Regal Partners (RPL) – Going with the flow

Regal Partners is a fund manager that invests across Australian and international markets. It employs market-neutral and absolute-return strategies, along with a bottom-up stock picking approach, to create its portfolios. Regal Partners was founded in 2004 and is based in Sydney.

Regal Partners posted a solid June-quarter trading update, with a 7% quarter-on-quarter (QoQ) increase in funds under management (FUM) and upgraded guidance for first-half CY25 fee revenue and earnings. The increase in fee-generating FUM to $17.7 billion was an impressive 9% ahead of Ord Minnett’s expectations, driven by a significant gain in its long-short equity strategy, primarily from investment performance, and in its credit and royalty strategy, mainly from net inflows of fee-earning FUM.

Regal now sees first-half performance fees of “at least $40 million”, up from “at least $35 million” as recently as early June. Incorporating the increased expectations for performance fees and marking FUM to current market values leads to significant upgrades in our EPS estimates – our forecasts rise 48.4%, 16.3% and 10.3% for CY25, CY26 and CY27, respectively.  We reiterate our Buy recommendation on Regal and raise our target price to $4.00 from $3.60.

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