Pengana Capital Group Ltd. · ASX:PCG
Pengana Capital — FY2020 Earnings Presentation
29 slides from Pengana Capital's earnings presentation, Aug 28, 2020
Slide 1: Pengana Capital Group Results for the Year Ended 30 June 2020
PENGANA CAPITAL GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2020 “Strong Yield with Exceptional Growth Prospects” Russel Pillemer Katrina Glendinning Chief Executive Officer Chief Financial Officer
Slide 2: Table of Contents
TABLE OF CONTENTS 1. Business Overview 2. Growth Prospects 3. FY 2020 Results 4. Valuation Components
Slide 3: Business Overview
SECTION 1 fa PENGANA CAPITAL, BUSINESS OVERVIEW
Slide 4: Pengana Capital Group Overview
PENGANA CAPITAL GROUP OVERVIEW • Leading Australian provider of premium, value added products • Proven long-term performance over multiple funds • Focused on the higher end retail market - SMSF’s, advisors and HNW’s: • Recognised brand • Strong distribution and marketing capabilities • Unique funds
Slide 5: Funds Under Management
FUNDS UNDER MANAGEMENT 1 FUM growth over last few years has been weak, as Historical Growth in FUM ($m)2 focus has been on re-positioning future FUM growth $4,000 $3,519 and higher margins $3,500 $3,272 $3,247 $3,127 $3,129 FUM decreased by 4% in 2020 $3,000 $2,879 • Distributions negatively impacte
Slide 6: Funds Under Management
FUNDS UNDER MANAGEMENT 1 30 June 20 Australian multi- caps 40% 3% • Growth in Australian FUM is limited due to market 6% dynamics and capacity constraints of our funds Australian small-caps • Major strategic aim has been to increase exposure to international assets; 32% at 6/2017 to 51% at 6/2020 2%
Slide 7: Diversified Range of Funds
DIVERSIFIED RANGE OF FUNDS 1 Primary Fund Name Strategy Strategy FUM Management Fee; Performance Fee at 31/07/20 ($m) (Primary Fund) 2 Pengana Australian Equities Australian Multi Caps 866 1.0%; 10% Pengana Emerging Companies Australian Small Caps 654 1.3%; 20% above ASX Small Ords Lizard Global Sma
Slide 8: Annual Fee Margin FY 2015 to FY 2020
ANNUAL FEE MARGIN FY 2015 to FY 2020 3.5% 3.23% 3.0% 2.5% 2.20% 2.0% 1.69% 1.56% 1.44% 1.5% 1.35% 1.0% 1.18% 1.15% 1.12% 1.15% 1.17% 1.21% 0.5% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Mgmt fee/avg FUM Perf fee/avg FUM Total fee/avg FUM, 6 year avg Total fee/avg FUM, 6 year median Performance
Slide 9: The Pengana Business: Key Attractions
THE PENGANA BUSINESS: KEY ATTRACTIONS • Highly diversified funds management business, across strategies/funds; geographies; market segments; listed equities and private equity, with option to expand into further asset classes • Excellent long term returns across strategies • Sticky and loyal client
Slide 10: Key Developments in FY 2020
KEY DEVELOPMENTS IN FY 2020 Strategic Initiatives: • Significant expansion of distribution and marketing team and capabilities • PE1 rights issue raises $94m • Acquisition of controlling stake in Lizard International LLC • Launch of Lizard International long-only strategy: now managing ~$170m • New
Slide 11: Growth Prospects
SECTION 2 fa PENGANA CAPITAL, GROWTH PROSPECTS
Slide 12: Exceptional Growth Prospects
EXCEPTIONAL GROWTH PROSPECTS • Over the past few years, PCG has focused on laying the foundations for multiple growth opportunities • This has been an expensive exercise, requiring PCG to invest substantial amounts, negatively impacting profitability • These opportunities are now poised to generate
Slide 13: Pengana International Fund
PENGANA INTERNATIONAL FUND • Recently passed the critical 5 year anniversary mark; FUM ~$100m • Top quartile returns since inception • Exceptional returns in negative markets e.g. 1 year returns of 16.2% vs 3.0% for benchmark1 • Differentiated returns from differentiated portfolio: • very limited ex
Slide 14: Pengana International Ethical Fund
PENGANA INTERNATIONAL ETHICAL FUND • Multiple vehicles acquired in the Hunter Hall acquisition; FUM currently ~$750m • Recently passed the 3 year anniversary mark under PCG management • Increasing demand for ethical strategies in Australia and globally • Top quartile returns relative to peers in the
Slide 15: Pengana Private Equity Trust (ASX:PE1)
PENGANA PRIVATE EQUITY TRUST (ASX:PE1) • The only ASX listed vehicle providing exposure to global Private Equity • $205m IPO in 2019; plus recent successful rights issue in the midst of COVID crisis raising $94m • Private equity considered to be one of the highest growth sectors in Australia and glo
Slide 16: Pengana Global Small Companies
PENGANA GLOBAL SMALL COMPANIES • Pengana entered into JV with Chicago-based Lizard Investors LLC in 2015 to launch the Pengana Global Small Companies Fund • Lizard is a specialist global small-cap manager – a sector that is growing in demand, with very few credible competitors in Australia • Solid p
Slide 17: Pengana WHEB Sustainable Impact
PENGANA WHEB SUSTAINABLE IMPACT • Pengana entered into JV with London-based WHEB Asset Management LLP in 2017 to launch the Pengana WHEB Sustainable Impact Fund • WHEB is a global leader in sustainable investing with a focus on the opportunities created by the transition to more sustainable, resourc
Slide 18: Pengana Israel Alpha Fund
PENGANA ISRAEL ALPHA FUND • Pengana recently entered into JV with Israel-based Alpha LTI to take over their existing Australian wholesale unit trust, now renamed the Pengana Alpha Israel Fund • Alpha is a leader in investing in Israeli listed companies; with most of these companies listed on either
Slide 19: Lizard International Small Cap Strategies/Funds
LIZARD INTERNATIONAL SMALL CAP STRATEGIES/FUNDS • PCG acquired 67% economic interest in Chicago-based Lizard Investors LLC (“Lizard”) in early 2020 • Lizard is a decade-old funds management firm based in Chicago with an excellent long-term track record in managing global small cap strategies • Curre
Slide 20: US Expansion Platform
US EXPANSION PLATFORM • PCG acquired 67% economic interest in Lizard Investors LLC (“Lizard”) in early 2020 • The aim of PCG is to help raise additional FUM for Lizard’s Global Small Cap Strategies, as well as to transform Lizard into a platform for the management of other strategies i.e. similar to
Slide 21: Illustrative Earnings Potential of Selected Funds (At Full Capacity)
ILLUSTRATIVE EARNINGS POTENTIAL OF SELECTED FUNDS (AT FULL CAPACITY) Indicative Indicative Gross Fee % to PCG Indicative Net Fee Additional Margin (from Base + Margin adding to Capacity Performance Fees) PCG EBITA Pengana International Fund >$5bn 1.0% 45% 0.5% Pengana International Ethical Fund >$3b
Slide 22: FY 2020 Results
[a PENGANA SECTION 3 CAPITAL, Ee = =) vy) Lu x =) N So N > LL
Slide 23: Underlying Profit After Tax
UNDERLYING PROFIT AFTER TAX1 Increase/ Increase/ Pengana Capital Group Operating 2020 2019 (Decrease) (Decrease) Comment EBITDA $’000 $’000 $’000 % Management fee revenue 38,091 37,619 472 1.3% AUM down but higher margin products Performance fee revenue 6,080 4,909 1,171 23.9% ~ 45% to PCG EBITDA Ne
Slide 24: Statutory Profit After Tax
STATUTORY PROFIT AFTER TAX Pengana Capital Group Operating EBITDA ($’000) 2020 2019 Underlying profit before tax1 12,481 10,924 Add: Items excluded from underlying profit before tax Non-cash amortisation and impairment (3,250) (3,410) Product development (623) (16,560) Other non-operating items (185
Slide 25: Balance Sheet
BALANCE SHEET1 Pengana Capital Group Balance Sheet ($’000) 30 June 2020 30 June 2019 Cash net of AFSL cash requirements 12,209 10,346 Current receivables 6,234 5,919 Current liabilities (12,209) (9,545) Net working capital 6,234 6,720 Investments net of AFSL liquid asset requirements 12,940 9,163 AF
Slide 26: Valuation Components
SECTION 4 VALUATION COMPONENTS
Slide 27: Valuation Components
VALUATION COMPONENTS PENGANA CAPITAL GROUP PENGANA CAPITAL GROUP • Net investable assets (includes Employee Share Loan Plan): $55m 1 • Net investable assets (includes Employee Share Loan Plan): $54m Plus Plus • Base fees on existing $3.3bn of FUM: generate EBITDA of ~$8m p.a. • Base fees on existing
Slide 28: Disclaimer
DISCLAIMER This presentation has been prepared by Pengana Capital Group Limited (ABN 43 059 300 426) (PCG). The information in this presentation is current as at 28 August 2020. This presentation is not an offer or invitation for subscription or purchase of securities or a recommendation with respec
Slide 29: Pengana Capital Group Limited
PENGANA CAPITAL GROUP LIMITED ABN 43 059 300 426 Level 12, 167 Macquarie Street T: +61 2 8524 9917 E: clientservice@Pengana.com PENGANA.COM