Ann: PAC provides update on Strategic Transaction Process, page-16

Hi @bobbyben

It is never enough, but it is better than where we were.

Thanks @reecevan for providing Twitter handle puppyehh. His tweets are very insightful.

To me this release presents River Capital with a big dilemma. If they think PAC is worth more, bid! If they don’t accept offer and the share price falls, shareholders will have grounds for legal action against them.

River Capital were buying PAC up to $8 per share. This is at least a 40% gain in a couple of years. Their average entry price would be around $7 at a best case, so 60%.

$9.85 per share is Accounting based NAV. $11.92 is based on management conservative valuation. PAC management have historically sold boutiques at more than double NAV - GQG, Aperio, Proterra Asia, etc. They have also had to close a few - Blackcrane, Seizert, Alphashares, CAMG. Over a few years, the net gain improvements are clear however PAC isn’t valued by Australian investors on a future value basis, no funds management business at the moment.

If no sale of PAC is executed there are a number of boutiques that will contribute to PAC’s growth and it would be good to be able to invest in this. These businesses will represent a disconnect between NAV and end sale value. Believe they include VPC, Pennybacker, Banner Oak, Cordillera (recent USD443M raise), Avante to move to Tier 1 status in 3 years and ALTI Financial looks likely to raise USD500M.

There is at least another $4 per share in PAC above todays offer price of $11. There is also 5 years when this would potentially be realised. At this stage it isn’t worth the wait and best to sell.

GQG can’t afford to partner with River Capital in the PAC business. PAC’s boutiques require capital to grow and a joint venture would restrict GQG’s ability to grow them.

As a shareholder in both companies, I think this a fair move, but I am concerned that Rajiv hasn’t really come out in support and said anything publicly about it. It is all on Tim Carver. Fund Managers in the US are diversifying into other Asset Classes like what GQG are doing with the PAC purchase. If GQG grew a business like PAC’s it would take ten years to find opportunities and a lot of learnings (although Tim did build PAC).

If the merger occurs, GQG will have the opportunity to buy 100% of the boutiques. VPC would be one they would definitely look at and be able to grow this business significantly.

The other thing to consider is the cost to purchase a similar business in the US. PX and OWL have market caps of USD1.1B and USD17B respectively. PAC current price is very cheap in comparison and the above companies will get taken over by larger fund managers like Blackstone over time. There is a difference in revenues and earnings, however with DD insights we would need to see what the projected earnings of what a “watershed” year would mean for PAC. All we know is we are looking at a large step up and River Capital may have been provided this insight.

These are some of my thoughts, overall good for both. Doesn’t come without risks, but there is significant detail we are missing and hasn’t been released publicly - what will PAC earn this year?

Best of Luck
Lost