Pacific Current’s Strategic Pivot: $265m Buy-Back and 15% NAV Rise Signal New Chapter
Pacific Current Group reports a 47% drop in statutory profit amid major asset sales but boosts dividends and completes a $265 million share buy-back, positioning for growth in FY26.
- Statutory NPAT down 47% to A$58.2 million due to asset disposals
- Underlying NPAT falls 20%, offset by 60% corporate cost savings
- Completed A$265 million share buy-back at A$12 per share
- Declared unfranked dividend up 13% to A$0.43 per share
- Internal fair value NAV rises 15% to A$15.51 per share
A Year of Transformation
Pacific Current Group Limited (ASX – PAC) has unveiled its full year results for FY2025, revealing a significant recalibration of its business model. The company reported a statutory net profit after tax (NPAT) of A$58.2 million, down 47% from the previous year, primarily reflecting the impact of strategic asset sales and fair value adjustments. Underlying NPAT also declined by 20% to A$26.0 million, influenced by the sale of stakes in boutique investment firms but partly cushioned by a substantial 60% reduction in corporate costs.
Despite these declines, Pacific Current demonstrated resilience by increasing its unfranked dividend by 13% to A$0.43 per share, signaling confidence in its cash flow and capital position. The company also completed a sizeable off-market share buy-back worth A$265 million at A$12 per share, reducing the number of ordinary shares outstanding by 42% to 30.2 million, a move that underscores management’s commitment to returning capital to shareholders.
Portfolio Reshaping and Capital Initiatives
FY2025 was marked by decisive portfolio management actions. Pacific Current exited investments in Banner Oak Capital Partners and Carlisle Management Company, and partially divested its stake in Victory Park Capital. These transactions generated significant liquidity, with proceeds received in a mix of cash, bonds, and equity stakes, including a notable receipt of Abacus Life bonds yielding nearly 10%.
The company also restructured its investment in Aether Investment Partners, shifting from equity ownership to a revenue-sharing model, while recognizing an impairment on this asset. These moves reflect a strategic pivot towards optimizing capital deployment and focusing on scalable growth opportunities.
Valuation and Outlook
Pacific Current’s internal fair value estimate of net asset value (NAV) rose 15% to A$15.51 per share, exceeding the statutory NAV of A$14.75. This divergence highlights the complexities of accounting standards that limit upward revaluation of certain boutique investments, suggesting potential upside not fully captured in statutory accounts.
Looking ahead, management has outlined a clear agenda for FY2026 – accelerating growth through existing and new boutique partnerships, unlocking shareholder value via targeted capital initiatives, maintaining disciplined cost control, reducing debt to enhance financial flexibility, and embedding organizational efficiencies. Chair Justin Arter and Acting CEO Michael Clarke expressed optimism about the company’s trajectory, emphasizing a robust foundation for future expansion.
Balancing Caution with Opportunity
While the company’s strategic divestments have trimmed assets under management by 29% to A$30 billion, the capital returned and cost savings achieved provide a platform for renewed growth. However, the reliance on fair value estimates and contingent earnouts, particularly related to Victory Park Capital, introduces an element of uncertainty that investors will watch closely.
Bottom Line?
Pacific Current’s FY25 reset sets the stage for growth, but investors should watch how new initiatives translate into earnings momentum.
Questions in the middle?
- How will Pacific Current deploy capital freed from recent asset sales to drive growth?
- What are the risks and timing around earnout payments from the Victory Park Capital transaction?
- Can the company sustain cost savings while expanding its boutique investment footprint?
