Platinum Investment Management Limited (PTM) Earnings Call Transcript & Summary

Gentlemen, and welcome to today's Extraordinary General Meeting. My name is Guy Strapp, and I am delighted to address you as a Director and Chair of Platinum Asset Management. I'd like to begin by acknowledging that I'm speaking to you today from the lands of the Gadigal people from the Eora Nation. I also acknowledge the traditional custodians of [indiscernible] I hereby pay my respects to their elders past and present and meeting. It's now 9:30, the appointed time for holding the meeting, and I'm advised that the necessary quorum is present. The notice of meeting dated 21st August 2025 was published on the ASX market announcements platform and sent to shareholders. So unless there are any objections, I will take the notice as read. Okay. There are no objections, so I declare the meeting open. As outlined in the notice of meeting, today, we will be seeking shareholder approval for a number of resolutions to give effect to the proposed merger of Platinum and Maven Proprietary Limited trading as L1 Capital. We are holding the meeting as a hybrid meeting to encourage broader participation amongst our shareholders. Please now allow me to introduce your Board of Directors. Firstly, Jeff Peters, our Chief Executive Officer and Managing Director; and now my fellow directors, Anne Loveridge AM, Chair of the company's Audit, Risk and Compliance Committee; Rachel Grimes, AM, Chair of the company's Nomination and Remuneration Committee; Philip Moffett and Jim Simpson. And before I get started, I will hand over to our Company Secretary, Joanne Jefferies, to take you through some of the formalities. Jo.

Good morning, everybody. As Guy mentioned, I'll take you through some of the procedural matters for today's meeting. However, before I do this, please can you ensure that your mobile phones are switched to silent. Thank you very much. Now in relation to voting, for those shareholders present in the room, you should have received a voting card to enable you to vote -- to cast your votes. If you have not received your voting card, please see one of the Computershare representatives at the desk outside. For those shareholders who have joined us online, in the top right-hand corner, you should see 4 icons. You can toggle between these at any time during the meeting. When you select the vote icon at the top of your screen, you will see each of the resolutions that you can cast a vote on. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded, and you'll see a green tick beside each resolution you have voted on. You have the ability to change your vote right up until the time the Chair declares the voting closed. In terms of voting today, all resolutions are being voted on by poll. Voting is now open, and shareholders in the room and online can cast their votes on the resolutions included in the notice of meeting and can do so until the poll is closed. Voting will remain open during the meeting, and the Chair will give you a warning when voting is about to close. In terms of asking questions, all shareholders present in the room, online or by phone will have the opportunity to ask questions in respect of the items of business for this meeting. For those shareholders in the room, if you would like to ask a question, when we move to question time in relation to the relevant item of business, please raise your hand and a platinum representative will bring a microphone over to you. [Operator Instructions] You are able to submit of business at any time during the meeting. However, these will only be answered when we get to the relevant item of business. If you are attending online and prefer to ask a question verbally, an audio facility is available. To use the service, please follow instruct on the online platform which are detailed below the broadcast. [Operator Instructions] Lastly, this meeting is being recorded, and the recording will be made available on Platinum's website in the following few days. I'll now hand back to Guy to deliver his Chair's address.

Thank you, Jo. Let me start by providing some background leading to the proposed merger of Platinum and L1 Capital, followed by an overview of the proposed transaction and the strategic rationale for the merger. Over the past 12 months or so, the Board engaged with a number of different parties who approached Platinum to explore various forms of transactions. This culminated in our announcement on 8 July 2025, advising that Platinum had entered into a merger implementation deed with the shareholders of L1 Capital. If the merger is approved by shareholders today, Platinum will acquire 100% of the Class A, Class B, founder and ordinary shares in L1 Capital. In return, the existing L1 Capital shareholders will be issued with new ordinary shares in Platinum, resulting in those L1 Capital shareholders holding approximately 74% and existing Platinum shareholders holding approximately 26% of the issued share capital of the merged group immediately after completion of the merger. Platinum shareholders will also be entitled to 100% of the management of any performance fees earned by L1 Capital with the exception of certain performance fees generated by L1 Capital's Long Short funds and mandates. These are the LSF performance fees. With respect to these LSF performance fees, Platinum shareholders will receive in-perimeter performance fees related to the first 3.5% of absolute returns, gross performance net of management fees per financial year generated by L1 Capital's Long Short Funds and Mandates. Existing L1 Capital shareholders will retain any LSF performance fees on absolute returns above 3.5% Importantly, accrual and catch-up arrangements in subsequent years will provide Platinum shareholders with downside protection for any shortfalls below 3.5% in prior years. Resolutions 1 to 4 concern the necessary shareholder approvals required in order to affect the proposed merger and are conditions precedent to the transaction. These resolutions must be approved by shareholders for the merger to complete. To demonstrate their long-term commitment to the business, the existing L1 Capital shareholders have agreed to enter into voluntary escrow arrangements in respect of their new Platinum shares. Release from those arrangements will be phased over a 4-year period, subject to customary exemptions. By virtue of these escrow arrangements, Platinum will acquire a relevant interest in these escrowed shares. So Resolution 5 seeks shareholder approval for this to occur. Approval of this resolution is not required in order for the merger to complete. It is further proposed that Platinum will be renamed as L1 Group Limited following the completion of the merger, whilst remaining listed on the ASX, but with a new ticker L1G. Resolution 6 seeks shareholder approval for Platinum to change its legal name on this basis and is conditional on the completion of the merger. Resolution 7 and 8 seek approval to appoint James Stewart and Neil Chatfield as directors of Platinum, pursuant to L1 Capital's right to nominate directors to be appointed to the Platinum Board under the merger implementation deed. Such appointments, if approved, will be conditional on completion of the merger having occurred. It is expected that Anne Loveridge, AM, Philip Moffett and James [indiscernible] Director and that Jane Stewart will not be an independent director as she will be an Executive Director on and from completion. So the strategic rationale for the merger. The Board is of the view that the merger offers the following attractive benefits for Platinum shareholders: exposure to a market-leading investment platform of listed equities and alternative investment strategies. exposure to a growing, scalable and well-diversified investment management business with a diversified client base across institutional, wholesale, high net worth and retail investors in Australia and globally. Potential to deliver annual pretax net synergy and cost benefits of $20 million and to be materially EPS accretive for shareholders. Specifically, the merger is expected to be double-digit EPS accretive in the next 12 months following completion and over 30% EPS accretive for shareholders in FY '27, which would be the first full fiscal year post completion, subject to the assumptions and footnotes set out in the presenting accompanying documents in the meeting. Finally, preservation of ongoing balance sheet strength to support investment in accretive growth opportunities. If the merger proceeds, Platinum's strong retail presence, combined with L1 Capital's leading investment performance and strong distribution capabilities have the potential to create a market-leading provider of listed and alternative investment strategies with over $16.5 billion in AUM based on L1 Capital and Platinum AUM as at 30th of June 2025. Conversely, if the merger does not proceed, Platinum shareholders will continue to be exposed to the risks associated with Platinum stand-alone business, which could materially impact the value of Platinum shares in the longer term, including the risk of further outflows of funds under management. The independent expert, Grant Thornton, has concluded that the merger is fair and reasonable in the absence of a superior proposal emerging. Importantly, no competing proposal has emerged since the company's announcement of the proposed merger on 8 July 2025. For all these reasons, the Board of Platinum unanimously recommends that Platinum shareholders vote in favor of resolutions 1 through to 8. Ladies and gentlemen, now let me come to the formal part of the meeting as outlined in the notice of meeting. Voting on all resolutions will be conducted by way of a poll. Each resolution set out in the notice of meeting, other than the vote on resolution 6, the change of name resolution, which is a special resolution. All other resolutions are ordinary resolutions and therefore, must be supported by a simple majority of votes cast by shareholders. With regards to questions, I will address any questions or comments that have been received under the relevant item of business. I will take questions from any shareholders, firstly, who are in the room attending in person, then from shareholders joining online. And finally, from shareholders using the audio facility. Shareholder questions received prior to the meeting, which are relevant to the business of the meeting will also be addressed under the relevant item of business. As I have already mentioned, completion of the merger is conditional on resolutions 1, 2, 3 and 4 being passed. The first resolution that will require a shareholder vote today is the approval for the acquisition by Annaeus Pty Ltd as trustee of the ML Family Trust, an entity associated with Mark Landau, one of the founders of L1 Capital, of a relevant interest in Platinum shares on completion of the merger for the purpose of Section 611, Item 7 of the Corporations Act and for all other purposes. The Platinum Board unanimously recommends that Platinum shareholders vote in favor of resolution 1. The screen behind me shows the proxies received for and against this resolution. With regard to open proxies given to me, I will be voting in favor of this resolution. I'll now take any questions or comments on the resolution, starting with questions in the room.

David Kingston, K Capital. Look, I've got a few comments to make to contextualize my questions because it's a very important meeting. So where we go. I'm not sure whether we're here for a wake or a celebration of a new entity. We'll find out later. But certainly, this meeting recognizes the very sad demise of a once great funding, a true fallen angel. In 2007, Platinum Mighty IPO-ed as an iconic funding at $5 a share. Share price peaked above $9. Founder, Kerr Neilson stepped down as CEO in 2018 when the shares were above $5, and Kerr left the Board in late 2022. Over recent years, PTM has flounded with soft performance, low performance fees, high operating costs and diminishing FUM. So Kerr recently sold 10% to L1 at $0.54 a share and an option over another 10%. Interestingly, L1 funded the purchase of the 10% shareholding with a margin loan of around $31 million. They use leverage everywhere. It also has a margin loan of around $51 million on its investment in PMC. It really is the end of an era because L1 intends to rename Platinum as the L1 Group. In my opinion, Chair, the deal will succeed and probably is inevitable. But in my opinion, the terms are not good enough. At the end of the day, we had a couple of very savvy parties, Matt Landau and Rafi, negotiating for over $1 billion of value versus a Board, which was somewhat constrained because Kerr had already decided to sell at the bottom. Yes, there are real synergies in this deal, but let me comment on a couple of issues. Critically, Chair, as per the Grant Thornton report, Platinum has around $170 million of cash and investments, whereas in this merger, L1 is contributing according to Grant Thornton, a mere $5 million cash. So $170 million versus $5 million. Secondly, Chair, Platinum contributes all of its fees on all of its FUM, whereas the L1 vendors have excised the performance fee on its long short strategy in excess of a 3.5% absolute return. Now to a lot of people, that's gobbly gooke, but the essence of it is critical because if the long short strategy, which is the dominant part of L1's value, if it delivers 15% per annum, there will be a 3% performance fee, of which a mere 0.7% goes to MergeCo, whereas 2.3% is retained by the L1 vendors. Notwithstanding those 2 big caveats, under this deal, the L1 vendors take 74% of platinum versus just 26% for existing holders. In my view, the L1 vendors have strongly outnegotiated the PTM Board, albeit I accept the Board was constrained by Kerr's sale. They are savvy guys, Mark and Rafi, with over $1 billion at stake versus the languishing platinum with Kerr abandoning it at a very low price. I am concerned that under the initial proposed deal, Chair, in May 2025, MergeCo would have received performance fees from the initial 5% return from the long short strategy. But for some reason, this has been dropped to 3%, 3.5%, a very large change. I accept that Platinum shares have increased above the price Kerr sold at due to the synergies and a hope that Platinum may have bottomed. Briefly, I will comment on one other area, and then I'll ask a couple of questions. Is the Platinum share price sustainable, which is a key issue for shareholders? When we add the value of the new shares being issued to the L1 vendors, MergeCo is currently valued at around $1.6 billion. That's a lot of money for a funding. Indeed, it's over 10% of MergeCo's FUM. And that's a very high rating for an equity funding. Now we all know examples of where fundies have risen on hype and then dropped like a stone. Magellan, VGI and even Platinum $9 down to $0.70. I think shareholders should also be aware that 74% of MergeCo will be escrowed. So when the stock trades, even though it's capped at $1.6 billion, only $400-odd million is trading. So it's a stock that can be distorted quite easily. I think it's also important to note that the LS fees are very high, potentially not sustainable. 1.4% management fee and 20% performance fee with no threshold other than a high watermark. So even if they put in a bad year and only deliver 5%, the performance fee is still 1.25%. Sadly, as I mentioned, MergeCo only keeps what is likely to be the minority of the performance fee. The majority of that fee will go to the vendors. I accept L1 has a solid record. But in my view, it's claimed to be Australia's best long short performer is dubious. The key issue is LSF performance since its 2018 IPO. That was when the large FUM was achieved. It's easy to get a large return on small FUM. Since the IPO, the performance is only 12%, which is moderately above the benchmark of 10%. But it's actually worse than that. The 12% return since IPO drops if the return is based on the LSF share price, which is currently at an 8% discount to its pretax NTA. Also, LSF has huge financial leverage in it. It's not a vanilla ungeared fund. It's got big leverage. When there's big leverage, shareholders have a right to expect significantly greater returns than an unleveraged index. I also note another of their strategies has been disappointing, the L1 Catalyst Fund. Finally, before my questions, I would note that Grant Thornton has raised some issues, key man risk with L1. Certainly, press comments has suggested that one of the founders might relocate to Israel. Grant Thornton also raised the issue of whether L1's outsourcing of multiple functions is suitable for a listed company. Also in the explanatory memorandum, there was an issue raised as to whether there might be a bias here because the executives might skew towards the LSF strategy because that's where they retain the biggest fee. My questions, Chair, are, in the ASX announcement on 19 September 2025, it was stated that performance fees for the year ended 30 June '25 from L1 Capital Long Short strategy were $82.5 million. Can you please advise the shareholders how much of that performance fee would MergeCo retain under this merger? And how much would be excised by the L1 vendors? I have two other questions, but if you want me to stop there.

Sure. It would be 3.5%.

But dollar-wise, of that $82.5 million, Chair, they're proudly announcing that in the recent announcement to shareholders. Of that amount, how much would MergeCo retain?

3, 1, 16, 8, 5. We've got $2 million?

Sorry, it would retain $2 million. They're proudly around.

3% of $82 million. I'm just doing off the top of my head, have I got decimal wrong?

Well, it's -- if you said $2 million, I don't think -- I think that's too low. But it's a really, really important point, Chair because the essence of this deal is that, yes, there's synergy. Yes, L1 has a better reputation than Platinum. I accept that. But the essence of the deal is L1 is excising a huge amount of their performance fees. They're not going to be delivered to MergeCo. They have then proudly claimed or I think it was Platinum in this announcement a few days ago, that the performance fees are $82.5 million. But that's irrelevant if MergeCo doesn't get that. So I think it's essential that every shareholder should know what part of that $82.5 million would MergeCo retain.

Yes, $2.87 million, which is 3.5% of $82.5 million.

So in that respect, Chair, is this announcement misleading? Should you issue another announcement that they're claiming $82.5 million, but really sub $3 million is retained by MergeCo. I think that's probably too low though, I think, Chair. I think it might be higher than that.

Sorry, you got -- yes, $38.5 million, sorry.

Well, Chair, if you're confused, you can.

You didn't have the calculate. So I think, David, the real answer to this question, the powerful answer here is that currently, the L1 founders take 100% of any performance fee they generate. So going forward, Platinum shareholders will enjoy a slice and not insignificant slice of those performance fees. Additionally, if L1 can sustain 15-plus percent returns, we have had a long bull market and they had some great numbers, as you highlighted, I agree. But if they retain that sort of return and generate inflow, which they plan to do so, which we plan to do so through global long short, then Platinum shareholders will also get to enjoy not just the performance fee component if sustainable, but hefty base fees, as you described them, of 1.4% per annum. And that's a wonderful outcome. Previous platinum portfolio, you identified at the start, has significant base fees similar to that, but no performance fees over recent years. So it's a win-win for Platinum shareholders to think that we can enjoy a growing global fund with less capacity constraint than the current Long Short Fund run by L1 Capital to reap performance fees and get healthy base fees through positive inflow, which will come if the numbers are that strong.

But Chair, even Grant Thornton have acknowledged that the growth in the long short strategy has slowed in recent times.

[indiscernible] Sorry, cross. The domestic fund is not that far from capacity, has some room to wiggle. It is a 70% domestic fund, 30% offshore. The intention with the Board's backing is for the new L1 Group to promote a global Long Short Fund, leveraging that 30% global capability into global markets, which have much less capacity constraint and can generate significant inflow.

Yes. Look, the performance of the strategy is pretty volatile. There was 1 month a couple of years ago where they lost 13% in 1 month. So it's pretty volatile. And certainly, Grant Thornton is saying putting some caveats on it. Let me ask the second question, Chair. If that's the answer, the $82.5 million, arguably is misleading because it's not relevant to MergeCo, 38 million, if that's the right number. But I think someone should clarify that precisely. If that's the right number, that's what MergeCo gets, not the $82.5 million. Second question, Chair, just disturbed. I accept the deal is going to happen, and Platinum needed to do a deal because it was on its knees, and it wasn't helped by the founder selling at $0.54. The deal will happen. But I am concerned that the actual terms of the deal are not fair. The initial announcement, Chair, was actually in May. And the initial proposal was that the split of fees on the long short strategy was the initial 5% of absolute returns. The MergeCo received its 20% of that. However, for some reason, this Board has chosen to accept a deal whereby MergeCo only gets a mere -- the performance fee of 3.5%. Now it's gobbly group to some people, it's confusing. But the essence of it all is that if a long short strategy delivers 15%, then the performance fee is 3%, which on $4 billion is a lot of money. But the sad thing is that MergeCo will only get 0.7% of that 3%, whereas the vendors who are getting a huge amount of equity in this company will continue to retain 2.3% performance fee. So they're getting -- they're double dipping. But I would just like to ask the question, what changed so that the Board accepted -- I don't know, it might have had a gun at its head, may have had no other options. Why did the Board accept a dramatic decline in the economic value of MergeCo because they're only going to get the performance fee up to 3.5%, whereas the initial announcement was up to 5%, huge change.

David, we renegotiated the 74-26 split as well. So we did that so that Platinum shareholders would have greater certainty in the earnings stream. As you said, performance fees can be very volatile. The Board felt it appropriate to have a slightly lower take on the volatile performance fees and greater certainty at 26% of the base fees.

Yes. But Chair, with respect, the move from 25% to 26% is miniscule.

Well, it depends on the value you associate with the company over the long term. And the Board are taking a longer-term view than just the last 5 minutes. So we're thinking about what this brings to Platinum shareholders, as I mentioned about accretion, not just in the very short term and the out year 1 and 2. But longer term, this is a great solution for Platinum shareholders.

On any parameter Chair, the value of an additional 1% of MergeCo is a lot less than the diminution in value by dropping the performance fee split from 5% down to 3.5%.

I intend it wouldn't be -- I'm not going to argue it, but I intend it wouldn't be in the circumstances where after an 18-year bull run, we have a 10-year period where markets are, call it, flat. We know what valuations are in terms of the Australian PEs and U.S., and it wouldn't surprise anyone to have at least 5-plus years of flat returns in markets, which means Platinum shareholders would get no return, but we get a bigger stake of the base fee.

My final question on the first resolution, Chair, is again, I'm just concerned, why has the Platinum Board -- I appreciate again that Kerr has set the rabbits running by selling 10% and optioning up another 10%. But why on earth in a merger -- suppose a merger of equals, albeit one company declining the other one going up. But why on earth would the Platinum Board agree to a deal where on its balance sheet, it has $170 million of cash and investments, real hard cash and investments, things like investments in PAI and a range of other investments and a lot of cash. And yet the party that you are offering 74% to, it's contributing part of its funds management business, it's retaining part. But it's contributing 0 or $5 million, I believe, according to Grant Thornton of cash and no investments. And in fact, the net cash share is offset by lease obligations that L1 is transferring to MergeCo. In my view, the negotiation of this deal has been pretty lame, albeit I accept that you probably had a couple of hands tied behind your back. But I appreciate your insight. Why would you support a deal like that? When $170 million of cash comes in from PTM, basically nothing from L1 and yet you're giving them 74% share.

Well, private companies tend not to accumulate very large balance sheets. And obviously, that's been distributed to the founders of L1 Capital. Going forward, a lot of the revenue that comes out of the L1 side of the business as well as the platinum flows to the new merged balance sheet. And the Board is of the view that, that balance sheet will be able -- is robust as you identify, and we'll be able to continue to be used to seek out for future growth opportunities.

As you rightly said, Chair, they've distributed a huge amount of profits over the years. They could have left the cash in their balance sheet. But at the end of the day, it's an aspect, in my opinion, of unfairness that Platinum itself is contributing $170 million. They're contributing basically nothing and yet they're taking 3/4 of the cake.

Sure. That's just -- that's a spot identification in terms of price. We're also looking at the future value. So what's inferred in the revenue stream from the L1 side of the business on a go-forward basis, and it's very healthy.

And they're getting a very healthy share of the cake. Anyway, thank you, Chair. I had a couple of questions later on for the following resolutions. Thank you.

Okay. I'll move to any other questions in the room.

And I'm actually asking a question at a very personal level. I've had trouble connecting with the ASX Index Every time I try to find out what's happening to my PTM shares and I get a message saying PTM does not exist. I have ordinary shares. I have not invested them in ETFs. So I'm just wondering with this merger, will my ordinary shares still have value or not?

Yes. But the problem about not being able to access the shares is something that we could take up with you after the meeting. Okay. I'll now move to online questions.

We have an online question from Mr. Stephen Mayne. Thank you for disclosing the proxy votes early along in the formal addresses. Could the Chair comment as to which substantial shareholder in the room with 33.5 million of undirected proxies. These are likely to be pivotal in determining the outcome of resolution 9, which has been opposed by 41% of directed proxy votes. In terms of resolution 1, there is strong support on the proxies. Question is, could Mark Landau please comment as to whether there is any leverage on these shares, which are proposed to be swapped into a dominant 33% stake in the merged group.

So I really got confused then because I was focusing on the unvoted proxy. Okay. Sorry.

Is a substantial shareholder in.

I wouldn't be prepared to disclose that.

And really asking Mark Landau to comment on the leverage on the shares.

No one will willing to hand over the mic.

Again, I can't comment on that.

Chair, there are no further questions for this resolution.

Beth, do we have any telephone questions?

There are no questions on the telephone Chair.

Okay. Thank you. The next resolution that will require shareholder vote is approval for the acquisition by Shomron Pty Ltd as trustee of the RL Family Trust, an entity associated with Raphael Lamm, one of the founders of L1 Capital of a relevant interest in Platinum shares on completion of the merger for the purpose of Section 611, Item 7 of the Corporations Act and for all other purposes. The Board of Platinum unanimously recommends that Platinum shareholders vote in favor of resolution 2. The screen behind me shows the proxies received for and against this resolution. With regards to open proxies given to me, I will be voting in favor of the resolution. I'll now take any questions or comments on the resolution, starting with questions in the room.

Thank you, David Kingston. Just if you could clarify, please, Chair. obviously, the 2 L1 founders are receiving a huge chunk of this company. But Paragraph F on Page 18 of the explanatory memorandum states, there is potential for misalignment as some executives will have a different interest in performance of the LSF strategies than in other parts of MergeCo. So if you could just clarify, please, for the benefit of all shareholders, is the fact that Mark and Rafi, in particular, have this huge interest in performance fees of the LSF strategy held outside of MergeCo. Is that a concern to the Board and you as Chair, that their focus is going to be on that and not in optimizing the totality of MergeCo's funds management business?

Actually, on the contrary, the fact that Mark and Rafi have elected not to stand as key management personnel or be represented on the Board means that they're doing what good funding should do and spend 100% of their time focusing on generating returns for themselves as founders and for the Platinum shareholders.

Maybe my question wasn't clear, Chair. I was more -- and the reference in the explanatory memorandum is directed to the fact that the return they get, for example, if the L1 Catalyst fund turns around from poor performance and starts performing or some of the other funds, the property fund, whatever, start performing, the concern is, will Mark and Rafi not focus on those because the only benefit to them is the investment performance then of MergeCo, whereas if they focus on their time on the LSF strategies, they get 2 substantial financial benefits, the return from their holding in Platinum, which will be renamed, plus the huge amount of performance fees on the LSF strategy above the 3.5% low threshold. That's the reason it's included in the explanatory memorandum.

So the answer is that all of the portfolio managers in their various cohorts are motivated by success within their own funds. And so Mark and Rafi are motivated to do that with their long short strategies and the other portfolio managers, whether it be in Catalyst and the other -- the long-only fund, et cetera, or other funds that we choose to seed and invest will all be motivated by the economics of their own fund.

Okay. The second one, Chair. I just I've only got two on this resolution. The arrangements and the incentivization of executives, we all know in funds management are crucial. L1 is a little bit complicated. It's a private entity, but Page 42 Chair of the explanatory memorandum, a little bit unusual. It states that L1 Capital International will enter an advisory agreement with PIML. L1 Capital itself, which is what you are buying, only holds 50% of the shares in L1 Capital International. So you're only buying -- giving 74% of the value of the company to L1, but you're only getting 50% of L1 Capital International. David Steinthal holds the other 50%. Now clearly, this is an important arrangement because it covers advice and activity on the global strategies, which, as you've said, Chair, is potentially going to become a bigger part of the group because this new strategy where it's not constrained to 70% Australia. But the explanatory memorandum goes on to say, it's all a bit strange and opaque that this very important agreement, you are only extending for 3 months, the advisory agreement. It's at a fee of 0.4% of the global strategies under advice, which I assume is effectively going to be a diminution to what Platinum MergeCo receives because part of the fees they get are going to go out to David Steinthal. Apologies if I mispronounced his name. But it's quite a strange arrangement, Chair. And I think shareholders would be -- would appreciate if you could clarify in greater detail what does David Steinthal do? Why does L1 Capital only own 50%? Is this advisory agreement going to continue for the long term? Is David going to say, I'm not going to provide any more advice to you? I don't know. But it's clearly an important part of the value of this company, and it's an unusual provision, which is why it's referred to in the explanatory memorandum.

It provides some certainty for the unitholders and investors so that there's a continuation of management through an uncertain period of time. You could imagine if the Platinum portfolio managers walked out the door once the vote goes through today, that there is no continuity in terms of who's going to manage the portfolio. So it was selected that was suggested and approved that David and his team run that money for a 3-month period, and that will be subject to review.

But that's hardly certainty, Chair. You're talking about a company capped at $1.6 billion. An important part of it is the global strategy. You are recommending as Chairman of the Board to allocate $1.2 billion of value to the vendors. And yet what you're saying and what I read in the EM is that an important part of the strategy, you don't know who's going to be managing it other than for the next 3 months.

Well, we do. It's David and his team plus 3 of the analysts from Platinum who will have continuity over that portfolio and a decision will be made on a go-forward basis when and if we get to completion next week.

Okay. But just to clarify, at the moment, legally, for shareholders in the room who are considering this merger, there is only a 3-month arrangement as to who and how the global strategy of MergeCo is going to be managed, only applies for 3 months.

There is a contracted agreement between the fund and that individual who has a long-term proven track record of outperforming in that market.

And so the belief, Chair, is that, that will be extended for the long run. Is that right? Or...

I'm sure that, that will be the case, but we can't make that decision today because we haven't yet merged.

And do you think the 0.4% fee is a realistic fee, of which you're only getting half of it? So that diminishes what is going to effectively be retained by the MergeCo shareholders.

We're talking 3 months. So the economics over this very short-term period is insignificant.

I accept that.

We're concerned here about, as I've reiterated previously, about the opportunities for Platinum shareholders over the next 1 or 2 years and indeed into the distant future.

Yes. But a critical thing with all funds managers and one of the reasons they go up and down like a yoyo is that really a large part of the value creation is in the individuals. It seems that the guy who is key to your global strategy hasn't yet at this stage committed for the long run. And he doesn't.

He will be committing. But once we're allowed to make that decision, we can't make that decision and make a permanent appointment until such time as we conclude this meeting and the shareholder votes are cast and completion occurs. So there's an order here.

Just a final one, though. The management fee as opposed to performance fee on the ES strategy is 1.4%. Does that mean that the net fee really drops down significantly because of the fee payable to David?

I'm not sure. There's an advisory fee of 0.4%.

Yes. So the net fee accruing to the shareholders of MergeCo will be below 1.4% because you are outsourcing part of that advice for a cost.

That's correct for 3 months.

Yes. But that's likely to continue. He's not going to do the work, Chair, going forward for nothing. Anyway, thank you.

Any more questions in the room? Okay. I'll move to questions online.

Chair, we have received a question from Mr. Stephen Mayne. What is the situation today in terms of L1 Capital being able to vote its shares in Platinum? Raphael Lamm signed a substantial shareholder declaration in May, revealing that L1 had voting power over 115.8 million shares or 19.9% of Platinum's issued capital under a private deal struck with Platinum founder, Kerr Neilson. This resolution proposes swapping Mr. Lamm's L1 shares into a dominant 33% stake in the merged group. Given the size of his holding, why isn't Mr. Lamm joining the Board of the merged group? And has any part of his shareholding been pledged to third-party financiers as security?

Okay. So L1 Capital currently has 9.6% shareholding in PTM, and L1 cannot vote on any of the merger-sensitive resolutions 1, 2, 3 and 4. And I think I've covered why he didn't join the Board because he wants to focus on doing a great thing for shareholders by investing. Do we have any telephone questions?

Chair, there are no audio questions for this resolution.

Thank you. Resolution 3 is for the approval of the acquisition by Platinum of the L1 Capital sales shares from each of Annaeus Pty Ltd as trustee of the ML Family Trust, an entity associated with Mark Landau, one of the founders of L1 Capital and Shomron Pty Ltd as trustee for the RL Family Trust, an entity associated with Raphael Am, one of the founders of L1 Capital. For the purposes of ASX Listing Rule 10.1.3 and for all other purposes. The Board of Platinum unanimously recommends that Platinum shareholders vote in favor of Resolution 3. The screen behind me shows the proxies received for and against this resolution. With regard to open proxies given to me, I'll be voting in favor of this resolution. I'll now take any questions or comments on the resolution, starting with questions in the room.

Just one question, Chair. I'm reducing my questions on each resolution, you'd be pleased to know. Start at 3, then 2 now 1. You have again reiterated that the Board strongly recommends that people should support this acquisition. Bearing in mind, you are only acquiring part of the L1 business. They are excising the majority of the performance fees on the LSF strategy. I would just clarify that David is taking part of the fees on the global strategy. Are you really genuinely happy, Chair, that you are recommending to shareholders today to pay on today's value, $1.2 billion for part of the L1 business? That's a lot of money. Bearing in mind, as I said before, funds managers go up and down like a yoyo, Platinum $9.50 down to $0.70. Magellan, $75 down to $10. VG1, I was involved in that deal, VGI, $17 or $18. It's $2.70 today with Regal taking it over. These things are volatile. Can you put your hand on your heart, Chair, and tell people here today that issuing $1.2 billion of paper for acquiring only part of L1 is a good deal?

Okay. Well, David, this resolution relates to an ASX listing rule that requires us to take a shareholder vote if we acquire an asset that exceeds 5% of the equity investments in the relevant company, which is Platinum. And as it turns out, this is right on the fringe of 5%. So this resolution is there for shareholders to approve for Platinum to acquire that 5%.

I know that Chair, but you prefaced the introduction of this by saying that the Board strongly recommends that shareholders support this deal. So I know what this resolution is, but can you explain to shareholders why you as Chair, are strongly recommending that this company issues $1.2 million of paper for part of the L1 business. It's a lot of money in a volatile industry.

Okay. It's not this resolution. But if we go back to the very start in terms of why we think this is a great deal, I'm happy to relitigate each of the key points there, if that's the question.

Look, if you're just going to repeat, that's fine. I'm just trying to encapsulate it in a snapshot. The vast majority of shareholders won't read the 250-, 300-page document that's sent out. I do scan it all. But the nutshell of it all, Chair, is that you as a Board are recommending to shareholders to pay $1.2 billion for part of the L1 business. Yes, not much point in relitigating, but I think to me, it's a little bit scary.

Yes. I think, David, if the market thought that the pricing was inappropriate, we wouldn't have seen a 50% increase in the price of Platinum shares since the 8th of July. The market would have voted with its feet and said, this deal s****, and that has not occurred.

Chair, as I mentioned earlier, this is an incredibly tight stock because 74% is escrowed. So it's very, very easy for the market to get a little bit carried away when only 26% of the company is in play. Secondly...

David, they're the shares that are currently all on free float. There's no escrow applicable to the current stock.

I accept that. But as you know, highly experienced BT -- a lot of BT people here. L1 is very powerful. It delivers a lot of brokerage. It's going to be a very rare broker who's going to come out and bag it. I don't need their support, so I can provide some objective comments. I don't get brokerage from L1, but there won't -- I can guarantee you there will not be a broker out there who will bag the deal, and there hasn't been. I think also it's rebounded with small caps have gone up, Chair, in recent times and Platinum is a small cap. But I think to look at funders, you've got to look below the surface, as I've explained that people get carried away with fundies and Magellan, VG1, VGI and Platinum solves are classic examples. But point taken, thank you, Chair. That's the end of my question.

Thanks, David. I'll now move to any online questions.

Chair, no questions have been received through the online platform for this item.

Thanks, Beth. Any telephone audio?

Chair, no questions have been received through the audio facility.

Thank you. Resolution 4 is for the approval of the acquisition by Platinum of a relevant interest in any Platinum shares in which L1 Capital has a relevant interest for the purpose of Section 611 Item 7 of the Corporations Act and for all other purposes. The Board of Platinum unanimously recommends that Platinum shareholders vote in favor of Resolution 4 and the screen behind me shows the proxies received for and against this resolution. With regard to open proxies given to me, I will be voting in favor of this resolution. I'll now take any questions or comments on the resolution starting with questions in the room. No questions in the room. I'll move to questions online.

Chair, no questions have been received through the online platform for this item.

And audio?

Chair, no questions have been received through the audio item.

Thank you, Beth. Resolution 5 is for the approval of the acquisition by Platinum of a relevant interest in any of the escrowed shares to be issued to the L1 Capital shareholders on completion of the merger for the purpose of Section 611, Item 7 of the Corporations Act and for all other purposes. The Board of Platinum unanimously recommends that Platinum shareholders vote in favor of Resolution 5. The screen behind me shows the proxies received for and against this resolution. With regard to the open proxies given to me, I'll be voting in favor of this resolution. I'll now take any questions or comments on the resolution starting with questions in the room.

Chair, just one question. Some of these questions overlap between different resolutions. So I appreciate a little bit of leniency as to which applies to which. But -- just if you could clarify, Chair. At the moment, L1 holder own 9.6% of Platinum. They also have an option to acquire an additional approximately 10% from Kerr, which will leave Kerr with 2% or 3%, whatever, de minimis. On reading the documents, when Platinum acquires L1, which owns 9.6% of Platinum, Platinum effectively is acquiring 9.6% of itself. Now that's not being taken into account in valuation by Grant Thornton for the simple reason that L1's equity in that is de minimis because they've margin lined it up to the tune of $30 million. They like margin loans. So Grant Thornton have not added or deducted any value in their assessment of MergeCo because of that 9.6%. But the question, Chair is, could you just clarify what is the plan? You are going to need to sell that -- sell or cancel that 9.6%. Do you have a preference at the moment to sell or cancel?

I think it's a requirement that it's sold within 12 months, and the intention would be to do so at an appropriate time.

You can cancel it as well, if you want to.

Well, we'd sell the shares and use the proceeds to pay the margin.

Or you can cancel it because you've got $170 million of cash and investments that are per courtesy of Platinum's hard work over the years. But anyway, it sounds like you haven't taken a final decision. But they're likely to be sold is what you're saying, and that will repay L1's margin line, which they have transferred to Platinum.

Well, and some, right? and some.

Okay. Not much left over anyway.

Share price is up 50%. I'll now move to questions online.

Chair, no questions have been received through the online platform for this item.

And any audio questions?

Chair, no questions have been received through the audio facility for this item.

Okay. Thank you. Resolution 6 is conditional on the completion of the merger and is seeking approval for the name of Platinum Asset Management Limited to be changed to L1 Group Limited. The Board of Platinum unanimously recommends that Platinum shareholders vote in favor of the resolution. The screen behind me shows the proxies received for and against this resolution. With regards to open proxies given to me, I will be voting in favor of this resolution. I'll now take any questions or comments on this resolution, starting with questions in the room.

Quick one, Chair. As I said earlier on, I'm not sure whether we're attending a wake here, the demise of fall and Angel or whether we're celebrating the launch of a new icon. I don't know. But I understand that the listed company will change its name, that's fine. But are you intending to remove Platinum from all funds in the group? Or are you going to keep Platinum as a brand name for some of the subsidiary funds?

Yes, the latter would be the intention. I'll now take any online questions -- sorry, any more in the room? No. I'll take online questions.

Chair, we have a question online, but you have already answered that in relation to the Platinum.

Okay. Thank you. And audio telephone?

Chair, no questions have been received through the audio facility for this item.

Turning to Resolution 7. The Board is also seeking shareholder approval for the election of 2 new directors to the Board, namely Jane Stewart and in terms of resolution 7; and Neil Chatfield, Resolution 8, with effect from completion of the merger. Jane and Neil have both been nominated by 1 Capital in accordance with the terms of the merger implementation D. The appointment of both candidates as directors is conditional on completion of the merger occurring. The Board of Platinum unanimously recommends that Platinum shareholders vote in favor of resolutions 7 and 8. I now turn to Resolution 7, the appointment of Jane Stewart as a Director of the company and invite Jane to provide a statement in support of her election. Jane?

Good morning, and thank you for the opportunity to address you. It is an honor to be nominated for a director role at an exciting and pivotal time where 2 great companies are coming together to create one of Australia's leading global investment firms. From very early on at L1, the team have held Platinum in high regard. It is a business with great people, history and strong legacy. In many ways, Kerr and his team have inspired the foundations of the L1 business and indeed, many investment managers across Australia. There has been plenty of effort and hard work to get us here, and we are confident in the opportunities and the benefits that we see for the combined entity, the L1 Group, including for our shareholders, clients, team and broader stakeholders. I understand the responsibility that comes with serving on the Board of an ASX-listed company, including the need for strong governance, oversight and to act in the best interest of all shareholders. If appointed, I will bring a collaborative and diligent approach to Board decision-making with a core focus on long-term shareholder value creation. I bring over 15 years of experience in funds management with a strong focus on law, regulation, governance and compliance, both in Australia and in the U.K. Since 2019, I've been L1's Head of Legal and Compliance, responsible for legal, governance and risk across the business. I hold a Bachelor of Laws, a Bachelor of Arts and a diploma in French from the University of Melbourne as well as a graduate diploma in corporate governance. I'm currently completing the AICD company directors course. Thank you for your consideration.

Thank you, Jane. The screen behind me shows the proxies received for and against this resolution. With regards to open proxies given to me, I'll be voting in favor of the resolution. I'll now take any questions or comments on the resolution starting with questions in the room.

David Kingston. Jane, just a quick question. Grant Thornton have said in their detailed report that they do have a concern that L1 have outsourced a lot of their functions, which is a little bit contrary to Platinum who have in-sourced a lot of their functions. Do you share that concern that Grant Thornton have expressed in their formal report that as a listed company, L1's propensity to outsource so many of its functions may make it vulnerable? And if so, do you support in-sourcing some of those functions that L1 have outsourced, which is part of the reason they have achieved good margins?

Well, so the model has worked really well at L1 so far. But as part of the integration that we're working on, we're looking at what's working well at Platinum to see if it would work well for L1 as well.

So you've got an open mind, so you don't reject what Grant Thornton has said that that's a question mark.

I wouldn't say that, but we've got an open mind to what works best for the business.

And can you also just express a view on another reservation that Grant Thornton expressed about key man risk? And not dissimilar from a number of other such fundees, the major fundees, Mark and Rafi receive most of their remuneration through their ownership of the structure. They paid a base fee, which is presumably not all that high, but they don't -- as I understand it, according to Grant Thornton, they don't receive bonuses, but they receive a huge amount of money through their ownership of the structure. Does that concern you as a listed company? That's fine as a private company. But as a listed company, does that concern you that it just contributes to key man risk, which is what Grant Thornton have taken the trouble to state?

I'll defer to Guy for that question.

I think we're well experienced in this area with key man risk and Kerr's ownership of Platinum over -- as you identified, over a long period of time. So it would clearly be in Mark and Rafi's interest given escrow arrangements, et cetera, to stick around. Where am I? I'm moving to online questions.

Chair, we have received a question from Mr. Stephen Mayne. Could Jane Stewart please comment on the approach she intends to take in terms of respecting retail shareholders, including the circa 19,000 Platinum retail shareholders that will be rolled into the merged group? For instance, does she support the merged group continuing to run best practice hybrid AGMs, which maximize the ability for retail shareholders to participate?

Yes. Firstly, I'd like to say that we're very respectful of all of our retail shareholders and understand their importance. And yes, we're very happy to support hybrid meetings, but it would be a decision for the broader group of the Board to decide.

A further question. What is Jane's history with Neil Chatfield, the other new director being nominated by L1 Capital at today's meeting?

I met Neil recently when he was nominated to the Board, and I look forward to working with him.

Are you surprised that the 2 L1 founders chose you to represent their interests on the Board when they will control a combined 66% stake in the merged company?

I think Guy has spoken about this already, but Mark and Rafi have publicly said that they want to focus on managing the funds, which shareholders should take great comfort in. This is by far the best use of their time.

And why does Jane believe they aren't stepping up to be directors themselves?

I think, yes, as we've discussed, they want to focus on picking stocks.

That was online, wasn't it? We're up to telephone.

So there are no further questions online for this item, and there are no questions received through the audio for this item.

I'll now turn to Resolution 8, the appointment of Neil Chatfield as a Director of the company. Neil has been assessed by the Board as independent. Neil is unable to join the meeting today due to a prior commitment. However, he has asked me to read a short speech on his behalf. And I quote, "I regret being unable to join the meeting in person today due to a long-standing overseas travel commitment. In terms of my background and experience, I have many years' experience as an independent nonexecutive director across a diverse range of industries with both domestic and global presence, including in highly regulated sectors, and I bring a deep focus and commitment to driving shareholder value. My relevant background includes significant experience in mergers and acquisitions, business integration, debt and equity capital markets as well as risk management and corporate governance. I'm excited by the potential of the opportunities of Platinum following the merger with L1 Capital, and I believe my background positions me well to help drive long-term shareholder value. Thank you for your consideration and support." The screen behind me shows the proxies received for and against this resolution. With regard to open proxies given to me, I'll be voting in favor of this resolution. I'll now take any questions or comments on the resolution starting questions in the room.

David Kingston, one question, which I was going to direct to Neil, but bearing in mind you his effective proxy, Chair, maybe if you could answer it, please. The company has publicly announced that there are synergies estimated at approximately $20 million, net synergies of $20 million, both coming -- arising from the merger, which I think is realistic and obviously will help the merged company. But Chair, could you -- I was going to ask Neil because he's got plenty of experience, and we all would support Neil. He's highly experienced, so it seems like a good candidate. But in his absence, Chair, could you please clarify where are those synergies are going to come from? Are you going to be removing duplicated functions? Are you going to be closing a few of the unsuccessful funds of Platinum? In my view, $20 million may end up being relatively conservative because Platinum is a fairly high-cost funds manager, and there will be synergies. But if you could clarify and amplify as to -- where -- what's the breakdown of those $20 million of estimated synergies, please?

I've done all the hard work up here. I'm going to get Jeff to answer that. Can people hear me?

Can people hear me now? There we go. That's -- so the breakdown of the synergies, David, is across the business. So you'll see some synergies in elimination of duplication of functions. You'll see some synergies in the back office. You'll see some synergies for individuals that will no longer be with us. And we do not plan on closing any funds.

And do you think the $20 million is optimistic or base case or conservative?

I think it's an estimate we have confidence in. Obviously, as we go forward, we'll do the best thing for shareholders in terms of the amount that makes sense for the business.

Okay. And Chair, my second question for Neil, bearing in mind, he has extensive experience in M&A, and he's had a lot of experience over the years. But I was just interested, Chair, if you could maybe answer this one on behalf of Neil. On Page 84 of the Grant Thornton report, it shows a MergeCo pro forma balance sheet. Now I appreciate that's preliminary and estimated and that will evolve. But I was surprised to see that it only showed intangible assets and goodwill of $219 million. Now I know it's estimated and it may change, Chair, but how can the Board justify issuing L1 vendors $1.2 billion of shares at current market price when Grant Thornton are indicating that the goodwill of the group will be at $219 million?

So Andrew, do you want to answer the intangible and goodwill $219 million?

Yes. So sorry, if you can hear me, David. The main thing to bear in mind with the transaction is that although from a legal perspective, Platinum is acquiring L1. From an accounting perspective, due to the significant ownership differential, it's actually treated as a reverse acquisition. And in the magical way of accounting, the goodwill is actually calculated on the Platinum shares and the Platinum value as opposed to the L1 value. And that's why you get that significant difference.

Sounds like a quirk.

I'll now move to online questions.

Chair, we have a question from Mr. Stephen Mayne. Given that Neil Chatfield is not here today, could the Chair please detail Neil's full history with L1 and the key personnel at Platinum, including founder Kerr Neilson.

I understand -- I met up with Neil a few times. I understand that he met up with Mark in about 2007. And the relationship has been one of in contact, but there's been no executive role. And with Kerr, I'm not aware of any relationship.

Also, please explain how someone who is specifically nominated by L1 to sit on the Merged Group's Board can then be classified as an independent director.

Well, because he's deemed to be independent. I mean I'm going to chair the merged Board, and I hope I'm still deemed to be independent.

Also, what pay arrangements have been negotiated with Mr. Chatfield? And is there an agreement that he will become Chair of the combined group, given that this is the normal position he takes at public company boards such as Virgin, SEEK, Costa and Aristocrat.

Look, in my conversation with Neil and subject to merger and completion, he has a desire to chair one of the subcommittees.

Chair, there are no further questions.

Thank you.

For this item.

Any telephone?

Chair, we have not received any questions through the audio.

Finally, Resolution 9 seeks approval to authorize the payment of termination benefits to certain current Platinum employees and executives if their employment is terminated in the future, provided payment of such benefits are made any time before 31 October 2028. This resolution is not interconditional with the other resolutions before us today, nor is it conditional on completion of the merger occurring. Equally, the merger is not conditional on Resolution 9 being approved. The Platinum Board, excluding Jeff Peters, who has abstained from making a recommendation, unanimously recommends that Platinum shareholders vote in favor of Resolution 9. The screen behind me shows the proxies received for and against this resolution. With regard to open proxies given to me, I'll be voting in favor of the resolution. I will now take any questions or comments on the resolution starting with questions in the room. Online questions?

Chair, we have a question from Mr. Stephen Mayne. Which proxy advisers issued reports about today's meeting? And did any of them recommend a vote against this resolution? If so, what grounds did they cite? And does the Chair believe this is -- there is merit in what they say?

We spoke to a number of the proxies, of course. CGI voted in favor of the resolution. CGI Glass Lewis voted in favor of the resolution. ISSS and Ownership Matters voted or recommended a vote against. And the shareholders excluded the KMP and executives.

Does the Chair believe that the votes on the floor will deliver majority support for this termination payments resolution in the poll despite the 41% proxy protest vote?

We'll find out later today.

What happens if shareholders vote this resolution down and which shareholders are excluded from voting on this resolution?

Well, we'll vote -- we'll look at what other arrangements may be required should that event occur. And as I mentioned, it's Jeff himself and Andrew Stannard, who would not be allowed to vote on this as KMP.

We have a question from Mr. Carter. Why has the Board issued so many favorable market updates that have primarily resulted in additional monetary payments to CEO, Jeff Peters, including the most recent $670,000 work effort payment?

I'm going to give Rachel a go.

Thank you for the question, Mr. Carter. What you're suggesting there is that we made these payments in -- for Mr. Peters in relation to getting a deal done. So this was to incentivize him. As our Chair said very early on that there were a number of parties interested in Platinum. The workload has been enormous, and therefore, that work effort payment, the Board felt was appropriate for the additional effort that Mr. Peters had to put in, in order to have this deal eventuate.

Can the Board cancel this $670,000 work effort payment and review and potentially reverse all generous additional payments made to CEO, Jeff Peters?

Under a contract in normal terms and conditions, what's been suggested there would be under malice and a clawback would be required. This is not this situation. The work effort payment is for the legitimate work being conducted by Mr. Peters in order to get the deal done.

Any telephone questions?

Chair, there are no further questions on the online or audio.

Thank you. Terrific. Ladies and gentlemen, that concludes the formal business of the meeting. A Computershare representative will now collect the voting cards from the floor. For those voting via the online platform, voting will remain open for a further 2 minutes, following which voting will close. Please ensure that you have cast your votes on all resolutions. [Voting]

So voting is now closed, and I now declare the meeting closed. The results of the poll will be announced to the ASX later today. On behalf of the Board, I would like to thank you for your ongoing support and invite you to join the Board and the Platinum team for refreshments in the lobby. Thank you.