Good afternoon, everyone. My name is Michael Cole. I'm an independent chairman of Regal Partners. Thank you for joining us for today's 2025 Annual General Meeting. Before we go any further, could I please ask all people in the room to turn your phones to silent? Thank you. The Company Secretary has advised me we do have a quorum, so I declare the meeting open. The notice of meeting, which was sent to shareholders on the 28th of April, will be taken as read. I'm chairing today's meeting from PwC's office in Sydney, and the Company's directors are all in attendance. With me today are members of the board, Brendan O'Connor, CEO and Managing Director, Jaye Gardner, and Sarah Dulhunty , both independent non-executive directors, and Ian Gibson, an executive director. On the far side of the table, we have Candice Driver, our Joint Company Secretary.
Also in attendance are representatives of our share registry, Boardroom, and our auditor, KPMG, is represented by David Kells and Matthew Brunton. Please note we are conducting today's meeting in a hybrid format, meaning people can participate in person, online, or over the phone. This will provide plenty of opportunities for shareholders to ask questions during the meeting. For detailed instructions on how to participate, please refer to the meeting materials distributed to our shareholders. We will run through the key logistics shortly. Turning to our agenda today. As reflected in the agenda, I'll begin with a short introductory address. Brendan O'Connor will then provide an update on the group. We will then move to the formal resolutions, where we will take questions on each resolution. Following this, there will be an opportunity to ask general questions, and we will then collect all the votes.
Once we formally conclude the AGM, we'll host a light refreshment for our shareholders attending in person. Please note today's meeting is about Regal Partners, and we'll focus primarily on the key items on the notice of meeting. Questions about equity markets, individual portfolios, and funds are best kept to other forums, such as webinars, client events that we host throughout the year. Questions about your personal holdings may be directed to our investor relations teams or the share registry after this meeting, both of whom will be only too happy to help you. Now, in terms of the meeting logistics, I would like to hand to Ingrid Groer briefly to run through the process for asking questions and voting. Ingrid is Head of Corporate Affairs at Regal Partners, so thank you, Ingrid.
Okay, thank you. Thanks, Michael. For today's meeting, all resolutions are being voted on by poll. For those in the room, when you registered today, you would have received one of three colored cards. Green cards were given to shareholders who have not submitted proxy forms prior to this meeting and proxy holders. Green card holders can therefore vote on the resolutions being put forward. Holders of a green card are also entitled to ask questions when prompted throughout the course of the meeting. Yellow cards were given to shareholders who have submitted proxy forms prior to this meeting and who therefore cannot cast votes again during this meeting. However, you are welcome to ask questions when we reach the relevant parts of the meeting. White cards were given to non-shareholder guests who cannot vote or ask questions during the meeting.
You can complete your voting at any time during the meeting. Just make sure that you give your card to one of our Boardroom representatives before we close voting at the end of the meeting. In terms of asking questions in the room, when we reach the relevant item in the meeting, we will ask for people with questions who have a green or yellow card to put up their hand for a microphone. One of our staff will provide a microphone to that person once our staff have seen the card. The Chair will then indicate when it is the person's turn to ask a question. Depending on time and the number of questions, we may need to limit each shareholder to two questions or comments per item of business.
For those of you who have logged into the webcast with your username and password, you will have the opportunity to submit questions online as well as vote on the resolutions. If you have already prepared a question, please submit it now through the website, and we will aim to answer it at the appropriate stage of the meeting. If your question relates to a specific item of business, please state the resolution number or reference the financial report at the start of the question. All other questions will be considered during the section for general questions. If we receive multiple questions on the same topic, we may group those together. Again, depending on time and the number of questions, we may also need to limit each shareholder to two questions or comments per item of business.
With regards to online voting, to give you ample time to vote, we are going to open the polls now. This means you can submit your online votes at any time between now and when we close the polls at the end of the meeting. If you change your mind about any vote, you can also override your original online vote between now and when the polls close. For those of you who have logged into the webcast as a guest, you will be able to view our webcast but not submit questions or vote. For shareholders who have joined over the phone, if you have provided your passcode to the call center and been verified, you will be able to ask questions. Please note that the process for registering your questions is very different to the webcast.
For those on the phones, please do not try to register for any questions or comments yet, as we will only open the phone lines when we reach each item of business. When we arrive at the first item, we will ask if you want to register for a question on that topic. You can register at that point by pressing star one. Once we have finished that item of business, we will move to the next item of business and repeat this process. Please do not register to ask a question for an item of business before we reach that item. So that we can give all shareholders a reasonable opportunity to ask their questions, once we have answered a shareholder's question on the phone, we will move to the next person in the phone queue.
If you have an additional question or comment on that same item of business, please press star one to register for the queue again. For other people on the phone, that is, guests and shareholders who have not provided their passcode, please note the phones will be listen only. I should also point out that if you are listening on the phone but viewing the webcast as well, that the webcast may lag the phone by 10 seconds or more. It may be simpler just to use the webcast for the sound as well. Note that you will not be able to vote over the phone. With that, I have now concluded this section, so I will hand back to Michael to make his Chairman's address.
Thank you, Ingrid. On behalf of the Board of Regal Partners, I would like to warmly welcome all shareholders today, and very much thank you for your support. As most of you would know, 2024 was another strong year of growth for the group. As shown on this slide, average funds under management or FUM grew 141% to AUD 14.4 billion, boosted by record net inflows of AUD 1.9 billion and positive investment performance. During the year, Regal also acquired Merricks Capital, a hard asset investment specialist, and 40% of the Argyle Group, a manager of water entitlement portfolios. These transactions have further diversified Regal Partners in terms of investment capabilities, geographic exposure, and client base, as well as adding scale. The portion of Regal's FUM that has a low correlation to equity markets has also risen, which we believe enhances the resilience of the Regal business.
Turning now to financial performance, the Company's results in 2024 were pleasing, with revenue up 151% to AUD 281 million on a normalised basis. Normalised net profit after tax was AUD 97.5 million, up 198% on the prior year, and an 18% fully franked dividend was determined and paid for the period. While fund performance has been softer this year to date, especially around March and April when markets sold off around US tariff announcements and the potential for broader trade wars, we have been pleased to see many portfolios recovering in recent weeks. It has also been encouraging to see positive net FUM flows continuing in 2025, with AUD 149 million in the March quarter and additional net inflows in both April and May. Consequently, we are very excited about Regal's future and the many opportunities that we have to grow the business further.
I'd now like to hand over to Brendan O'Connor, the CEO, to provide his address.
Thank you, Michael. As Michael just described, Regal Partners has had another busy year since we held our last AGM, and I'd like to thank you, our shareholders, and our clients who have been with us during this time. To begin my presentation, I'd like to start with this slide, which is a quick snapshot of our business today. As shown here, our funds under management of AUD 16.5 billion sits across four key alternative asset classes: long-short equities, private markets, real and natural assets, and credit and royalties. The acquisition of Merricks Capital in July 2024 particularly boosted our credit capabilities, with the Merricks business being a significant non-bank lender for assets across the commercial real estate, agriculture, and specialised infrastructure sectors in Australia and New Zealand.
Importantly, this transaction has broadened Regal's ability to offer income solutions to our clients, as well as being very complementary to the agricultural nature of the significant water portfolios within the group. Further, Adrian Redlich, Merricks Capital's founder, has taken on the broader role of Chief Investment Officer for our group's income strategies, which is leading to additional product innovation opportunities, and as I will describe later in this presentation. Also, in July 2024, Regal acquired a 40% interest in the Argyle Group. For those who are not aware, Argyle is a pioneer within the Australian water entitlements market, having first launched Australia's first investable water fund in 2012. This fund, the Argyle Water Fund, has generated a 12.5% annualized return net of fees for investors since inception, with zero correlation to equity markets.
Pleasingly, the outlook for the Argyle business has improved further in recent months, with spot water prices jumping 50% from mid-April to early May and asking those for water entitlement transactions increasing. This bodes well for the likelihood of water prices and Argyle's funds valuations being marked higher later this calendar year. I'd also like to take a moment to reflect on the PM Capital business. You may recall that we acquired the PM Capital business in December 2023, and so it has now contributed its first full-year earnings to our business in calendar 2024. This transaction has been highly accredited for Regal and provides an excellent example of what is possible under Regal's inorganic growth strategy. As this slide shows, PM Capital's FUM has grown 43% from AUD 2.8 billion at the time of acquisition to AUD 4.1 billion as at the end of March this year.
Importantly, this has been through a combination of strong investment performance and net flows. In particular, PM Capital's global long-short strategy has continued to perform exceptionally well, with the flagship Global Companies Fund being ranked number two out of 131 on investment performance over the 10 years to March 2025, amongst its peers in the recent Morningstar survey. PM Capital's fund flows have also accelerated since Regal's acquisition of the business, with AUD 533 million of net inflows achieved in 2024 compared to AUD 114 million in the prior year. Strong flow momentum has continued into 2025, and we are excited about the opportunity to grow this business further, especially given the global equity strategy has the capacity to be many multiples of its current size.
We're also pleased to highlight that early this month, the city-based teams of PM Capital and Merricks Capital co-located in Regal's head office in Sydney. While many back office functions had already been integrated before this, bringing together staff into one central location has already had strong cultural benefits and will hopefully accelerate collaboration and cross-sell opportunities across the group. Another important point related to the PM Capital acquisition has been the further broadening of the investment team that drives the group's long-short equity strategies and indeed the credit strategies. As shown on this slide here, Paul and his team's long-short equity capabilities represent almost half of the AUD 7 billion in long-short equities within the group.
This, alongside our expansion of our credit and water strategies that I mentioned earlier, has contributed to a far larger and far more diversified mix of funds under management than existed back in June 2022 when Regal Partners was formed. We see many benefits of this evolution since 2022, including improving the resilience of the firm to withstand a range of market conditions, a reduction in key man risk across the group, the ability for performance fees to be earned from a larger pool of uncorrelated assets and therefore serve as a more consistent source of revenue for the group, the opportunity to offer a wider range of capital solutions to companies, improving Regal's relevance to them, and finally, the opportunity to also offer a broader suite of investment solutions to clients both in Australia and offshore.
Touching upon the corporate solution aspect first, I believe this slide is a powerful illustration of Regal's importance in being a material provider of capital to Australian companies. Our scale and our ability to offer funding via equities, debt, and royalties across both public and private markets should lead to better deal origination, greater relevance to our clients, and ultimately superior performance for our investor clients. If we then consider what this diversification means for Regal for clients, Regal Partners has now built an impressive set of capabilities across the alternative investment space. This has increased our ability to offer products that suit a client's particular circumstances and, in many cases, tailor mandates for them.
As shown on this slide, it also means that we can design multi-strategy products that blend a range of our greatest capabilities with the objective of generating attractive risk-adjusted returns with low volatility and minimal correlation to traditional financial assets. This thinking was behind the launch of our very own Regal Investment Fund, RF1, back in 2019, which has generated annualized returns of over 15% net of fees since inception and has contributed to evolve in the recent years by adding more non-equity strategies. It has also led to our creation of the unlisted Regal Partners Private Fund in December 2023. Since then, the Partners Fund has delivered a solid 10.6% annualized return net of fees.
The fund has also reached almost $500,000,000 in size after only 17 months, which further demonstrates strong demand for this type of product and gives us confidence that this could be the flagship fund for Regal Partners in the years to come. We'll also continue to work on additional multi-strategy ideas. For example, later this year, we are targeting the launch of a multi-strategy income fund, which will draw upon the broader credit and royalty investment capabilities across the group. We expect, and indeed we observe, high demand for such a product given the aging population in Australia, the demographic trend, the phasing out of bank hybrids, and more recently, the current federal government's plans to tax unrealized gains within high superannuation balances.
Importantly, this type of multi-strategy product has only been made possible because of the acquisitions of Merricks Capital and PM Capital that Regal has made in recent years, which has materially bolstered our credit expertise. In terms of other opportunities, we see plenty of runway for further organic growth within Australia, and we are also very excited about the potential for further expanding our offshore product set and client base. This is a market that we have only just started targeting recently by appointing a senior distribution executive in Singapore in 2022. Since then, we have been steadily building our relationships in Asia and the Middle East and have launched Cayman or offshore versions of a number of our domestic strategies, including our multi-strategy Partners Fund. We also have gained more than 20 North American institutional clients through our acquisition of half of Taurus in late 2023.
As a result, offshore clients have contributed approximately AUD 600 million, or 30% of our AUD 1.9 billion in net flows in 2024. Further, offshore client fund now represents about AUD 3.3 billion, or 20% of Regal's total funds under management, and we are optimistic that this can grow materially in coming years based upon our expanding product range, current due diligence discussions, and executive capability. I'm also delighted to announce that we are finalizing the recruitment of a senior executive to represent Regal Partners in North America to service our North American clients and to seek new clients that could benefit from the diverse capabilities within the alternative investment strategies that we're building. Moving now to Regal Partners Limited 2024 results, Michael has covered the key points earlier, which are listed again on this slide, so I won't repeat those. However, I might make some additional comments.
Firstly, our 2024 profit of AUD 97.5 million only includes the earnings from Merricks Capital and Argyle Group transactions from their time of acquisitions in July 2024. 2025 should benefit from a full year of earnings from these businesses. Thinking about this another way, Regal's average fund in calendar 2024 was AUD 14.4 billion. Regal's fund is now at least AUD 16.5 billion, and Regal's management fees should benefit from a higher average fund in 2025 compared to 2024, even if funds under management remain flat for the rest of this year. Secondly, as Michael mentioned earlier, Regal's net flows in the first quarter of 2025 were AUD 149 million.
Flows have continued to be positive in both April and May 2025, and whilst flows are likely to be less than AUD 341 million achieved in the second quarter of 2024, I think there'll still be a strong outcome, and this reflects a weaker fundraising environment as many clients opted to defer investment decisions in April and May, pending improved clarity on the U.S.-initiated trade war. In terms of performance fees, it's just over one month until 30 June 2025, which is a key anniversary date for a number of our strategies to earn performance fees. The first half of 2025 performance fees could still change quite a bit between now and their crystallisation date. However, we've already crystallised some performance fees in the half, and we are hopeful that we will earn additional performance fees at 30 June 2025.
We'll provide you with an update of our first half performance fees in July this year when we release our June quarter funds under management. Finally, while not shown on this slide, the balance sheet is also strong with over AUD 230 million in cash and investments at the end of December 2024, or AUD 197 million once adjusting for the payment of dividend in March. In addition, Regal has repaid and closed its HSBC debt facility and early this year upgraded to a larger AUD 100 million facility with Standard Chartered, giving Regal additional balance sheet flexibility. Another development I wanted to highlight is the material progress we have made in evolving the Regal Partners share register in recent years.
We understand and realize that passive investing or index investing is a large part of the share market these days, so our efforts to improve the free float to the group are important in ensuring that we trade at a fair valuation. When Regal Partners was formed in June 2022, we estimated its free float was only about 9%. This reflected the fact that most of the shares were held by individuals with substantial shareholdings, that is, more than 5% each, or in escrow. Consequently, there was limited liquidity for any investor wanting to buy or sell RPL shares. There was also no formal broker coverage for retail and institutional investors, making it more difficult for investors to obtain independent advice on the stock.
Today, Regal's free float has risen materially to around 62%, and this, combined with a larger number of shares on issue and market capitalisation, has led to increased liquidity and relevance, including RPL becoming eligible for certain key indexes, with more to hopefully come in the next year. As part of this, we have seen a rise in the number of shareholders, including a significant increase in more recent weeks. Turning now to my final slide, our core strategic message remains the same.
That is, our growth-focused strategy is built on three key pillars: to continue to diversify and scale our growing platform, to continue operating within the attractive market tailwinds operated by the alternative investment strategy segment, and recognizing that investors are increasingly seeking alternative ways to generate returns, and then thirdly, harnessing the strong business economics given our business is able to command higher fees relative to traditional long-only managers of equities or fixed income or passive vanilla products. As you have heard today, this means we have multiple avenues for growth organically, and we also continue to review inorganic opportunities while remaining disciplined on the price we are willing to pay. In the meantime, we will look to harness the full benefits from our past acquisitions.
Thank you again for your support of Regal Partners, and I look forward to updating you further in August when we release our results. I'd like to particularly thank our shareholders and clients, but also staff for the contributions they've made during calendar 2024. It puts us in a great position to expand. I'd also like to acknowledge the tragic passing of one of our beloved portfolio managers in 2024, Todd Guyot . Todd was a great example of a wonderful culture at Regal. We miss him dearly, and whilst we continue to build the business, we've continued to reflect on the contribution that Todd had made to the business. I'd now like to hand back to Michael for the next stage of the meeting.
Thanks, Brendan. We will now turn to the formal business of the meeting.
I'll take each item and resolution in the order that is set out in the notice of meeting. Our meeting today involves tabling and reviewing the accounts and the four resolutions to be decided. In terms of logistics, when we reach the point for questions, we will start with online questions from the webcast first, then questions over the phone, then questions from the room. For those online, please remember you can submit your questions at any time during the meeting. Just please type clearly at the top whether it relates to our financial reports or type the number of the resolution or state if it is a general business. Nothing we will cover in general questions after the formal business. As a reminder, for those on the phones, please wait until each item of the business before registering for a question on that item.
Please press one to register, and to cancel, press two. As we mentioned earlier, we will conduct a poll of all the resolutions today, combining votes submitted before the meeting with votes that are cast during the meeting, both in the room and online. Since the online poll is already open, if you would like to vote now, please do so. Alternatively, it is also fine if you prefer to only vote after we have discussed each resolution. I'll also allow some time at the end of the meeting for you to finalize your votes.
For those voting online, if you make a mistake or change your mind, please select the preferred voting option that will override your original vote. I note that Boardroom are the returning officers for today's meeting and will conduct our poll. Certain votes will be excluded in accordance with the Corporations Act and the ASX Listing Rules. The proxy votes will be shown before discussion of each individual resolution. I advise the meeting that I'll be voting all undirected proxies in favor of all resolutions as indicated in the notice of meeting. As a result, the poll will not be available before the close of the meeting. They'll be released to the ASX and made available on our website later today.
Turning now to the first item of formal business, which is the tabling of the financial report, the director's report, and the auditor's report for the financial year ending December 31, 2024. The company is required to lay before the meeting the last audited annual statements and reports, which were released to the ASX on February 26, 2025, as part of the company's annual report. No resolution on this matter is required. However, I now invite shareholders and their proxies to ask questions on the reports. Questions may also be asked of the auditors in relation to the conduct of the audit, the content of the audit report, accounting policies adopted by the company, and the independence of the auditor in carrying out the audit. Let's start with the online questions. I'll ask Ingrid to read out the questions as they come through on the webcast.
Thanks, Michael. At this point, I can't see any online questions, but we might just give them a few moments. In the meantime, I don't think there are any questions on the phone, but I'll just double-check that with our operators. Are there any questions on the phone?
Thank you. There are no questions via the phone lines.
Okay, we'll come back to those shortly, but we now might go to questions in the room then.
Okay, is there any questions in the room that people would like to ask in relation to the annual report, the conduct of the audit?
Thank you. It's Charlie Kingston from K Capital. Just a few questions around the accounts, please. Firstly, just around, I suppose, the nature of the business, but the performance fees, their proportion of the company's profits, generally they're around 80-90% of the normalised NPAT.
I appreciate the business has changed a lot. You've been acquiring a lot of businesses, but 2023 performance fees of AUD 25 million, total NPAT AUD 32 million, 2024, AUD 84 million performance fees, AUD 97 million NPAT. It does seem like the business really is just subject to however the underlying managers perform. That's fine if that's just the nature of the business. It's very, very volatile, but I'm just thinking going forward, can we expect that performance fee contribution to profit to reduce and it become more of a consistent sort of base fee profitable business? Because, yeah, it's clearly maybe that is Regal. A lot of the funds are highly volatile, but going forward, should we expect more of a recurring NPAT, please?
Okay, Brendan, do you want to comment on that?
Yeah, certainly. Thank you, Charlie. I think you're exactly right.
The performance fee contribution across our strategies continues to be a material portion of our earnings, but importantly, we will diversify and therefore dilute in its percentage contribution going forward. As we have diversified the business beyond just long-short equities into credit and royalties, real and natural assets, and private markets, we have a growing proportion of our performance fee eligible fund that is tied to non-equity-related products. That, as a result, should lead to a more consistent earning of performance fees across a period. I think as well as we have integrated these businesses, we will look to improve the operating margin of the business overall. Performance fees will always continue to be an important part of our earnings, but I think going forward, they will become a smaller percentage portion of our profit.
Just following up on that, the average management fee is 1.09% in 2023, 1.13% in 2024. It does seem fairly high, especially relative. I know you've got some listed funds, and you're diversifying into other asset classes, etc. From an equities perspective, that does seem very high. Clearly, there's a lot of pressure on fees coming down. Maybe just within the context of all the different asset classes that you are diversifying into and noting the constant pressure on fees, especially equities like some institutions, I don't know, they're on 20-30 basis points. We just appreciate your thoughts on if that is sustainable going forward, well above 1%, particularly across equities, fixed income, and the other areas that you are getting into, please. I suppose fixed income. I know you're going to raise one of those funds, but that's getting very competitive.
Is there fee pressure in fixed income? Yeah, just appreciate your thoughts there.
Yeah, thank you again. You're absolutely right. I agree with the trend that you're seeing in the market, that asset management fees generally are trending lower. Basically, it's forcing managers to either become mass producers of low-cost products like ETFs and passive investing, where you're basically getting your beta for equities or fixed income close to zero, or you're at the other end of the spectrum where you're originating differentiated asset classes such as water, resource royalties, private credit, or indeed trading traditional investment strategies in a non-traditional manner. If you can differentiate the investment strategy and generate strong performance or good risk-adjusted returns, you'll be able to command typically higher fees. That's typically where an alternative investment product sits.
An alternative investment product distinguishes it from a traditional product by managing a traditional product in a non-traditional manner, by investing long-short, or by harvesting and managing alternative sources of beta, such as water, agriculture, carbon, private credit, resource royalties, for example. Many studies of the world show that as a capital allocator, over half a capital allocator's fee budget would be reserved for alternative investment strategies. That is why we choose to play within that space. Provided we can generate strong risk-adjusted returns, I think we have got a strong position to defend the fee margin, the management fee margin we charge on those products.
Equity is sustainable, you think, from here?
Yeah, it will move around based on sort of currencies, depending on whether we are raising more US dollar fund versus domestic fund and whether the fixed income funds are growing faster than the equity funds.
I think where we're sitting today is probably a good proxy for the medium term going forward.
Just finally, Regal, and credit to you for getting a very high share market rating, notwithstanding the recent fall, but I suppose everyone else has fallen somewhat. Regal, we're trading on around 5% of our fund, probably a bit over, but you can adjust for your NTA, but let's just call it 5%. That is still a very high multiple of fund relative to some other peers like Perpetual, again, equity. Very different and probably not comparable, but they're probably sub 1% of fund. I think whatever Macquarie sold their equities business, I think it was around about 1%. Us at 5%, and again, appreciate it's a very different type of fee and fund offering.
Given we have acquired a lot and used our script, and you've spoken to more inorganic opportunities, is that a real focus of you going forward whilst we do have a very healthy valuation or multiple of our fund to continue to use it, given I suppose we have today and we've bought PM Capital, we've bought Merricks Capital? Yes, do you view that as a multiple of fund? Now is time to strike and use it whilst we have it, so to speak, or should we expect you tried to buy Platinum, etc.? You've been very inquisitive and very busy, but should we expect that to continue?
I think there are two questions within there. One, in terms of our valuation, I'd say that today we're trading at a discount to alternative investment managers in the United States.
I think the many trends in financial services that start in the U.S. and ultimately make their way to Australia. I certainly believe that the trends around the growth in alternatives is a good example of that. If you have a look at the average valuation on a multiple basis for those U.S. managers, they're trading around sort of high teens to 20-plus multiples. On that basis, I think we're trading at a discount to that. I think as we grow the business, there's absolute opportunity for us to re-rate to that level. In respect to the inorganic, we continue to be looking for other opportunities. Our first priority is to continue to grow the businesses that we have today and the capabilities. We certainly will be disciplined in keeping an eye on other opportunities out there.
If we can identify as a great addition because they've got a proven edge in what they're doing, and it would be accretive to our platform and accretive to our share price, we would certainly continue to grow inorganically.
Sorry, one final one. I'll hand it over. The free float that you spoke to, because we have used a lot of currency to buy others, I think a lot of it's escrowed. Can you just, micro, micro question, but I'm trying to get a sense of how many shares are yet to be issued, what our actual total share base is, assuming they are all issued, and is that potentially an overhang if PM and Merrick's do want to sell? I'm not sure how long they're escrowed for, but what is that quantum and how does that play into the free float? Do they need to sell down?
Two questions. What's the actual fully diluted shares that we are going to have on issue, and how much is with companies that we've acquired potentially going to be an overhang, please?
You're right. It's a very detailed question, so it may be better that we take it offline. What I would say, if you have a look at our results that we've been putting out to the market and including the most recent results on the 26th of February, the appendix to that result has a very helpful table that shows the forecast issuance of shares as a result of the acquisitions. Maybe post this AGM, I can take you through those numbers.
Thanks, Dan.
The only point I'd add, Charlie, is that going to your point about the inorganic acquisitions, we're always looking to increase earnings per share via those acquisitions.
So naturally, we're looking for companies which have got a lower PE at the point of purchase than what we've got in the market at that kind of point in time in order to boost the EPS level as a result of the acquisition. The point is spot on that you highlighted. Ingrid, did we ever get anything from the rest of the world out there?
We have some online questions coming through, but not for this item. At this point, there's nothing more.
All right, if there's no more questions, we'll now move to resolution one, which is the adoption of the remuneration report. Under the Corporations Act, listed companies are required to include as part of the directors' report a remuneration report. The remuneration report for the financial year ended 31 December 2024 is included in the company's 2024 annual report.
The Corporations Act requires companies put to shareholders a non-binding vote to enable shareholders to voice their opinion on matters included in the remuneration report. Given the vote is advisory only, it does not bind the board or the company. However, the board will take the outcome of the vote into account when considering future remuneration decisions. The board recommends that shareholders vote in favor of adopting the 2024 remuneration report. I'll now move this resolution, and we'll show proxy votes on the screen in a moment before asking for questions. You can see the proxy votes on this slide. Open proxies are in favor of the chair at the time of the meeting will be voted in favor of the resolution. Adjusting for these votes for resolution one, approximately 126 million shares are in favor, 71,000 other proxy discretion, and 406,000 against.
This equates to 99.6% in favor, 0.1% of other proxy discretion, and 0.3% against. Are there any questions or comments in relation to the 2024 remuneration report? Ingrid, can we start with the online questions?
At this point, we have no online questions, and I do not think there are any questions on the phone either. Is that correct, Operator?
No questions. Thank you. There are no questions via the phones.
Great.
Okay, why do we not throw it open to questions from the room? If there are no questions from the room, for shareholders and proxy holders who have questions and have either a green or yellow card, could you please put your hand up to talk? I do not think there is anybody wanting to do that. No? Okay. Thank you.
If there's nothing there, we'll now move on to the voting aspect of it for those people that have it. For those in the room with green cards, if you're a shareholder or proxy holder and eligible to vote online, could you please complete your vote in relation to resolution one? Alternatively, if you prefer to wait, please complete your voting at any time between now and the end of the meeting. We'll now move on to resolution number two, which is the re-election of Jaye Gardner as a director of the company. With regards to this resolution, listing rule 14.4 requires a director must not hold office without re-election past the third AGM following their appointment or three years, whichever is the longer. As Mr. Gardner was last elected at the 2022 AGM, he accordingly retires at this AGM, but being eligible, offers himself for re-election.
The details are set out in the explanatory memorandum of the notice, and are also shown on this slide. As you can see, Jaye has extensive experience in corporate finance and valuation work, culminating in her current role as a managing director of Grant Samuel. This experience has proven very useful to Regal over the past three years, particularly given Regal has considered and executed a number of acquisitions. Personally, I've enjoyed working with Jaye over this time and have greatly appreciated her input and expertise. I'll now hand over to Jaye to say a few words about her re-election.
Thanks, Michael. Good afternoon. Thank you for giving me the opportunity to address your meeting. I'm pleased to put myself forward for re-election to your board of directors.
By way of background, I was appointed to the VGI Partners Board in conjunction with its IPO in June 2019 and was re-elected on the merger with Regal Funds Management in June 2022. It's been a privilege over the last six years to work with and make a contribution to the board, particularly in my role as Chair of the Audit and Risk Committee. As Michael mentioned, I have more than 30 years' experience in corporate finance and valuations as a Managing Director at Grant Samuel, and I believe this gives me strong commercial and financial skills and the governance capabilities that are necessary to be an effective contributing member of the board and its committees. I'm committed to the effective operation of the board and its committees and willingly devote the necessary time to fulfill my roles.
I appreciate the opportunity to continue to represent shareholders as an independent, non-executive director on the Regal Partners Board. Thank you. I'll now hand back to Michael.
Thanks, Joe. The Board, with Ms. Gardner abstaining, supports the re-election of Jaye Gardner as a director. I'll now move that Jaye Gardner be re-elected as a director of the company, and I'll show the proxy votes on the screen before asking for questions. Turning to the proxy votes, open proxies in favor of the Chair at the meeting at the time will be voted in favor of the resolution. Adjusting for these, the votes for resolution two are approximately 135 million in favor, 71,000 other proxy discretion, and 1.4 million against. This equates to 98.9% in favor, 0.1% other proxy discretion, and 1.0% against. I'll now go to questions. Ingrid?
There's nothing online for this resolution at the moment.
Nothing on the phone. Okay. Anything from the floor?
Thank you. Just a question. I suppose I've already asked it, but Jaye seemed to be the in-house M&A expert given all your current role elsewhere. Similar question, but we've clearly done a lot of M&A, and as you know, it is notoriously difficult to do M&A, let alone how many companies we bought and integrate, whether it be Perpetual and Pendle and all the things they bought, especially asset managers. They're people-heavy, and there's been a lot of shareholder wealth destroyed by M&A, but we've done very well thus far. Just would like your thoughts, please, given your experience about going forward. Can we digest more? What's the general thoughts? Where have we got the gaps? Are there any particular areas that you think would be good for Regal shareholders going forward?
Just your general thoughts on M&A going forward, please.
Thanks, Charlie. Look, we're very disciplined when it comes to M&A, and we are certainly prepared to step back when we don't believe it works, and we did that with Platinum. I have got a lot of confidence in that process as we go through before we approve an acquisition, and we will only approve them when we believe they're going to be in the best interests of shareholders. Yes, we are an alternative asset manager, and yes, there are some gaps in our offering. I think we might keep sort of our strategic priorities confidential unless Brendan would like to sort of share where our focus is in those regards. We are always looking for opportunities where we have got gaps, but we will always be disciplined in the approach we take.
Anything you want to add, Brendan?
No, I think I've been fairly clear. I think the traditional areas of alts that we're not in at the moment are things like real estate, infrastructure, private equity. I'd say we're underweight in credit, for example, relative to what we could be. They all remain areas of interest to us.
As Jaye and Brendan emphasised, with a strong discipline process around the sifting of those opportunities for review by the board.
Okay, thank you. There's no further questions. We can now move on to resolution three. People in relation to resolution two, if they could vote, that would be the process or the right time to do that now. Completely vote for resolution two. Moving on to resolution three, the re-election of Sarah Dulhunty as a company director.
With regards to this resolution, as noted in the previous resolution, listing rule 14.4 requires that a director must not hold office without re-election past the third AGM or following their appointment or three years, whichever is the longer. As Ms. Della Hunte was elected at the 2022 AGM, she accordingly retires at this AGM but, being eligible, offers herself for re-election. Ms. Della Hunte's details are set out in the explanatory memorandum of notice, and they're also shown on this slide. As you can see, Sarah has a distinguished legal career over 35 years with experience across corporate and securities law, equity, capital markets, and corporate governance. As with Jaye, it has been a pleasure working with Sarah over the past three years, and I've greatly valued her insights. I'll now hand over to Sarah to say a few words about her re-election.
Thanks, Michael. Good afternoon, everyone.
I'm also pleased to put myself forward for re-election to your board today. I've served on your board for three years now, joining the board as an independent, non-executive director and Chair of the Nomination and Remuneration Committee at the time of the merger of VGI and Regal. Over this period, I've had the privilege of being able to contribute to Regal's growth and success, and I'm excited about the opportunities for Regal that lie ahead. Prior to joining your board, I was a corporate partner at Ashurst, an international law firm, as Michael mentioned, with over 35 years' experience advising ASX-listed companies and funds, primarily on equity, capital markets, and M&A transactions and corporate governance. I also served on the board of Blake Dawson at the time of its merger with Ashurst and on the Takeovers Panel, the AICD Law Committee and the Corporations Committee.
This experience has equipped me with the skills to be able to contribute effectively to the operation of the Regal board in overseeing Regal's transition to life as a listed company, the implementation of Regal's strategic objectives, and the development of Regal's remuneration framework. I'm committed to enhancing shareholder value and ensuring the long-term success of Regal and believe in upholding strong corporate governance and transparency. I'm willing to commit the time and attention to serving as an independent, non-executive director and contributing to Regal's future growth and success. I appreciate the opportunity also to continue to represent shareholders as an independent, non-executive director on your board. Thank you. I will now hand back to Michael.
Thanks, Sarah. The board, with Ms. Della Hunte abstaining, supports the re-election of Sarah Della Hunte as a director.
I'll now move that Sarah Dulhunty be re-elected as a director of the company and show the proxy votes on the screen before turning to ask for questions. Turning to the proxy votes, open and in favor of the chair at the time of the meeting will be voted in favor of the resolution. Adjusting for these, the votes for resolution three are approximately AUD 113 million in favor, 71,000 other discretionary proxies, AUD 23.4 million against, and this equates to 82.9% in favor, 0.1% other proxy discretion, and 17.1% against. I'll now go to questions. Ingrid?
At this point, there is nothing online or on the phones.
Okay. I'll now go to the floor. Charlie?
17% against, but I genuinely have no idea, but curious what was the reasons, if you know of any, for that vote?
I don't know of any reasons for that, but I am hoping to find out after the meeting and arrange a meeting with the relevant shareholder to find out the reason for the vote.
Shareholder one. Is that anyway? All good. Thank you.
Nothing further from the floor. Nothing further from you, Ingrid? Nothing? Okay. We'll now move on to voting. Could anyone who is eligible now please vote your vote in relation to resolution three? Okay. The final resolution, number four, the approval and ratification of the issuance of securities for the employee incentive plan. This is essentially a matter of internal housekeeping, but as a background, September 2024, the company announced the issuance of performance share rights or PSRs to certain employees to promote retention and alignment of the employees with the shareholders.
In relation to this, 3,424,887 rights were issued to employees under the terms of the company's employee incentive plan for no cash consideration and under the 15% annual capacity limit permitted in listing rule 7.1, thus not requiring shareholder approval. The majority of these rights related to a deferred bonus grant for the financial year 2024 remuneration, in other words, are issued in line with the company's practice of deferring a portion of variable remuneration for certain employees whose remuneration exceeds a specific amount for a period up to two years. The remainder of the rights related to the new long-term incentive plan where the rights are able to vest after three years if the relevant criteria were met. The purpose of resolution four today is to seek shareholder approval and ratification for the prior issuance of these rights that were granted in September 2024.
If shareholders approve the resolution, the rights will be no longer treated as having been issued under the 15% placement capacity, thus making that capacity available for further business opportunities. If shareholders do not approve the resolution, the rights will remain issued under Regal's 15% placement capacity. The board recommends shareholders vote in favor of resolution four, and I now move this resolution. I'll show the proxy votes on the screen. Open proxies in favor of the chair at the time of the meeting will be voted in favor of the resolution. Adjusting for these, the votes are approximately 123 million in favor, 70,000 other proxy discretion, and 318,000 against. This equates to 99.7% in favor, 0.1% other proxy discretion, and 0.3% against. Now going to questions. Ingrid, anything?
Nothing online or on the phones for this item.
Okay. Anything from the floor? Okay. All right.
We'll now move to voting. Could everyone who is eligible please complete your vote for resolution four? While you're doing that, I would like you to note, we have now addressed all four resolutions. I intend to now call for any general questions, but I'll leave the polls open during this discussion. This means if you wish to take a little bit longer to decide your votes or change your votes, you may do so. When we are nearing the end of the meeting, I'll give approximately 15 seconds' notice. We intend to close the poll. I'd now like to ask if shareholders have any general questions at this time. We'll kick off again with you, Ingrid.
Yes.
Charlie, you're in the queue.
The online question I have is, in light of share price weakness in 2025 to date, is the board considering a buyback or other capital management initiatives?
Yep. I think Brendan's the man to answer that.
Good question. It's certainly been something that management has been considering, but perhaps refer back to one of my earlier slides showing the considerable efforts we've made to improve the free float of the business over the last three years. Remember, at the time of Regal Partners' merger with VGI and the creation of Regal Partners, our free float was 9%. It's now 62%. A buyback would be a short-term hit to the share price and erode some of that free float. I think ultimately, in building a sustainable long-term business, we're better served by keeping that capital on balance sheet and continuing to grow the free float of the business.
Nothing else online or on the phones at this point.
Anything from the floor, Charlie? You're going—oh,
Okay.
You're second in the queue.
Okay.
Andy Derrick, I'm a proxy. First of all, congrats on a great year, and thanks for doing best practice with the hybrid meeting. It's great to see. A couple of questions. During the year, there was an investment with U.S.-based or Aussie-based biotech Opthia. Generally speaking, my understanding is the weighting of that investment was quite heavy towards the LICs, or at least well represented by the listed investment companies' part of the portfolio. Was there any particular reason for that? I know a lot of the funds are very sector-specific or specialist, and I know you've now got multiple portfolio managers and those kinds of things, but was there—yeah, was there any particular reason for that?
Brendan, Jordan, take that.
Yeah, thank you, Andy.
I think the stock you're referring to is Opthia, ticker OPT. You're right. It was a high-conviction position and appeared in a number of our strategies across the Regal-branded long-short equity strategies. Just to be clear, it didn't appear in any of our credit and royalty strategies, certainly didn't appear in the PM Capital Global strategies either. Within the strategies, it appeared a number of times. I'll reiterate, though, that it was always within the mandate and the risk guidelines of each of those funds. Having said that, I think you touch upon a point whereas whether it was appropriate to have such a position so common across those portfolios, particularly of that size in the retail funds.
As a result, we've taken measures internally to restrict the chance of that happening again, particularly as it relates to our multi-strat funds and also in respect of our retail funds being VG1, RG8, and RF1 in particular. Well noted, and we regret what has occurred. However, we've made changes to reduce the impact of that happening again, whilst not impacting the ability of the Regal long-short portfolio managers to continue to generate strong fundamental returns.
Thank you. That's very helpful. Just by extension, because naturally, again, you've got multiple portfolio managers, but they might be overseeing multiple strategies. Pardon the ignorance, but how does the firm manage positions where you've got different structured classes, managed funds, etc., investing in the same stock? Are there ever crosses or transactions between Regal strategies or just the group strategies, I might say?
First and foremost, the guiding principle in terms of how each of our strategies, whether they be funds or mandates that we run, are the offering documents in respect to those. If it's a retail product, there'll be a PDS. If it's a wholesale product, which would be more commonly what there is, there'll be an offering document. If it's a mandate, there'll be a contract that governs how that investment strategy is to be run. At all times, we're managing the investment strategy in accordance with that either offer document or that contract. We're doing what we've been employed to do, and that is typically to generate fundamental returns from investing on the long side and the short side. As I said before, Opthia was a company we'd known for a long period of time.
We had high conviction in its ability to emerge into a global leader. We got that wrong. We've acknowledged that. We've been very transparent to our clients, so we made a mistake there. We've put some guardrails in place, as I've mentioned before, and we're moving forward. My priority is to make sure that each of the funds and strategies are being run in accordance with those risk guidelines that's in the offer documents, and we were satisfied that it was. Can they trade with one another, though, hypothetically? It would be rare, but if a fund was a seller for a reason and another fund was a buyer, it would be done at a fair market price. Yes, it technically can.
It would be done under arm's length transaction, recognizing there's a high inherent risk of related-party transactions, have a high inherent risk of concerns, perhaps, around that.
Thank you. Just one last question. Again, Regal does have quite a portfolio of LICs, and as the firm has displayed, its growth is really, really strong and keen to continue so. There's been a lot of acquisitions, and there are some very acquisitive participants in the LIC market. Is this something that the firm might look at going forward? Because, again, it's a market that seems to have a lot of acquisition, but as I understand it, the firm hasn't pursued a large amount of climbing up the registers of LICs and yeah.
It's not for certain, there are two examples that I'll highlight.
One is a listed investment company called PMC, run by Platinum Asset Management, and another one, PAI, it's a ticker under the Asian strategy run by Platinum. We've been very public about our desire to put forward a proposal there to offer those shareholders an alternative. Unfortunately, we've been rejected by each of those boards. I guess I highlight that as an example. It's a very public example of our desire to ensure that where we've got great investment capability, and we think it's superior to another invest LIC, that we'd like to put that forward. Having been rebuffed by the boards of those LICs, we've decided to stop work on that.
Fair loss, I think. Yeah. Thank you very much. It's very helpful.
Thanks, Andy.
Okay.
Thank you.
Continuing on the topic of LICs, I have to ask, but given our previous interest, but VG1, AUD 1.60 share price, AUD 1.92 NTA, 17% discount, RG8, AUD 1.81 share price, AUD 2.16 NTA, 16% discount, and even the flagship product, I think you referred to it as, RF1, trading at a 9% or 10% discount, I believe. Yes, clearly, that has, well, it's seemingly chronic. I'm not sure how much of Opthia had to do with, I don't know if that's blown out the discounts, but clearly there is a trend, as you know, that some, or you've tried to correctly with the vehicle that you've had currency because it was trading at a premium. PM tried to take over some underperforming LICs that were at a discount, so that makes sense. Yes, just your thoughts on VG1, VG8, RG8, given those discounts do seem to be chronic.
Maybe if you could just, it does seem like a bit of a, I do not know what the industry term is, style drift. I am not sure that they were sort of global funds, and I do not know how Opthia ended up being such a big position for those funds. It does seem a bit different to what one would normally expect, but anyway, I suppose you have answered that. Just addressing the discount, please, any thoughts or updates as to how you can close that? Because whatever has been done does not seem to be working, so just like your thoughts, please, going forward. Is there anything you are going to be doing differently to try and close those discounts, or should we just assume that that is now chronic?
No, thank you for your observation.
The VG1 and RG8 is now coming up to three years since we basically acquired VGI, and we've been working hard to close that discount. Whilst we had a challenging investment performance through sort of March, April, I'm pleased to say that in May it's performing really strongly, both VG1 and RG8. Some of that gap more recently has opened up because of the strong investment performance, including even with RF1. We're not satisfied to allow that gap to sort of stay, and so we're continuing to assess all options above and beyond, I guess, the three pillars of what we'd highlight at the time. One, being very clear with investor communications, highlighting what the portfolio is and how we're investing. Two, being very clear from a capital management perspective, using a combination of buybacks and a very clear dividend yield.
Three, more broadly, making sure that we're combining the investment capability, the entire group, to get the best outcomes for shareholders. We haven't given up, and we continue to sort of drive, I think, better performance for those funds going forward, and if we continue to do that, I'm sure that gap will close. It is just performance that you're assuming will close the discount because in the long term, performance will be the key part of that. I am just looking. I think it's I just have one point, Charlie, and that is the question may stay the same and the answer's still the same, that we're a service provider to those LICs, and Brendan has expressed what we do as a service provider in trying to help generate performance, which we believe is ultimately the long-term solution to closing the NTA share price gap.
At the end of the day, it's the directors of the LICs who are independent directors who will make those decisions and those questions in relation to that are better directed to them than they are to RPL. With service provider, Brendan's indicated what we're doing in that capacity, but they are independent companies with independent directors, and at the end of the day, they decide what policies will be implemented in relation to their shareholders.
Thank you. Just the strategies, like I'm looking at RG8 financials, and the total loss for the half was AUD 8.8 million, of which there was an interest expense of AUD 7.3 million for the shorting, management fees AUD 2.8 million, this is for the half. That's pretty similar for VG1.
As you know, we have raised that some of these products, like just the fee drag, like so many other people are getting fed before their shareholders, whether it be the banks or the brokers or the manager. Yes, I know you're just a service provider, but the service has not been great to date for those three that you've been managing, two that you've been managing for three years now. Do you think that's sustainable, or is that just chronic given the fee drag that there should be such a significant discount associated with those funds, with the interest, with the fees? It sounds like you're not going to do anything about those fees, which I think is up to the fund manager.
I take your point. It's up to the other board, but just those particular funds.
I'd encourage you to raise those issues with the board. I mean, I say the good news story is the PM Capital Fund, which trades at a premium, but we're not going to go there because, again, that's an independent board. As I said, it's not our bailiwick. We're a service provider. We're more than happy to comment on the services we provide, but the actual investment strategies and responsibility of the shareholders lies with those boards and their direct accountability to the shareholders at their relevant meetings.
Do you employ the managers of those strategies?
Do we employ them?
Yes.
Yes. And we provide services to those companies.
Right. So there is some influence over the performance and the strategy, etc. Anyway, we don't need to argue about that, but it just does seem chronic.
I look forward to strategies going forward to hopefully close those discounts. Thank you.
I encourage you to engage with the independent directors of those companies if you're unhappy with the way the performance is going on.
Perhaps for Brendan, but are you able to express as a proportion of the firm how material the income from the four LICs is?
I can't off the top of my head, but it's public information. You could work out, obviously, the management fee is paid to the manager right across the group and divide that by our, obviously, total revenue. So it's a no-one answer, and it's in the public domain.
Yeah. I know there's four different strategies of varying timeframes and the rest, but it'd be material, wouldn't it?
Certainly.
How much is total fund, Brendan?
AUD 16.5 billion.
No, of the four.
AUD 2.3 billion.
Okay.
So you're roughly 1%, something like that?
Yeah.
No, that helps, but yeah. Yeah.
So that gives you a rough proportion of it.
Thanks.
Okay. Any other questions? This is the general question segment.
Anything else online? Just one last check of the phones.
Thank you. There are no questions via the phone lines.
Okay. That finishes the general question section. In case you have not completed your voting during the meeting, I will now give you a few moments to finalise your voting. As mentioned earlier, Boardroom are a Regal share registry. We'll conduct the poll using the voting cards that you will submit today in this room, the online votes that you submit, and the votes that were cast online before the meeting.
As a reminder for those in the room, the persons entitled to vote on this poll are all shareholders and proxy holders who hold green voting cards, which look like this. On the reverse of your green admission card is your voting paper and the instructions. Please ensure you print your name where indicated and sign the voting paper. When you're finished filling in your voting card, please provide it to the Boardroom staff to ensure the votes are counted. Boardroom staff will also be able to help you if you need additional time or assistance. If you require any help, please raise your hand. Okay. Are all votes now done? I hope so. I now declare the poll closed and formally ask Boardroom to start counting the votes. The results of today's AGM will be posted to the market and made available on the Regal Partners website later today.
I'd like to thank everyone for attending, encouraging the people to contact the investor relations team if you have any further questions. As there is no other formal business at the meeting, I declare this AGM of Regal Partners closed. For those in the room, please feel free to join us for refreshments on the other side of the room. Okay. Thanks very much.