The NTA Story Is Becoming a Fee Growth Story
Since our last coverage, Powerhouse shares have risen 21% to 14 cents.
Our view was that the company was ripe for a re-rate. Net tangible assets (NTA) were sitting almost 1:1 with the market cap, while funds management and advisory were starting to add a more scalable earnings profile. Essentially, Investors could buy the NTA at fair value and get the advisory and funds management upside for free.
That case was already showing up in the numbers. In H1 FY26, total revenue rose 27% to A$4.6m, while earned fees jumped 647% to A$2.1m, all high-margin revenue, demonstrating its new model is already adding value to the Powerhouse rebrand.
We still think there is room for the market to catch up. Currently trading at 14c per share versus NTA of 11.9 cents, the stock trades at a 17.6% premium to NTA. The market is starting to value the new segments, but we still see more upside from here.
This is because fees are becoming a more reliable cash flow driver as new deals come through, giving PVL more depth than the market is pricing in.
For deeper analysis on the pivot, see our previous research note.
Why PVL’s NTA Track Record Stands Out
An important metric investor likely overlooked is that PVL has out compounded three of the most respected deep tech investment funds in the market, while its asset growth continues to hold up strongly.
PVL benchmarked its deep tech performance against ARK Innovation ETF, which is Cathie Wood’s well-known disruption fund.
Schroders Capital Global Innovation Trust, a London-listed fund focused on IP-rich technology and life sciences companies; and Baillie Gifford US Equity Growth Fund, one of the most respected global growth investors.
Most of that outperformance was driven by skilled deep tech investing during PVL’s pure investment company phase from H1 FY22 to H2 FY25. The most recent uptick increasingly reflects operating profit from the advisory and funds management businesses, a different form of capital allocation, but no less meaningful.
As PVL evolves into more of an operating company, this comparison will become less directly applicable. But the track record still speaks to a team that has consistently put capital to work intelligently.
Figure 1 above shows A$1.00 of PVL’s net tangible asset value from four years ago would now be worth A$1.63. By comparison, ARK is at A$0.45, Schroders Innovation Trust is at A$0.81, and Baillie Gifford US Equity Growth Fund is at A$1.00.
The way PVL has improved that asset quality reveals a deliberate strategy, and it’s worth understanding exactly what they’re doing.
PVL’s Portfolio Is Not Just Bigger, It Is Getting Cleaner
What does PVL asset quality look like, and how has it improved?
Well, effectively, two things are happening at the same time. The portfolio is growing, and the quality of those assets is improving.
But investors need to understand the asset classification to see how PVL is improving its portfolio. We have created a quick breakdown of how PVL categorises its assets, which you can also see in Figure 2.
Asset quality summary
- Level 1 assets are the highest quality in terms of liquidity. These include ASX-listed securities and cash-like assets, with positions such as Metal Powder Works, Janus Electric and Nordic Resources.
- Level 2 assets are unlisted private investments that have been externally validated through a recent transaction, such as a capital raising within the past 12 months. Valuation is easier to verify compared with older holdings.
- Level 3 assets are private, unlisted investments where no external transaction has occurred for more than 12 months. These are harder to value, because no recent transaction can verify the investment, meaning valuation relies more heavily on internal assumptions.
Portfolio Quality Improves as Level 1 Assets Jump 4.5x
What investors can now see from Figure 2 is a clear improvement in PVL’s portfolio quality and improvements in liquidity. Level 1 and Level 2 assets are now dominating the portfolio, while Level 3 assets have shrunk dramatically.
The most important shift came in H1 FY26. Level 1 assets reached 22% of the portfolio, which is 4.5x higher than a year ago. Level 3 has now almost disappeared.
So, we know that the portfolio is becoming more liquid, but this also addresses one of the core criticisms of VC-style investment companies. Sceptics usually ask, “How do you trust the valuations of illiquid private holdings?”
PVL is giving investors a clearer way to assess that risk. By tracking the Level 1, Level 2 and Level 3 mix over time, the company is showing how much of the portfolio is listed, cash-like or externally validated.
It also gives those valuations more credibility. Independent third parties have put capital into those companies, which helps validate the value of these unlisted holdings.
A few more reasons why we like PVL
One of the reasons we think PVL is a contender for a buy rating is its strong management team. We met the team recently and came away impressed with both the discipline in how they think about upside and downside risk, and the way they could answer investor questions clearly.
What we have also noticed is that the team has a clear plan in place and is already executing on it.
Management has been specific about the philosophy they stick by which assumes anything that can go wrong will go wrong, then structures the business accordingly.
That means every position, deal and investment is sized within the company’s capacity to absorb it. PVL is not trying to overreach on speculation. It is trying to build a platform that can absorb downside while still participating in upside.
We can see this approach working well.
The other important point is structure. Each business unit, including Advisory, Treasury and Funds Management, sits in its own entity and reports separately. That gives investors a clearer view of which segments are performing, instead of having everything muddled together inside one opaque group number.
The core risks Investors must consider
On the bull case, the new Powerhouse fund is now formally established and launches with $13M of existing PVL assets as its starting portfolio. If advisory keeps compounding and the fund attracts material external capital, the premium has room to expand meaningfully.
But there are still execution risks worth considering, particularly in small-cap companies.
This comes down to people capacity. In Equity Capital Markets (ECM), the entire model rests on a small team, with James Kruger, Dave McNamee, and Doron Eldar as the three people generating advisory mandates, running the funds and managing the portfolio.
Advisory and fee revenue has delivered impressive results, with 647% growth. But success fees are inherently lumpy and rely on constant deal flow and deal-closing momentum.
That makes capital markets risk the main issue. If deals slow for a quarter, whether through a macro shock, credit event, regulatory uncertainty or simply a dry advisory pipeline, revenue and operating profit can evaporate almost immediately. This is not a bug. It is a feature of capital markets.
Furthermore, a clever feature of this business model is that Powerhouse takes part of its advisory fees as scrip rather than cash. This builds the portfolio without depleting cash, but it also creates risk because the portfolio starts to mirror the performance of PVL clients, meaning client weakness can flow directly into the portfolio.
