Pacific Current Group Ltd (ASX:PAC) chugs along
Pacific Current released funds under management (FUM) figures for the December quarter today. Total FUM was up 10% but this includes 5% related to a recent investment in Banner Oak Capital Partners with most of the remaining growth coming from minority owned GQG. Excluding both these fund managers FUM rose from $31.4 billion to $32.0 billion (about 2%). Whilst this growth is unexciting, it continues the trend of steady positive inflows which the company is forecasting will continue for the next couple of years.
I estimate the business has a run rate underlying profit after tax of about $35 million following the Banner Oak acquisition and has about $40 million of investable cash placing the stock on an EV/NPAT of under 9. All that is required is continued steady inflows combined with the odd fairly priced acquisition and the returns will be very satisfactory.
The attractive thing about PAC relative to other fund management businesses is that as an investor in fund management operations it is more diversified. Furthermore, its focus is on private and alternative fund management companies which are less susceptible to the passive tsunami and tend to suffer lesser drawdowns. I am happy to keep holding provided inflows continue at PAC's major investments and capital allocation remains sensible.