L1 Group Faces Integration Challenges as Platinum FUM Stabilisation Looms

Merger Completion and Strategic Rationale

On 1 October 2025, L1 Group Limited officially completed its merger with Platinum Asset Management, creating one of Australia's most formidable investment management entities with $16.9 billion in funds under management (FUM). The union combines two well-regarded brands, L1 Capital and Platinum Investment Management, under a scalable operating platform designed to leverage strong distribution channels and diversified client bases.

The merger aims to capitalise on complementary strengths – L1 Capital’s track record of capital-light growth and innovative product launches, alongside Platinum’s established global equities expertise and brand recognition. This strategic alignment is expected to enhance investment capabilities and broaden market reach, particularly with new offshore distribution hubs in North America and EMEA.

Financial Performance and Synergy Targets

Pro-forma financials for the fiscal year ended June 2025 reveal a combined revenue of $262 million and an underlying EBITDA of $142.3 million, reflecting a healthy 54% EBITDA margin. Underlying net profit after tax (NPAT) stands at $96 million. The group is targeting $30-35 million in cost synergies within 18 months, with at least half expected to be realised by October 2026. These savings stem from merger efficiencies and Platinum’s ongoing cost reduction initiatives.

Importantly, the group anticipates margin expansion and elevated cash conversion as integration progresses, supporting improved return on equity and providing flexibility for potential capital management initiatives and selective acquisitions.

Focus on Funds Under Management Stabilisation

One of the merger’s immediate priorities is stabilising Platinum’s $7.6 billion FUM, which has experienced outflows. L1 Group plans to invest in high-calibre talent and bolster investment and client servicing capabilities to reverse this trend within the next 18 months. The integration includes transitioning management of Platinum’s international funds to L1’s International team, which has demonstrated consistent top-quartile performance.

The group’s client base is notably diversified, with 92% of revenue derived from non-institutional clients across retail, high net worth, wholesale, and listed investment companies. This diversification is expected to underpin more stable and sustainable growth going forward.

Governance and Shareholder Alignment

L1 Capital’s founders hold approximately 74% of L1 Group shares, locked in long-term escrow arrangements spanning two to four years. This significant founder ownership aligns management’s interests closely with shareholders and fund investors, reinforcing a commitment to delivering strong, long-term outcomes. The board maintains a majority of independent directors, emphasizing governance best practices as the group navigates integration and growth phases.

Growth Outlook and Strategic Priorities

Looking ahead, L1 Group plans to drive growth through multiple pathways – enhancing performance and flows in existing funds, launching new products such as the recently introduced Global Long Short Fund, expanding distribution internationally, and selectively pursuing acquisitions. The group’s capital-light model and pipeline of innovative strategies position it well to capture emerging market opportunities while maintaining operational discipline.

While the merger presents clear opportunities, execution risks remain, particularly around achieving FUM stabilisation and synergy realisation amid competitive market conditions. Investors will be watching closely for quarterly updates on these fronts.