Hi GregThere is a good case for PAC getting broken up for the...

Hi Greg

There is a good case for PAC getting broken up for the parts. Has been undervalued for a long time and is displaying significant growth in FUM. I think what happens will be based on what River Capital fund is holding PAC investment, dividend plus or strategic capital fund. Dividend plus will be a long term hold, strategic capital fund could see a possible takeover.

The other thing for me is the price being paid. I am not 100% certain but I get the impression River Capital are the investors pushing share price higher with their buying. It says to me there will be something happening in the short term.

The amount currently invested is within River Capital’s remit of up to $100m stakes, but this is 7.5% of FUM. It is a large commitment for this fund manager and you would expect high confidence of an outcome would go with this.

An alternative could be that River Capital are looking to get hold of ROC stake. PAC paid $7m to buy 12% in July 2019. Holding in ROC of 30% could be swapped for River Capital shareholding. ROC 30% holding is easily worth circa $75m or $250m total business value, this is about 6 times total investment.

With $9B in FUM, ROC doesn’t earn as much as Regal from FUM, but the revenue being generated should be close to $90M.

As a benchmark here are two other examples:
> AEF generates circa $60m in revenue and is valued by market at $400m.
> Regal generates circa $80m in revenue and is valued by market at $750m.

There is a discount for ROC being a private business, but based on revenue generated by other listed ASX companies should be a fair value of ROC holding.

Best of Luck
Lost