Hi All Given the recent turmoil at HHL, thought it would be...

Hi All
Given the recent turmoil at HHL, thought it would be interesting to compare the value of the company versus PAC’s current and future market capitalisation. While the following comparison is only one aspect of valuing PAC, it is interesting to look at how the market is valuing PAC compared to a similar company.
Keep in mind that PAC has a lower valuation because of last year’s accounting write downs and it not earning as much from its funds as HHL would due to different types of business models and PAC Fund businesses charging less for managing funds.
Hunter Hall International Ltd
Hunter Hall has 27,239,371 shares on issue and has $1.139 Billion FUM
Market Capitalisation at today’s share price of $2.43 equals $66,191,671
A FUM to Market Cap ratio of 17.2 times.
Assume the correct value is what Peter Hall sold his shares to W H Soul Pattison for $1, Market Capitalisation would be $27,239,371, a FUM to Market Cap ratio of 41.81 times.
The above gives us two ratio values to compare against PAC, 17.2 times as a high end valuation and 41.81 as a low end valuation.
Pacific Current Ltd
PAC will issue future additional 13,700,000 shares
PAC has current shares on issue of 28,125,955
Total future shares on issue are 41,825,955
In Future State FUM will be $13.191 Billion. $13,191,000,000 how many $179,851,606 ($4.30 x 41.825 M) = 73.34 times.
In Current State FUM is equivalent to about $8.9 Billion. $8,900,000,000 how many $120,941,606 ($4.30 x 28.125 M) = 73.58 times (the higher the ratio the lower the valuation).
For valuation purposes, we will assume PAC is currently incorrectly valued.
Current State Valuation (assuming we vote no to restructure in March 2017)
If you place a Current State value of FUM against Current State shares on issue market capitalisation (@$4.30 per share), current state market capitalisation is $120,941,606.
Theoretically, if PAC have a similar FUM to Market Cap ratio as HHL of 17.2 times (a business in current turmoil and potentially losing FUM now their Chief Investment Officer has left), PAC market cap should be $517,441,860 minus debt approximately $51 Million (assuming we don’t approve restructure), similar market cap would be $466,441,860 or $16.58 per share based on 28,125,955 shares on issue.
Based on 41.81 times would be $212,867,734, minus debt of $51 Million, similar market cap would be $161,867,734 or $5.75 per share based on 28,125,955 shares on issue.
Therefore, the range of current state share price is between $5.75 and $16.58 per share.
Future State Valuation (assuming we vote yes to restructure in March 2017)
Based on a Future State, PAC similar FUM to Market Cap ratio as HHL of 17.2 times, PAC market cap should be $766,918,604 minus debt approximately $30 Million (assuming restructure is approved), similar market cap would be $736,918,604 or $17.61 per share based on 41,825,955 shares on issue.
Based on 41.81 times would be $315,498,684, minus debt of $30 Million, similar market cap would be $285,498,684 or $6.82 per share based on 41,825,955 shares on issue.
Therefore, the range of future state share price is between $6.82 and $17.61. The higher valuation is largely due to debt reduction (adding in the $10 Million additional debt PAC took on to finalise the Aperio LLC investment).
Compare HHL to Investors Mutual (IML)
Investors Mutual have $7.4 Billion of FUM, similar FUM to Market Cap ratio as HHL of 17.2 times at today's market cap, IML market cap would be $430,232,558.  PAC has 40% ownership, therefore valuation would be $172,093,023, roughly the same as the future state market capitalisation of $179 Million.
If you take the conservative estimate based on the $1 sale price per share, the FUM to Market Cap ratio of 41.81 times, IML market cap would be $176,991,150.  PAC 40% ownership therefore valuation would be $70,796,460, equivalent to about $1.69 per future state share.
The above are just one aspect of valuation compared to others in the industry. Similar comparisons to Platinum Asset Management and MGF yield higher valuations than HHL comparison. It will take a while for PAC to get back to these levels and may require further business changes to get there. Question is, when will we get there?  A possible catalyst would be to get IML list on the ASX.
By the way, IML is growing at twice the rate of HHL, so should be afforded the higher multiple and more.  This places a higher valuation equivalent to PAC's current market cap, leading to a higher fundamental value of PAC shares.
Best of Luck
Lost