Pacific Current eyes return to active management

Pacific Current is mulling a return to active management, two years after it stepped back from active investing and externalised management of its portfolio.

The move follows a year of asset sales that left the firm debt-free and holding $158 million in cash.

It has received a proposal from River Capital, a major shareholder and an established Australian investment manager with $1 billion in assets under management, for Pacific Current to acquire the firm.

River Capital's proposal envisages Pacific Current evolving into an active listed equities and private markets investment manager. The proposal contemplates Pacific Current acquiring River Capital for approximately $80 million.

River Capital has proposed a consideration of approximately 6.3 million Pacific Current shares, implying a value of $13 per share, which would be subject to a two-year escrow period.

Pacific Current said it has three options to consider including progressing the River Capital proposal, selling Pacific Current or delisting the company from the ASX and undertaking an orderly realisation of its holdings.

Pacific Current executed a series of transactions during the year that simplified the portfolio and strengthened liquidity including partial sale of Victory Park Capital for $7.7 million, full repayment of a senior secured facility at $62.2 million, exit from Janus Henderson for $13.9 million, the partial sale of Abacus Global Management for $11.4 million and the sale of its revenue share in Aether for $2.6 million.

It's funds under management came in at $26.4 billion in the financial year, down from $30 billion in the previous year, which it said is due to the exit from Aether in June 2026.

While the simplification has left the firm free of financial debt and total overheads declining 41%, it reported a statutory net loss after tax of $1.5 million from a profit of $58.2 million in the previous year.

Underlying profit came in at $14.8 million, halving from $26 million in the previous year, following the realisation of boutique interests and the return of surplus capital to shareholders.

Following a period of portfolio realisations and capital returns, the company's asset base now comprises a combination of investments in asset managers, financial assets and cash. In this context, the Pacific Current board has been considering potential actions to improve return on capital and optimise value, it said.

Pacific Current chair Justin Arter said: "FY26 was a year of deliberate transition. The board is pleased with the discipline shown in realising assets at attractive values, retiring the company's debt in full and returning capital to shareholders.

PAC enters FY27 with a simpler portfolio, a strong balance sheet and a clear mandate to convert that position into shareholder returns."

Pacific Current managing director Michael Clarke added the task for this financial year is to put the capital to work.

"This result reflects the successful execution of our strategy to simplify the business and retire debt. Interest income now covers corporate expenses more than three times over, our cost base is 41% lower, with scope for further material reduction in FY27 and we finished the year with $158m of cash. The task in FY27 is to put that capital to work," Clarke said.