Hi Rusmin and Victor
For the case of Value Partners Group, would PE and/or P/CF be a good valuation choice given its cyclical nature?
Performance fee is part of their business so cannot discount it. I think the ideal valuation for them is PB or percentage of asset under management (AUM). Fund with good track record should commend at least 5% of AUM while fund with bad track record should have valuation of 3% of AUM.
In the fund management industry, when they want to sell their fund away to another manager. They will sell in term of % of AUM. For instance, I am running a $100 million fund with a 1% management fee yearly. Today I decided to sell my fund to someone to manage. If I have a good track record someone may offer me at 5% of AUM which means $5m (5% of $100m).
If my track record is bad, the person may offer 3% of AUM. Do note that sometime, good track record can be purchase at higher percentage up to 9% of AUM.
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