Hedge fund group VGI Partners eyes merger with rival

Hedge fund VGI Partners is reviewing a merger or a sale of its business with several parties including Regal Funds Management interested in progressing a deal.

The group, led by Robert Luciano, said on Monday it had held preliminary discussions with a number of parties regarding a range of potential transactions.

Shares in VGI’s listed head company rocketed up 9.2 per cent following the announcement to trade at $5.20.

That rise was a welcome boost for VGI which has seen its shares slump 40 per cent in the past 12 months amid concerns about the performance of its funds.

VG has also come under scrutiny from high profile former investment bankers turned private investors David Kingston and Malcolm McComas in the past year. In April, the duo criticised VGI partners’ dealings with retail investors, its high fee structure and the gap between its share price and the valuation of its funds.

VGI runs two listed funds, VGI Partners Global Investments and VGI Partners Global Investments. It also has an unlisted hedge fund operation.

VGI took up an ASX listing in 2017 with the view to building a retail shareholder base and expand its business to a wider market.

Regal, headed up by Sydney investment guru Phil King, has a similar business model to VGI with both a listed group catering to retail investors and an unlisted hedge fund business. However, Regal tends to take a much lower profile on its short positions than its possible merger target.

VGI is not the only money manager to have a rough year.