Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — FY2023 Earnings Presentation
62 slides from Pinnacle Investment Management's earnings presentation, Aug 2, 2023
Slide 1: FY23 Results Presentation
PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) FY23 RESULTS PRESENTATION 2 nd August 2023
Slide 2: Important notice and disclaimer
Pinnacle Investment Management Group Limited (PNI) 2 This presentation has been prepared by Pinnacle Investment anagement roup Limited ABN 22 100 325 184 (PNI). The information in this presentation is current as at 2 August 2023. PNI has prepared this presentation based on information available to i
Slide 3: Agenda
Agenda 3 01 Introduction and Highlights Ian Macoun 4 02 Financial Performance Dan Longan 17 Market Update – Institutional & 03 International Andrew Chambers 22 Market Update – Wholesale & 04 Retail Kyle Macintyre 25 05 Growth Agenda Ian Macoun 28 06 Corporate Responsibility Ian Macoun 39 07 Conclusi
Slide 4: Introduction and Highlights
01 Introduction and Highlights Ian Macoun, Managing Director
Slide 5: FY23 Themes
FY23 Themes 5 Investment for future growth continued, performance fees show benefits of diversified platform, new business conditions remain challenging, particularly in retail • Benefits of Pinnacle’s diversified platform continue to be demonstrated • trong performance rebound across multiple Affil
Slide 6: Benefits of Pinnacle's diversified platform continue to be demonstrated
FY23 Themes 6 1. Benefits of Pinnacle’s diversified platform continue to be demonstrated x iversified base of Affiliates by asset class and style and investors by channel and geography has delivered positive net inflows, solid performance fees and steady revenues in a challenging and volatile market
Slide 7: Horizon 2 investment program continued and set to deliver future growth
FY23 Themes 7 5. orizon 2 investment program continued and set to deliver future growth, within Pinnacle and Affiliates significant, short-term profit impacts x Pinnacle and Affiliates have continued to invest will drive strategic growth over the medium term x hort-term profit impact in FY23 (Pinnac
Slide 8: FY23 financial highlights
FY23 financial highlights 8 Diversified platform demonstrating resilience in challenging market conditions. Investments made to support earnings growth in the future Affiliate FUM / Revenue (100%) NPAT / EPS Affiliate FUM (100%) 30 Jun 23 30 Jun 22 Change FY23 FY22 Change Aggregate Affiliate FUM (at
Slide 9: Track record of earnings growth throughout market cycles
Track record of earnings growth throughout market cycles 9 The strength of our platform and award-winning brands generates material earnings growth for our shareholders over the long-term NPAT growth: 2016 - 2023 Diluted EPS growth: 2016 - 2023 CA (five years to CA (five years to 27.1% 24.2% 30 une
Slide 10: Affiliate strategies outperformance over benchmarks
Investment performance 10 Our industry leading portfolio of high performing Affiliates continues to outperform benchmarks and provides an engine for continued FUM growth and performance fee generation Affiliate strategies outperformance over benchmarks (alpha) over 5-year period, p.a. Spheria Austra
Slide 11: Pinnacle has a diversified Affiliate platform
Pinnacle has a diversified Affiliate platform 11 Track record of investing to deliver medium-term growth xecutives of both Pinnacle and Pinnacle Affiliates have significant e uity interests. uity ownership enhances alignment with shareholders. Seed FUM and Middle office and Technology and other firm
Slide 12: Pinnacle Affiliate revenues are linked, in part, to movements in equity markets
Track record of earnings growth throughout market cycles 12 • Pinnacle Affiliate revenues are linked, in part, to movements in e uity markets. hilst markets ended the year predominantly in positive territory, there was significant volatility throughout, with IT markets in particular remaining under
Slide 13: The annual reliability of overall performance fee revenue has been improved
Performance fees 13 24 strategies with the potential to deliver performance fees – solid result for the FY after a very modest 1H FY23 Closing FUM & number of strategies subject to performance fee • The annual reliability of overall performance fee revenue has been improved by olume of F with perfor
Slide 14: Strong performance rebound across multiple Affiliates in 2H FY23
Strong performance rebound across multiple Affiliates in 2H FY23 14 Performance fees disappointed in 1H FY23 with the volatility in equities markets and rapid changes in lending rates, but rebounded in 2H FY23, demonstrating the value of Pinnacle’s diversified platform of Affiliates f particular not
Slide 15: Funds under management
Funds under management 15 Gross FUM ($bn) 1 • F has grown at a CA of 23.8% p.a. over the last ten years (22.2% excluding $6.8bn ‘ac uired’ in uly 2018, $3.0bn ‘ac uired’ in ecember 2019 and $1.1bn ‘ac uired’ in ecember 2021) • arkets were mixed over FY23 • P/A 300 index up 9.4% • CI orld Index up 14
Slide 16: Diversification to resilience of core earnings
Diversification resilience of core earnings 16 A broadly diversified platform in place to move ahead with sustained growth Change in FUM by Asset Class (%) 30 un 23 FY23 FUM by Affiliate (%) 1 13% 30 un 16 1.6 1.5 0.4 8% 1.6 Resolution Capital 7 41% 3.6 Hyperion 24 4% Plato 7.7 2 67 Metrics 16% 15
Slide 17: Financial Performance
02 Financial Performance Dan Longan
Slide 18: Continued industry awards
Continued industry awards 18 2023 Financial 2023 Money Management 2022 Zenith Fund 2022 Financial Standard Newswire/SQM Research Annual Fund Manager of Awards: Investment Leadership Fund Manager Awards: the Year Awards, Awards 2022: partnering with Lonsec: • Resolution Capital - Global Real • Hyperi
Slide 19: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 19 Continuing improvement in average base rate fees and client diversity; Horizon 2 investment in growth initiatives moderates profits in the short term, but will drive strategic growth through the cycle Revenue (Pinnacle and Affiliates) 1 • Total Affil
Slide 20: FY23 financial results
FY23 financial results 20 FY23 ($ ) FY22 ($ ) % Change • NPAT attributable to shareholders of $76.5m (marginal increase on PINNACL FY22) evenue1 45.5 46.0 -1% • Performance fees earned by Pinnacle Affiliates, post-tax, 2,3 contributed $14.7m of Pinnacle’s NPAT in FY23 ($16.6m in FY22) xpenses (36.4)
Slide 21: Balance sheet
Balance sheet 21 30 un 2023 ($ ) 30 un 2022 ($ ) Change • Cash and PI of $187.2m C NT A T Cash and cash e uivalents 27.6 38.3 (28%) • Includes $148.5m invested in strategies managed by Financial assets 159.6 139.9 14% Pinnacle Affiliates Total cash and financial assets 187.2 178.2 5% • CBA facility
Slide 22: Market Update – Institutional & International
03 Market Update – Institutional & International Andrew Chambers
Slide 23: Institutional & International: Market Update
Institutional & International: Market Update 23 International flows exceed $1bn; Domestic flows rebound in second half Australia International • -$150m net flows in FY23 • $1.1bn net flows in FY23 • $2.3bn net flows in 2 23 • $420m net flows in 2 23 obust 2 inflows into Australian e uities offsettin
Slide 24: Institutional & International: Market Outlook
Institutional & International: Market Outlook 24 Robust sales pipeline, diverse demand Australia International • Australian e uities (large small cap) • lobal emerging market e uites • lobal value e uities • lobal value e uities • lobal emerging market e uities • lobal small caps • Public bonds and
Slide 25: Market Update – Wholesale & Retail
04 Market Update – Wholesale & Retail Kyle Macintyre
Slide 26: Wholesale & Retail: Market Update
Wholesale & Retail: Market Update 26 Wholesale and Retail flows subdued, albeit positive in FY23 due to volatile market conditions Wholesale and Retail flows (Net) • Australian and lobal e uities • utflows elevated in FY23 lobal e uities have experienced elevated outflows with a risk off sentiment i
Slide 27: Wholesale & Retail: Market Outlook
Wholesale & Retail: Market Outlook 27 Pinnacle is well positioned to meet the evolving needs of Australian investors • Investor demand for private assets is driving innovation Pinnacle affiliated private asset managers • trong demand for private assets in the wholesale market • Attractive risk adjus
Slide 28: Growth Agenda
05 Growth Agenda Ian Macoun, Managing Director
Slide 29: Three Horizons of growth
Three Horizons of growth 29 Prepared for, and seeking, further expansion opportunities – committed to taking advantage of the significant offshore opportunity to evolve into a global multi-affiliate by ‘exporting our model’ – but maintaining discipline on quality and valuation • Continue to build Pi
Slide 30: Future growth drivers
Future growth drivers 30 An excellent platform in place to move ahead with sustained growth Distribution Platform Robust, Flexible, Start-Up Affiliate Existing Affiliate Acquisitive Expansion Operating Platform Enablement Expansion Growth • Investment in (and • Stable / robust, • Develop investment
Slide 31: Horizon 2 – deliberate investment drives high returns over time
31 Horizon 2 – deliberate investment drives high returns over time Pinnacle and Affiliates continue to actively pursue growth initiatives, recognizing that these will moderate profits in the short-term but provide extremely lucrative growth opportunities over the medium-term xamples of previous oriz
Slide 32: Horizon 2 – current status
32 Horizon 2 – current status Pinnacle and Affiliates continue to actively pursue growth initiatives, recognizing that these will moderate profits in the short-term but provide extremely lucrative growth opportunities over the medium-term Current orizon 2 initiatives, within Pinnacle, include • uppo
Slide 33: Horizon 2 – broad range of diversified initiatives
33 Horizon 2 – broad range of diversified initiatives xamples of previous orizon 2 initiatives, within Affiliates, include • yperion lobal uity, Palisade enewable Infrastructure, Plato Australian Income, esCap lobal IT , olaris uity Long/ hort Current initiatives, within Affiliates, include Affiliat
Slide 34: Horizon 2 – highly valuable accelerator for new Affiliates and strategies
34 Horizon 2 – highly valuable accelerator for new Affiliates and strategies • The aggregate net cost to Pinnacle of these initiatives, within Pinnacle and Affiliates, was approximately $14m in FY23 (Pinnacle share, after tax) • Investment made in partnership with Affiliates, demonstrating the commi
Slide 35: Horizon 2 – International
35 Horizon 2 – International Incubations remain a highly attractive investment proposition for Pinnacle. e are continuing to look to incubate more outside of Australia and leverage off the operational infrastructure we have developed in the / urope and in Canada Aikya (London) • Commenced 2020 • igh
Slide 36: Horizon 2 - Metrics
Horizon 2 - Metrics 36 Metrics continues to invest heavily to further diversify and grow their business and create additional origination capability • etrics has 120 employees including 70 origination professionals located in ydney, elbourne and Auckland • etrics also continues to diversify and grow
Slide 37: Horizon 2 - Metrics
Horizon 2 - Metrics 37 Metrics continues to invest heavily to further diversify and grow their business and create additional origination capability • etrics’ profit in FY23, particularly 2 , was negatively impacted by these orizon 2 investments, as well as the impact of consolidating Payright • etr
Slide 38: Horizon 3
38 Horizon 3 • ur most recent orizon 3 transaction was the ac uisition of a 25% interest in private e uity and venture capital firm Five Capital in ecember 2021. ince ac uisition • xpanded team to over 30 professionals enlarged buyout team and established New ealand team • Launched Five Capital oriz
Slide 39: Corporate Responsibility
06 Corporate Responsibility Ian Macoun, Managing Director
Slide 40: Our Sustainability Strategy
Our Sustainability Strategy 40 e are committed to building a sustainable, inclusive and resilient firm. This means fostering a work environment that attracts and retains exceptional people, aligning firm growth with our climate ambitions, expanding the reach and impact of our philanthropic partnersh
Slide 41: Our GHG Emissions Breakdown
Our GHG Emissions Breakdown 41 ur business activities, guided by our strategy and climate goals have supported a 15% reduction in total emissions since our FY20 base year. e enhanced our emission reduction target. 800.0 14.00 e set an intensity target to reduce our tonnes of C 2-e emitted per 700.0
Slide 42: Pinnacle Charitable Foundation
42 Pinnacle Charitable Foundation • Pinnacle is passionate about enabling better lives through investment excellence. This belief is strongly reflected in Pinnacle’s commitment together with Affiliates to the Pinnacle Charitable Foundation • The Foundation’s focus is on growing the reach, sustainabi
Slide 43: Total donations by the Foundation in FY23 were over $620,000
43 Pinnacle Charitable Foundation • Total donations by the Foundation in FY23 were over $620,000, primarily directed towards 14 long term not-for-profit (NFP) partners as well as two additional recipients of the 2023 PNI employee choice one-off donations. upport was also provided for initiatives ali
Slide 44: Multiple partnerships with 14 NFPs are driving long term sustainable impact
Pinnacle Charitable Foundation 44 • ultiple partnerships with 14 NFPs are driving long term sustainable impact across six core categories ental wellbeing supporting positive mental health together with illness prevention and early intervention exual, domestic and family violence facilitating legisla
Slide 45: Conclusion
07 Conclusion Ian Macoun, Managing Director
Slide 46: Pinnacle differentiation
Pinnacle differentiation 46 Australia’s leading ‘multi-affiliate’ investment firm 1. istinguished from competitors 2. igh uality, experienced, 3. All the advantages, benefits and by comprising the highest uality dedicated, passionate superior conditions of a investment management firms investment pr
Slide 47: Summary
Summary 47 Pinnacle’s diverse Affiliate stable and extensive distribution channels fosters resilience and growth Fundamentals in place • ighly regarded Affiliates with strong local and international investment consultant and research house ratings for organic sales growth • iverse stable of Affiliat
Slide 48: Q&A
Q&A
Slide 49: Appendix
Appendix
Slide 50: Continuing strong investment performance of Affiliates to 30 June 2023
50 Inception Inception 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment anagement yperion Asset anagement - ross Performance yperion Australian rowth Companies Fund 9.92% 11.81% 12.09% 1/10/2002 Continuing strong utperformance 2.80% 3.26% 3.26% yperion mall rowth Companies Fund 10.79% 13.53% 16.
Slide 51: Continuing strong investment performance of Affiliates to 30 June 2023
51 Inception Inception 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment anagement pheria Asset anagement - ross Performance Continuing strong pheria Australian icrocap Fund 14.65% 15.73% 16/05/2016 utperformance 12.39% 10.01% investment performance of pheria Australian maller Companies Fund 7.78
Slide 52: Affiliates' investment performance
52 Inception Inception 1Y 3Y (p.a.) 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment anagement yperion Asset anagement - ross Performance yperion Australian rowth Companies Fund 22.21% 8.13% 9.92% 11.81% 12.09% 1/10/2002 utperformance 7.81% -2.94% 2.80% 3.26% 3.26% yperion mall rowth Companies F
Slide 53: Affiliates' investment performance
53 Inception Inception 1Y 3Y (p.a.) 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment anagement Firetrail Investments - ross Performance Firetrail Australian igh Conviction Fund 14.52% 13.54% 5.80% 6.66% 14/03/2018 utperformance -0.26% 2.42% -1.36% -1.12% Firetrail Absolute eturn Fund -1.93% 4.64
Slide 54: FY23 funds under management
54 FY23 funds under management
Slide 55: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 55 2023 Financial Newswire/ esearch Fund anager Awards 2021 Australian Alternative Investment Awards • yperion TF Provider Finalist • etrics Best 2021 Private ebt Fund • Langdon merging Funds Finalist • Pinnacle Best 2021 Investor upporting A
Slide 56: Affiliate commitment to ESG
Affiliate commitment to ESG 56 All Pinnacle Affiliates embed into their investment decision making process Incorporate into Affiliate ignatory to P I ave an policy Investment process Aikya Yes Yes Yes Antipodes Yes Yes Yes Coolabah Yes Yes Yes Firetrail Yes Yes Yes Five (Certified B Corporation) Yes
Slide 57: Pinnacle Affiliates
Pinnacle Affiliates 57 lobal merging arket uities • igh uality • Absolute return with downside protection • Concentrated portfolio • Long term sustainable growth • tewardship and ustainability • ead uartered in London, nited ingdom lobal and merging arkets uities (Long nly and Long- hort) • ‘Pragmat
Slide 58: Pinnacle Affiliates
Pinnacle Affiliates 58 igh conviction Australian and lobal uities • eep fundamental research approach consistently applied for 15 years • Australian, lobal, mall Companies and Long- hort e uities • No enduring style bias. Building concentrated portfolios of best growth and value ideas • Focused on g
Slide 59: Pinnacle Affiliates
Pinnacle Affiliates 59 lobal and Canadian mall Cap uities • Active and ngaged owners of world class smaller companies • Blue Chip small cap, focusing on cash flow growth • eek to identify and evaluate businesses that can compound intrinsic value at high rates over the long term • ead uartered in Tor
Slide 60: Pinnacle Affiliates
Pinnacle Affiliates 60 Private Infrastructure, Impact eal Assets • id- arket focus results in better ac uisition multiples and portfolio yield • Actively involved in operational management and governance of assets unlocks embedded value • wns airports, seaports, portside bulk li uid storage, gas pip
Slide 61: Pinnacle Affiliates
Pinnacle Affiliates 61 Private Agriculture, Food ater • eal asset backed investments across the food and agriculture sector • Participation throughout the value chain investing in assets that are critical to the production of essential goods water, farmland, agricultural infrastructure and agribusin
Slide 62: Disclaimer
Disclaimer 62 Lonsec esearch The Lonsec atings presented in this document are published by Lonsec esearch Pty Ltd ABN 11 151 658 561 AF L 421445. The atings are limited to eneral Advice (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the
Pinnacle Investment Management Group — FY2023 Earnings Presentation on 6ix