What propelled Pinnacle (ASX:PNI) to raise dividend by 70%

Summary

  • Pinnacle Investment Management has reported strong first-half results driven by the solid performance of its investment management affiliates. 
  • The firm holds significant equity interests in several high-performing investment managers in Australia and provides infrastructure and distribution capabilities to affiliates.   

Pinnacle Investment Management Group Limited (ASX:PNI) declared interim results after the bell on Wednesday. For the period ended 31 December 2020, the company delivered a net profit after tax of $30.3 million. 

Net profit rose 120% compared to the same period last year - PNI recorded a net profit of $13.8 million in 1H FY20. As a result, basic earnings per share stood at 17.5 cents compared to 8.1 cents in the previous corresponding period. 

The firm provides fund infrastructure, support, and superior distribution to the specialist investment managers. Although Pinnacle provides growth and business support to investment managers, it also holds equity interests in the specialist managers. 

Source: PNI Presentation, 3 February 2021

Pinnacle Investment Management also offers working capital, seed funding, and other investment support services to its specialist managers, who independently run their firms and share profits with the company.

The company also announced a fully franked interim dividend of 11.7 cents per share, up 70% compared to the same period last year. A large part of its profit came through the share of profits from affiliates, which was $31.8 million for the half-year. 

On a 100% basis, its affiliates had funds under management of $70.5 billion, as of 31 December 2020. FUM figure was up 20% or $11.8 billion compared to June 2020, while it was up 14% or $8.9 billion against December 2019. 

Source: PNI Presentation, 3 February 2021

Net inflows during the half-year period stood at $5.5 billion, which included $1.9 billion of retail inflows. It was noted that net inflows recovered strongly during the half-year period from retail as well as institutional investors. 

Four affiliates of the company earned a performance fee of $45.2 million, of which Pinnacle’s share was $11 million for 1H FY21. On a 100% basis, base management fee revenues also grew 18% over the previous corresponding period. 

The interim dividend is payable on 19 March 2021 to the shareholders on records on 5 March 2021. It represents a payout ratio of 70% of diluted EPS. Pinnacle continues to invest in the business, specifically in offshore distribution and loss-making affiliates, to deliver future growth.

PNI shares closed nearly 7% higher at $8.03 on 3 February 2021. 


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