June 3, 2024

By Lynda Kiernan-Stone, Global AgInvesting Media

ASX-listed Regal Partners has agreed to acquire Merricks Capital, a hard asset investment specialist executing private credit and alternative investments in Australia and New Zealand and the manager of the A$470 million (US$313.55 million) Merricks Capital Agriculture Credit Fund. 

The deal, valued at A$235 million (US$156.77 million) (approximately 6.5x normalized EBITDA in the calendar year to December 31, 2023), encompasses a cash payment of A$40 million (US$26.68 million) and the issuance of 63,934,426 fully paid ordinary shares in Regal at a price of A$3.05 per share. 

Founded in 2007 by current executive chairman and CIO Adrian Redlich, Merricks Capital has a 17-year history of delivery growth and consistent returns. As of April 30, 2024, the firm managed approximately A$2.9 billion (US$1.93 billion) in capital across three dedicated funds: the A$470 million Merricks Capital Agriculture Credit Fund; the A$1.28 billion (US$850 million) Merricks Capital Partners Fund – a multi-strategy private credit fund; and the A$527 million (US$351.6 million) Merricks Capital FOO Fund, a Cayman Islands-domiciled private credit fund focused on commercial real estate. These are joined by various co-investment vehicles for a wide range of wholesale wealth advisory firms, institutional client groups, and family offices. 

In regard to the Merricks Capital Agriculture Credit Fund, Redlich explains that the firm sees significant opportunity to deploy alternative credit gaining risk-adjusted returns through its asset-backed investment strategy. And indeed, with a portfolio spread across the dairy, horticulture, protein, cropping, forestry, food processing, cotton, and supply chain infrastructure, the fund has generated 11.2 percent net annual returns as of December 31, 2023. 

Upon the expected closing of the deal in early July 2024, Redlich will join the company as Regal Partners CIO, Income Strategies, and will continue to lead the Merricks business, including its 44-person team and offices located across Melbourne and Sydney. 

“Over 17 years, Adrian Redlich and the Merricks Capital team have established themselves as a leading provider of alternative investment solutions, delivering attractive risk-adjusted returns to  their investors. The business is well-recognised as being a leader in the provision of innovative  financing  solutions to the agricultural, commercial real estate and specialized industrial and infrastructure sectors, leveraging the deep experience and capabilities of its 44-person team.”

The addition of Merricks Capital to the Regal Partners group is expected to increase Regal Partners’ total group funds under management by 24 percent to A$15.1 billion (US$10 billion) on a pro forma basis as of April 30, 2024, and forecasts that the deal will be accretive to its earning per share in calendar year 2024, prior to any synergies. 

“The addition of Merricks Capital to the Regal Partners platform will significantly expand the origination and underwriting capabilities for both groups, bringing Regal’s total FUM across credit and royalty solutions alone to over A$6 billion (US$4 billion). We are thrilled that Adrian and the Merricks team have chosen to partner with Regal for the next phase of their growth, and we believe that the combination of Regal and Merricks will be exceptionally well positioned to benefit from the continued growth in opportunities across private credit in Australia and New Zealand.”

The potential for Merricks that this acquisition represents was further commented on by Redlich, who said, “This is a transformational  development for the Merricks Capital business and one that will significantly accelerate the scale and opportunity set available to its investors. Regal’s extensive corporate relationships, diverse access to deal-flow opportunities and deeply experienced industry specialists will provide Merricks with a strong foundation for continued growth. Merricks Capital will retain its key people, branding and local presence, at the same time benefiting from access to Regal’s well-regarded corporate and operating platforms.”

“Regal’s consistent focus on performance and alignment with its investors resonates strongly with us and we admire the innovative, founder-led culture that the Regal team has developed over many years,” continued Redlich.

“As  a  group, we are genuinely excited by the vision that Brendan O’Connor and Regal Partners’ Board have for the combined business and share the enthusiasm around the opportunities it will deliver for investors, borrowers and shareholders alike. We look forward to working together and delivering on Regal’s broader vision of being the leading provider of alternative investment strategies in Australia and Asia.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and Agtech Intel News. She can be reached at lkiernan-stone@globalaginvesting.com.

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