Phil King, one of Australia’s best-known hedge fund managers, is preparing to retire from Regal Partners, sending shares in the listed investment firm sharply lower, according to a report by Bloomberg.

King, who co-founded Regal in 2004 and serves as chief investment officer for its long-short equities business, will remain in his role until at least June 2027 as part of a phased transition towards retirement.

Regal shares fell as much as 10% following Monday’s announcement before recovering some ground to trade about 3.5% lower in afternoon Sydney trading.

“I believe now is the right time to commence my transition toward retirement,” King said in a statement. “This is a staged process.”

King is directly responsible for about 16% of Regal’s funds under management, making his departure a significant change for the firm and its investors.

Regal manages about AUD21.4bn ($15.3bn) across listed equities, alternative investments, credit and real assets, with operations spanning Australian and international markets. The firm reported around AUD1.4bn of net client inflows across its strategies during the six months to the end of June.

The planned succession follows a difficult period for Regal. The firm wrote down a AUD200 million investment in biotech company Opthea to zero after a trial of an eye-treatment drug failed. King subsequently acknowledged that the investment had been a mistake.

Regal has also faced regulatory scrutiny. South Korean authorities previously indicted the company and a former employee over alleged violations of short-selling rules, allegations that Regal denied.

In Australia, the company was cleared in 2021 in a matter involving a former dealer and portfolio manager who was banned by the Australian Securities and Investments Commission for market manipulation.

Despite those challenges, Regal has expanded its investment platform considerably. Its long-short equities operation has 35 investment professionals spread across 10 strategy teams, including portfolio managers, analysts and dealers.

The broader group employs more than 200 people across six offices.

King’s continued involvement through at least June next year gives Regal time to manage the transition and determine how responsibilities across its long-short equities platform will be redistributed.