Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Wilsons Rapid Insights Conference 2019
44 slides from Pinnacle Investment Management's conference presentation, May 27, 2019
Slide 1: ASX cover letter: Presentation
For personal use only 27 May 2019 By electronic lodgement The Manager Company Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Pinnacle Investment Management Group Limited – Presentation Pinnacle Investment Management Group Limited is pleased to attach a copy of a presentation that will
Slide 2: Wilsons Rapid Insights Conference
For personal use only Wilsons Rapid Insights Conference 30 May 2019
Slide 3: Agenda
Agenda For personal use only • Latest Update • Introduction to PNI • First half FY19 Financial Highlights • First half FY19 Business Highlights • First half FY19 Results Discussion • Additional material: – Group Overview and Business Focus – Horizon 2 Initiatives – Distribution Update – Summary and
Slide 4: Latest Update
Latest Update For personal use only • FUM at 30 April 2019: $52.1 billion (including $10.9 billion retail), compared with $46.7 billion at 31 December 2018 • Equity markets have rebounded strongly 2019 calendar year to date: – ASX/S&P 300 index up 12.2% in the four months to 30 April – MSCI World in
Slide 5: Introduction to PNI: What we do
Introduction to PNI For personal use only What we do • A ‘pure play’ investment management firm providing affiliated investment managers with the distribution, infrastructure and other support services they need • Founded in 2006, Pinnacle currently holds an equity interest in 13 specialist investme
Slide 6: Introduction to PNI: How we generate our profits
Introduction to PNI For personal use only How we generate our profits • Our share of Affiliates’ profits – equity accounted (FY18 NPAT – our share $24.9m of $61.6m total) • ‘Parent’ revenues for our services, offset by costs of provision and ‘Horizon 2’ investment for future growth We continue to gr
Slide 7: Building a strong, diversified platform
Building a strong, diversified platform For personal use only Continuing to invest in a diversified platform to strengthen future growth • Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests • Equity ownership enhances alignment with shareholders Seed FUM and workin
Slide 8: Pinnacle business philosophy and approach
Pinnacle business philosophy and approach For personal use only The formula for investment success involves experienced, dedicated, passionate money-makers, free from distractions, spending most of their time on investing Equity ownership for key investment professionals attracts a higher calibre in
Slide 9: Pinnacle differentiation
Pinnacle differentiation For personal use only Australia’s leading “multi-affiliate” investment firm Distinguished from competitors by comprising the highest quality investment management firms High quality, experienced, dedicated, passionate investment professionals – strongly focused on performanc
Slide 10: PNI Continues to Grow
PNI Continues to Grow For personal use only • Three Horizons of Growth • See subsequent slides for Historical Growth • Analyst Research – projections of ‘Horizon 1’ growth in FUM, Profitability, Capacity, and Performance Fee Upside 8
Slide 11: Three Horizons of Growth
Three Horizons of Growth For personal use only • Continue to build Pinnacle by taking a measured approach to growth - Support the growth of our current affiliates with increased investment in distribution channels (e.g. international and listed markets) - Invest in / seed new affiliates where manage
Slide 12: First half FY19 financial highlights
First half FY19 financial highlights For personal use only Announced 22nd February 2019 • Pinnacle’s share of Affiliates’ NPAT $14.3 million, up 44% from $9.9 million in PCP • Pinnacle funds under management (FUM) of $48.7bn at 31 January 20192 • Fully franked interim dividend of 6.1 cents per share
Slide 13: First half FY19 business highlights
First half FY19 business highlights For personal use only • FUM at 31 December 2018 $46.7 billion1, 3 – up $8.7 billion or 23% from $38.0 billion at 30 June 2018 – up $14.4 billion or 45% from $32.3 billion at 31 December 2017 • Retail FUM now $9.4 billion 2, up 19% from $7.9 billion at 30 June 2018
Slide 14: First half FY19 business highlights
First half FY19 business highlights For personal use only • Acquisition of a 40% interest in Omega Global Investors • Longwave Capital Partners established in September 2018 (Pinnacle holds a 40% interest) – commenced managing money 1 February 2019 • Significant downturn in equities markets during t
Slide 15: Understanding 1HFY19 financial outcome
Understanding 1HFY19 financial outcome For personal use only • Pinnacle remains well positioned to deliver superior business and financial performance in the medium term: – Proven deep expertise and diversity of our 13 Affiliates – 94% of Pinnacle Affiliated Investment Manager strategies and product
Slide 16: Financial summary
Financial summary For personal use only 1H2019 1H2018 YoY change Pinnacle • ‘P&L’ investment in support of Horizon Revenue 7.5 6.0 25.0% 2 growth – adding resources to cater E xpens es (11.7) 2 (7.8) 2 50.0% for growth (including ahead of S hare of Pinnacle Affiliates net profit after tax 14.3 1 9.9
Slide 17: Highlights of interim results - Affiliates
Highlights of interim results - Affiliates For personal use only 1H2019 1H2018 YoY change Pinnacle Affiliates (100% aggregate basis) 1 • Continuing FUM and revenue FUM ($billion) 46.7 32.3 44.6% Revenue ($million) 103.1 70.5 46.2% growth Net profit before tax 52.3 36.1 45.0% Tax expens e (14.6) (10.
Slide 18: Significant components of 1HFY19 financial result
Significant components of 1HFY19 financial result For personal use only • Continuing growth in ‘Pinnacle Parent’ revenues and costs – Significant ‘P&L’ investment in 1HFY19 in support of Horizon 2 initiatives (including Offshore distribution, ETF, Direct to retail consumers, new Affiliates) – Net lo
Slide 19: A strong and flexible balance sheet
A strong and flexible balance sheet For personal use only At 31 December 2018: • $47.6m of cash and principal investments • Includes $37.1m invested in strategies managed by Pinnacle Affiliates • Excludes nearly $7m of cash applied for Affiliate equity recycling loans, working capital loans (Two Tre
Slide 20: Funds Under Management – December 2018
Funds Under Management – 31 December 2018 For personal use only 1includes $6.8 billion ‘acquired’ in July 2018 2$52.1 billion at 30 April 2019 18
Slide 21: Funds Under Management – December 2018
Funds Under Management – 31 December 2018 For personal use only Date Pinnacle Hyperion Plato Solaris RCL Palisade Antipodes Spheria Two Trees Firetrail Metrics Omega Longwave (total) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m)* ($m)* ($m) ($m) 3 31 Dec 18 46,741 5,599 4,680 7,606 7,779 2,010 8
Slide 22: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards For personal use only 2016 Morningstar Fund Manager of the Year Awards: • Hyperion – Australian Fund Manager of the Year • Hyperion – Domestic Equities Category Winner, Australia • Hyperion – Domestic Equities Small Caps Category Winner, Aust
Slide 23: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards For personal use only 2018 Professional Planner | Zenith Fund Awards: • Pinnacle – Distributor of the Year (third consecutive year) • Resolution Capital – Global REIT Category Winner (fifth consecutive year) • Solaris Investment Management -
Slide 24: Overview of Pinnacle Affiliates
Overview of Pinnacle Affiliates For personal use only Pragmatic value manager of global equities (long only and long-short) • Funds under management have grown to in excess of $8.1 billion in approximately 3.5 years High conviction investment manager of Australian and Global equities • Absolute Retu
Slide 25: Overview of Pinnacle Affiliates (continued)
Overview of Pinnacle Affiliates (continued) For personal use only Sydney-based alternative asset manager specializing in private debt, fixed income and capital markets • Pinnacle acquired a 35% interest in July 2018 Offers smart beta, factor investing and client solutions (including ESG) capabilitie
Slide 26: Overview of Pinnacle Affiliates (continued)
Overview of Pinnacle Affiliates (continued) For personal use only High conviction manager of Australian and Global listed real estate securities • Funds under management $7.8 billion at 31 December 2018 • Launched Collective Investment Trust (CIT) for US institutional investors – secured seed client
Slide 27: Continuing strong investment performance of Affiliates
Continuing strong investment performance of Affiliates 94% of Pinnacle Affiliated Investment Manager strategies and products (with a track record exceeding 5 years) have out For personal use only performed their benchmarks over the 5 years to 30 April 2019 Inception 5Y 10Y Inception date Pinnacle In
Slide 28: Affiliates' investment performance to April 2019
Affiliates’ investment performance to 30 April 2019 For personal use only Inception 1Y 3Y 5Y 10Y Inception date Pinnacle Investment Management - gross performance unless otherwise stated Hyperion Asset Management Hyperion Australian Growth Companies Fund 13.93% 9.51% 9.66% 13.26% 12.38% 1/10/2002 Ou
Slide 29: Affiliates' investment performance to April 2019
Affiliates’ investment performance to 30 April 2019 Inception For personal use only 1Y 3Y 5Y 10Y Inception date Pinnacle Investment Management - gross performance unless otherwise stated Spheria Asset Management Microcap Fund 2.87% 13.01% 16/05/2016 Outperformance -4.31% 2.05% Smaller Companies Fund
Slide 30: Focus on managing the business to maximise profits and value
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only We continue to build Pinnacle by taking a medium term approach • Make decisions and release information when it is reliable and representative of ‘real’ or genuine trends • Selection
Slide 31: How does Horizon 2 add value in the Medium Term?
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only • How does ‘Horizon 2’ add value in the Medium Term? – Investment in growth initiatives that don’t require additional capital to be raised – Reasonable limits to be set given short-t
Slide 32: Horizon 2 initiatives and increased resources
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only • We have deliberately increased resources and costs in ‘Pinnacle parent’ to ensure excellent ongoing service to existing Affiliates, support of new strategies and of new Affiliates
Slide 33: Building a more resilient platform to support Horizon 1 and 2
Building a more resilient platform to support Horizon 1 and 2 initiatives For personal use only Risk and Compliance expansion in response to market expectations and Horizon 1 and 2 growth • Appointment of a Chief Risk and Compliance Officer • Team expansion from three to six members • Appointment of
Slide 34: Three Senior Executives included in additional resourcing
Building a more resilient platform to support Horizon 1 and 2 initiatives For personal use only Three Senior Executives included in additional resourcing • Chris Meyer – Director, Listed Products – Former CEO RMI Investment Managers (South Africa) – Former CEO RMB Morgan Stanley (South Africa) – 20+
Slide 35: Horizon 2 examples undertaken
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only Horizon 2 examples undertaken: • Hyperion Global and Plato Global Income Funds launched (Lonsec rating upgrades February 2019) • Longwave Capital incubation – Seeded Longwave Austral
Slide 36: Progressive expansion of domestic and offshore distribution platform
Focus on managing the business so as to maximise profits and Company value over the medium term For personal use only • Progressive expansion of domestic and offshore distribution platform – Completed build out of ‘capital markets’ team focused on exchange-traded offerings • Closed End (LICs, LITs)
Slide 37: Horizon Progress
Horizon 2 Progress For personal use only Initiative Status Approximate Launched $m to market 31 Dec 18 Direct to Retail Developing $480 2017 Capital Markets (LIC, LIT, ETF) Developing $1,722 2017 Plato Global Early Stage $55 2017 Two Trees Developing $215 2018 Hyperion Global Developing $470 2018 Sp
Slide 38: Recap on Horizon Criteria – What could we acquire?
Recap on Horizon 3 Criteria – What could we acquire? For personal use only Criteria • Must not place the Company at risk • Only consider if low risk and high return on capital • Exercise great care and careful due diligence • Must be synergistic with existing core • Few will meet this test Status •
Slide 39: Evolution of Pinnacle's Distribution capability
Evolution of Pinnacle’s Distribution capability For personal use only • Adapt – Grow ahead of our boutiques – Listen to clients and move quickly to meet their evolving needs – Do not become the market – be ahead of it • Resource – Growing adviser engagement – 15+ in retail – Direct (non advised & of
Slide 40: Evolution of Pinnacle's Distribution capability
Evolution of Pinnacle’s Distribution capability For personal use only • Traditional ‘intermediated retail’ distribution expertise expanded over time to include ‘direct and exchange traded’ – Intermediated (Financial Advisers) • Private managed funds – Platform & Direct • Exchange traded funds – Dire
Slide 41: Progress to date – Platform and Reputation
Progress to date – Platform and Reputation For personal use only • A platform for growth – Continuing investment excellence – Widespread industry recognition and support – ‘Article of faith’ reputation • Increasing diversification • Proven ability to build high quality investment managers, and facil
Slide 42: Pinnacle Charitable Foundation
Pinnacle Charitable Foundation For personal use only • Pinnacle has a strong belief in corporate Australia’s responsibility to give back to the communities which sustain and inspire businesses both large and small • In partnership with Affiliates, Pinnacle primarily supports the community through th
Slide 43: Summary and plans for the remainder of FY19
Summary and plans for the remainder of FY19 For personal use only • Maintain current momentum and investment to deliver medium term growth • Maintain culture – attract exceptional individuals to our business and retain them • Horizon 2 initiatives under way • Continue to deliver growth within existi
Slide 44: Disclaimers
Disclaimers For personal use only This presentation has been prepared by Pinnacle Investment Management Group Limited (PNI). The information in this presentation is current as at 27 May 2019. This presentation is not an offer or invitation for subscription or purchase of securities or a recommendati
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