Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Investor Presentation (July 2018)
49 slides from Pinnacle Investment Management's investor presentation, Jul 24, 2018
Slide 1: Pinnacle Investment Management Group Limited
Pinnacle Investment Management Group Limited 24 July 2018
Slide 2: Important notice and disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer This presentation is issued by Pinnacle Investment Management Group Limited (ACN 100 325 184) (“Company” or “Pinnacle”). This presentation has been prepared by the Company in relation to an institutional placement (
Slide 3: Important notice and disclaimer (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer (cont.) To the extent that this presentation contains forward-looking information, the forward-looking information is subject to a number of risk factors. Any such forward-looking statement also inherently involves
Slide 4: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda Pinnacle overview and FY18 trading update 6 Metrics Credit Partners Acquisition 15 Omega Global Investors Acquisition 21 Pinnacle outlook and deployment of prior capital 23 Capital raising key terms and dates 26 Appendix A. Key risks and se
Slide 5: Introduction
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Introduction ▪ Pinnacle today announces an FY18 trading update and an institutional placement of $60m of new shares (“Placement”) (“New Shares”) ▪ Pinnacle expects to report the following results for the 12 months ended 30 June 2018: - NPAT from c
Slide 6: Pinnacle overview and FY18 trading update
Pinnacle overview and FY18 trading update 6
Slide 7: Pinnacle overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Pinnacle overview ▪ Pinnacle is an investment management firm providing affiliated investment managers with distribution, infrastructure and other support services ▪ Founded in 2006, Pinnacle currently holds an equity interest in nine specialist i
Slide 8: Australia's leading multi-affiliate investment management firm
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Australia’s leading “multi-affiliate” investment management firm Structure promotes independence, accountability, focus and longevity • Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests • Equity ownership enhanc
Slide 9: Funds under management by Affiliate
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Funds under management by Affiliate Gross FUM by affiliate ($m) Pinnacle Hyperion Plato Solaris Resolution Palisade Antipodes Spheria Two Trees Firetrail Date (total) Capital 30 Jun 18 38,032 6,507 4,918 8,319 8,038 1,847 7,554 702 71 74 31 Dec 17
Slide 10: Demonstrated growth track record
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Demonstrated growth track record Gross FUM ($bn)(1) Affiliate revenues ($m)(2,3) 168.4 FY15-FY18 CAGR: +33% 38.0 FY15-FY18 CAGR: +33% 128.3 26.5 92.8 19.8 72.0 16.1 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Pinnacle share of Affiliates’ NPAT ($m)(2,
Slide 11: FY18 funds under management
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES FY18 funds under management Gross FUM growth ($bn)(1) 40 38.0 5-yr CAGR: +28.4% ▪ Current FUM of $38.0bn as at 30 June 2018 35 10-yr CAGR: +27.0% 7.8 ▪ FUM has grown at a CAGR of 27.0% p.a. over the last ten years 30 ▪ Increase in FUM of $5.7bn in
Slide 12: FY18 trading update
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES FY18 trading update Aggregate affiliate revenues ($m)(1) 180 168.4 Affiliate performance fees - 100% 160 Affiliate revenues - 100% (excl. performance fees) 17.2 ▪ Pinnacle expects to report the following results for the 12 months ended 30 June 201
Slide 13: Focus on managing the business to maximise profits and company value
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Focus on managing the business to maximise profits and company value over the medium term ▪ We continue to build Pinnacle by taking a measured approach to growth - Support growth of our current affiliates with increased investment in distribution
Slide 14: Strong growth track record
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Strong growth track record Affiliate gross FUM evolution 30 Jun 13: $10.9bn 30 Jun 18: $38.0bn Spheria Firetrail Two Trees 1.8% 0.2% 0.2% ▪ Addition of a number of new affiliates including Palisade 6.7% Hyperion Antipodes, Spheria, Two Trees and F
Slide 15: Metrics Credit Partners acquisition
Metrics Credit Partners acquisition 15
Slide 16: Transaction overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction overview ▪ Building on Pinnacle’s existing distribution partnership with MCP, Pinnacle has agreed to acquire a 35% interest in MCP - Subject to various conditions precedent, including completion of the Placement by Pinnacle - Remaining
Slide 17: Strategic rationale
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Strategic rationale ▪ Four partners with over 100 years of combined credit experience and 18 employees High quality ▪ MCP has lent $4.6bn across 172 transactions since June 2013 management ▪ All MCP strategies have exceeded their investment object
Slide 18: MCP overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES MCP overview FUM growth (FY13–FY18)(1) 2.5 ▪ MCP is a Sydney-based alternative asset manager specialising 5-yr CAGR: +101% 0.8 in private debt, fixed income and capital markets ▪ Assets under management (“AUM”) of $3.0bn as at 30 June 2018 of whic
Slide 19: Market opportunity: private debt
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Market opportunity: private debt ▪ Australian corporate loan market is large (+$700bn)(1) Large Market ▪ Large volume of annual issuance (+$100bn)(1) ▪ Banks have historically funded corporate Australia on their own balance sheets Regulatory Chang
Slide 20: MCP growth outlook
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES MCP growth outlook ▪ MCP continue to see significant opportunity for FUM growth in the private debt market ▪ MCP intends to continue to grow its FUM in its existing strategies (i.e. Australian senior loans, secured private debt and real estate deb
Slide 21: Omega Global Investors acquisition
Omega Global Investors acquisition 21
Slide 22: Omega: purchase of 40% equity stake
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Omega: purchase of 40% equity stake Overview and rationale Omega - Investment strategies ▪ Proposed acquisition of 40% equity interest with founders retaining majority stake ▪ $2m upfront consideration and up to $2m earn-out subject to profitabili
Slide 23: Pinnacle outlook and deployment of prior capital
Pinnacle outlook and deployment of prior capital 23
Slide 24: Pinnacle outlook
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Pinnacle outlook ▪ Strong momentum going into FY19 - Acquisition of MCP equity interest, expected to grow strongly - Acquisition of Omega equity interest, ETF initiative being pursued - Further affiliates in the pipeline, expect activity 1H FY19 -
Slide 25: Deployment of $30m equity raised in January 2017
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Deployment of $30m equity raised in January 2017 ▪ Almost $10m deployed in recycling of Palisade equity: - Purchased shares for future recycling and made loans to Palisade Executives to purchase shares - Purchased 4.3% of Palisade and already recy
Slide 26: Capital raising key terms and dates
Capital raising key terms and dates 26
Slide 27: Overview of capital raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of capital raising Placement ▪ Pinnacle is conducting a Placement of $60.0m (10.9m shares) ▪ The Placement price of $5.50 represents: - A discount of 3.0% to Pinnacle’s closing share price on 23 July 2018 of $5.67 per share - A discount o
Slide 28: Sources and uses
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Sources and uses Sources Uses Source A$m Use A$m Placement proceeds 60.0 MCP equity investment 46.0 Total sources 60.0 Omega up front consideration1 2.0 Equity raising costs 2.3 ▪ Any additional proceeds raised under the non- underwritten SPP will
Slide 29: Placement indicative timetable
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Indicative timetable Event Date Trading halt and announcement of Placement and SPP Tuesday, 24 July 2018 Placement bookbuild Tuesday, 24 July 2018 Placement Trading halt lifted and Pinnacle shares recommence trading on ASX Wednesday, 25 July 2018
Slide 30: Appendix A: Key risks and international offer jurisdictions
Appendix A Key risks and international offer jurisdictions 30
Slide 31: Acquisition and company risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition and company risks This section discusses some of the specific risks associated with an investment in Pinnacle. There are also a number of general risks, such as global economic conditions, share price fluctuations and force majeure eve
Slide 32: Acquisition and company risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition and company risks(cont.) Acquisition specific risk factors (continued) Pinnacle undertook a due diligence process in respect of the proposed investments in Metrics Credit Partners and Omega (the “Acquisitions”), which relied in part on
Slide 33: Acquisition and company risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition and company risks(cont.) Specific risks related to Metrics Credit Partners and Omega (continued) Metrics Credit Partners has approximately A$2.5 billion of FUM and Omega has approximately A$4.2 billion of FUM. Metrics Credit Partners a
Slide 34: Acquisition and company risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition and company risks(cont.) Specific risks related to Metrics Credit Partners and Omega (continued) After completion of the Acquisitions, there is no guarantee that the respective growth strategy of each of Metrics Credit Partners and Ome
Slide 35: Acquisition and company risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition and company risks(cont.) Company specific risk factors (continued) The industry in which Pinnacle operates is very competitive. There are a number of market participants that compete vigorously for client investments and the provision
Slide 36: Acquisition and company risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition and company risks(cont.) Company specific risk factors (continued) As Pinnacle is a minority shareholder in its Affiliates, it may not independently, among other things, cast the Limited ownership majority of votes at a general meeting
Slide 37: Acquisition and company risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition and company risks(cont.) Company specific risk factors (continued) Key to the strategy and operating and financial performance of Pinnacle and its Affiliates is the ability to attract and retain Key Staff with appropriate levels of fun
Slide 38: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person,
Slide 39: International offer restrictions (continued)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions (continued) Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Acc
Slide 40: Appendix B: Additional information
Appendix B Additional information 40
Slide 41: Illustrative example of MCP revenue model
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Illustrative example of MCP revenue model Fund manager Management fees paid from fund to Metrics Management services Management fee: Determined by the terms of the trust deeds and (e.g. portfolio construction, asset origination, due management agr
Slide 42: Overview of Pinnacle Affiliates
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of Pinnacle Affiliates ▪ Antipodes Partners – a pragmatic value manager of global equities (long only and long-short) - Funds under management have grown to in excess of $7.6bn in under 3 years ▪ Firetrail Investments – high conviction in
Slide 43: Overview of Pinnacle Affiliates (continued)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of Pinnacle Affiliates (continued) ▪ Resolution Capital – a specialist manager of Australian and Global listed real estate securities portfolios - Funds under management has grown to more than $8.0bn ▪ Solaris Investment Management – a sp
Slide 44: Firetrail investments
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Firetrail investments ▪ Business established ▪ Team of 11 in place and investment process commenced ▪ Initial strategies - High Conviction - Absolute Return ▪ Expecting net inflows in excess of $1bn in Q1 (by 30 September 2018) ▪ Highly Recommende
Slide 45: Affiliate updates
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Affiliate updates ▪ Antipodes: addition to the Colonial First Choice platform as a stand alone option; demand for Antipodes EQMF ▪ Hyperion: Global Equity strategy ranked No 1 for 1 year and 3 years to 31 May 2018 in the Morningstar Institutional
Slide 46: Pinnacle Affiliates continue to win major industry awards
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Pinnacle Affiliates continue to win major industry awards 2016 Morningstar Fund Manager of the Year Awards: ▪ Hyperion – Australian Fund Manager of the Year ▪ Hyperion – Domestic Equities Category Winner, Australia ▪ Hyperion – Domestic Equities S
Slide 47: Continuing strong investment performance of Affiliates
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Continuing strong investment performance of Affiliates 100% of Pinnacle Affiliated Investment Manager strategies and products (with a track record exceeding 5 years) have out performed their benchmarks over the 5 years to 30 June 2018 5Y 10Y Incep
Slide 48: Affiliates' investment performance
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Affiliates’ investment performance 1Y 3Y 5Y 10Y Inception Inception date Hyperion As s et Management - Gros s Performance Hyperion Australian Growth Companies Fund 16.25% 12.98% 13.74% 11.98% 12.73% 1/10/2002 Outperformance 3.01% 3.84% 3.75% 5.70%
Slide 49: Affiliates' investment performance
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Affiliates’ investment performance 1Y 3Y 5Y 10Y Inception Inception date Antipodes Partners - Gros s Performance Global Fund 13.59% 14.57% 14.57% 1/07/2015 Outperformance -1.36% 4.96% 4.96% Global Long Only 18.79% 16.16% 16.16% 1/07/2015 Outperfor
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