The sharp decline in Platinum’s shares reflect the underperformance of the group’s investment portfolio, after it failed to have a substantial exposure to US stocks, particularly in the technology sector, which soared over the past decade.

During the past decade, there was also a fracturing in the relationship between Platinum’s co-founders, Neilson and Andrew Clifford, concerning the group’s management and investment strategy.

Platinum appointed a new chief executive, Jeff Peters, eight months ago, to replace Clifford.

Peters delivered a mea culpa to investors and clients, at Platinum’s annual roadshow last month, on the group’s investment performance. “I do know at times the relationship has been a difficult one. Our performance hasn’t been where we would want it to be,” he said, while thanking clients and shareholders for their patience and loyalty.

Platinum’s shares have been trading near $1.21 since the Regal bid, with the strong rise implying that another bid was expected. But the rise in the stock has not been entirely driven by the takeover activity. Platinum’s shares have also benefited from recent gains in Platinum’s Asia fund, which strengthened after a powerful rally in Chinese stocks.

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Chinese stocks have had some of their biggest gains in almost two decades after that country’s government recently unveiled a stimulus package to revitalise growth, amid curdling economic sentiment and deflation.

In its statement on Friday, Platinum said the due diligence it had granted Regal was not exclusive, and that it would “assess the absolute and relative value of Regal share consideration and the costs and benefits of any combination”.

Analysts had expected that Regal hadn’t yet played its best hand, and would move quickly to keep the pressure on Platinum’s board, and Neilson, in the coming weeks.

Platinum cautioned shareholders there was no guarantee that discussions with Regal would progress, or that there would be a revised offer.

Regal, co-founded by Phil King, has led consolidation in the funds management and alternative investment sectors, in recent years. It has done a handful of deals that have included acquiring Paul Moore’s PM Capital, private credit group Merricks Capital, and stakes in Taurus Funds Management and the agricultural private investment manager, Argyle Group.

In a statement, Regal said the due diligence would allow it to determine if a higher bid would be “in the best interest of, and accretive to, Regal shareholders”.

A deal with Platinum would be Regal’s biggest and most ambitious, almost doubling its funds under management to $29 billion. An acquisition of Platinum would most likely put Regal into the ASX200 index.

At the end of August, Platinum had $12.2 billion in funds under management. Regal had $17.2 billion and Wilson Asset Management about $5.5 billion in funds under management.

Neilson has previously told this masthead that he wasn’t interested in an outcome for Platinum that was “just to smash companies together and take out costs”. Regal first flagged an interest in Platinum in 2022.

Regal’s offer, which includes a special dividend, has already shown that a deal with Platinum has to involve paying out the asset manager’s cash pile to shareholders to get it over the line.

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