The alternative asset manager announced their December FUM update last week, with the numbers somewhat disappointing, though shares were propped up thanks to investment commitments made since the start of the new year. Negative mark-to-market changes weighed on Funds Under Management (FUM) in the final quarter of 2022 with total FUM falling $300m to $5.1b despite positive net inflows of $200m. Their outlook did include a $200m commitment to a new Private Credit offering being rolled out, a key cornerstone investment in the fund which will be important for future growth, while it’s also a key diversifier. The risk with Regal is all around Phil King, and as we saw with Hamish Douglas, having a such heavy reliance on one individual creates risk. Broadening RPL’s exposure to a broader range of asset classes & strategies, with a wider team of portfolio managers creates a lower-risk model, which we applaud.
Importantly, the group still has plenty of dry powder on their balance sheet and will look at more M&A opportunities following the successful integration of VGI in 2022. Given the alternative investment mandates that Regal offer, we expect FUM flows to rebound as more investors look for less market-linked returns.
MM remains bullish & long RPL in the Emerging Companies Portfolio
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