L1 Group Shares Jump 6.79% on ASX After Fund Manager Posts 97% Profit Growth in First Result Since Merger

MELBOURNE — Shares in L1 Group Ltd rose 6.79%, climbing 7.5 cents to close at $1.18, after the Australian fund manager delivered its first full set of financial results since merging with Platinum Asset Management, reporting underlying net profit growth of 97% on the back of strong investment performance and a large one-off gain.

The company reported total revenue up 49% to $385.9 million for the period, while underlying net profit after tax nearly doubled, rising 97% to $188.8 million. The figure included a one-off $79.3 million performance fee generated from the closure of the unlisted L1 Wholesale Gold Fund, a contribution the company flagged as a significant driver of the result alongside broader gains across its investment strategies.

Underlying earnings before interest, tax, depreciation and amortization climbed 102% to $287.4 million, with L1 Group crediting a roughly 15% reduction in operating expenses for driving strong operating leverage across the combined business. Funds under management rose 17% over the period to $19.1 billion, with the company reporting improving net flows in every quarter, a trend it said reflected growing investor confidence in the merged entity following its formation.

L1 Group was created through the combination of L1 Capital, the Melbourne-based boutique investment firm founded in 2007, and Platinum Asset Management, the Sydney-based international equities manager that had operated independently since 1994. According to the company's results, L1 Capital affiliates now manage approximately 73% of the group's total funds under management, up sharply from 55% at the time the merger was completed, indicating the extent to which the combined firm's asset base has shifted toward its newer strategies since the deal closed.

The company said integration between the two businesses was running ahead of schedule, with $31.7 million in merger-related cost synergies already realized. L1 Group lifted its synergy target for the transaction from an original $35 million to $43 million and said it expected to capture a further $11 million in savings during fiscal 2027, suggesting management sees additional room to cut costs as the two firms continue combining operations.

Investment performance across several of the group's flagship strategies was a central driver of the result. The company reported that its L1 Long Short Strategy returned 45.4% over the period, its Global Long Short strategy returned 57.8%, and its Gold Strategy delivered a return of 83.2%. Those figures, disclosed alongside the earnings result, underscored a period of unusually strong performance across multiple asset classes for the manager, though L1 Group did not specify the precise time period over which those particular strategy returns were measured in the portion of its announcement made public Monday.

The company declared a final dividend of 2.0 cents per share, fully franked, bringing the total dividend for the financial year to 3.0 cents per share. L1 Group also reported a debt-free balance sheet, with $635 million in cash and seed investments on hand at period end, a position the company pointed to as providing financial flexibility as it continues to grow both organically and through the ongoing integration of its merged operations.

Monday's share price reaction places L1 Group among the stronger performers on the Australian market as the country's corporate reporting season continues to unfold, with a wide range of companies across sectors releasing half-year and full-year results in the same window. The stock's gain came as investors digested a result that combined genuine underlying earnings growth with a substantial one-off contribution from the closure of the gold fund, a distinction that analysts and investors typically weigh carefully when assessing the sustainability of a reported profit figure.

L1 Group's shares have shown considerable volatility over the past year as the market absorbed the implications of the Platinum-L1 Capital merger. Data from share price tracking service Stockopedia showed the stock had risen more than 79% over the trailing 12 months as of a snapshot in May, having significantly outperformed the broader ASX All Ordinaries index over that period, even as the shares traded within a wide 52-week range between roughly 61 cents and $1.30, according to data compiled by Halo Technologies.

The company, headquartered in Melbourne, provides investment products across long-short Australian and international equities, activist equities, multi-strategy hedge fund offerings, and a U.K. residential property fund, serving a client base that spans large superannuation funds, offshore pension funds, asset consultants, private wealth firms, financial advisers, family offices and both wholesale and retail investors. According to Morningstar, the combined entity had approximately $18 billion in funds under management as of April, a figure that has since grown to the $19.1 billion reported in Monday's results.

Market data providers had previously noted that L1 Group's dividend yield sat below the broader industry average for ASX-listed asset managers, while its price-to-earnings ratio and price-to-sales ratio remained comparatively attractive relative to sector peers, according to analysis compiled by Simply Wall St ahead of Monday's results. Those metrics are likely to shift following the release of the improved earnings figures and the accompanying dividend increase.

As the reporting season continues, investors in fund managers such as L1 Group are likely to remain focused on the durability of net flows into the business, given that performance fee income — including the substantial one-off contribution disclosed Monday — can vary significantly from period to period depending on market conditions and the timing of fund closures or restructurings. The company's next scheduled updates are expected to provide further detail on how flows and performance across its various strategies have trended into the current financial year, as the market continues to assess how successfully the two merged businesses are being integrated more than a year after the transaction was first announced.