DALLAS - P10, Inc. (NYSE: PX), a private markets solutions provider, has announced the definitive agreement to acquire Madrid-based Qualitas Equity Funds SGEIC, S.A. for an initial $63 million. The acquisition is poised to add approximately $1 billion in fee-paying assets under management and expand P10's global client base by over 1,300 limited partners.
The transaction, expected to close in the first quarter of 2025, includes $42.25 million in cash and $20.75 million in P10 stock, with a potential for additional earnout consideration of up to $35 million tied to future fund revenue. The earnout consideration will be a mix of cash and stock, with a cap of 65% in cash. The stock portion of the initial and earnout consideration is subject to a three-year lock-up period.
Qualitas Funds specializes in fund-of-funds, direct co-investing, and NAV financing opportunities in the European lower-middle market. The firm, established in 2014, is led by co-founders and managing partners Eric Halverson and Sergio Garcia, who will continue to manage the company post-acquisition, retaining control of day-to-day operations and investment processes.
P10's Chairman and CEO, Luke Sarsfield, highlighted the decade-long relationship between P10's strategy leaders and the team at Qualitas Funds, noting the shared culture and dedication to client service. Halverson and Garcia expressed enthusiasm for joining P10's private markets ecosystem and the opportunity to generate accelerated growth and value for clients.
The acquisition does not include any carried interest for legacy funds. It is subject to customary closing conditions and regulatory approvals, including approval from Spanish regulators.
P10, with a global investor base across 50 states, 60 countries, and six continents, is known for providing investors with access to a broad set of investment solutions within private markets. The addition of Qualitas Funds is expected to be modestly accretive to P10's fully-taxed adjusted net income per share in 2025.
Legal advisories for the transaction include Kirkland & Ellis LLP and Pérez-Llorca Abogados, S.L.P. for P10, and Cuatrecasas, Gonçalves Pereira, S.L.P. for Qualitas Funds.
This strategic move is based on a press release statement from P10, Inc. and further details can be accessed through the investor relations section of P10's website or the company's filings on the SEC website.
In other recent news, P10 Inc (NYSE:PX) reported a strong second quarter in 2024, with revenue increasing by 14% to $71 million and substantial growth in fee-paying assets under management (AUM). Despite a slight 3% decrease in Fee-Related Earnings (FRE), the company raised and deployed $844 million in gross new AUM. P10's strategic focus on mergers and acquisitions (M&A) and data utilization has positioned the firm for further growth and expansion into new markets and capabilities.
However, UBS has recently downgraded P10's stock from Buy to Neutral, citing concerns about near-term earnings potential and valuation. The firm's decision reflects expectations of muted FRE growth for P10 and the potential impact of growth initiatives on near-term margins. The analyst from UBS noted that the potential upside from any prospective acquisitions is likely to be modest, suggesting that the shares are now fully valued at their current price.
These recent developments reflect a complex picture for P10, with strong revenue growth and strategic expansion on one hand, and concerns about near-term earnings and valuation on the other. As always, investors are encouraged to keep a close eye on these recent developments.
InvestingPro Insights
As P10, Inc. (NYSE: PX) gears up for its acquisition of Qualitas Equity Funds, investors are closely monitoring the company's financial health and market position. According to InvestingPro data, P10 currently holds a market capitalization of $1.18 billion with a notable price-to-earnings (P/E) ratio of 597.85. This high P/E ratio indicates that the stock is trading at a premium, which could be reflective of the market's optimism about the company's future growth or its assets' valuation.
InvestingPro Tips suggest that P10's net income is expected to grow this year, aligning with the company's strategic expansion through the acquisition. Additionally, liquid assets of the company exceed its short-term obligations, providing a cushion for potential financial challenges and enabling the company to pursue growth opportunities like the Qualitas Funds acquisition.
InvestingPro data also reveals a strong return over the last three months, with a 33.38% total return. This performance may instill confidence in investors regarding the company's market trajectory post-acquisition. However, it is important to note that four analysts have revised their earnings downwards for the upcoming period, which may warrant caution and further analysis by potential investors.
For those interested in a deeper dive into P10's financials and future outlook, InvestingPro offers additional tips that can be accessed through their platform, providing a more comprehensive view of the company's position and potential.
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