Platinum to lose $1bn mandate

Platinum Investment Management is set to lose a sizeable institutional mandate at the end of the week.

The ASX-listed manager disclosed it received notice overnight that an institutional mandate worth about $958 million is to be terminated. The termination is to take effect from this Friday.

"The impact to profit of the related loss of revenue will be offset by an acceleration of planned cost savings to be delivered in FY26," Platinum said.

Reporting to the ASX, Platinum recorded total funds under management as at April end of $9.64 billion. This figure includes the mandate that has now been terminated, the loss of which will show up in the May numbers.

In April, Platinum saw net outflows of about $243 million, including $215 million from the Platinum Trust Funds. The balance was the result of market movements.

The mandate loss follows the news that Platinum is seriously considering merging with L1 Capital.

L1 Capital recently bought 9.6% of Platinum from its founder Kerr Neilson. Including a call option, if a competing offer is made for Platinum, L1 Capital's share would effectively rise to 19.9%.

Under the planned deal, Platinum would acquire L1 Capital and in return L1 Capital's shareholders would own 75% of Platinum's shares, with existing shareholders owning the balance. Platinum explained that this accounts for the combined entity receiving participation in performance fees related to the first 5% of absolute returns from the L1 Long Short funds.

In an analyst note, Morningstar said some value would be unlocked via a merger, but said it didn't expect any meaningful upside from cross-selling opportunities or for Platinum's funds to necessarily appeal to L1 Capital's clients.