P10 Holdings Does it Again
Late last week, P10 Holdings (PIOE) announced another transformative acquisition.
And the stock continues to skyrocket.
It is up over 200% from our initial recommendation price earlier this year and it’s definitely not dirt cheap anymore.
Nonetheless, I recommend holding on (but not buying more) as it is not expensive and continues to execute on its strategy.
In this transaction, P10 will be acquiring Enhanced Capital Group, a premier impact investment platform. Since its inception, Enhanced has deployed over $2 billion of capital into impact credit and impact equity investments. Areas of focus include small business lending in impact areas and to women and minority-owned businesses, renewable energy, and historic building rehabilitation.
As is typical for its transactions, P10 is paying for the deal with cash and convertible preferred equity. Full terms of the transaction have not been disclosed, but my estimate is that this transaction will increase run rate EBITDA to ~$75 million. As such, P10 is trading at an EV/EBITDA multiple of 13.8x pro forma for this deal.
As I said above, the stock is no longer dirt cheap. Nonetheless, it still trades at a sharp discount to its closest peer, Hamilton Lane (HLNE), which trades at an EV/forward EBITDA multiple of 27.0x. Catalysts for P10 Holdings going forward include: 1) additional deals and 2) a potential up-listing to a major exchange. I rate the stock as a Hold but would likely upgrade it if it dropped below 5.00.