Pacific Current divestments drive cost savings for business
Pacific Current (PAC) noted FY24 was a “transformational year” as it made multiple divestments to create a lower cost structure for the business.
The firm previously announced its intention during the year to “rightsize” the business through externalising its investment management and certain operations.
During the year, PAC sold three of its assets to GQG Partners – which previously made an unsuccessful bid to acquire the whole firm – in Avante, Cordillera and Proterra for US$71.2 million.
Since the end of the financial year, the firm has also sold its interest in Carlisle to alternative asset manager Abacus Life in July and divested Victory Park Capital to asset manager Janus Henderson in August.
This has enabled the business to report cost savings of over 40 per cent to materialise in FY25 onwards. The externalisation, together with a restructure of PAC’s US back office operations, has generated net cost savings of $6 million.
Underlying net profit after tax was $32.2 million, up from $26.1 million in the previous year.
In its FY24 results, reported to the ASX on 23 August, the firm said: “FY24 was a transformational year for Pacific Current Group. After multiple parties sought to purchase PAC, a viable transaction ultimately emerged that PAC believed would be both feasible and beneficial to shareholders.
“The intent of this strategy was to unlock value by reducing corporate expenses, while retaining access to key investment capabilities. It involved simultaneously selling three of PAC’s assets to GQG, while externalising the investment management of PAC’s portfolio by appointing an affiliate of GQG to provide investment management services to PAC.
“The transaction results in a significantly lower cost structure for PAC while ensuring continuity of portfolio management of PAC’s portfolio. The agreement externalising investment management will last a minimum of two years but can be extended at PAC’s discretion.”
Going into FY25, the firm is now focused on returning capital to shareholders, enhancing capital flexibility, delivering on its growth initiatives, optimising organisational effectiveness, and paying down outstanding debt.
PAC’s chairman Tony Robinson noted: “FY24 has been an extraordinary year where PAC realised a number of investments at a great return and the business has consolidated operations to increase operational leverage.”
AUTHOR
Laura Dew
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