For a brief moment, Phil King looked serious about merging his fund management powerhouse, Regal Partners, with the stricken investment giant Magellan Financial. It would have been a major coup for King, a stalwart of the local funds management sector ever since he returned from a stint at a London hedge fund in 2004.
If that’s the case, it is hard to see in the frenzy of activity that is Regal. The firm’s various funds back start-ups like TerraCom and Till Payments, and invest across a swathe of the local equities market – from Woodside Energy and Bowen Coking Coal, to Tyro Payments and Platinum Asset Management.
In the longer term, the strategy appears to be working. Regal’s Australian Small Companies Fund, which started in February 2015, has posted an annualised return of 22.5 per cent every year, more than 15 per cent above its benchmark.The longer-running Regal Australian Long Short Equity Fund has an annualised return of 13.6 per cent between its launch in 2009 and the end of July – on average 5 per cent above its benchmark every year.
Meanwhile, King catches the ferry into the office, the top floor of Sydney’s Gateway Plaza, most days. Despite his wealth, he is said to fly economy, even on lengthy international trips. “He’s a quiet guy and there’s a certain mystique around Phil that’s also built up around Regal and the way it does things,” Jennings says.King’s seven years at Macquarie were fruitful.
The Kings launched their fund in what would become one of the strongest bull runs in the Australian sharemarket’s history. By 2006, they had $20 million in funds under management. Soon after, they won a mandate for another $20 million and started hiring. That’s when Julian Babarczy arrived.“Regal was still very much under the radar at that point. I’d asked around, and the word was they were smart,” Babarczy says.
While it was a difficult period, it was also a brief one. One year later, the Atlantic fund posted annual returns of 191.66 per cent, pushed higher by a rebound in highly levered stocks. That was the email from Bell Potter’s Angus Aitken to Phil King in late May 2013. The stockbroker was telling Regal that an institutional shareholder in the then-listed Network Ten was about to dump their stake.
A few years later, Regal was back on the corporate regulator’s radar. Dylan Rands, a dealer and portfolio manager, was banned from providing financial services for five years for manipulating the market by trading shares in life insurance and superannuation group ClearView.