Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Investor Presentation (February 2022)
67 slides from Pinnacle Investment Management's investor presentation, Feb 2, 2022
Slide 1: 2022 interim financial results
2nd February, 2022 By Electronic Lodgement The Manager Company Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Pinnacle Investment Management Group Limited (ASX: PNI) 2022 interim financial results Pinnacle Investment Management Group Limited (PNI) is pleased to advise s
Slide 2: Composition of Group Results
Composition of Group Results The profit after tax attributable to shareholders for 1H FY22 was $40.1 million, representing basic earnings per share of 21.5 cents, compared with 17.5 cents per share in the PCP. We remain confident of future growth, from multiple sources. Record retail net inflows of
Slide 3: FUM Update
FUM Update The aggregate FUM of PNI’s sixteen Affiliates as at 31 December 2021 was $93.6 billion, reflecting: > an increase in FUM of $4.2 billion or 5% during the six months ended 31 December 2021 (an increase of $8.1 billion, or 9%, during the half year, excluding the $3.9 billion outflow of the
Slide 4: Retail FUM Update
Retail FUM Update Aggregate Retail FUM stood at $23.8 billion at 31 December 2021, reflecting an increase in FUM of $3.5 billion or 17% during the six months ended 31 December 2021, comprising net inflows of $2.9 billion and increases due to market movements/investment performance of $0.6 billion. P
Slide 5: Dividend and Outlook
Dividend The Board has resolved to pay a fully franked interm dividend of 17.5 cents per share to shareholders recorded on the register on 4 March 2022 and payable on 18 March 2022, which represents a payout ratio of 83% of diluted EPS. The Dividend Reinvestment Plan (DRP) is applicable to this divi
Slide 6: Authorised by: Calvin Kwok Company Secretary
Authorised by: Calvin Kwok Company Secretary
Slide 7: 1H FY22 Results Presentation
PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) 1H FY22 RESULTS PRESENTATION 2 nd February 2022
Slide 8: Pinnacle Investment Management Group Limited (PNI)
Pinnacle Investment Management Group Limited (PNI) This presentation has been prepared by Pinnacle Investment Management Group Limited ABN 22 100 325 184 (PNI). The information in this presentation is current as at 2 February 2022. PNI has prepared this presentation based on information available to
Slide 9: Agenda
Agenda 01 Introduction and Highlights Ian Macoun 4 02 Financial Performance Dan Longan 15 Market Update – Institutional 03 and International Andrew Chambers 19 04 Market Update - Retail Ramsin Jajoo 23 05 Growth Agenda Ian Macoun 31 06 Corporate Responsibility Ian Macoun 35 07 Conclusion Ian Macoun
Slide 10: Introduction and Highlights
01 Introduction and Highlights Ian Macoun, Managing Director
Slide 11: Ongoing opportunities for growth from multiple sources
1H FY22 - A broadly diversified platform in place to move ahead with sustained growth 1. Ongoing opportunities for growth from multiple sources • Short term domestic institutional rebalancing offset by continued strength in international and higher margin, sticky retail inflows • Continued ‘Horizon
Slide 12: 1H FY22 financial highlights
1H FY22 financial highlights 6 Revenue growth delivered by strong retail net inflows, offsetting weaker institutional net flows which reflect short term investor rebalancing/lumpiness; institutional pipeline remains strong Affiliate FUM / Revenue (100%) NPAT / EPS DPS Aggregate Affiliate $93.6bn +5%
Slide 13: 1H FY22 Highlights: diversified Affiliate platform
Pinnacle has a diversified Affiliate platform 7 Track record of investing to deliver medium-term growth Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests. Equity ownership enhances alignment with shareholders. Seed FUM and Middle office and Technology and other fi
Slide 14: Continued track record of earnings growth
Continued track record of earnings growth 8 The strength of our platform and award-winning brands generates material earnings growth for our shareholders NPAT growth: 2016 - 2021 EPS growth: 2016 - 2021 CAGR (five years): 63.1% CAGR (five years): 47.7% Fully franked dividends have grown at a CAGR of
Slide 15: Pinnacle continues to grow strongly, through varying market conditions
Pinnacle continues to grow strongly, through varying market conditions 9 • Whilst growth in FUM and profitability were suppressed in FY20 due to the impacts of the COVID-19 crisis on markets and our business, Pinnacle has grown strongly, on average, over the 2½ year period to 31 December 2021, which
Slide 16: Investment performance
Investment performance 10 Our industry leading portfolio of high performing Affiliates continues to outperform benchmarks and provides an engine for continued FUM growth and performance fee generation Affiliate fund outperformance over benchmarks (alpha) – over 5-year period, p.a. Hyperion Global Gr
Slide 17: Funds under management
Funds under management 11 Gross FUM ($bn) 1 • FUM has grown at a CAGR of 26.0% p.a. over the last ten years (24.5% excluding $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021) • Equities markets were up in 1H FY22: • S&P/ASX 300 index up 2.0% •
Slide 18: Performance fees
Performance fees 12 18 strategies with the potential to crystalise performance fees in FY22 – delivering uncorrelated opportunities to drive a diverse base of growth Closing FUM & number of strategies subject to performance fees • The volume of FUM with performance fee potential continues to 5 6 8 1
Slide 19: Diversification -> increased resilience
Diversification -> increased resilience 13 A broadly diversified platform in place to move ahead with sustained growth 1H FY22 FUM by Affiliate (%) 1H FY22 FUM by Asset Class (%) 31 Dec 21 Hyperion 9 30 Jun 16 Plato Solaris Resolution Capital 8.00.2 14.0 9 Palisade 7 4 Antipodes Spheria 7.1 10.9 24
Slide 20: Major industry awards
14 Major industry awards 2021 Zenith Fund 2021 Money Management 2021 Morningstar Fund Awards: Fund Manager of the Manager of the Year Year: Awards: • Metrics – Listed Entities Category • Hyperion – Fund Manager Of The • Hyperion – Australian Fund Manager Winner Year Winner of the Year • Firetrail -
Slide 21: Financial Performance
02 Financial Performance Dan Longan
Slide 22: 1H FY22 financial results
1H FY22 financial results 16 H1 FY22 ($M) H1 FY21 ($M) % Change PINNACLE • NPAT attributable to shareholders of $40.1m (+32% on 1H FY21 (PCP)) 1 Revenue 21.6 14.4 50% Performance fees earned by Pinnacle Affiliates, post-tax, Expenses 2,3 • (19.0) (15.9) 19% contributed $6.4m of Pinnacle’s NPAT in 1H
Slide 23: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 17 Benefits of embedded operating leverage clearly emerging, notwithstanding continuing 'Horizon 2' investment both within Affiliates and in Pinnacle Revenue (Pinnacle and Affiliates) 1 Affiliate NPAT margins continuing to strengthen 450 Affiliate perfo
Slide 24: Balance sheet
Balance sheet 18 • Cash and PI of $176.4m • Includes $147.0m invested in strategies managed by Pinnacle Affiliates Excludes $11.9m of cash applied for Affiliate equity Balance sheet table • recycling loans, working capital loans and additional Affiliate equity purchased • CBA facility of $100m fully
Slide 25: Market Update – Institutional and International
03 Market Update – Institutional and International Andrew Chambers
Slide 26: Institutional & international
Institutional & international 20 Institutional and international client base was enlarged and further diversified in 1H FY22 • 260+ individual institutional clients at 31 December 2021 • ~230 at 30 June 2021 • ~190 at 31 December 2020 • ~60 at 30 June 2016 • Top 20 institutional clients by FUM are i
Slide 27: Institutional market - Australia
Institutional market - Australia 21 1H FY22 Australian gross inflows were higher than PCP however this was offset by portfolio rebalancing away from rallying equity markets and a lumpy, ‘passive' FUM loss. Our domestic sales pipeline outlook remains positive Summary Outlook • 1H FY22 Australian gros
Slide 28: Institutional market - international
Institutional market - international 22 International inflows maintaining positive momentum in 1H FY22 Summary Outlook • ~$11bn international FUM • International sales pipeline continues to build across Aikya global emerging market equities • 37 countries • Antipodes global value equities • $850m ne
Slide 29: Market Update – Retail
04 Market Update – Retail Ramsin Jajoo
Slide 30: Retail update
Retail update 24 Record 1H retail flows achieved on the back of strong investment performance, research ratings, consultants’ allocations, continued lift in sales activities and high-performance operating model • Record retail net flows of $2.9bn achieved in H1 FY22 (vs $1.9bn PCP) • 10,013 advisers
Slide 31: Retail update
Retail update 25 • Finetuning Engagement and Communications to earn a larger share of voice with increasingly time-poor advisers/investors • Development of on-site studio and multimedia production facilities underway along with recruitment of video production specialists • Digital and video content
Slide 32: Retail - listed solutions update
Retail - listed solutions update 26 $4bn1 of FUM in eight listed vehicles spanning most asset classes across > 70 000 underlying investors • ETF penetration has a long runway ahead in Australia: • ETF FUM of $134bn is 4% of unlisted managed fund FUM in Australia vs 25% in the US2 • Active ETF FUM of
Slide 33: Retail FUM evolution
Growth in retail FUM 27 Retail FUM evolution 8.6x Total FUM 30 June 13: $10.9bn Total FUM 31 Dec 2021: $93.6bn Retail: $0.9bn Retail: $23.8bn 26.4x 8% Retail 25% Retail 92% institutional 75% Institutional • Pinnacle has invested significantly in retail distribution and has generated substantial reta
Slide 34: 1H FY Retail Net Flows and Top 5 Affiliate Contributions
Strong YoY growth from multiple Affiliates and strategies 28 1H FY Retail Net Flows and Top 5 Affiliate Contributions $4,000,000,000 $2.9bn $3,500,000,000 $3,000,000,000 $2,500,000,000 $1.9bn $2,000,000,000 $1,500,000,000 $0.9bn $1,000,000,000 $500,000,000 $0 -$500,000,000 -$1,000,000,000 1H FY20 1H
Slide 35: Extended COVID-19 lockdown(s) - 130%+ lift in retail sales activity
Extended COVID-19 lockdown(s) - 130%+ lift in retail sales activity 29 Source: Salesforce, Pinnacle Retail
Slide 36: Large and diversified footprint across the intermediated channel
Large and diversified footprint across the intermediated (wealth management) channel 30 84% of net flows sourced outside Top 20 clients $510 m 16% of net flows sourced from Net flows from Top 20 Wealth Top 20 clients Mgt Clients $2.7bn Net flows across retail funds in 1H FY22 Source: Salesforce, Pin
Slide 37: Research ratings and consultants' support drive future flows
Research ratings and consultants’ support are key factors that drive future flows1 31 Lonsec Research Morningstar • Antipodes Global Fund – Long - Recommended • Resolution Capital Global Property Securities Fund – Gold • Firetrail Absolute Return Fund - Highly Recommended • Solaris Core Australian E
Slide 38: Expanded retail platform
Expanded retail platform 32 21,300+ Advisers 1,050+ Researchers 150+ Consultants 1,000+ Brokers Source: Pinnacle, Salesforce & Pardot
Slide 39: New digital marketing approaches to overcome 'digital fatigue'
New digital marketing approaches to overcome ‘digital fatigue’ 33 Email version testing is enabling our On-demand ‘Netflix-style’ event hub helps content to break through the clutter drive record attendance at Pinnacle’s Multi-Affiliate Annual Virtual Summit • A/B testing experiments are doubling cl
Slide 40: The digital activities continue to nourish the sales engine
The digital activities continue to nourish the sales engine Video Content & Events Email Automation Websites Attendance | Views | Clicks | Page Views Distribution Team Leads Direct Applications
Slide 41: Growth Agenda
05 Growth Agenda Ian Macoun, Managing Director
Slide 42: Three Horizons of growth
Three Horizons of growth 36 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’ • Continue to build Pinnacle by taking a measured approach to growth Horizon
Slide 43: Future growth drivers
Future growth drivers 37 An excellent platform in place to move ahead with sustained growth Distribution Platform Operating Start-Up Affiliates Established Acquisitive Growth Platform Thriving Affiliates Expanding Growth • Investment in (and • Stable / robust, • Develop investment • Investment in ne
Slide 44: Update on international expansion
Update on international expansion 38 • 1st incubation in North America • 1st half 2022 • Global Small Companies and Canadian Equities • Opportunities generated from: Credit, Real Estate, Infrastructure, Global Equity, Quant Equity, High • Trusted industry experts Yield, US Smalls/Micro, Asia/China •
Slide 45: Corporate Responsibility
06 Corporate Responsibility Ian Macoun, Managing Director
Slide 46: Alignment with Sustainable Development Goals
Alignment with Sustainable Development Goals 40 Pinnacle recognises the need for strategies that foster economic development, reduce inequities and transition towards a more sustainable future. By aligning our sustainable initiatives with the UN SDGs and through the support of the Pinnacle Charitabl
Slide 47: Pinnacle Charitable Foundation
41 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 and imp
Slide 48: Pinnacle Charitable Foundation
42 Pinnacle Charitable Foundation • A total of 14 charity partners operating across six core categories are driving long term sustainable, impactful partnerships, with 5 new partnerships initiated in 1H FY22: Mental wellbeing - together with illness prevention and early intervention Sexual, domestic
Slide 49: Conclusion
07 Conclusion Ian Macoun, Managing Director
Slide 50: Pinnacle differentiation
Pinnacle differentiation 44 Australia’s leading ‘multi-affiliate’ investment firm 1. Distinguished from competitors 2. High quality, experienced, 3. All the advantages, benefits and by comprising the highest quality dedicated, passionate superior conditions of a investment management firms investmen
Slide 51: Delivering strategic objectives
Delivering strategic objectives 45 Clear evidence of strategy execution success - growth and resilience simultaneously delivered Objectives Then NOW 30 June 2016: 31 December 2021: Growth in retail distribution – highly diversifying and higher fees $2.6bn, 13% of total $23.8bn, 25% of FUM total FUM
Slide 52: Summary
46 Summary Pinnacle’s diverse Affiliate portfolio and extensive distribution channels provide stability whilst fostering growth opportunities Fundamentals in place • Highly regarded Affiliates with strong local and international investment consultant ratings for sustained sales • Diverse stable of A
Slide 53: Q&A
Q&A
Slide 54: Appendix
Appendix
Slide 55: Continuing strong investment performance of Affiliates to 31 December 2021
49 5Y ( p.a.) 10Y ( p.a.) Inception ( p.a.) Inception date Pinnacle Investment Management Continuing strong Hyper ion A sset Management - G r oss Per for manc e Hyperion Australian Growth Companies Fund 18.18% 17.77% 14.06% 1/ 10/ 2002 Outperformance investment performance of Hyperion Small Growth C
Slide 56: Affiliates' investment performance
50 1Y 3Y ( p.a.) 5Y ( p.a.) 10Y ( p.a.) Inception ( p.a.) Inception date Pinnacle Investment Management Hyper ion A sset Management - G r oss Per for manc e Hyperion Australian Growth Companies Fund 17.44% 27.49% 18.18% 17.77% 14.06% 1/ 10/ 2002 Outperformance - 0.10% 13.53% 8.24% 6.98% 4.65% Hyperi
Slide 57: Affiliates' investment performance
51 1Y 3Y ( p.a.) 5Y ( p.a.) 10Y ( p.a.) Inception ( p.a.) Inception date Pinnacle Investment Management Fir et r ail Invest ment s - Gr oss Per for manc e Affiliates’ investment Firetrail Australian High Conviction Fund Outperformance 19.85% 2.62% 14.96% 1.34% 8.96% - 1.09% 14/ 03/ 2018 performance
Slide 58: 1H FY22 funds under management
1H FY22 funds under management 52 Pinnacle Hyperion Plato Solaris RCL Palisade Antipodes Spheria Two Trees Firetrail Metrics 4 Omega 3,5 Longwave Riparian Coolabah Reminiscent Aikya Five V 6 (total) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m)1 ($m)1 ($m) ($m) ($m)2 ($m) ($m) ($m) FUM Hist
Slide 59: Pinnacle Affiliates continue to win major industry awards
53 Pinnacle Affiliates continue to win major industry awards 2021 Australian Alternative Investment Awards: 2019 Zenith Fund Awards: Metrics – Best 2021 Private Debt Fund Pinnacle – Distributor of the Year Winner (fourth consecutive year) • Pinnacle – Best 2021 Investor Supporting Australian Alterna
Slide 60: Affiliate commitment to ESG
Affiliate commitment to ESG 54 Thirteen Affiliates are signatories to the United Nations supported Principles of Responsible Investment (“PRI”): Incorporate ESG into Affiliate Signatory to PRI Have an ESG policy Investment process Aikya Yes Yes Yes Antipodes Yes Yes Yes Coolabah Yes Yes Yes Firetrai
Slide 61: Pinnacle Affiliates
Pinnacle Affiliates 55 Global Emerging Market Equities • High quality • Absolute return • Concentrated portfolio • Long term sustainable growth • Stewardship and Sustainability • Headquartered in London, United Kingdom Global, Asian and Emerging Markets equities • ‘Pragmatic value’ investment approa
Slide 62: Pinnacle Affiliates
Pinnacle Affiliates 56 Australian, Global, Small Cap & Long/Short Equities • Deep fundamental research approach consistently applied for 15+ years • Experts in high conviction investing • Focused on generating alpha from stock selection, whilst reducing exposure to unintended macroeconomic or themat
Slide 63: Pinnacle Affiliates
Pinnacle Affiliates 57 Canadian and Global Small Cap Equities • Idiosyncratic approach to small caps in a conviction-based manner • Bottom-up process resulting a in a concentrated, high-conviction portfolio • Headquartered in Toronto, Canada Australian Small Cap Quality Equities • Quantamental appro
Slide 64: Pinnacle Affiliates
Pinnacle Affiliates 58 Australasian Private Infrastructure • Mid-Market focus results in better acquisition multiples and portfolio yield • Actively involved in the operational management and governance of the assets unlocks embedded value • Owns airports, seaports, portside bulk liquid storage, gas
Slide 65: Pinnacle Affiliates
Pinnacle Affiliates 59 Australasian Private Agriculture, Food & Water • Real 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 infrastruc
Slide 66: Pinnacle Affiliates
Pinnacle Affiliates 60 Systematic Global Macro • Former GMO SGM team • Competitive edge is the novel way in which the firm fuses together a deep philosophical understanding of financial economics with rigorous scientific techniques for forecasting returns, volatility and correlations and the way in
Slide 67: Disclaimer
Disclaimer 61 Lonsec Research The Lonsec Ratings presented in this document are published by Lonsec Research presented in this document are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445. The Ratings are limited to "General Advice" (as defined in the Corporations Act 2001 (Cth))
Pinnacle Investment Management Group — Investor Presentation (February 2022) on 6ix