Hi GregKeen on feedback on the following from all as I am very...

Hi Greg

Keen on feedback on the following from all as I am very bullish on PAC. Believe PAC can re-rate in the next 12 months as it is clearly demonstrating the value of being invested in Boutique Fund Managers investing in the Alternative Investment space in the US. PAC has the ability to extend this growth with exposure to rural food/commodity (Proterra, ROC, Aether), US Real Estate/Infrastructure (Banner Oaks, PennyBacker, Aether, Astarte, CAMG if it finally takes off), Global/Emerging Market/Small Cap Equity (GQG, EAM) and other Alternatives (ALTI Financial, Nereus).

In simple, for those who don't want to read through the reasons why, believe PAC should be rated the same as Pinnacle from a PE Ratio perspective at 26 times, if not higher due to:
1. PAC's stability of FUM growth in good and bad economic times
2. Higher Earnings Growth this year and over the next two years at least - this year and future years looking at 20% Earnings Growth
3. US Addressable Market is much higher for boutique FUM growth compared to Australian Addressable Market

Target price based on earnings numbers above are:
1. FY22 60c to 65c range - $15.60 to $16.90
2. FY23 80c - $20.80

Over the last month, believe the uptick in the share price is likely to be due to the following:
1. Due to FUM announcement and the growth they are displaying in FUM - 9% for the quarter, 50% in the last year (including Banner Oaks acquisition with internally generated funds).
2. More awareness of PAC as ROC Partners is doing a roadshow at the moment to raise $1B in FUM. During the week Crestone Wealth hosted Michael Lukin ROC Partners to high net worth investors - https://www.linkedin.com/posts/activity-6962286546687315968-zW8F/ ; https://www.linkedin.com/posts/martin-randall-2a083214_some-will-succeed-some-will-struggle-as-activity-6961113324780478464-ub0B/
3. Increased exposure of GQG in the news (The Australian hasn't had much). The AFR has had a couple of interesting articles - see GQG board (https://hotcopper.com.au/asx/gqg/)
4. Additional Institutional investment from River Capital or Regal. Believe River Capital will move from 10% to a similar position as Perpetual and Regal (circa 15% each).

PAC's Strengths:
1. Victory Park Capital is increasing FUM significantly due to Private Credit strategies
2. Victory Park Capital special situation investments seem to be maturing - American Plastics and ZeroFox to name a couple.
3. US based boutiques growth is far superior than any Australian small boutique
4. US Real Estate exposure to Multi-Family and Industrial property sectors is growing exceptionally well and is holding up against the back drop of US Single Home Residential and Commercial property sectors falls.
5. Exposure to Infrastructure in the US and UK through Astarte Partners and Aether. Major allocation of funds to investment managers in this space with the potential of taking advantage of US Government Funding/Tax advantages.
6. Long term FUM commitments. A lot of PAC's FUM will not exit the boutiques as easily like equity managers have as seen with Perpetual, Pendal, Pinnacle, Platinum, Janus Henderson and Magellan.
7. Scale, greater FUM growth due to US Addressable Market. PAC"s boutiques majority exposure to a mature US market where allocation to the alternative investment market
8. Investment in early stage boutiques - while this has issues, the low capital outlay means the risks associated with failure are minimal. This leads to outsized returns when it goes well, like GQG - $US5M to $AUD256.706M pre-tax (($1.655*119,121,254)+($59.56M)).

9. Investment in mid-sized boutiques - while these investments have some issues, the more mature boutiques tend to survive and thrive as the investment is made on the basis the boutique requires capital to grow. VPC is a perfect example of this, FUM has almost doubled since PAC's 2018 investment.
10. Financial strength - PAC's bottom line FUM growth is starting to correlate into growing earnings. There is no visibility of a slowing of FUM, with most boutiques in the middle of FUM Capital Raisings. Some of these raisings are larger than most have done before and they are achieving these objectives, VPC's recent FUM Capital Raising closure of $USD2.4B.
11. One business that doesn't get mentioned much IFP, has grown AUM of about 75% in the last two years $USD6B reported in Sep 2020 here and $USD10B in an SEC Report here where they received a $US400k fine due to one of their advisers misbehaving - Adviser was banned for life. PAC reported a large jump in boutique revenue in the last Annual Report (Note 22b) by $62M, in large part due to IFP. With this growth is it likely to increase further? PAC owns 24.9% of IFP due to increased funding over 2020.

PAC's Weaknesses/Opportunities:
1. Nereus Capital (impact about $17M) - while I have listed this as a Weakness, also believe it to be an Opportunity. With no announcement of payment of debt, believe it is just business as usual. A Solar Energy Fund Management boutique operating in India (at a low 17mw capacity) is a good source of alternative FUM with potential to grow to become profitable.
2. VPC Specialty Lending and it focus on BNPL sector. This is low impact, approximately $AUD300M in FUM or less than 1% of PAC's FUM ex GQG, this will grow slowly over the next couple of years due to increased regulation and liquidations. There will be positives this year with some potential performance fees, this will reduce over time. This vehicle also focuses on investing in BNPL providers in the Asia Pacific (Kredivo) and Latin American markets. This is an opportunity as interest rates increase, Argentina just raised rates to 69.5%, Brazil 15%, Chile 10%. Any debt product in these markets, funded by US dollars, will make significant high risk returns and provides a debt solution to unbanked customers in these markets.

There is also a greater awareness of Alternatives in Australia and it is increasing. Here is a podcast from Gemma Dale with WAM's alternative investment manager, Dania Zinurova:
https://www.nabtrade.com.au/investor/insights/your-wealth/news/2022/08/looking_for_alternat
There is a lot of good points in the podcast. A lot of the sectors identified are PAC's key investments - Private Credit, Turnaround opportunities, Real Estate, Real Assets with long term potential, etc.

Also believe Regal becoming public will improve the understanding of Alternatives in Australia.

As mentioned above, keen on feedback and any other thoughts on share price increase. Has Ords released another report and increased forecast?

Best of Luck
Lost