GQG Partners has entered into an agreement with Melbourne-based Pacific Current Group (PAC) to acquire minority interests in three of PAC’s US-based affiliates.
The fund manager will acquire stakes in Avante Capital Partners, Proterra Investment Partners, and Cordillera Investment Partners for an aggregate cash consideration of US$71.2 million ($108 million).
The boutiques will represent the foundational investments for the newly launched GQG Private Capital Solutions (PCS), marking GQG’s first foray into private markets, and will operate independently from GQG’s traditional global equities business.
In an ASX announcement, GQG said PCS would be focused on providing a broad range of financing and strategic solutions to mid-market private capital asset management firms, including perpetual equity investments, structured financings, and distribution services across institutional and retail markets.
The agreement is expected to close in the first half of the year, pending the approval of PAC’s shareholders at an extraordinary general meeting in April, receipt of regulatory approvals, and receipt of certain consents and waivers from other interest holders in the boutiques.
Following completion of the transaction, PAC chief executive Paul Greenwood and GQG managing director Mike Daley will co-lead the PCS business and investment team.
The majority of PAC’s US-based employees, including the investment team led by Greenwood, will become full-time employees of GQG. The executives previously worked together for over a decade at PAC and its predecessor, Northern Lights Capital Group.
“We are thrilled to announce the launch of PCS, and the recruitment of the leadership team for that business,” said GQG chief executive Tim Carver.
“The launch of this business line, and its partnership with Avante, Cordillera and Proterra, presents a tremendous opportunity for GQG in its efforts to expand into private markets.”
Greenwood added: “I am thrilled at the opportunity to join a platform that, supported by GQG’s world-class distribution team, can offer differentiated and valuable financing and strategic solutions to top-tier asset managers.”
River Capital, which has a 19.8 per cent holding in PAC, and Perpetual, which has a 15 per cent holding in PAC, have indicated their support for the proposal.
“The Pacific Current board believes this initiative delivers significant strategic and operational flexibility along with a meaningful release of capital,” said PAC chair Tony Robinson.
“Externalisation of investment management to an affiliate of GQG allows PAC to reduce overall costs and convert a significant proportion of expenses from fixed to variable during a period of portfolio reshaping, while providing continuity of personnel to oversee PAC’s current portfolio.”
Last year, GQG had tried to acquire PAC in a bidding war with Regal Partners but was ultimately unable to secure the approval of its largest shareholder, River Capital, and withdrew its bid. Reflecting on the bid, Carver said asset management M&A is “very, very difficult” and that the firm is more likely to lift out or take a minority stake in an investment team instead.
In its full-year results, GQG Partners reported funds under management (FUM) grew to US$120.6 billion for the year ended 31 December 2023 – a 37 per increase in FUM from the prior corresponding period.
