Powerhouse Ventures (ASX:PVL) Builds a Merchant Revenue Engine as CIO Fund Scales

The New Revenue Engine Investors Are Starting to Notice

Powerhouse Ventures (ASX:PVL) is now trading at A$0.15 per share. Since we began covering the stock two months ago and adopted a bullish stance at A$0.11, investors are now up around 25%.

The Re-rate came as the company has made strong progress with its commercial pivot, combining its advisory business with the launch of the Critical Infrastructure Opportunities Fund, or CIO Fund.

Upon the recent launch of the CIO fund, PVL secured a memorandum of understanding with a European investment firm to co-manage the vehicle. This opens the door to new opportunities, broader deal flow and access to international markets.

However, the more important point for investors, we believe, is the synergy between Powerhouse’s advisory arm and its funds management arm.

Together, these two businesses can begin feeding the same commercial engine. The CIO Fund identifies deep tech opportunities early. It invests in them, holds them, and nurtures them over time. Eventually those companies reach a liquidity event an ASX listing, an M&A transaction, a major capital raise. That’s when the advisory business steps in.

This is what is known as a merchant business model. Most listed investment companies usually do one of two things. They either invest their own balance sheet, which was PVL’s old business model, or they manage external capital for a fee. PVL is now building the revenue engine, whereby the advisory business, the existing portfolio and the funds management arm can all work together from the same deal flow. This creates a more integrated model where one opportunity can potentially generate advisory revenue, fund management fees and investment upside.

We think this could mark the beginning of PVL’s competitive advantage, provided management continues to execute on strong deal flow and quality.

What is the merchant business model?

The basic idea of a merchant business model is that the company does more than simply advise on deals. The CIO Fund identifies and invests in companies early, then holds them as they mature. When one of those companies eventually reaches a liquidity event an IPO or M&A transaction PVL’s advisory arm can execute the deal itself. Two revenue streams from one relationship.

This is important for investors to understand. Traditional advisory firms usually help companies raise capital, earn a fee for their advice, and then move on to the next transaction. Their revenue is largely dictated by deal volume, and the incentives are not always fully aligned with long-term investor outcomes.

The merchant model is different. PVL isn’t just an advisor with money to invest on the side. It’s a long-term investor that also happens to have capital markets execution capability.

That said, PVL is not focused on deal volume. As Chairman James Kruger puts it: ‘Advisory sells fine dining, doesn’t flip cheeseburgers.’ In other words, the focus is on asset quality, high-conviction, carefully selected transactions, rather than a high-volume, low-quality deal factory.

Figure 1: Merchant Model

The Proof is in the Pudding – Nordic Resources (ASX: NNL) case study

The merchant model for PVL is not just theory at this point in time nor is it constrained purely to technology opportunities.

The merchant model is already operating in the small-caps and resources sector. A clear example of this is Nordic Resources (ASX: NNL), where PVL led a A$3.5 million placement at a premium. The transaction helped reshape the register and was followed by a 240% increase in the share price. The opportunity emerged in 2025 when the gold price was surging, but small-cap gold stocks had not yet seen a corresponding re-rate. Powerhouse identified this valuation lag and moved early.

Nordic Resources, with its pending acquisition of advanced Finnish gold projects, presented a compelling opportunity that met PVL’s investment criteria. This is a real example of PVL’s business model execution in motion. It shows the company’s ability to identify mispriced opportunities, structure capital solutions and participate in the upside when the thesis plays out.

The specific synergies for the CIO Fund

Proprietary advisory pipeline

The CIO Fund identifies deep tech companies early and holds them through their commercialisation phase. When those companies eventually reach a liquidity event PVL’s advisory arm is uniquely positioned to execute the transaction. That’s a genuine competitive edge. Most Australian VC funds hand off to external advisors because they don’t know ECM. This basically allows PVL to capture the full value of the deal.

Deeper due diligence built over years

By the time a CIO Fund portfolio company is ready for a liquidity event, PVL may have already held the investment for several years. That’s not the six-week due diligence period a pure advisor gets when pitching for a mandate. It’s years of insider understanding of the business. 

Multiple revenue streams from a single relationship

Because PVL originates the relationship through the fund and executes the eventual transaction through advisory, it captures value across the entire lifecycle of a company. That means investment returns and management fees during the growth phase, and advisory fees and performance fees at the liquidity event.

How does this actually impact the revenue model?

This is where the story becomes more interesting for investors. For a deeper breakdown of the fee economics, read our previous article here. But from a revenue model perspective, this is where the engine really begins to take shape. Historically, PVL’s revenue was driven mainly by investment returns from its balance sheet. The business relied on how well management invested into growth opportunities.

In H1 FY26, PVL started to see a shift in revenue generated from its new model, with total revenue of A$4.6 million. This was split across three key areas:

Advisory customer revenue: A$1.92M

Investment gains within advisory segment: A$1.63M

Funds management revenue: A$215K

Investing segment revenue: A$849K

Total: A$4.61M

The key point is that advisory is already becoming a meaningful revenue line. With the CIO Fund now established, the funds management side has the potential to follow a similar growth trajectory. Using standard private market fee assumptions of 1.5% to 2.0%, and based on PVL’s 50% share of the CIO Fund economics, we estimate the fund could generate approximately A$1.1 million to A$1.4 million in annual management fee revenue for PVL.

If the advisory business sustains its H1 pace through H2, annualised revenue would sit around A$3.5-4M. Though advisory revenue is inherently episodic and depends on deal flow, so think of this as more of a bull case.

Why we still rate PVL a buy

So far, we have detailed PVL’s new business model, how the revenue lines work together and why funds management could become a strong growth driver over the coming years.

The key difference is that funds management revenue is recurring fee income. As the fund grows, the recurring revenue line grows with it.

This matters because investors value recurring fee revenue very differently from portfolio returns.

Listed investment companies typically trade at, or near, net tangible assets because the market values them mainly on the underlying portfolio. Asset managers, however, can trade on much higher revenue multiples 8x – 12x because their earnings are more predictable, scalable and recurring.

Keep your eyes open on PVL we think there is more room to run.