ASX-listed fund managers Regal Partners and GQG Partners have both separately outlined their intentions to acquire multi-boutique asset management firm Pacific Current Group.
In a statement to the ASX on Wednesday afternoon, Pacific Current announced that it had received an “unsolicited, non-binding, indicative proposal” from Regal to acquire 100 per cent of shares in its company by way of a scheme of arrangement.
Under the proposal, which Regal confirmed in its own statement to the ASX shortly after, Pacific Current shareholders would receive 2.2 shares in GQG and $7.50 in cash per Pacific Current share, with an implied value of $10.77 per share or a total of around $555 million.
Pacific Current retains a 4 per cent stake in GQG, which listed on the ASX in 2021. Meanwhile, Regal currently holds a 12 per cent interest in Pacific Current.
“This proposal represents a transformational growth opportunity for both Regal and Pacific Current and one that we believe would create meaningful long-term value for both shareholders and clients,” said Regal chief executive officer and managing director Brendan O’Connor.
“A transaction would combine the scale, operational expertise, and fundraising networks of Regal with Pacific Current’s highly attractive and globally diverse portfolio of ‘GP stakes’ in leading alternative asset managers.
“It represents another exciting step in our pursuit to be the leading provider of alternative investment strategies in Australia and Asia and would capitalise on the continued growth in demand for high-performing, uncorrelated alternative investment strategies.”
Regal noted that it has entered into a cooperation agreement with River Capital – Pacific Current’s largest shareholder with a 19 per cent stake – under which the two firms have agreed to cooperate in pursuing funding support for the proposal.
Late last year, Regal also launched a bid alongside the BPEA Private Equity Fund VIII to takeover Perpetual, which at the time was finalising its acquisition of Pendal Group.
In response to Regal’s proposal, Pacific Current said that the company’s share price “does not reflect the underlying value of the PAC portfolio and its business.
“The Pacific Current board recently formed an independent board committee, which included putting in place a conflict management protocol for the purpose of identifying and executing on options to realise the underlying value of the business for shareholders. This step also reflected inbound interest in PAC.”
Pacific Current noted that its independent board committee would evaluate the Regal proposal and other alternatives to “maximise value for shareholders”, including by obtaining advice from financial, legal and tax advisers, and has already enlisted UBS to act as a financial adviser.
GQG outlines separate bid
On Thursday morning, GQG then announced its intention to submit a “non-binding indicative proposal” to acquire all of the issued ordinary shares in Pacific Current.
“We believe that we can put forward a compelling proposal to PAC shareholders and that we will be viewed as strategically compelling to both PAC’s underlying portfolio companies and management team,” said GQG Partners CEO Tim Carver.
“We have a long history with PAC, both as executives and by virtue of our corporate relationship. We have evaluated the PAC portfolio and have a strategic vision for unlocking value for PAC’s shareholders and portfolio companies. We are confident in our transaction approach and will look forward to participating in the PAC transaction process.”
GQG, which did not provide any specific details of its proposal, noted that it could not give any assurance that a transaction will proceed or the terms and conditions of such a transaction.
Both Regal and GQG also noted that their respective proposals would be subject to a number of preconditions, including satisfactory completion of due diligence, the execution of binding transaction documents, and board approval.
Any transaction would also require the support of Pacific Current shareholders as well as required regulatory and other approvals.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.