PAC ‘flush with cash’ ahead of $300m buyback
Pacific Current Group (PAC) chief executive Michael Clarke has told its shareholders that the firm is “flush with cash” after numerous divestments and is seeking to do an estimated $300 million off-market buyback.
Clarke, who is holding the role in an acting capacity after the departure of Paul Greenwood to join GQG Partners, shared his thought in the firm’s annual report.
During the financial year, PAC:
- Sold its stake in GQG Partners.
- Sold a partial stake in Pennybacker to Goldman Sachs Asset Management for $63.5 million.
- Sold its minority interest in boutiques Proterra, Cordillera and Avante to GQG for $71.2 million.
- Sold its stake in Carlisle Management Company to Abacus Life for a combination of Abacus bonds and stock.
Since the end of the financial year, the firm announced it had divested Victory Park Capital to asset manager Janus Henderson for $33.9 million.
In an annual report, he wrote: “As a result of selling so many significant assets, PAC is flush with cash.”
Chair Tony Robinson added: “This has left us with significant cash holdings and significantly more cash than we can deploy in a reasonable time and in a time frame which would see us able to generate returns on our assets that are appropriate for our shareholders.”
In April 2024, the firm announced its intention to return capital to shareholders via an off-market stock buyback which is estimated to be $300 million and due to take place in late 2024 or in early 2025.
PAC said its focus in FY25 will be to return capital, enhance capital flexibility, deliver growth initiatives, reduce debt, and optimise organisational effectiveness.
This will include opportunities to increase investment in current boutique partners where the potential exists to accelerate growth and other new growth investments.
The annual report also flagged the proceeds from these divestments skewed its FY24 results and that FY25 will likely look “notably different”.
Underlying net profit after tax was $32.2 million in FY24, up from $26.1 million in the previous year.
“PAC’s financial results will be notably different in FY25. This stems from the fact that many assets have been sold and some of the dispositions are in progress, and the timing of when these transactions are completed remains uncertain. Additionally, some of the proceeds PAC will be receiving will produce earnings for PAC so long as the assets continue to be held.
“Lastly, PAC’s cost structure will be notably lower going forward due to the GQG transaction and future cost reduction initiatives. Helping shareholders understand how these different considerations impact financial results will be an important initiative in FY25.”
Earlier this year as it announced its financial year results, Clarke denied the firm was on a wind-up path with the divestment and said the bid offers had come from outside buyers.
“With so many asset sales, it may appear that it’s been a strategic decision to sell, however that is not the case. All of these have been driven by outside buyers expressing interest in the firm’s assets and fortunately their offers have been quite attractive with all transactions occurring at, or above, PAC’s estimate of fair value.”
AUTHOR
Laura Dew
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