As requestedHigh-profile stock picker Phil King is hoping to...

As requested

High-profile stock picker Phil King is hoping to attract a flood of money from index-tracking funds to his Regal Partners investment house by dividing up his holding and paving the way for the firm’s inclusion on ASX indices. King and his brother Andrew founded Regal in 2004, and have grown the business into an ASX-listed manager of around $18 billion invested in strategies from global equities to private credit and agriculture. In shareholder disclosures over the past month, Mr King’s family trust said its stake in the firm has sunk by nearly 10 per cent. Despite the disclosed fall over Christmas, the King family has not sold the Regal shares. Regal Partners is set for the S&P/ASX 300 Index after co-founder Phil King (pictured) divided his family trust with his brother Andrew over Christmas.

People briefed on the movement in shareholding, who asked for anonymity to discuss the matter freely, said Andrew King’s stake had now been split between his trust and a charitable vehicle, effectively pushing each under the ASX’s 5 per cent disclosure threshold. Following the separation, Mr King’s stake stands at 17.7 per cent, down from around 35 per cent in March. That stake had already been diluted in the lead-up to the trust break-up by Regal’s acquisition of Melbourne private lender Merricks Capital last year – as well as two minor share issuances. The oversized stake held by Mr King’s trust has hampered Regal’s chances of making it onto the S&P/ASX 300 Index, one of the market’s most widely tracked benchmarks. After a stellar two years for the firm, which has posted strong returns and made a number of big acquisitions,

Regal’s market capitalisation ended last year at more than $1 billion. Several analysts who spoke with The Australian Financial Review said the adjustment to the firm’s share registry would make Regal – now around the 240th largest stock listed on the ASX – a likely entrant when the S&P/ASX 300 Index was rebalanced in April. There had been hope the proposed tie-up with rival firm Platinum Asset Management would remedy the free float issues – until the deal fell through last month. "For [Regal], the free float could always be higher,” said Bell Potter analyst Marcus Barnard. “I thought the Platinum deal as proposed, would have increased the free float, and the liquidity in the shares. "Passive money inbound Once onto the S&P/ASX 300 Index, Regal stock is set to benefit from the uptake from so-called passive strategies, which are required to hold every stock on a benchmark to track performance. That will bring a flow of new money into the stock, sending Regal’s share price higher.

Brook Mitchell Likewise, his big bets of stocks like buy-now-pay-later comeback story Zip Co, have also benefited from passive flows as the stock climbed back onto major ASX indexes last year. Playing at the fringes of indexes is a fertile ground for the Regal’s Global Alpha Strategy, according to the firm’s head of trading John Manchee.“One of the big opportunities that has arisen in the market is a huge rise of index and tremendous opportunities,” he said on a call with investors late last year. “The high index concentration of many stocks is added to the upward pressure as markets are moving higher, pushing stocks to extreme levels. "The stock’s entry on the index will also place the firm on the radar of other active fund managers, which benchmark their funds against the ASX 300.

Despite holding buy ratings across the board from analysts, including Mr Barnard, Regal remains remarkably underheld by the wider funds management. Wilson Asset Management confirmed it was one of the few fund managers holding the stock but declined to comment.