Powerhouse Ventures Limited to Acquire Aliwa Funds Management
POWERHOUSE VENTURES LIMITED (PVL) Share Update September 2024 Tuesday 17th
Powerhouse Ventures Announces Acquisition of Aliwa Funds Management
Powerhouse Ventures Limited (PVL) has announced a significant strategic move to acquire Aliwa Funds Management Pty Ltd, aiming to enhance its investment capabilities and shareholder value.
Instant Summary:
- PVL to acquire 100% of Aliwa Funds Management in an all-scrip deal.
- The acquisition will provide PVL with a base to grow a funds management division.
- The deal includes a performance-based earnout contingent on future performance.
- Shareholder approval is required for the acquisition.
- David McNamee to become Chief Investment Officer & Portfolio Manager within PVL Group.
Acquisition Overview
Powerhouse Ventures Limited (PVL) has announced its plan to acquire Aliwa Funds Management Pty Ltd, a move that aligns with its strategy to enhance shareholder value and expand its investment capabilities. The acquisition is structured as an all-scrip deal, subject to shareholder approval.
The acquisition will be executed in three tranches. The first tranche involves an upfront payment of $500,000 in scrip at 4 cents per share. The second tranche, amounting to $224,000 in scrip at $0.04 per share, is contingent on Aliwa Funds Management retaining $20 million+ Funds under Management (FUM) over 18 months. These two tranches will equate to just under 15% of shares on issue.
Strategic Rationale
The strategic rationale behind the acquisition includes several key points:
- Capital markets alignment, allowing PVL to utilize fund vehicles for investment activity with an incentivized team.
- Better diversification and liquidity profile compared to the current static asset book.
- Enhanced equity story, mixing annuity and performance-based income for a more flexible balance sheet.
- Leverage and capitalize on risk/reward opportunities in micro-cap stocks and risk asset landscape.
- Broader investment and funds management platform for additional revenue opportunities.
- Opportunity to close the NTA discount to the share price and potentially reflect a premium for the funds management business.
- Potential to identify and acquire fragmented and subscale fund managers that make strategic sense.
Terms and Conditions
The final contingent earnout has been agreed as a fixed share (65%) of any paid performance fees up to the end of the financial year 2026, capped at $650,000. This will be paid in scrip provided PVL shares are trading at or above 8 cents. If the share price is below 8 cents, the earnout may be paid in cash, subject to Listing Rules.
Aliwa Funds Management is a related party of PVL through David McNamee's interest in the entity. As a result, shareholder approval will be sought under Chapter 10 of the Listing Rules. Assuming approval, David McNamee will become the Chief Investment Officer & Portfolio Manager within the PVL Group.
Shareholder approval for this transaction will be sought at the next Annual General Meeting. Full details will be provided in the Notice of Meeting, which will be made available to all shareholders in due course.
The acquisition of Aliwa Funds Management is expected to significantly enhance PVL's investment capabilities and shareholder value. The strategic alignment with capital markets and the potential for additional revenue opportunities could positively impact PVL's stock price. The performance-based earnout structure aligns the interests of both parties, potentially leading to improved financial performance.
Investor Reaction:
Analysts are likely to view this acquisition positively, given the strategic benefits and potential for enhanced shareholder value. The performance-based earnout structure is also seen as a positive move, aligning the interests of both parties and incentivizing future performance.
Conclusion:
Investors should closely monitor the upcoming Annual General Meeting for the final approval of the acquisition. This strategic move by PVL could provide significant long-term benefits and enhance shareholder value. Stay informed and consider the potential impacts on your investment portfolio.