Pacific Current Group Ltd · ASX:PAC
Pacific Current — H1 FY2024 Earnings Presentation
38 slides from Pacific Current's earnings presentation, Feb 23, 2024
Slide 1: H1 FY24 Results Presentation
ASX ANNOUNCEMENT 23 February 2024 H1 FY24 Results Presentation Pacific Current Group Limited (ASX:PAC) encloses for immediate release its H1 FY24 Results Presentation. -ENDS- Authorised for lodgement by the Board of Pacific Current Group Limited. CONTACT For Investor enquiries: • Paul Greenwood – Ma
Slide 2: First Half FY24 Results Presentation
FIRST HALF FY24 RESULTS PRESENTATION PRESENTERS Paul Greenwood Ashley Killick Managing Director, CEO and CIO CFO 23 February 2024 1
Slide 3: Disclaimer
The information in this presentation is general information about Pacific Current Group (‘Pacific Current’ or ‘PAC’) and is current only at the date of this presentation. In particular, this presentation § is not an offer or recommendation to purchase or subscribe for securities in Pacific Current,
Slide 4: 1H24 Overview
1H24 Overview Pacific Current Group (PAC) is a global investor in investment management firms, with stakes in 16 investment firms across the US, Europe, Australia and Asia. PAC’s boutiques offer a diverse range of investment products across multiple asset classes, delivering sustainable and growing
Slide 5: 1H24 Underlying Results
1H24 Underlying 1H24 1H23 1H24 1H23 Comments (A$m) (A$m) (US$m) (US$m) Growth driven by strong Pennybacker fundraising Results Boutique management fees 29.8 22.3 19.4 14.9 and Banner Oak fee crystallisation Boutique performance fees 4.5 5.5 2.9 3.7 Led by Roc realisations Non-cash item, primarily re
Slide 6: Revenue Composition
Revenue Underlying Revenues (US$m) Composition 20 19.4 14.9 15 11.0 9.8 Management Fee revenues 10 continued steady growth over the past three years 5 4.6 3.7 2.9 2.3 1.7 1.2 1.6 1.0 0.2 0.3 0 (0.6) (0.8) 1H21 1H22 1H23 1H24 Management Fees Performance Fees Unrealized MTM Corporate Revenues § 1H24 m
Slide 7: Fair Value vs Book Value
FAIR VALUE VS BOOK VALUE PACIFIC CURRENT GROUP
Slide 8: Building Value for Shareholders
Building Value for Shareholders Statutory NAV vs Fair Value NAV vs Share Price (per share)*** Boutique Fair value (A$m)* Book value (A$m) Fair value uplift (A$m) 15 11.76 11.92 $136.3m $76.1m $60.2m 11.69 11.09 11.15 10 8.53 8.30 8.64 8.40 8.39 8.01 $84.7m $32.3m $52.4m AUD 8.79 7.31 7.32 7.41 6.92
Slide 9: Assessing Changes in Fair Value NAV
Assessing Changes in Fair Value NAV Changes in Fair Value NAV from 30 June 23 to 31 December 23* 15 Fair value adjustments of A$0.78 per share (GQG, 0.78 Pennybacker and Roc) were offset by A$0.80 per share of 11.92 0.02 11.69 impairments (Aether and Banner Oak) 12 (0.80) (0.23) Foreign exchange flu
Slide 10: Unlocking Shareholder Value
UNLOCKING SHAREHOLDER VALUE 9
Slide 11: Unlocking Shareholder Value
Unlocking In 1H24, PAC conducted a strategic review process through efforts of an Independent Board Shareholder Committee (IBC), to seek and consider offers to acquire PAC's business Value The IBC worked with UBS to meet with a large group of high-quality prospective partners before ultimately concl
Slide 12: Portfolio Update
PORTFOLIO UPDATE PACIFIC CURRENT GROUP
Slide 13: Funds Under Management
Funds Under Management FUM managed by boutique asset managers within Pacific Current Group’s portfolio Cumulative 3-year FUM growth as at 31 December 2023 (in boutique’s local currency ($m)) Notes: PAC invested in Banner Oak on 31 December 2021, Cordillera on 6 April 2023, and Avante on 21 September
Slide 14: Ownership Adjusted FUM (OAF)
Ownership Adjusted FUM (OAF) OAF = PAC Equity Stake x Boutique FUM OAF = PAC Ownership x FUM Aggregate Ownership Adjusted FUM Commentary 18 15.3 15 14.1 14.3 Ownership Adjusted FUM (OAF) reflects PAC’s proportionate 13.1 13.3 13.4 ownership of each boutique’s FUM 12.8 12.9 12.8 13 Investment in 11.0
Slide 15: Ownership Adjusted Yield (OAY)
Ownership Adjusted Yield (OAY) OAY = (Mgt. Fees plus Performance Fees)/Ownership Adjusted FUM PAC Private Markets Ownership Adjusted Yield PAC Public Markets Ownership Adjusted Yield 50 40 44.7 33.1 39.1 31.6 40 29.9 35.8 27.8 30 27.4 26.6 31.2 30.7 29.9 24.1 25.0 24.6 24.4 27.2 28.1 27.6 28.3 28.2
Slide 16: PAC Tier 1 Boutiques
PAC Tier 1 Boutiques Private credit, structured equity Private real estate Life settlements Private equity 2023 investment 2021 investment 2019 investment 2023 investment USA USA Luxembourg USA § Expected to go to market with their next SBIC fund in mid-2024 § Rate of capital deployment slowing as B
Slide 17: PAC Tier 2 Boutiques
PAC Tier 2 Boutiques Private equity, real assets Private equity, real assets Global, international, Hybrid RIA platform 2021 investment 2008 investment & EM small cap equity 2019 investment UK USA 2014 investment USA USA § Initial Fund (ASOP 1) investments tracking well, particularly § Fundraising c
Slide 18: Outlook
OUTLOOK PACIFIC CURRENT GROUP
Slide 19: Operational Outlook
Operational Outlook After concluding efforts to sell PAC's business, the company continues to actively explore various alternatives to unlock more value for shareholders PAC expects its portfolio companies, ex GQG, to receive A$2b-A$5b of gross new commitments in FY24. We expect the momentum of thes
Slide 20: Financial Outlook
Financial Outlook PAC expects FY24 to show notable year-over-year growth in boutique contributions (ex MTM) and NPAT. In 2H24 PAC expects lower management fees than 1H24 but higher performance fees Strong FY24 growth muted by certain rapidly growing portfolio companies increasing reinvestment in the
Slide 21: Appendices
APPENDICES PACIFIC CURRENT GROUP
Slide 22: Pacific Current Overview
Pacific Current Overview Pacific Current is an ASX-listed, global, multi-boutique asset management business, which leverages its experience and resources to identify exceptional asset managers and help them grow Market Information (A$)* PAC Share Price Movement ASX 200 Movement Shares on Issue 51,57
Slide 23: Statutory Profit or Loss
Statutory Profit A$000s Revenue from operations 1H24 6,135 1H23 9,247 or Loss Distributions and dividend income Other income 15,805 148 13,173 71 Changes in fair value 41,890 (19,130) Total statutory income 63,978 3,361 Results include the revenues and Employment expenses (8,416) (7,492) Impairment
Slide 24: Statutory to Underlying Reconciliation
Statutory to A$000s Reported Net Profit/(Loss) Before Tax 1H24 17,544 1H23 (12,238) Underlying Non-cash items Amortisation expenses 4,328 4,508 Reconciliation Fair value adjustment of financial assets Fair value adjustment of financial liabilities (40,651) (1,239) 15,812 3,318 Impairment of investme
Slide 25: Expenses
Underlying $000s Boutique contributions 1H24 (A$) 32,946 1H23 (A$) 26,912 1H24 (US$) 21,500 1H23 (US$) 18,028 Profit Drivers Revenues Employment 519 4,821 359 4,085 339 3,146 241 2,736 Marketing/commissions 204 128 133 86 Travel/entertainment 308 375 201 251 Expenses Underlying NPBT and NPAT are Adv
Slide 26: Underlying Functional P&L Summary
Underlying A$000s Investment Sales 1H24 Group Total 1H23 Functional P&L Revenues Boutique contributions Management fees 29,779 — — 29,779 22,280 Summary Performance fees Unrealised MTM 4,448 (1,281) — — — — 4,448 (1,281) 5,500 (868) Boutique contributions 32,946 — — 32,946 26,912 Commissions and ret
Slide 27: Statutory Balance Sheet
Statutory A$000s 31 Dec 23 30 Jun 23 Cash 17,601 23,201 Other current assets 20,441 20,854 Balance Sheet Non-current assets Investments in associates and joint ventures 205,114 189,715 Intangible assets 24,148 41,388 Other financial assets 357,610 324,893 Other assets 5,439 6,259 Reflects the consol
Slide 28: Alternate Balance Sheet
Alternate A$000s Cash 31 Dec 23 12,113 30 Jun 23 16,095 Balance Sheet Other Current Assets 20,095 20,219 Current Liabilities (23,023) (4,956) PAC’s Investable Cash 9,185 31,358 Reflects deconsolidation of Investment in Boutiques operating subsidiaries (Aether and Subsidiaries 27,459 44,388 SCI) to p
Slide 29: Statutory Cash Flow
Statutory Cash A$000s Operating cash flow 1H24 1H23 Flow Net receipts from customers/suppliers/financiers Dividends received (12,480) 26,184 (6,753) 22,814 Income tax paid (1,346) (13,598) Investing cash flow Repayment of Hareon liability — (17,718) Increased new investments (24,004) (31) Other 754
Slide 30: Alternate Cash Flow
Alternate Cash A$000s Underlying NPBT 1H24 21,756 1H23 18,541 Flow Accounting earnings from boutiques Dividends from boutiques (30,489) 26,184 (21,417) 22,814 Net interest expense 368 139 Reconciles the underlying NPBT to Depreciation and amortisation 454 291 cash generated from operating Changes in
Slide 31: PAC Boutique Investments
PAC Boutique Investments 100% 39% / 44.5% 24.9% 35% Private equity, real assets Private equity, real assets Private credit, structured equity Private real estate 2008 investment 2021 investment 2023 investment 2021 investment USA UK USA USA Aether Investment Partners is an alternative Astarte Capita
Slide 32: PAC Boutique Investments
PAC Boutique Investments 16% / 40% 16.38% / 24.9% Pref. Equity / 18.8% 4% Life settlements Private Equity Global, international, & EM small cap equity Global, international, & EM equity 2019 investment 2023 investment 2014 investment 2016 investment Luxembourg USA USA USA Carlisle Management Company
Slide 33: PAC Boutique Investments
PAC Boutique Investments 24.9% Variable Pref. Equity / 23% 16.5% Hybrid RIA platform Private equity, renewable energy Placement agent Private real estate 2019 investment 2008 investment 2014 investment 2019 investment USA India UK USA Independent Financials Partners (“IFP”) is a Nereus Holdings ("Ne
Slide 34: PAC Boutique Investments
PAC Boutique Investments 8% / 16% 29.7% 60% 24.9% Private equity and private credit, Private credit Private equity, Asia-Pacific Hedge fund seeding and acceleration 2018 investment natural resources 2014 investment 2015 investment USA 2019 investment Australia UK USA Proterra Investment Partners (“P
Slide 35: Ownership Adjusted FUM Reconciliation
Ownership Boutique Private Market / Public Market Strategy FUM (US$m) Dec-23 PAC Interest Ownership Adjusted FUM (US$m) Adjusted FUM Avante Private 557 24.9% 139 Reconciliation Banner Oak Private 8,001 35.0% 2,800 Carlisle Private 1,964 40.0% 786 Cordillera Private 1,491 24.9% 371 Tier 1 GQG Partner
Slide 36: Key Definitions
Underlying Results/Earnings Open-end funds Unaudited and non-IFRS financial measures used by PAC Funds under management that are not committed for an agreed Key management to reflect the recurring elements of PAC’s business Boutique Contributions period. These funds can be redeemed by an investor on
Slide 37: Understanding Fair Value NAV
Understanding The statutory consolidated financial statements have been prepared on the basis of historical cost, except for certain financial instruments that are measured at fair value at the end of each reporting period. As such, the Group’s investments in operating subsidiaries (such as Aether a
Slide 38: Tips for Analysing PAC
Tips for Revenue recognition Analysing PAC § Private equity, private infrastructure, and private real estate managers normally charge fees on committed capital. Thus, new FUM becomes revenue immediately after the legal commitment is received, even though it may take several years to invest the commi
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