Tacoma // denver // sydney // melbourne
February 25, 2022
HALF YEAR RESULTS OF THE PACIFIC CURRENT GROUP
Half-year ended December 31, 2021
SYDNEY (February 25, 2022) – Pacific Current Group (“PAC” or the “Company”) (ASX: PAC) is pleased to announce the Company’s interim results for the six months ended December 31, 2021.
- Underlying NPAT rose 26% to A$14.6 million.
- Underlying revenue growth of 21%, driven by higher performance fees and fee income.
- Fully franked interim dividend of $0.15 per share, up 50% from HY21.
- FUM grew 16% to A$165 billion. Excluding the new investment in Banner Oak, FUM increased by 11%.
- GQG is listed on the ASX, generating proceeds of A$59 million and a remaining stake valued at A$210 million as of December 31.
- Revenue growth achieved despite only recognizing 4 months of GQG contributions in earnings due to the change in recognition of earnings from accrual to cash.
- US$35 million investment in private property manager Banner Oak Capital Partners on December 31.
PAC’s underlying NPAT attributable to members for the six-month period increased by 26%, from A$11.6 million to A$14.6 million. This growth was fueled by a significant increase in performance fees, resulting in a 21% increase in underlying revenue. Underlying expenses remained stable compared to the previous comparable period.
Victory Park’s performance fees increased significantly during the period, in part due to contributions from several company-sponsored special purpose acquisition companies (SAVS). Victory Park was PAC’s largest revenue contributor during the period and posted the highest FUM growth rate in the portfolio.
FUM was up 16% in 1H22. Excluding the new investment in Banner Oak, FUM increased 11%. At the end of August 2021, PAC projected that its portfolio companies, excluding GQG, would receive A$3-8 billion in gross new commitments by the end of FY23. This target was later revised to rising from AU$5 billion to AU$8 billion. After six months, PAC’s non-GQG stores have received A$2.2 billion in gross new commitments.
Although underlying revenue increased significantly, management fee revenue remained stable. Revenues would have been significantly higher had it not been for a change in accounting policy that caused PAC to change the way it accounts for GQG earnings. Following GQG’s IPO, PAC will no longer recognize GQG’s earnings on an accrual basis, but rather on a cash basis in the period dividends are received. This change is a timing item that will only impact reported results for FY22.
Specifically, for its 1H22 results, PAC recognized GQG-related revenue for the four months prior to GQG’s October 28 listing. In 2H22, PAC will recognize the interim dividend declared by GQG for the last two months of 2021 and the dividend GQG is expected to declare for the quarter ending March 31. In total, in FY22, PAC will “miss” recognition of two months of GHQ revenue in 1H22 and one month
Pacific Current Group Limited (ABN 39 006 708 792)
Suite 3, Level 3, 257 Collins Street, Melbourne VIC 3000 Australia
www.paccurrent.comTel: +61 3 8375 9611
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in 2H22. In FY23, PAC will begin recognizing six months of GQG revenue in each semi-annual reporting period. The change in accounting policy for GQG has no significant impact on when PAC receives cash from GQG.
The first half statutory result was a loss of A$16.6 million. This loss arises from the way the change in the carrying value of GQG is treated. Following GQG’s IPO, changes in the value of PAC’s stake in GQG (i.e. change in GQG’s (ASX:GQG) share price) are now reflected in the PAC income statement. The decline in GQG’s share price after listing resulted in the statutory loss. Going forward, future changes in the value of GQG could have a material impact on PAC’s statutory results.
PAC declared a fully franked interim dividend of A$0.15 per share, up 50% from 1H21, reflecting PAC’s stated intention to reduce dividend distortion between the two halves.
HIGHLIGHTS OF PORTFOLIO COMPANIES
The listing of GQG on the ASX was the most significant development in PAC’s portfolio during 1H22, which generated significant cash proceeds for PAC. This product has already been redeployed through PAC’s US$35 million investment in Banner Oak Capital Partners, a leading real estate private equity firm based in Dallas, Texas.
From an earnings perspective, Victory Park stood out in 1H22. The company recorded large gains in incentive fees and obtained a large amount of new FUM. PAC expects the company’s commercial momentum to continue in FY23. EAM has also secured significant new commitments, primarily from a leading Australian institutional investor.
Earlier investments in IFP and Astarte hurt results, but both companies are making solid progress and should deliver better results in FY23.
PAC management expects continued strong growth in FY22, with the potential to accelerate growth in FY23 for the following reasons:
- In FY22, PAC will receive 9 months of revenue from GQG, while in FY23, it will receive 12 months of revenue.
- PAC’s investment in Banner Oak was completed on December 31, 2021 and will deliver six months of earnings in FY22 and 12 months in FY23.
- PAC expects 2H22 fundraising progress from major private equity boutiques to have a significant impact on FY23.
- Early-stage investments should produce better results as they move towards profitability.
- Management fee income will increase for some private equity strategies as recently acquired FUM is invested.
According to PAC CEO Paul Greenwood, “We are delighted with how our portfolio has weathered the pandemic as well as the improved growth prospects we are seeing emerging across the portfolio.” Mr. Greenwood added: “Even if equity markets have a weak start to 2022, this is not expected to have a material impact on PAC due to our broad diversification. Our largest exposure to equity markets comes from GQG, a company that has historically produced its best relative performance when equity markets are weak.”
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Pacific Current Group would like to invite you to participate in our conference call to be held at 11:00 a.m. (AEDT) on Friday, February 25, 2022.
Presenters will be Paul Greenwood, MD & CEO and CIO and Ashley Killick, CFO.
CONFERENCE DETAILS FOR INVESTORS
The call will take place via webcast or conference call. Please use the links below to register before the event.
Webcast (listening mode only):
(An online archive of the webcast event will be available approximately four hours after the webcast)
Teleconference (Pre-registration required for Q&A participation):
AUTHORIZED FOR DEPOSIT BY:
Managing Director and Chief Executive Officer and Chief Investment Officer
For investor and media enquiries:
- Paul Greenwood – Managing Director and CEO and CIO
- (+1) 253 617 7815
ABOUT THE PACIFIC CURRENT GROUP
Pacific Current Group Limited is a multi-boutique asset management company dedicated to delivering exceptional value to shareholders, investors and partners. We apply our strategic resources, including capital, institutional distribution capabilities and operational expertise to help our partners excel. As of February 25, 2022, Pacific Current Group holds investments in 16 asset management companies globally.
FIRST HALF 2 0 2 2 RESULTS
Paul Greenwood, Managing Director and CEO and CIO
Ashley Killick, Chief Financial Officer
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