Partners Group Holding Ag · SIX:PGHN
Partners — Investor Presentation (September 2024)
77 slides from Partners's investor presentation, September 2024
Slide 1: Update on Partners Group
Update on Partners Group September 2024 For Institutional Use Only – Not for Public Distribution For Institutional Use Only – Not for Public Distribution
Slide 2: Table of contents
2 Table of contents 1 Overview - Partners Group 2 Industry update 3 Investments 4 Clients 5 Financials 6 ESG 7 Private markets outlook
Slide 3: Partners Group is one of the largest firms in the private markets industry
Overview - Partners Group 3 Partners Group is one of the largest firms in the private markets industry Total assets under management1 (in USD billion) 149 $149bn assets under management $104bn in bespoke solutions 2 43 5 private markets asset classes 3 11 $220bn invested since foundation 2014 2006 2
Slide 4: Built differently from the rest of the industry
Overview - Partners Group 4 With our heritage in Switzerland and our primary presence in the Americas in Colorado, we are built differently from the rest of the industry Americas Europe Asia-Pacific Thematic We focus our thematic research on growth sectors Toronto New York Denver Houston Seoul Tokyo
Slide 5: We apply our industrial mindset to build market-leading businesses and assets
Overview - Partners Group 5 We apply our industrial mindset to build market-leading businesses and assets that can capitalize on growth trends Across asset classes (invested since inception) Across geographies (invested since inception) Royalties1 Rest of world Real estate n/a 3% 13% Asia-Pacific 10
Slide 6: Our transformational investing approach delivers repeatable performance
Overview - Partners Group 6 Our transformational investing approach delivers repeatable performance Thematic sourcing Entrepreneurial ownership allows us to find winning businesses in high-growth sectors drives value creation tailored to each investment ✓ 3 giga themes and dozens of thematic sectors
Slide 7: Table of contents
7 Table of contents 1 Overview - Partners Group 2 Industry update 3 Investments 4 Clients 5 Financials 6 ESG 7 Private markets outlook
Slide 8: The transaction environment has shown signs of gradual improvement during 2024
Industry update 8 The transaction environment has shown signs of gradual improvement during 2024 Global buyout and IPO volumes (in USD billion)1 North America Europe Improving fundamentals 1'090 Asia-Pacific Rest of World Accessibility to financing 707 +18% Recalibrating valuations IPO transaction v
Slide 9: Realizations within the industry remain low; moderate improvement expected in H2 2024
Industry update 9 Realizations within the industry remain low; moderate improvement is expected to occur during H2 2024 Private equity industry liquidity levels (based on annual realizations in % of NAV)1 50% 45% "86% [of managers] expect a rise in distribution levels in 2024, the 40% majority (72%)
Slide 10: Fewer, more differentiated managers are successfully raising capital
Industry update 10 The changing environment has initiated a period of natural selection; fewer, more differentiated managers are successfully raising capital today Industry fundraising (in USD trillion)1 Private equity Real estate +24% Midpoint of Direct lending guidance2 Secondaries 1.7 Since 2021,
Slide 11: Table of contents
11 Table of contents 1 Overview - Partners Group 2 Industry update 3 Investments 4 Clients 5 Financials 6 ESG 7 Private markets outlook
Slide 12: Thematic investing approach starts with 3 giga themes
Investments 12 Our proprietary and systematic thematic investing approach starts with 3 giga themes 3 Giga Themes Digitization & Automation New Living Decarbonization & Sustainability Dozens of Transformational Trends Democratization of Institutionalization of Self-learning Increasing speed-to- Deve
Slide 13: We translated our thematic pipeline into attractive investment opportunities
Investments 13 We successfully translated our thematic pipeline into attractive investment opportunities for our clients Investments1 H1 2024 Portfolio assets ▪ Secondaries often overweighted in periods of economic Liquid loans 43% 18% recalibration as part of allocation management Equity ▪ Credit v
Slide 14: Investment activity has meaningfully increased in the second half
Investments 14 Investment activity across the platform has meaningfully increased as we entered the second half of the year Total investments 1 1 H1: $9bn infrastructure private equity closed H2: +$6bn a market-leading provider of sustainable decentralized partner to pharma companies for the discove
Slide 15: Private equity: hands-on value creation in growing themes
Investments 15 Private equity: our transformational investing approach drives hands-on value creation in growing themes 2023 performance Realized portfolio outcomes3 11% 33% 32% Revenue growth1 91% of realized portfolio outcomes >2.0x 26% 13% EBITDA growth1 23% 5% EBITDA margin1 4% 4.4% <1.0x 1.0 -
Slide 16: Infrastructure: we build next-generation infrastructure platforms
Investments 16 Infrastructure: we build next-generation infrastructure platforms 2023 performance Realized portfolio outcomes3 11% 41% Revenue growth1 No portfolio realizations 33% <1.0x 15% 23% EBITDA growth1 >150 Value creation initiatives 0% 3% 12.6% <1.0x 1.0 - 2.0x 2.0 - 3.0x 3.0 - 4.0x >4.0x 1
Slide 17: Private credit: strong performance across the direct lending portfolio
Investments 17 Private credit: diligent underwriting coupled with active asset management has led to strong performance across the direct lending portfolio 2023 performance Default rates since Consistent outperformance inception3 through variable conditions4 ~90% 1.53% 1.62% Lower defaults vs. marke
Slide 18: Real estate: NOI growth and improving occupancy rates
Investments 18 Real estate: we mitigated an ongoing disruptive change through our active approach by delivering NOI growth and improving occupancy rates 2023 performance Operational performance remains solid 100% 3-9% +1%pt YoY +6%pt YoY +5%pt NOI1 growth Occupancy rates YoY +3%pt YoY 4% Occupancy i
Slide 19: We will build a dedicated, scalable, multi-sector royalty strategy in 2024
Investments 19 We will build a dedicated, scalable, multi-sector royalty strategy in 2024 Opportunity Strategy Globally scaled Well-established Developing high dedicated offering sectors growth sectors Relative value Cross sector approach strategy Evergreen Pharma $1 trillion Sports & Brands structu
Slide 20: We achieved USD 9 billion in realizations during H1 2024
Investments 20 We achieved USD 9 billion in realizations during H1 2024 Portfolio realizations H1 2024 Portfolio assets 30% ▪ Combined credit, secondaries, and primaries drove realizations (68% of total) Second. & prim. 30% Credit ▪ Direct equity exit activity remains slow but is expected to 38% imp
Slide 21: Most recent exit example: Aavas Financiers
Investments 21 Most recent exit example: Aavas Financiers India Market leader in affordable housing finance focusing on Private equity unbanked and informal income segments of homebuyers in India Thematic conviction ▪ Democratization of financial services ▪ Demographic shifts and population growth i
Slide 22: Table of contents
22 Table of contents 1 Overview - Partners Group 2 Industry update 3 Investments 4 Clients 5 Financials 6 ESG 7 Private markets outlook
Slide 23: We raised USD 11 billion in H1 2024
Clients 23 We raised USD 11 billion in H1 2024; up 39% vs. the same period last year Fundraising by asset class H1 2024 ▪ Private equity: fundraising driven predominantly by private Royalties Private equity wealth and mandates; Direct Equity V completed fundraising Real estate 1% ▪ Private credit: s
Slide 24: H1 2024 client demand driven by tailored private market solutions
Clients 24 Differentiation in the current market is key; H1 2024 client demand was driven by tailored private market solutions Fundraising by program type H1 2024 Traditional ▪ Mandates: solid demand as increasing numbers of private programs markets investors prefer custom solutions 23% Mandates 35%
Slide 25: AuM growth supported by diversified offering
Clients 25 AuM growth supported by diversified offering AuM by asset class H1 2024 AuM by program H1 2024 Real estate 11% Traditional Private equity client programs 51% 31% Mandates 39% Infrastructure 18% $149 $149 billion billion Evergreens Private credit 30% Bespoke 21% client solutions 69% Note:
Slide 26: Leader in innovative private markets client solutions
Clients 26 We are a leader in developing innovative, sophisticated private markets client solutions AuM by client type Private wealth & Number of investment structures managed by Partners Group wealth distribution partners 23% +100 Asset managers, family offices, Public pension banks & others $149 f
Slide 27: Customization and perpetuality of bespoke solutions
Clients 27 Customization and perpetuality of bespoke solutions makes them preferred choice for both clients and Partners Group Illustrative example of program characteristics from a client's perspective Mandates Evergreens Traditional funds Strategic allocation decision Decision to invest in Commitm
Slide 28: Our portfolio solutions are amongst the most sophisticated in the industry
Clients 28 Our portfolio solutions are amongst the most sophisticated in the industry Mandate portfolio (example) Evergreen solution (example) Strategy allocation Asset allocation (Private equity directs, private (IT, healthcare, consumer, equity secondaries, private equity discretionary, industrial
Slide 29: Our track record was built on 20+ years of experience
Clients 29 Our track record was built on 20+ years of experience Success of mandates Success of evergreens ▪ 26 years of experience providing mandate solutions ▪ 23 years experience; over 5 economic cycles ▪ >150 mandates under management ▪ 17 evergreen funds under management ▪ 79% of mandate AuM in
Slide 30: Clients globally diversified; 2024 fundraising guidance confirmed
Clients 30 Our clients are globally diversified; 2024 fundraising guidance confirmed Current AuM split by region (as of 30 June 2024) 2024 fundraising & tail-down guidance ▪ Client demand: +$20 to +25 billion 57% full-year guidance confirmed as 23% transactional market gradually improves 8% 3% 3% ▪
Slide 31: Table of contents
31 Table of contents 1 Overview - Partners Group 2 Industry update 3 Investments 4 Clients 5 Financials 6 ESG 7 Private markets outlook
Slide 32: H1 2024 financials overview
Financials 32 H1 2024 financials overview AuM Management fees Performance fees EBIT margin EBIT (in USD bn) (in CHF m) (in CHF m) (in %) (in CHF m) +5% +4% -39% +0.8%-points -6% 149 815 142 786 Avg. +2% 129 AuM in 644 126 605 CHF 61.2% 62.0% 265 161 25% in % of 17% revenues H1 2023 H1 2024 H1 2023 H
Slide 33: Revenues underpinned by stable contractually recurring management fees
Financials 33 Revenues underpinned by stable contractually recurring management fees Revenues1 (in CHF m) 1'051 977 Revenues ▪ Revenues: growth impacted by performance fees; FX adversely affected 265 161 Performance fees revenue growth by 2% +4% 85 Other revenues & ▪ Management fees: recurring in na
Slide 34: Management fee margin remains solid
Financials 34 Management fee margin remains solid Revenue margin1 2.41% Performance fees Management fees2 1.89% 1.82% 46% 1.74% 1.71% 30% 29% 1.51% 1.51% 1.56% 1.52% Performance 1.36% 1.39% 19% 1.35% 1.36% 1.33% 1.39% 1.38% 24% 17% fees as % of 1.26% 1.25% 1.26% 1.23% 30% 19% 14% total revenues aver
Slide 35: Performance fee outlook reconfirmed
Financials 35 Performance fee outlook reconfirmed Performance fees as % of total revenues ▪ H1 2024: direct private equity assets and 25-40% private credit drove performance fees; Performance fees1 impacted by low transaction volumes 20-30% ▪ 2024: expected to be at around 20% amid 17% more muted ma
Slide 36: Performance fee potential is expected to follow AuM growth
Financials 36 Performance fee potential is expected to follow AuM growth over time $56 billion Direct investments AuM1 (in USD bn) Performance fees (in CHF m) 147 149 Past investments 1500 135 translate 140 into 2015- 127 future performance Direct2 vs. portfolio $10 billion 2019 fee potential Direct
Slide 37: Total operating costs impacted by performance fee-funded expenses
Financials 37 Total operating costs impacted by performance fee-funded expenses From revenues to EBIT (in CHF m) We continue to invest into our future H1 2024 H1 2023 growth at a ~60% EBIT margin Revenues1 977 -7% 1'051 ▪ Total costs: decrease mainly driven by lower Total operating costs, of variabl
Slide 38: Revenues and costs affected by currency movements against the CHF
Financials 38 Revenues and costs affected by EUR or USD movements against the CHF Currency exposure H1 2024 AuM ≈ Management fees1 Total costs2 Others GBP 6% ▪ Appreciation of CHF against the 5% USD and EUR negatively Other EUR impacted revenues by 2% EUR 5% 4% 44% SGD 9% CHF ▪ Year-over-year foreig
Slide 39: Investing for growth at ~60% EBIT margin target
Financials 39 We continue to make investments at ~60% EBIT margin target to support growth EBIT margin development AuM $149 billion 65% 65% 63% 62% 63% 60% 59% 59% 58% 61% 60% 61% 62% ~60% target1 AuM $37 billion 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 H1 2024 1 For all performan
Slide 40: Strong financials, balance sheet, and liquidity
Financials 40 Strong financials, balance sheet, and liquidity From EBIT to profit Balance sheet (in CHF m) (as of 30 June 2024) H1 2024 H1 2023 Revenues1, of which 977 -7% 1'051 2.3 45% Management fees2 815 +4% 786 CHF billion return on Performance fees 161 -39% 265 available liquidity4 equity5 Tota
Slide 41: Strong track record of compounding dividends
Financials 41 Strong track record of compounding dividends Dividend per share Strong dividend track record (in CHF, as of 31 December 2023) (as of 31 December 2023) AuM 50 180 $147 billion 45 1 160 39.00 40 33.00 37.00 140 17% 16 35 dividend growth years of consistent 27.50 120 30 p.a. since 2006 di
Slide 42: Table of contents
42 Table of contents 1 Overview - Partners Group 2 Industry update 3 Investments 4 Clients 5 Financials 6 ESG 7 Private markets outlook
Slide 43: PG released its Sustainability Report in April 2024
ESG 43 PG released its Sustainability Report in April 2024 Full report can be found in "Reports and Presentations" on Partners Group website https://www.partnersgroup.com/en/s hareholders/reports-and- presentations#all Reports & Presentations - Partners Note: For illustrative purposes only. Source:
Slide 44: Committed to sustainability for over 20 years
ESG 44 Partners Group has been committed to sustainability for over 20 years Double materiality assessment: Signature of UN-backed Update to Sustainability Principles for Launch of the 1st global private markets firm Strategy and Policy Responsible Investment LIFE Strategy included in Dow Jones (UN
Slide 45: Highlights from our Sustainability Report 2023
ESG 45 Highlights from our Sustainability Report 2023 Investing in renewables Data & Cybersecurity Portfolio Net Zero >7.5bn USD >90% >60 committed to investing of portfolio companies portfolio companies in renewables have cyber and data- Paris Agreement securities in place aligned Sustainable Lendi
Slide 46: The consolidated approach for sustainability at Partners Group
ESG 46 The consolidated approach for sustainability at Partners Group 2023 2024 Corporate Sustainability Report Sustainability Report Global Reporting Initiative (GRI) TCFD Report Sustainability Accounting Standards Board (SASB) Task Force for Climate-related Financial Sustainability Strategy Disclo
Slide 47: Core elements of our sustainability approach
ESG 47 Core elements to our sustainability approach at corporate and portfolio level Example of a climate topic Material for Firm Topic Firm Portfolio ▪ GHG emissions reduced by 28.8% since 2019 Climate ▪ On target to reach corporate net-zero by Human rights & labour 2030 Talent Diversity, Equity &
Slide 48: Sustainability Strategy – Portfolio (priority topics)
ESG 48 Sustainability Strategy – Portfolio (priority topics) Climate Talent Governance Aligned to ▪ Design tailored employee engagement ▪ Appoint a board responsible for Net Zero Investment Framework strategies and employee incentive sustainability ▪ Measure and report GHG footprint1 initiatives ▪ C
Slide 49: Sustainability strategy – Corporate (priority topics)
ESG 49 Sustainability strategy – Corporate (priority topics) Climate Talent Governance ▪ Measure and externally assure our ▪ Strive for top-quartile employee ▪ Assess sustainability risks and greenhouse gas (GHG) footprint engagement score and equal promotion opportunities as a responsible investor
Slide 50: Table of contents
50 Table of contents 1 Overview - Partners Group 2 Industry update 3 Investments 4 Clients 5 Financials 6 ESG 7 Private markets outlook
Slide 51: The new 'traditional' asset class: financing the economy
Private markets outlook 51 The new 'traditional' asset class: financing the economy Public and private markets have swapped roles as IPOs have shifted away from the real economy 800 85% Transition into new IPO era IPOs as strategic corporate Private markets drive the broader Traditional development
Slide 52: The new 'traditional' asset class: investors' considerations
Private markets outlook 52 The new 'traditional' asset class: investors' considerations As private markets overtake public markets, the private markets investor landscape will significantly develop and transform industry DNA Private markets capital formation has outpaced Private markets at the 1'200
Slide 53: What shapes the private markets investment paradigm in the 'brave new world'?
Private markets outlook 53 What truly shapes the private markets investment paradigm in the 'brave new world'? Recalibration of the macroeconomy? Geopolitics-driven de-globalization? US Inflation and Interbank Rates Over Time1 Geopolitical tensions and increasing What could break under higher-for- p
Slide 54: Is the recalibration of the macroeconomy a game-changer?
Private markets outlook 54 Is the recalibration of the macroeconomy a game-changer? Private markets grow and deliver strong returns across macroeconomic cycles Private Equity Fundraising, USD tn1 Higher financing costs and lower debt availability impact returns… 1'000 25.0% Debt level in the capital
Slide 55: Is geopolitics-driven de-globalization a game-changer?
Private markets outlook 55 Is geopolitics-driven de-globalization a game-changer? World trade has remained quite resilient as Globalization embarked on a profound transformation Global Exports of Goods & Services, USD tn1 30 27 Globalization Isn’t Dead. But It’s Changing. Multinational companies sti
Slide 56: Are labor and demographic dynamics a game-changer?
Private markets outlook 56 Are labor and demographic dynamics a game-changer? Productivity has become the key driver of global growth Employment Contribution (USD tn)1 Over the past two decades, productivity growth Trend is expected to Productivity Contribution (USD tn)1 has become a more than a 2x
Slide 57: Is the next generation of technology a game-changer?
Private markets outlook 57 Is the next generation of technology a game-changer? There are an unusually broad range of perspectives on the potential impact of the new generation of technology AI pioneer says its threat to world Many top business leaders are seriously worried How A.I. can help create
Slide 58: The only constant is the ACCELERATION of change!
Private markets outlook 58 The only constant is the ACCELERATION of change! While it seems widely accepted that the only constant in the economy is change… Constant Transformation Is the Embracing Change as a Constant Embracing The One Constant In New Normal In today’s digitized and interconnected B
Slide 59: Digitization 1.0: digital integration of the global economy
Private markets outlook 59 Digitization 1.0: digital integration of the global economy over the last 25 years Democratization of Digital Connectivity Institutionalization of Computation Power Access to internet, personal computers, smartphones ... …based on server / device-based computation & storag
Slide 60: Digitization 2.0: self-learning autonomy in the global economy
Private markets outlook 60 Digitization 2.0: self-learning autonomy in the global economy in the coming 10-15 years Democratization of Artificial Intelligence Institutionalization of Cloud-Based Computation-aaS Access to deep learning, neural networks, reinforcement learning … …based on distributed
Slide 61: Business process transformation
Private markets outlook 61 Business process transformation AI adoption is here. Organizations are no longer asking whether to add AI capabilities, but Co-pilots and intelligent systems will materially support performance of tasks and processes how they plan to use it August 2023 Personalized co-pilo
Slide 62: Business performance transformation
Private markets outlook 62 Business performance transformation Generative AI, experts assess that technology could achieve human-level performance in some A new generation of systems will provide for the full automation of entire tasks and jobs technical capabilities sooner than previously thought J
Slide 63: Business innovation transformation
Private markets outlook 63 Business innovation transformation Generative AI poses fundamental disruption to Novel scientific methods driving faster innovation will drive radical shifts in business models and the traditional innovation cycle, […] enabling a further transform profit pools rate of chan
Slide 64: Recalling digitization 1.0: major changes across industries
Private markets outlook 64 Recalling digitization 1.0: major changes across industries Democratization of Digital Connectivity Institutionalization of Computation Power Access to internet, personal computers, smartphones ... …based on server / device-based computation & storage, faster CPUs etc. Ind
Slide 65: Recalling digitization 1.0: shifting profit pools
Private markets outlook 65 Recalling digitization 1.0: shifting profit pools Shifting profit pools in the music industry Shifting profit pools in the advertising industry 30 Music Sales by Medium, USD bn1 Share of Global Advertising Spend2 100% 20 75% 50% 10 25% 0% 1998 2000 2002 2004 2006 2008 2010
Slide 66: Recalling digitization 1.0: reshuffling winners & losers
Private markets outlook 66 Recalling digitization 1.0: reshuffling winners & losers Shifting profit pools in the last 25 years led to a major redistribution of winners and losers across the economy Top 10 most valuable companies in the S&P 500 in 1998 vs. 20231 Top 10 1998 Top 10 2023 The redistribu
Slide 67: The impact of the next transformation of the economy
Private markets outlook 67 The impact of the next transformation of the economy All [PG's] mega-themes are impacted by the next transformation of the economy Private Equity Infrastructure and Real Estate Goods & Products Distribution Industrial Food Value Chain Social Infrastructure Public Last Mile
Slide 68: Transformational investing in a transforming economy
Private markets outlook 68 Transformational investing in a transforming economy Over the past 25 years, typical private markets investments would experience ~20% of the total transformation of the economy, requiring an intentional approach to value creation to generate outsized returns Sept Apr Jan
Slide 69: Private markets AuM hypothesis
Private markets outlook 69 Private markets AuM hypothesis Asset Class Breakdown Today1 Investor Demand Over Cycle1 Investment Opportunity At End of Cycle1 Private Equity Private Equity Current Private ~ USD 10 tn AuM ~ USD 15 tn Markets Aum ~ USD 15-20 tn Investment Opportunity Private Infrastructur
Slide 70: Private equity investment opportunity
Private markets outlook 70 Private equity investment opportunity ~ USD 15-20 tn Private Equity investment opportunity ...<5 bn companies increasingly looking to private driven by… ownership … Private Equity AuM, USD tn1 Number of IPOs2 15% ~ 7.5% More Companies Are Going Private Than CAGR CAGR 15-20
Slide 71: Investment opportunity in private infrastructure
Private markets outlook 71 Investment opportunity in private infrastructure ~ USD 4-8 tn Private Infrastructure investment opportunity …the increased need for social infrastructure… driven by… Private Infrastructure AuM, USD tn1 Private markets can play a key role in Post-pandemic, government balanc
Slide 72: Investment opportunity in private real estate
Private markets outlook 72 Investment opportunity in private real estate ~ USD 3-5 tn Private Real Estate investment opportunity ...the workforce transformation... driven by… 1 Private Real Estate AuM, USD tn Private capital needed to transform assets disrupted by work-from-home trends 10% 7-10% U.S
Slide 73: Investment opportunity in private credit
Private markets outlook 73 Investment opportunity in private credit ~ USD 4-8 tn Private Credit investment opportunity driven …shifting structural trends in banking… by… Private Credit AUM, USD tn1 High interest rates, driven by the Unlike most bank loans, private Federal Reserve’s higher-for- credi
Slide 74: Synergetic coexistence between private and public markets
Private markets outlook 74 Synergetic coexistence between private and public markets Public and private markets are becoming increasingly complementary and synergetic Private equity will take on many corporate Private markets are financing the creation Private markets are leading the largest real or
Slide 75: Conclusion
Private markets outlook 75 Conclusion 1 Private markets continue to outgrow 2 The game changer is the next public markets in the Brave New transformation of the economy in World the next 10 to 15 years 3 Transformational investing is 4 Successful private market paramount when the only constant inves
Slide 76: Contacts
76 Contacts Zugerstrasse 57 Philip Sauer Head Corporate Development T +41 41 784 66 60 6341 Baar-Zug philip.sauer@partnersgroup.com Switzerland T +41 41 784 60 00 shareholders@partnersgroup.com www.partnersgroup.com Danica Ruso Corporate Development T +41 41 784 67 67 danica.ruso@partnersgroup.com
Slide 77: Disclaimer
77 Disclaimer NEITHER THE INFORMATION IN THIS DOCUMENT NOR ANY RELATED MATERIALS MAY BE TAKEN OR TRANSMITTED INTO THE UNITED STATES OR DISTRIBUTED OR REDISTRIBUTED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN. This presentation is strictly confidential to the recipient a
Partners Group Holding — Investor Presentation (September 2024) on 6ix