class and client diversity that the merger would bring, potentially enhancing cross-selling opportunities and improving customer retention.
Overall, Morningstar views the Platinum and L1 Capital merger as a positive development, citing the potential for earnings stabilisation, cost synergies, and enhanced market positioning. The market awaits the shareholder vote on September 22 which will determine the next steps in this merger.
Source: https://www.sharecafe.com.au/