Platinum Asset Management’s shares slump as $1.4b in outflows loom large

Shares in Platinum Asset Management (ASX: PTM) have been savaged by investors despite the international securities investor announcing that it is on track to cut annual expenses by $25 million by the end of the financial year.

Shares in Platinum, a company with more than $15 billion in assets under management comprised entirely of international shares, slumped more than 22 per cent in early trading.

Shareholders were largely rattled by revelations that the group was expecting outflows of at least $1.4 billion from its institutional and wholesale business over the coming month after one of its clients informed the group that it plans to “rebalance its exposure away from benchmark agnostic global equity managers’.

Platinum notes that this will be a partial redemption that is unrelated to its cost-cutting initiative.

“As such, we do not expect the account to close but rather to see a reduction in mandate size,” the company says.

Platinum says the redemption, along with other institutional account changes expecting over the next few months, will lead to a cut in annualised fee revenue of about $18 million for the company.

Platinum also revealed that the planned cost reductions could lead to a further $200 million drop in assets under management for the group.

Platinum Asset Management announced in February that it was undertaking a review of operations after reporting a 5 per cent fall in interim net profit to $35.6 million in the December half.

New CEO Jeff Peters at the time of the profit announcement noted that it has been a “difficult year so far” for the group.

Platinum today has revealed that the proposed cost savings would shave 26 per cent off the company’s annualised half-year expense base of $96 million.

But because the savings will begin to be realised from the last quarter of this financial year, Platinum says they are “unlikely to generate a material impact on the company’s reported FY24 profit, with the bulk of savings being progressively realised during the 2025 financial year”.

The savings imply staff cutbacks for Platinum Asset Management as well as “non-people” cost savings that will result in yet to be determined one-off charges for the bottom line.

Platinum says the cut in expenses will also be delivered through a simplification of the company’s product range, including the rationalisation of Platinum’s offshore distribution efforts.

“Although funds under management are expected to reduce by approximately $200 million as a result of these initiatives, the impact on profit is likely to be positive once related direct and indirect cost savings have been realised,” says the company.

Platinum Asset Management’s most recent update on funds under management revealed net outflows of about $285 million in February, although total assets under management rose to $15.56 billion from $15.19 billion in January.

“In late February we outlined a strategy to reset and position the business for future growth,” says Peters in a statement to the ASX today.

“I am pleased to be able to report that we are acting swiftly to implement the changes required as part of the reset phase.

“I would like to reiterate my firm belief that Platinum will emerge from this challenging phase as a revitalised business that is better able to leverage its strong brand and talented team for the benefit of its clients.”   

Peters was appointed CEO of Platinum in February after Platinum co-founder Andrew Clifford announced last August his intention to step aside from the position.

Clifford was reported to have been forced from the leadership role following pressure from Platinum’s biggest shareholder and co-founder, Kerr Neilson, with the rich-lister seeking change after Platinum reported a 20 per cent drop in full-year earnings in FY23.

Shares in Platinum Asset Management were trading at $1.04, down 26.5c, at 12.45pm (AEDT).