Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Investor Presentation (August 2023)
69 slides from Pinnacle Investment Management's investor presentation, Aug 2, 2023
Slide 1: FY2023 financial results ASX announcement
2nd August 2023 By Electronic Lodgement Market Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Pinnacle Investment Management Group Limited (ASX: PNI) FY2023 financial results Pinnacle Investment Management Group Limited (PNI) is pleased to advise shareholders that the h
Slide 2: FY23 highlights and management commentary
> Continued Affiliate medium-term outperformance – 81% of 5-Year Affiliate strategies have outperformed as at 30 June 2023 > Cash and Principal Investments of $187.2 million at 30 June 2023. Facility from CBA of $120.0 million fully drawn down. $100.0 million of the facility invested into liquid fun
Slide 3: Composition of Group Results
Composition of Group Results The profit after tax attributable to shareholders for FY23 was $76.5 million, representing diluted earnings per share of 39.0 cents compared with 39.5 cents per share in FY22. Pinnacle’s share of net profit after tax from its equity interests in Affiliates was $67.4 mill
Slide 4: Results footnotes
1. Includes dividends and distributions received on PI. These were $6.1m in FY23, compared with $3.9m in FY22 2. Includes interest cost on the CBA facility of $5.9m in FY23 ($2.2m in FY22) and amortization of the PL8 offer costs of $0.2m in FY23 ($0.9m in FY22) 3. Includes mark-to-market and realize
Slide 5: FUM Update
FUM Update The FUM of the fifteen PNI Affiliates as at 30 June 2023 was $91.9 billion, at 100%, reflecting: > an increase in FUM of $8.7 billion or 10% during 2H FY23, comprising net inflows of $3.1 billion and increases due to market movements/investment performance of $5.6 billion > an increase in
Slide 6: Retail FUM Update
Retail FUM Update Retail FUM stood at $22.7 billion at 30 June 2023: > an increase in FUM of $1.9 billion or 9% during 2H FY23, comprising net inflows of $0.3 billion and increases due to market movements/investment performance of $1.6 billion > an increase in FUM of $1.6 billion or 8% during FY23,
Slide 7: Dividend
Dividend The Board has resolved to pay a fully franked final dividend per share of 20.4 cents (up 17% from the fully franked FY22 final dividend of 17.5 cents), to shareholders recorded on the register on 29 August 2023 and payable on 15 September 2023, taking total fully franked dividends for the f
Slide 8: FY23 Results Presentation
PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) FY23 RESULTS PRESENTATION 2 nd August 2023
Slide 9: Disclaimer
Pinnacle Investment Management Group Limited (PNI) 2 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 August 2023. PNI has prepared this presentation based on information available to
Slide 10: 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 11: Introduction and Highlights
01 Introduction and Highlights Ian Macoun, Managing Director
Slide 12: 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 • Strong performance rebound across multiple Affi
Slide 13: FY23 Themes: diversified platform and performance rebound
FY23 Themes 6 1. Benefits of Pinnacle’s diversified platform continue to be demonstrated • Diversified 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 volati
Slide 14: FY23 Themes: Horizon 2 investment program
FY23 Themes 7 5. Horizon 2 investment program continued and set to deliver future growth, within Pinnacle and Affiliates – significant, short-term profit impacts • Pinnacle and Affiliates have continued to invest – will drive strategic growth over the medium term • Short-term profit impact in FY23 (
Slide 15: 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 16: 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 CAGR (five years to CAGR (five years to 27.1% 24.2% 30
Slide 17: 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 strategies outperformance over benchmarks (alpha) – over 5-year period, p.a. Spheria Aust
Slide 18: Pinnacle has a diversified Affiliate platform
Pinnacle has a diversified Affiliate platform 11 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 f
Slide 19: Track record of earnings growth throughout market cycles
Track record of earnings growth throughout market cycles 12 • Pinnacle Affiliate revenues are linked, in part, to movements in equity markets. Whilst markets ended the year predominantly in positive territory, there was significant volatility throughout, with REIT markets in particular remaining und
Slide 20: Performance fees
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: 5 6 8 14 18 18 22 24
Slide 21: 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 Of particular no
Slide 22: Funds under management
Funds under management 15 Gross FUM ($bn) 1 • FUM has grown at a CAGR of 23.8% p.a. over the last ten years (22.2% excluding $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021) • Markets were mixed over FY23: • S&P/ASX 300 index up 9.4% • MSCI W
Slide 23: Diversification and resilience of core earnings
Diversification resilience of core earnings 16 A broadly diversified platform in place to move ahead with sustained growth Change in FUM by Asset Class (%) 30 Jun 23 FY23 FUM by Affiliate (%) 1 13% 30 Jun 16 1.6 Resolution Capital 8% 1.6 1.5 0.4 7 41% 3.6 Hyperion 24 4% Plato 2 67 7.7 Metrics 16%
Slide 24: Financial Performance
02 Financial Performance Dan Longan
Slide 25: Continued industry awards
Continued industry awards 18 2023 Financial 2023 Money Management 2022 Zenith Fund 2022 Financial Standard Newswire/SQM Research Annual Fund Manager of Awards: Investment Leadership Fund Manager Awards: the Year Awards, Awards 2022: partnering with Lonsec: • Resolution Capital - Global Real • Hyperi
Slide 26: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 19 Continuing improvement in average base rate fees and client diversity; Horizon 2 investment in growth initiatives moderates profits in the short term, but will drive strategic growth through the cycle Revenue (Pinnacle and Affiliates) 1 • Total Affil
Slide 27: FY23 financial results
FY23 financial results 20 FY23 ($M) FY22 ($M) % Change • NPAT attributable to shareholders of $76.5m (marginal increase on PINNACLE FY22) Revenue1 45.5 46.0 -1% • Performance fees earned by Pinnacle Affiliates, post-tax, 2,3 contributed $14.7m of Pinnacle’s NPAT in FY23 ($16.6m in FY22) Expenses (36
Slide 28: Balance sheet
Balance sheet 21 30 Jun 2023 ($M) 30 Jun 2022 ($M) Change • Cash and PI of $187.2m CURRENT ASSETS Cash and cash equivalents 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 f
Slide 29: Market Update – Institutional & International
03 Market Update – Institutional & International Andrew Chambers
Slide 30: 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 2H 23 • $420m net flows in 2H 23 • Robust 2H inflows into Australian equities off
Slide 31: Institutional & International: Market Outlook
Institutional & International: Market Outlook 24 Robust sales pipeline, diverse demand Australia International • Australian equities (large & small cap) • Global emerging market equites • Global value equities • Global value equities • Global emerging market equities • Global small caps • Public bon
Slide 32: Market Update – Wholesale & Retail
04 Market Update – Wholesale & Retail Kyle Macintyre
Slide 33: 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 Global equities • Outflows elevated in FY23 • Global equities have experienced elevated outflows with a risk off sentim
Slide 34: Wholesale & Retail: Market Outlook
Wholesale & Retail: Market Outlook 27 Pinnacle is well positioned to meet the evolving needs of Australian investors Pinnacle affiliated private asset managers • Investor demand for private assets is driving innovation • Strong demand for private assets in the wholesale market • Attractive risk adju
Slide 35: Growth Agenda
05 Growth Agenda Ian Macoun, Managing Director
Slide 36: 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 37: 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 38: 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 Examples of previous Hor
Slide 39: 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 Horizon 2 initiatives, within Pinnacle, include: • Su
Slide 40: Horizon 2 – broad range of diversified initiatives
33 Horizon 2 – broad range of diversified initiatives Examples of previous Horizon 2 initiatives, within Affiliates, include: • Hyperion Global Equity, Palisade Renewable Infrastructure, Plato Australian Income, ResCap Global REITS, Solaris Equity Long/Short Current initiatives, within Affiliates, i
Slide 41: Horizon 2 – 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 42: Horizon – International
35 Horizon 2 – International Incubations remain a highly attractive investment proposition for Pinnacle. We are continuing to look to incubate more outside of Australia and leverage off the operational infrastructure we have developed in the UK/Europe and in Canada Aikya (London) • Commenced 2020 •
Slide 43: Horizon – Metrics
Horizon 2 - Metrics 36 Metrics continues to invest heavily to further diversify and grow their business and create additional origination capability • Metrics has +120 employees including 70+ origination professionals located in Sydney, Melbourne and Auckland • Metrics also continues to diversify an
Slide 44: Horizon – Metrics profit impact
Horizon 2 - Metrics 37 Metrics continues to invest heavily to further diversify and grow their business and create additional origination capability • Metrics’ profit in FY23, particularly 2H, was negatively impacted by these Horizon 2 investments, as well as the impact of consolidating Payright: •
Slide 45: Horizon 3 – Five V Capital acquisition
38 Horizon 3 • Our most recent Horizon 3 transaction was the acquisition of a 25% interest in private equity and venture capital firm Five V Capital in December 2021. Since acquisition: • Expanded team to over 30 professionals; enlarged buyout team and established New Zealand team • Launched Five V
Slide 46: Corporate Responsibility
06 Corporate Responsibility Ian Macoun, Managing Director
Slide 47: Our Sustainability Strategy
Our Sustainability Strategy 40 We 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 partners
Slide 48: Our GHG Emissions Breakdown
Our GHG Emissions Breakdown 41 Our business activities, guided by our strategy and climate goals have supported a 15% reduction in total emissions since our FY20 base year. We enhanced our GHG emission reduction target. 800.0 14.00 We set an intensity target to reduce our tonnes of CO2-e emitted per
Slide 49: 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, sustai
Slide 50: Pinnacle Charitable Foundation donations
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. Support was also provided for initiatives al
Slide 51: Pinnacle Charitable Foundation partnerships
Pinnacle Charitable Foundation 44 • Multiple partnerships with 14 NFPs are driving long term sustainable impact across six core categories: Mental wellbeing – supporting positive mental health together with illness prevention and early intervention Sexual, domestic and family violence – facilitating
Slide 52: Conclusion
07 Conclusion Ian Macoun, Managing Director
Slide 53: Pinnacle differentiation
Pinnacle differentiation 46 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 54: Summary
Summary 47 Pinnacle’s diverse Affiliate stable and extensive distribution channels fosters resilience and growth Fundamentals in place • Highly regarded Affiliates with strong local and international investment consultant and research house ratings for organic sales growth • Diverse stable of Affili
Slide 55: Q&A
Q&A
Slide 56: Appendix
Appendix
Slide 57: Continuing strong investment performance of Affiliates
50 Inception Inception 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment Management Hyperion Asset Management - Gross Performance Continuing strong Hyperion Australian Growth Companies Fund 9.92% 11.81% 12.09% 1/10/2002 Outperformance 2.80% 3.26% 3.26% investment performance of Hyperion Small Gro
Slide 58: Continuing strong investment performance of Affiliates
51 Inception Inception 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment Management Spheria Asset Management - Gross Performance Continuing strong Spheria Australian Microcap Fund 14.65% 15.73% 16/05/2016 investment performance of Outperformance Spheria Australian Smaller Companies Fund 12.39% 7.
Slide 59: Affiliates' investment performance
52 Inception Inception 1Y 3Y (p.a.) 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment Management Hyperion Asset Management - Gross Performance Hyperion Australian Growth Companies Fund 22.21% 8.13% 9.92% 11.81% 12.09% 1/10/2002 Outperformance 7.81% -2.94% 2.80% 3.26% 3.26% Hyperion Small Growth C
Slide 60: Affiliates' investment performance
53 Inception Inception 1Y 3Y (p.a.) 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment Management Firetrail Investments - Gross Performance Firetrail Australian High Conviction Fund 14.52% 13.54% 5.80% 6.66% 14/03/2018 Outperformance -0.26% 2.42% -1.36% -1.12% Firetrail Absolute Return Fund -1.93%
Slide 61: FY23 funds under management
FY23 funds under management 54
Slide 62: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 55 2023 Financial Newswire/SQM Research Fund Manager Awards: 2021 Australian Alternative Investment Awards: • Hyperion – ETF Provider Finalist • Metrics – Best 2021 Private Debt Fund • Langdon – Emerging Funds Finalist • Pinnacle – Best 2021
Slide 63: Affiliate commitment to ESG
Affiliate commitment to ESG 56 All Pinnacle Affiliates embed ESG into their investment decision making process: 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 Firetrail Yes Yes Yes Five V (Certified B
Slide 64: Pinnacle Affiliates: Global Emerging Market Equities
Pinnacle Affiliates 57 Global Emerging Market Equities • High quality • Absolute return with downside protection • Concentrated portfolio • Long term sustainable growth • Stewardship and Sustainability • Headquartered in London, United Kingdom Global and Emerging Markets Equities (Long Only and Long
Slide 65: Pinnacle Affiliates: High conviction Australian and Global Equities
Pinnacle Affiliates 58 High conviction Australian and Global Equities • Deep fundamental research approach consistently applied for 15+ years • Australian, Global, Small Companies and Long-Short equities • No enduring style bias. Building concentrated portfolios of best growth and value ideas • Focu
Slide 66: Pinnacle Affiliates: Global and Canadian Small Cap Equities
Pinnacle Affiliates 59 Global and Canadian Small Cap Equities • Active and Engaged owners of world class smaller companies • Blue Chip small cap, focusing on cash flow growth • Seek to identify and evaluate businesses that can compound intrinsic value at high rates over the long term • Headquartered
Slide 67: Pinnacle Affiliates: Private Infrastructure, Impact & Real Assets
Pinnacle Affiliates 60 Private Infrastructure, Impact & Real Assets • Mid-Market focus results in better acquisition multiples and portfolio yield • Actively involved in operational management and governance of assets; unlocks embedded value • Owns airports, seaports, portside bulk liquid storage, g
Slide 68: Pinnacle Affiliates: Private Agriculture, Food & Water
Pinnacle Affiliates 61 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 infrastructure and agri
Slide 69: Disclaimer
Disclaimer 62 Lonsec Research The Lonsec Ratings 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)) and based solely on consideration of the investment merits
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