Pacific Current is a business that invests in fund managers around the world. One of its most valuable investments is GQG Partners.
GQG Partners to IPO?
The global fund manager GQG Partners may be getting close to listing with a valuation of more than $5 billion, according to reporting by the Australian Financial Review.
It may end up listing in the December 2021 quarter. The AFR said that GQG will point to its rapid funds under management (FUM) growth as a key reason for a high price tag.
Over FY21, GQG’s FUM increased by 90% in US dollar terms, rising from US$44.6 billion to US$84.7 billion. Pacific notes that GQG has achieved its growth from a standing start in just five years. Pacific called it “wildly successful”.
The AFR reported that the manager recorded $US250 million of EBITDA (EBITDA explained) over the last year with about an EBITDA margin of around 75%. The investment team are rewarded with their ownership of the business, rather than big bonuses.
It was also reported that GQG is thinking about listing on the ASX because of management’s knowledge of the Australian market and clients who are large investors. GQG also wants to grow its Australian retail investor base and brand profile.
How does this affect Pacific Current?
Pacific Current owns 5% of GQG Partners’ shares, though the current exposure to GQG’s earnings is not a simple 5% of earnings due to the current bespoke economic structure in private ownership.
However, if listed, then Pacific Current would seemingly benefit from the external market valuation of GQG Partners. It will be interesting to see how much Pacific Current decides to hold on to of GQG Partners.
Summary thoughts on Pacific Current and the share price
Over the last month, Pacific Current has gone up 20% after this news and the release of the FY21 result, which included a small profit and dividend increase.
This listing could lead to a lot of realised value for Pacific Current. But GQG is its best investment, so hopefully it holds onto some shares and can find other attractive investments as well.
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