I'm a bit unconvinced about this acquisition. The stake...

I'm a bit unconvinced about this acquisition. The stake purchased implies a circa US$180M valuation for a business with only $1.5Bn in FUM...this seems like a real stretch in my view. According to their linkedin profiles, the firm has been around since 2014, so they've had 9 years to grow already and this is not a huge level of FUM after 9 years. It has echoes of PNI's acquisition of Five V...I think PNI overpaid significantly on that deal.

With these types of niche fund managers who specialise in unlisted assets, growth tends to be achieved on a deal by deal basis...they can't just take huge flows in, like say GQG or a Hyperion can after a bout of good performance, and deploy it seamlessly into markets. Also someone like GQG can potentially hang onto the FUM for the long term if they do a passable job and it can then just compounds away for 20+ years with CGT potentially acting as a soft lock-in...wonderful stuff! With a lot of these managers like Five V, they often are required to have relatively fixed terms on their funds and have to hand the capital back to their investors and re-market a new fund and find new opportunities to keep still, let alone grow. This means they're always on the treadmill of having to raise new FUM via new funds and are:
a) only as good as their last fund's performance when it comes time to raise new capital, and
b) always at risk of losing out to whatever new investment sector is the latest flavour of the month in gatekeeper/allocator's minds
A manager like GQG doesn't face these hurdles to the same degree.

I get it that these guys charge much higher fees than traditional managers, but this also makes them more likely to lose business whenever they make a mis-step. I worry that PNI and PAC may be at risk of overpaying for some of these "sexier" managers and may be disappointed with the results. PAC appear to have been very disciplined to date, but this deal seems like a stretch. I really do hope I'm wrong, and am interested to hear the thoughts of others.