Currency Headwinds and Boutique Exits Cloud Pacific Current’s FUM Growth Outlook
Pacific Current Group reports a 6.1% increase in total Funds Under Management to A$30 billion as of December 31, 2024, despite a decline in USD-denominated assets and exits from two boutique managers.
- Total Funds Under Management rose to A$30.0 billion from A$28.3 billion
- USD-denominated FUM decreased by 5.9% due to asset realizations
- AUD-denominated boutique saw a 7.3% FUM increase driven by market revaluations
- Completed exits from Carlisle Management Company and Banner Oak Capital Partners
- Fundraising momentum expected to improve in the second half of the financial year
Pacific Current Group's FUM Growth Despite Currency Headwinds
Pacific Current Group Limited (ASX: PAC) has reported a solid increase in its total Funds Under Management (FUM), reaching A$30.0 billion as at 31 December 2024, up from A$28.3 billion at the previous quarter. This 6.1% growth in Australian dollar terms underscores the resilience of the group's multi-boutique asset management model amid mixed currency and market conditions.
However, the picture is nuanced when viewed through the lens of native currencies. USD-denominated boutique managers experienced a 5.9% decline in FUM, primarily due to asset realizations from maturing portfolios. This contraction was partially offset by a 7.3% increase in FUM for the single AUD-denominated boutique, driven largely by positive market revaluations.
Strategic Portfolio Adjustments and Boutique Exits
During the quarter, Pacific Current Group completed strategic exits from two boutiques: Carlisle Management Company and Banner Oak Capital Partners. These divestments reduced the group's aggregate FUM but align with a broader portfolio optimisation strategy. The exits may reflect a focus on consolidating investments in higher-performing or more strategically aligned boutiques, though the company has not detailed future acquisition plans.
Michael Clarke, Executive Director and Acting CEO, acknowledged the challenges in fundraising during the December quarter but expressed optimism about the second half of the financial year. He anticipates an improvement in fundraising momentum, which will be critical for sustaining growth and enhancing shareholder value.
Complexities in FUM and Economic Benefits
Pacific Current Group cautions investors against simplistic extrapolations of financial performance based solely on FUM trends. The economic benefits PAC derives from its boutiques vary significantly, influenced by factors such as fee structures, ownership stakes, and bespoke economic arrangements. This complexity means that while FUM growth is a positive indicator, it does not directly translate into proportional earnings or cash flow improvements.
The group’s portfolio currently includes eight boutique firms globally, with a mix of open-end and closed-end funds. Notably, Victory Park Capital remains a key holding, with partial interest sold and provisions in place for potential future sales, indicating ongoing portfolio management activity.
Looking Ahead
As Pacific Current Group navigates currency fluctuations, market valuations, and boutique portfolio adjustments, the coming quarters will test the group's ability to capitalize on fundraising opportunities and operational efficiencies. Investors will be watching closely to see how these dynamics translate into financial performance and strategic positioning in a competitive asset management landscape.
Bottom Line?
Pacific Current’s FUM growth masks underlying currency and portfolio shifts that will shape its next phase.
Questions in the middle?
- How will Pacific Current’s fundraising efforts evolve in the second half of the financial year?
- What impact will the exits from Carlisle and Banner Oak have on long-term earnings?
- How might currency fluctuations continue to influence the group’s USD-denominated assets?
