Regal Investment Fund’s Profit Falls 78% as Capital Raising Hits $104 Million
Regal Investment Fund reported a sharp 78% drop in operating profit for FY25 but maintained steady performance slightly above the RBA Cash Rate. The fund bolstered its position with a $104 million capital raise and extended its on-market buy-back program through mid-2026.
- Operating profit down 78% to $24.5 million
- Total investment income halved to $80.7 million
- Net asset value increased to $689.5 million
- Raised $104.4 million via placement and unit purchase plan
- On-market buy-back extended to July 2026
Performance Highlights Amid Market Challenges
Regal Investment Fund (ASX – RF1) disclosed its annual results for the year ended 30 June 2025, revealing a significant contraction in profitability. Total investment income fell by 53% to $80.7 million, while operating profit plunged 78% to $24.5 million compared to the prior year. Despite this, the Fund delivered a net return of 4.30% after fees, marginally outperforming its benchmark, the RBA Cash Rate, which returned 4.28% over the same period.
Capital Raising and Buy-Back Strategy
In response to market conditions, the Fund successfully raised approximately $104.4 million through a placement to wholesale investors and a unit purchase plan open to existing holders. The new units were issued at a slight discount to the prevailing market price, enhancing liquidity and enabling investors to increase their holdings without incurring brokerage costs. Concurrently, the Fund extended its on-market buy-back program for another 12 months to July 2026, having repurchased and cancelled over 6.2 million units during the year at a cost of $18.8 million. This dual approach reflects a strategic effort to manage liquidity and address any discount to net asset value in the trading price of units.
Portfolio and Governance Overview
The Fund continues to invest in alternative strategies managed by Regal Funds Management Pty Limited, adhering to its Product Disclosure Statement and constitutional provisions. Its portfolio comprises a diversified mix of equities, unlisted unit trusts, convertible bonds, and derivatives, with a net asset value rising to $689.5 million as at 30 June 2025. The Fund reported no changes in control or interests in associates during the period. Governance updates include director resignations and reappointments, with Equity Trustees Limited remaining the Responsible Entity. The auditor, KPMG, issued an unqualified opinion, highlighting the valuation of financial assets and liabilities at fair value as a key audit focus.
Distributions and Investor Engagement
Distributions for the year totaled 17 cents per unit, split between a paid December distribution of 10 cents and a payable June distribution of 7 cents. The Fund maintains a distribution reinvestment plan, allowing eligible unit holders to reinvest distributions into additional units, with flexibility on whether new units are issued or existing units are purchased on market depending on pricing relative to net asset value.
Looking Ahead
While the Fund’s financial results reflect the challenging investment environment, the capital raising and buy-back initiatives signal a proactive stance to support unit liquidity and investor confidence. The Fund’s management emphasizes adherence to its investment mandate and risk management framework, with ongoing updates provided to investors through monthly and annual reports.
Bottom Line?
Regal Investment Fund’s strategic capital moves and disciplined management will be critical as it navigates ongoing market volatility and seeks to restore profit momentum.
Questions in the middle?
- What factors contributed most to the steep decline in investment income and operating profit?
- How will the Fund deploy the proceeds from the recent capital raising to enhance returns?
- What impact will the extended buy-back program have on unit liquidity and pricing?
