Thank you. And thank you all for joining us for the Pacific Current Group FY 2022 Results Presentation. We appreciate your interest in our company, and today we'll go through the highlights of FY 2022 and share some thoughts on what we believe the future holds for PAC. I would like to thank the entire PAC team for their work this year. It has been a year of significant progress that we plan to build upon in FY 2023. Our model of creating a broadly diversified portfolio, primarily of alternative asset managers, has exhibited the resilience we expect when capital markets are challenging. As I go through my remarks, I'll be sharing some forward-looking thoughts about what we expect in FY 2023 and beyond. When doing this, we typically assume flat equity markets and stable currencies.
To state the obvious, we can't know with certainty how much FUM, a boutique will gain or lose, how it will perform, and how stable this business will be in the future. On page 3, we cover some of the highlights for the year. Clearly, the biggest development was the IPO of GQG Partners in what was the largest IPO on the ASX last year. As a reminder, our initial investment in 2016 was AUD 3.6 million, and we sold 20% of our stake in GQG on the offering. This netted us AUD 59 million in pre-tax proceeds. In the interim, we have received about or more than AUD 40 million in distribution since our initial investment. Today's price, our remaining stake is worth around AUD 200 million.
That means the combination of what we've already received and our ongoing position is worth somewhere between 80-90 times our initial investment. We reinvested the proceeds of our GQG sale into Banner Oak Capital Partners, a private equity real estate manager, which has been in the portfolio for six months. FUM growth was quite strong during the year, growing 19%. When we strip out GQG because it's so large and adjust for the purchase of Banner Oak, our boutiques FUM grew 18% year-over-year, which we are thrilled about. A year ago, we had estimated our boutiques ex-GQG would receive AUD 3 billion-AUD 8 billion of gross new commitments over the 24 months ending June 2023.
We're pleased to say that the tally reached 6.2 billion in just the first 12 months and are poised to exceed the upper end of this range by the end of this fiscal year. Investment performance was generally good across the portfolio. Among our traditional active equity managers, GQG had spectacular results. However, our higher growth-oriented managers, EAM and BlackRock, lagged benchmarks as we would expect. In terms of financial performance, underlying revenue increased 7% to AUD 49.8 million, and underlying NPAT grew 3% to AUD 27.1 million. PAC also declared a final dividend of AUD 0.23, bringing the full year dividend to AUD 0.38, a 6% increase year-over-year, and that dividend will be fully franked.
Underlying revenue would have exceeded or underlying revenue growth would have exceeded 14% and underlying NPAT growth would have exceeded 13%, were it not for the fact that we could only recognize nine months of earnings for GQG during FY 2022. This foregone revenue totaled approximately AUD 3.3 million. As a reminder, this loss of revenue recognition came about because upon listing on the ASX, PAC's preferred interest in GQG converted into common stock, and now we must recognize earnings in the period when we receive the dividends as opposed to the previous situation when we could accrue GQG's obligation to us. This really has no bearing on when we actually receive cash, however. Page 4 summarizes the financial results both in AUD and U.S. dollars.
You can see that management fee revenues declined slightly due to the GQG earnings recognition issue that I just touched on. I would also note that Banner Oak was a great contributor as a new investment, though it was only in the portfolio for six months. Had Banner Oak been in all year and we had recognized 12 months of GQG earnings, management fees would have grown more than 20% year-over-year. Pacific Current commission revenues increased significantly due to the success we had in raising capital for Victory Park last year. Performance fees grew substantially 113%, primarily to Victory Park, though FCI and Roc also made very nice contributions.
We had some mark-to-market losses of about AUD 1.2 million, which reflect our share of the unrealized losses on marketable securities held on certain PAC portfolio company balance sheets. We are breaking these out because as the value of our boutiques' balance sheets continues to grow, we think we'll be seeing more of these. It's important to note, though, that these are non-cash items. From a statutory results perspective, we recorded a AUD 35 million dollar loss. This has to do with the decline in GQG stock after it went public. Admittedly, it's a bit confusing as we had to change the method of accounting, so we recognized the post-IPO losses through our earnings, though the gain at the time of listing was recorded through OCI.
In the end, we believe it is, you know, important to note that our stake in GQG is worth more than it was a year ago and it's nice to see that their stock has actually risen since June 30. On page 5, we cover. There's an important overview of the composition of PAC's revenues. As noted earlier, PAC's corporate expenses were basically flat, so the story of FY 2022 is about revenue. Page 5 breaks it into the component pieces, boutique management fees, boutique performance fees, these unrealized mark-to-market gains and losses and our corporate revenues. The numbers on this page are in U.S. dollars to minimize any currency-related distortions. The way we think about our business is that corporate revenue, which is primarily commissions related, will be volatile.
This is readily apparent as commission revenues increased 72% last year after falling 49% the prior year. We will also have some mark-to-market gains and losses which will be volatile, but don't involve any cash and should be modest in the context of our overall revenues. At the end of the day, what drives our results are the returns we receive in exchange for allocating capital. For a specific amount invested, we receive our share of management fees and performance fees. We expect the management fees and performance fees will typically comprise more than 90% of our total revenues. What these charts show is that FY 2020 and 2021 were very stable, something we attribute to the limited ability of our private capital boutiques to raise capital during the pandemic.
FY 2022 saw the combination of management fees and performance fee revenues grow more than 14% due to the growth in performance fees. If we layered on the missing GQG piece, these core components of revenue would have grown more than 22%. If Banner Oak had been in the portfolio all year, then we'd be looking at something in the neighborhood of 30% year-over-year growth in these core components of revenues. Page 6 touches on management fee profitability, which represents the profits we earn just from management fees and netted, where we net the corporate costs against them. This management fee profitability declined during the year, primarily because of that missing GQG revenue and because of some mark-to-market impacts.
We expect to see significant improvements in this metric in FY 2023 for a variety of reasons that I will touch on toward the end of my comments. Page 7 is an important slide because it details how our net asset value is growing, and it speaks to our effectiveness at allocating capital. When we look at net asset value per share, we have seen that it has grown 19% a year for the last five years. We think this is great, but we also don't think it tells the entire story. NAV presented here ties directly to PAC balance sheet. As such, you will only see increases as a result of fair value assets being written up, and more notably, when we sell assets and realize proceeds in excess of book value.
Much like the FY 2018 sale of IML, the FY 2019 sale of Aperio, and most recently, the IPO at GQG. What this chart does not capture is the increase in the value of our equity accounted boutiques like Victory Park, Pennybacker, Roc, and others, which are required under the accounting rules to be held at cost or lower if they've been written down. It is our opinion, which we cannot prove absent liquidity events, is that the true NAV has grown notably faster than this chart suggests. Page 8 speaks to what we're really trying to accomplish with our investment strategy. As we've said on numerous occasions, we don't wanna be a leveraged beta play where our revenues and fortunes primarily reflect those of the stock market, but with just higher volatility.
With public equity managers, downward movements in equity markets have meaningful impact on managers' revenues, which disproportionately impacts the returns to the owners of those businesses because of the essentially fixed operating expenses that they have. Instead of that, we endeavor to produce double-digit organic growth, that's our objective, but to do so largely independent of equity markets. Our view is that if we do a good job of allocating capital, we will ultimately hit those return targets. I think the prior slide on NAV speaks to our ability to do this. The way we avoid being a leveraged beta play is to diversify into private capital strategies, limit exposure to liquid markets, and use a breadth of financial structuring tools. We believe the benefit of this approach is apparent on this page.
We have the lowest beta among our ASX peers over the last five years. Our stock price performance is notably different as well, particularly in periods where equity markets are declining, such as the first half of this calendar year. On page 10 of the presentation, we showed the cumulative gain in FUM for our managers the last several years. We note that with the exception of Blackcrane, our boutiques have shown impressive growth in recent years. In pages 11 to 15, we have now decided to provide updates on all portfolio companies instead of doing it selectively as we've done in the past. Page 17 speaks to our opportunities we see in our pipeline. We continue to see a large amount of deals.
We are seeing as many high-quality deals as ever, but we're also seeing more marginal deals come to market. I think I may have mentioned that in the last call. The most important point to make here is that we are confident that we can still find attractively priced, high-quality investment opportunities. At this point, we are expecting to fund them with a new line of credit we hope to finalize in the immediate term. Page 18 provides some thoughts on our operational outlook for this year. We expect modest increases in expenses, primarily due to some inflation, and increased commission expenses and a pickup in corporate travel. We expect at least AUD 3 billion-AUD 5 billion of gross new commitments ex GQG during the year.
We anticipate finalizing the credit facility of up to $50 million to provide the dry powder for new investments. I also note that we would not be surprised if there is some liquidity in our portfolio. Nothing is certain, but there are a large number of portfolio companies that have had inquiries. So that, you know, that suggests there's a heightened possibility. The one thing we are confident in is that if any of those events occur, it will come at valuations that we would believe are highly attractive, such that the after-tax proceeds could be reinvested and our earnings would increase. Then last, on page 19, getting to financial outlook. We're confident of seeing meaningful growth in management fees next year. Really, this is due to several things.
Receiving a full 12 months of earnings from GQG, receiving full 12-month contributions from Banner Oak instead of 6 months. Companies that were loss-making breaking into profitability. Organic growth at BPC and Pennybacker in particular, but other boutiques as well. Then the new investments that we make, expect to make during the year. We note the results we think will be biased for the second half of the year, and I say that there are very specific reasons for this, so I'll touch on those. First is we expect less incentive fees from Victory Park's listed vehicle in FY23. These are fees crystallized in the first half of the year. We expect more carried interest and performance fees from Victory Park's commingled funds and separate accounts.
These tend to be biased toward the second half of the year. BPC's management fee will be growing throughout the year as it deploys the newly raised capital, thus its second half management fee revenue should be bigger than its first half. Pennybacker is in fundraising mode. We expect its fundraise to be quite successful. If they secure commitments in the second half of this fiscal year, those investors will have to pay what are known as catch-up fees, which is basically the fees that they would have paid had they been in the fund since May of 2022. We think or obviously the new investments made this half won't have a full 12 months of impact.
This year we do expect somewhat lower commission revenues, although they're very hard to predict, just because we won't be as active with Victory Park given that they just raised a fund. In terms of performance fees, these can be difficult to predict. Last year, they were AUD 14 million. They could exceed this level this year, but that is not our expectation. I would expect perhaps slightly less, but they are difficult to predict. That said, beyond FY 2023, it is our expectation that performance fees will rise to what we're just trying to characterize as a sustainably higher level. The reason for this is primarily related to Victory Park and where it stands in terms of some of the funds it manages. Basically, the performance fees are largely paid at the end of funds lives.
It's possible to make reasonable estimates about performance fees because the products are private credit strategies that have fairly even returns and fairly predictable. As long as performance is expected, then what we expect, we should get those sort of consistent higher performance fees. The combination of growth in management fees and expected performance fees at VPC lead us to project that from FY24 onward, VPC will be our largest economic contributor. Those are my prepared remarks, but we received a variety of questions that I thought I would sort of preemptively address. Then after that, we can. They're nice detailed questions. After that, we'll take any other questions, but I think some of these will be shared by other people.
In no particular order, I'm going to sort of jump into these. Question number one was, in the helpful tips for analyzing PAC slide, you only highlight private credit as taking time to earn fees from deployment, not raising a fund. Which managers get paid on what? I'll try to provide some clarity on this to the extent possible, although this can get a little complicated. Private credit managers generally get paid once capital is deployed. Once it's invested, not once it's been committed. That is one of the reasons we know Victory Park's management fees will grow over time. Private equity strategies such as Pennybacker and Carlisle get paid from the point of commitment, not investment.
Forterra is generally paid on committed capital, though there is a minority of what they do that is paid on invested capital. Banner Oak is an exception for private real estate firms and gets paid once it invests capital. Uncertain gets paid on committed capital. I believe Roc is generally paid on committed, though it has a private credit strategy that is more likely paid on invested capital. You can see how this gets a little noisy. Question number two, Roc's earnings appear to have fallen over the year despite outstanding growth in fund. Is it reasonable to assume that is because 2021 included performance fees that fell into 2022, and the fund still includes low-fee fund that is being replaced with high-fee fund? I have modeled Roc getting towards Tier 1 in a few years. Is that reasonable?
My thoughts on that are Roc's new business continues to come in at fees that exceed its legacy business. Their earnings contribution declined in FY 2022 due to the fact that FY 2021 had a small accounting true-up payment. Two, we recognized less performance fees in FY 2022. That said, the firm's revenues grew double digits, and we are confident that they will do the same this year. Because they are primarily a private equity manager, performance fees will be highly variable and will likely comprise the majority of their earnings, and thus our earnings that we receive from them. We expect performance fees to be higher in FY 2023 than they were in FY 2022, and we expect they will continue to trend higher over time.
I think if you gross up Roc's contributions for the taxes paid, because Australian firms, you know, they pay taxes before the money gets to us, and that's different than U.S. firms. If you gross that up for the taxes paid, then we expect them to be right around that Tier 1 threshold on a go-forward basis, though subject to high level of variability based on when performance fees are realized. Question 3. Banner Oak's earnings look less than I expected for the half. I get AUD 3.3 and a half million compared to my expectation of AUD 4 million. Is this a timing issue or is Banner Oak disappointing you? Let's see, you call out that Banner Oak will increase its diversification of clients. Does that imply it is already diversified away from the original one client?
Banner Oak came in slightly lower than I expected, but still sort of provided a very nice contribution. The investment is tracking, you know, to roughly a 15% pretax yield, which we think is great. Banner Oak continues to deploy significant capital from their clients on an annual basis over the next several years. It has deployed $428 million through June of this year, and it estimates it will deploy another $380 million for the remainder of the calendar year. Most of this deployment is related to previously approved commitments or previously approved investments. The relationship with their client is not likely to grow beyond these commitments given their overall exposure.
Diversifying this business has always been an objective of the firm, and as we move forward toward calendar year 2023, those efforts will ramp up. My expectations for this year and next year in terms of contributions from Banner Oak are roughly in the ballpark of what the annualization of what we've seen so far. Question number 4. Aether appears to be doing well, with the new fund heading toward a good closing. Has the firm been re-energized? Do you expect future funds? The seed fund Aether is working on is very important to the business because it represents a departure from their old flagship style funds, and it offers the firm a higher capacity strategy. Having a first close of $70 million was a major milestone for the firm.
At this point, it all comes down to how much success they can have raising additional capital for the fund. As you might expect, this is the primary focus of the firm at this time. Question number five had to do with Carlisle. Carlisle's value has increased substantially, yet its fund has not moved materially and its discount rate appeared to increase. This suggests that you expect their fundraise to be quite successful. Is that an unreasonable interpretation? Our forecast for Carlisle did not change significantly. About one-third of the 27% increase in valuation is just currency related and unrelated to business performance. In U.S. dollars, the value went from $44.1 million to $51.9 million, so not that dramatic.
The discount rate actually that we use for Carlisle actually dropped about 70-80 basis points due to the greater portion of their asset base that is now in longer locked up vehicles. Most of the increase in the value stems from an increase in forecasted carried interest in the out years of the financial model. Question number 6. I'm struggling with the potential significance of distribution from Northern Lights to IFP and Astarte. Would it be reasonable to assume that in aggregate they approach Tier 1 status? Last year, the collection of these were probably slightly negative. NLA was a positive contributor and IFP were loss-making and Astarte were loss-making. This year we expect all three to be profitable, and they're all moving in the right direction.
I don't think they will collectively contribute what a Tier 1 manager will this year, but in the best-case scenario, they could reach that on a run rate basis by year-end. It is worth noting that with Astarte there is a lot of operating leverage, so once that flywheel starts to spin, their contributions will grow quite rapidly, and they could easily become a Tier 1 contributor on their own. Question 7. The statement that additional value could be recognized through an FY 2023 sale of one of the assets is consistent with last year's comments in relation to liquidity. However, at the half year you said that there is nothing active at the moment, but that was a general comment on the market. Am I to interpret this as a general comment, or do you intend to imply something specific could be contemplated by this comment?
You're right that my comment last year was more general observation. While no liquidity in any investment is certain at this point, my comment is not a general comment either. In other words, I think there is an elevated probability of some liquidity based on various ongoing discussions. As noted in the presentation, while we're not certain of any of this liquidity at this point, if any is achieved, we are highly confident that the valuations would allow us to pay tax on the proceeds and improve earnings through reinvest. I also think that will validate our contention that the true, fair market value for some of our assets, can be notably above the book value. Question number 8. The strategy of investing funds using debt to increase earnings is clearly spelled out.
Do you compare that strategy to increasing earnings per share by buying back shares? When I look at the increased fund forecasts of more funds, raising and hence earnings growth potential, I can't help think EPS could be increased by buying back shares. How do you think about that comparison? That's a question we often receive. When it comes to capital management, we certainly look at buying our own stock back, and we do that math exercise and compare it to alternative uses of cash. That said, there are a couple reasons that reduce the likelihood of this occurring. The first is that everything else equal, we want more shares outstanding, since having more liquidity should expand the universe of potential buyers of the stock.
The other reason relates to how seldom we are in a position where we don't have material non-public information, and thus would feel free to buy back stock. Examples of this would be potential and significant investments that are well advanced that we're looking at, and also if any of our portfolio companies have advanced discussions about selling all or parts of their firms. When such events are underway, they often go on for many months, which basically means we seldom are in a position to engage in a buyback. We go through that exercise of talking with our general counsel every reporting period to figure out if we can even open the window for employee trading. The reality is we've very seldom been able to open that window for employees and board members to buy stock.
The last question, then we'll get to your questions, is your sentiments around Victory Park are quite positive. Having written down the investment earlier, why are you so bullish now? If you expect them to contribute more than GQG in FY 2024, does that mean they are worth more than GQG? As we've noted previously, our investment in VPC did not get off to a great start, and the business contributed less than we expected. However, one of our strongly held views is that if you get the quality of the asset right, there's a good chance you're gonna arrive at a positive outcome. That appears to be what is playing out with Victory Park. Over the last couple of years, VPC has really hit its stride. There is increasing demand for the type of strategy it offers.
Their investment performance continues to be excellent. Their distribution strategy has been refined. Their most recent fund, fundraise for their ABOC, which is the asset-backed opportunistic credit fund, was $2.4 billion. We expect that this fund will be fully deployed this fiscal year, and they will be back in market in the second half of this fiscal year, raising another ABOC fund. The firm's growth prospects, combined with the visibility we have on performance fees over the next four years, make us confident in the likelihood they will become the biggest economic contributor to PAC beginning in FY 2024. While value is in the eye of the beholder, I think if they become the largest economic contributor, it would be hard to argue that they aren't the most valuable asset.
With that, I apologize for the length of all that, but hopefully, I answered some people's questions. With that, happy to address any questions people have.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speaker phone, please pick up the handset to ask your question. Your first question comes from Nic Burgess from Ord Minnett. Please go ahead.
Morning, Paul. Thanks for that additional detail over the last few minutes. That's been helpful. A few questions. Firstly, just on the flow guidance, AUD 3 billion-AUD 5 billion over the next 12 months. We're in FY 2023. In the fourth quarter of 2022, you mentioned AUD 1.3 billion of flows that weren't recognized in that fourth quarter and would roll over into the first quarter of 2023. Does that AUD 3 billion-AUD 5 billion include or exclude that AUD 1.3 billion that you called out previously?
Yeah. That's a great question. I guess I'd be kind of cheating a bit. But no, that excludes that.
Right. Okay. Excludes the AUD 1.3 billion. Okay, thank you. Secondly, just the line of credit. Can you give us a sense of the potential quantum of the line of credit that you're after?
Yeah. We're looking for a credit facility of up to $50 million.
Okay. Thank you. Lastly, just the boutique unrealized mark to market in the underlying P&L. Can you just explain again?
Sure.
In a bit more detail what that is and which boutiques that comes from?
Yeah. You know, in the past, yeah, happy to do that. Basically, some of our boutiques, it's primarily, frankly, Victory Park. Their balance sheet has been growing, their corporate balance sheet, which is actually sort of a, in one sense, an undisclosed asset that we have, is our pro rata share of that balance sheet. But that is, there's a couple other, I think, companies where we have some exposure to balance sheet, but that primarily sits at Victory Park. You know, and a lot of that was SPAC related, that declined.
A lot of the strong performance fees they achieved in the first half of the year were crystallized in their listed vehicle, and that's where they actually benefited as a result of those SPACs.
Okay. I guess my question is, if we think about 12 months ago, why was the benefit in that year described as a management fee?
I guess the second question is how are you gonna disclose them moving forward?
Yeah. Well, it's a good question. I mean, I think, you know, we've always defined management fees. I think, in our dictionary or our little glossary there is sort of everything non-performance fees. We realized that, you know, going forward, we'll just break them out like we did this time, and so you'll have, you know, very explicit detail around that.
Okay. Thank you very much.
Thank you. Your next question comes from Gabe Neri from River Capital. Please go ahead.
Hi, guys. Congrats on the result and thanks for taking questions. Just a few from me. Firstly, on some of your assets. Blackcrane looks to have had a pretty bad year and written down to zero. It just seems surprising that it's happened this quickly, and last year you guys were positive on it. Talk to what went wrong. Is there any other.
Yeah.
Same risk?
Their performance last year was exceptionally difficult. They had their client base was a small, concentrated institutional client base. You know, the loss of two or three big accounts sort of is what you're seeing impacted there. The prior year, the performance had been very good, so it was, you know, but last year was sufficiently rough that it sort of precipitated that.
Thanks. On CAMG, still failed to raise any funds, despite a big boom in infrastructure globally.
Yeah.
Can you just talk to that?
Yeah, sure. That is, CAMG is, you know, a startup private infrastructure manager been trying to get lift off here for several years. What I'd say is that, you know, they obviously haven't achieved that yet. They still have a decent chance of pulling it off, and I think we'll know in this half if they're able to do that.
Okay. On Nereus.
I should say I don't think we have any additional capital commitments to them. I'm pretty sure I'm right on that.
Great. Thanks. Then on Nereus, do you have a sense of how much this will actually cost us? Seems every year there's another provision, and I'm hoping we must be near the end.
Yeah. I think we are near the end. We think that what we have provisioned for will ultimately be about the right number. I think how the timing of the cash flows is. There'll be a little complexity to it, but we think at the end of the day, what we've provisioned will be about what it will cost us in cash.
Okay. Thank you. Just on your asset valuations, can we get some color around the movement in discount rates?
Yeah. I mean, in what sense?
Just trying to unpack the changes in valuations and if you've seen discount rates increase across a couple of them or what's
Yeah. Yeah. That's a great question. I mean, I think I'm gonna call on Ashley, who's on the phone. I think in general, we have seen them tick up a little bit. Although in some cases, like I mentioned with Carlisle, the specific component was actually declining. Ashley, but is that what.
Yeah. Rather than get into a 20-minute conversation about how we see our cost of capital, I think you hit the nail on the head. Generally speaking, the cost of capital has risen over the period.
Yeah
Across the board, but specific boutiques had seen
There's none in particular.
Potentially the case with Carlisle. Sorry?
Apart from Carlisle, there's none in particular to call out that you've seen, significant increase in discount rate?
Yeah. Basically.
Yeah.
Carlisle is a great example in that there's been a transition away from the open-end funds to the closed-end funds. It would be underlying changes in operations that have seen a change in discount rate more than risk as such.
Perfect. Just on FX, you guys are enjoying a nice tailwind there. Do you have a sense for what EPS would have looked like on a constant currency basis?
You know, I think, I mean, I think it's probably the best. I mean, Ashley might have some thoughts on that, but I think the best way to look at that is, it's not entirely perfect, but on the, I think it's page four, where we break things out in U.S. dollars and because most of our revenues and costs are U.S. dollars.
Yeah. Down in the appendix 24, page 24, we've shown A dollar and U.S. dollar profit margins. From the impact, the bottom line, you can see it was reasonably flat, a little bit growth.
Okay. Thank you. I'll have a look at that. Last one from me on corporate costs in FY 2023. How much of the-
Yeah
The bonus will flow through the PNL in 2023? Can you just give us an expectation of how we should be thinking about corporate costs this year?
All right. What would flow through? Eco. Yeah.
Sorry.
Yeah. I didn't quite hear all of it.
Just on the bonus, the AUD 1.6 million of bonus payment. I understand that not all of that is being paid. Just trying to get a sense for how that will flow.
Yeah.
through in 2023.
Oh, it's all been accrued.
Yeah. Okay.
Half paid, and the other half sitting at balance sheet accrual.
Perfect. Just one last one. Just the franking balance looks like there's only one year of franking left. What's the plan going forward? Will you guys just pay on frank dividends?
Yeah, there's no change. You know, we haven't right now. There's no change in sort of our dividend guidance. The board will, you know, obviously. Dividend policy is something the board is always discussing it and will, you know, do that in our upcoming meetings. You know, as of now, no. It's possible that it might, ultimately, we might not ramp up the dividends as fast as earnings grow. You know, to be determined.
Great. Thanks, guys.
Yeah.
Thank you. Your next question comes from Advait Joshi from Salter Brothers. Please go ahead.
Hey, guys. Congrats on the result. Just a quick question on your boutique unrealized mark-to-market adjustments. Your total revenue, just in Aussie dollars, grew 6%. If you normalize the unrealized M2M adjustments, it's kind of like, you know, 19%-20% plus. Should analysts kind of be thinking about normalizing those adjustments out because that's, you know, a AUD 5 million swing factor. How should we think about it?
Yeah, I think so, because it's not cash, right? You know, you also have, if you look at, you know. Put it this way, if you normalize that out and then imagine you got your just the 12 months of earnings from GQG, you get sort of a you know a fairly robust picture. I mean that's the way we think of it.
Yeah, that's what I thought. How do I think about those mark-to-market adjustments kind of going forward? Is that in terms of-
I-
You know, just analyst forecast, do I just kind of assume that it stays the same? Do I assume, like, you know, just.
Yeah, look, I expect on average they'll be positive. I think what we'll do is just do what we did here and just then break it out. I think that, you know, analytically, people can look at it however they want. I think you can certainly make the argument that you should look at this without, you know, you can strip that out and that might be a more accurate portrayal of the momentum of the business.
Yes. All right, cool. Thanks, guys.
Thank you. Once again, if you wish to ask a question, please press star one. Your next question comes from Cameron Schall from Schall Family SMSF. Please go ahead.
Thanks for that. I had a question around AlTi Global. Could you provide an update on that, please?
Sure. A lot of people may wonder or it's a little obscure thing we've done. We basically for AlTi bought essentially for a nominal amount of money an option to invest in the business if they achieve a pre-agreed upon multiple if they achieve certain developmental milestones. The business is actually a very interesting business. It provides direct private equity exposure in significant large private equity deals but it provides that to the retail level. You know it would be a small investment for us but the nice thing is if we end up doing it that means they will have achieved these milestones and largely we think de-risk the investment.
My best guess is that they will in fact achieve those milestones and sometime in this year we'll end up pulling the trigger there.
Thanks. I have another question on the liabilities for Victory Park. They've increased by $40 million, and I should say that it's an aggregate rather than sort of tax share. What's the reason for the increases in liabilities, and we sort of anticipate seeing that over the next couple of years?
Yeah, I'm gonna defer that to Ashley.
Oh, I'll take myself off mute. Yeah. Again, balance sheet has grossed up a little bit this year in that, some of the performances following through.
Absolutely increase. Our share of that, of this, that's 100%. We took a quarter of that.
Actually, correct me if I'm wrong, but one of the challenges we have is some of our managers in the U.S. will accrue these performance fees. We're not allowed to accrue those and show those. If they have accrued them and they're gonna pay us a bunch, you know, we can't recognize that basically until it's paid to us.
Yeah. The accounting standards require us to have a very conservative approach to recognition of performance fees. For all intents and purposes, it's pretty much cash as it's about to hit to us rather than accrual.
Cool. Can I just clarify, just around do you know why they increased the debt or liabilities by AUD 40 million?
Sorry.
So-
You cut in there.
That's okay. I guess my question is more around why did VPC increase the liabilities from AUD 40 odd million- AUD 80 odd million? Is there a business reason behind that?
As it flows through the performance fees.
Maybe if I'd ask the question a bit differently. In note 22, 22B, the liabilities for Victory Park from 2021 is like $41 million, and it's gone up to $80 million this year. Is there a reason for that?
These benefits have timing differences associated with the underlying funds. The accrual through the underlying entities that the performance fees flow through.
Okay.
Yeah. I mean, there's no debt or anything like that that's driving-
It's just the borrowing.
Okay. Cool. Well, thanks for that.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. We'll pause for any further questions to register. Thank you. There are no further questions at this time. I'll now hand back to Mr. Greenwood for closing remarks.
All right. Well, thank you all. I apologize for the length of this, but I thought it was helpful to get into some more granular detail. I appreciate your time. We will be doing a roadshow the week of September 19th. If you'd like to get together and you're not on the calendar, please reach out and let us know. Obviously, if you have any other questions, you know, feel free to contact me or Ashley directly. Thanks so much. Have a great day.