Pacific Current Group Ltd - Revenues Stable Despite Volatile Equity Markets
Pacific Current Group Ltd
Revenues stable despite volatile equity markets
Pacific Current Group (ASX:PAC) is a multi-boutique asset management firm with funds under management of A$169.3b. PAC has sixteen boutique asset managers ranging from start-ups to mature businesses, with investment focus including private equity in real assets, private real estate, international and global equities, private and listed infrastructure, renewable energy, private credit, hedge fund seeding and emerging market equity. The boutique firms operate in the US, Europe, Asia and Australia. PAC continues to grow and renew the portfolio of boutique managers with internal growth in the group, IPO and sell down and additional investments. Management assert that deal flow has not been affected by the difficult macroeconomic environment and resulting volatile securities markets. In FY23 PAC expects to make new investments in earlier-stage asset managers as well as larger, higher-yielding investments.
Business model
PAC revenues are related to funds under management. Pacific Current Group receives a share of profits or revenues earned by the boutique managers which are generally a proportion of individual FUM. PAC may have an equity interest in the boutique and receive a dividend and may receive fees for distribution and other corporate services. Currently, the group has equity shares in 12 associated managers of between 16.5% and 50% and reported an equity accounted share of boutique profits of $8.1m in FY22. Total contributions from boutiques rose from $44.2m to $45.8m including management fees, performance fees and unrealised mark-to-market losses.
Stable revenues despite equity markets
FY22 underlying revenues rose 7% to $49.8m with underlying NPAT up 3% to $27.1m. Reported financials are distorted by the IPO of GQG Partners during the year and a mark-to- market loss at year-end relative to the IPO price. PAC also made a US$35m investment in Banner Oak Capital Partners during the year. Dividends of 38cps for FY22 were up from 36cps in FY21.
Positive outlook
Pacific Current Group expects double-digit growth in FY23 biased to the second half. New fund commitments of between $3b-$5b are projected with Victory Park Capital Advisers expected to become the largest contributor by FY24 due to higher management and performance fees. Compared to the peers noted PAC is reasonably valued with Pinnacle highly rated.
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- Pacific Current Group Ltd - Revenues Stable Despite Volatile Equity Markets09 Sep 2022