Phil King’s Regal snaps up Chris Mackay’s 6.6pc stake in Magellan

afr.com:

It seems two of Australia’s best-known fund management houses were hobnobbing after market close on Wednesday.

Phil King’s Regal has bought a sizeable stake in Magellan. Brook Mitchell

Phil King’s Regal Funds was the buyer of Magellan Financial co-founder Chris Mackay’s 6.6 per cent stake in the business traded on Wednesday night by Barrenjoey’s desk.

Sources said Regal took up the bulk of the stake, and should emerge as a substantial shareholder on Magellan’s register in the coming days. It was not known if Regal would hold the investment within one of its funds or on its balance sheet. Likewise, it wasn’t known what Regal’s intentions are with the stake – although it would be safe to say listed companies don’t buy stakes in rivals on a whim.

It’s interesting timing from Regal. The M&A-minded investment firm picked up the Magellan stake on the eve of its half-year results, where it posted a doubling of after-tax profit to $13.1 million from $47.6 million revenue.

Of greater significance, it is waiting to hear back from Pacific Current’s board on its $600 million-odd bid lobbed nearly a month ago. The target’s 19 per cent shareholder, River Capital, is backing Regal’s bid, but ASX-listed rival GQG Partners has declared its intention to lob a counter offer.

While Regal establishing a toe-hold stake at Magellan is interesting, investors know well not to get too excited. History says Regal is not afraid to abandon its targets even if it’s given them fierce chase.

Less than a year ago, Regal partnered with Swedish private equity firm BPEA EQT to table two non-binding bids for Perpetual, first at $30 a share and then at $33 a share. The duo tried to argue its offer was a better option for Perpetual shareholders than an