Regal Partners (RPL) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Merricks Capital expands scale and capabilities in private credit, increasing group FUM by 24% to AUD 15.1 billion and diversifying offerings across mining finance, corporate lending, and structured credit.

• Private credit and royalties now represent nearly 40% of FUM, or AUD 6 billion, enhancing product diversity and positioning the group as a leading provider of alternative investment strategies in Australia and Asia.

• Merricks Capital brings complementary hard asset investment strategies and a strong track record in private credit, agriculture, and infrastructure lending, providing broader investment opportunities.

• Merricks' founder will lead income strategies, enhancing leadership and expertise.

• Enhances access to wholesale advisory, institutional, and family office clients.

Financial terms and conditions

• Acquisition price is approximately AUD 235 million: AUD 40 million in cash and 63,934,426 Regal shares at AUD 3.05 per share, with 85% of consideration in shares.

• Vendors intend to hold shares for at least 12 months post-completion, aligning interests.

• The price reflects a 0.6% discount to 10-day VWAP and a 3% discount to 5-day VWAP.

• Transaction equates to approximately 6.5x normalised EBITDA for 2023 and is immediately accretive to 2024 earnings, pre-synergies.

• Merricks Capital generated AUD 59.7 million in normalised revenue and AUD 35.9 million in normalised EBITDA in 2023.

Synergies and expected cost savings

• Synergies are expected to be revenue-related, especially in distribution and product expansion.

• Collaboration between distribution teams aims to deepen penetration in high-net-worth, family office, and institutional channels.

• Offshore distribution capabilities will be leveraged to grow the international investor base.

• Strong alignment of interests with Merricks management, supporting long-term value creation.

• Transaction is expected to be accretive to EPS in 2024, before any synergies.