Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Investor Presentation (August 2024)
73 slides from Pinnacle Investment Management's investor presentation, Aug 1, 2024
Slide 1: Pinnacle FY2024 financial results announcement
1st August, 2024 By Electronic Lodgement Market Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Pinnacle Investment Management Group Limited (ASX: PNI) FY2024 financial results Pinnacle Investment Management Group Limited (PNI) is pleased to advise shareholders of the fi
Slide 2: International net inflows and outperformance
> International net inflows: $7.0 billion ($3.9 billion in 2H FY24) > Continued medium-term outperformance across many Affiliates – 85% of 5-Year Affiliate strategies have outperformed their respective benchmarks over the five years to 30 June 2024 – consistent alpha generation underpins ongoing per
Slide 3: Composition of Group Results
Composition of Group Results The profit after tax attributable to shareholders for FY24 was $90.4 million, representing diluted earnings per share of 45.5 cents, up 17% from 39.0 cents per share in FY23. Pinnacle’s share of net profit after tax from its equity interests in Affiliates was $90.8 milli
Slide 4: Evidence of the benefits of this work
evidence of the benefits of this work and remain confident that these initiatives will prove valuable over the medium term. 1. Includes dividends and distributions received on PI. These were $6.4m in FY24, compared with $6.1m in FY23 2. Includes interest cost on the CBA facility of $6.9m in FY24 ($5
Slide 5: FUM Update
FUM Update The FUM of the fifteen Pinnacle Affiliates as at 30 June 2024 was $110.1 billion, at 100%, reflecting: > an increase in FUM of $10.0 billion or 10% during 2H FY24, comprising net inflows of $5.4 billion and increases due to market movements/investment performance of $4.6 billion > an incr
Slide 6: Retail FUM Update
Retail FUM Update Retail FUM stood at $28.8 billion at 30 June 2024: > an increase in FUM of $2.9 billion or 11% during 2H FY24, comprising net inflows of $2.1 billion and increases due to market movements/investment performance of $0.8 billion > an increase in FUM of $6.1 billion or 27% during FY24
Slide 7: Dividend
1 Affiliate revenues are shown at 100% to indicate trend. Pinnacle owns significant minority stakes in each Affiliate and accounts for its share of Affiliates’ NPAT 2 Includes $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021. FUM shown is 100%
Slide 8: Appointment of Non-Executive Director
Appointment of Non-Executive Director Pinnacle is pleased to announce that Christa Lenard will be appointed to the Board effective from 2 August 2024. Ms. Lenard specialises in employment and workplace law, with a practice that spans both the public and private sectors. She has 20 years’ experience
Slide 9: FY24 Results Presentation
PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) FY24 Results Presentation 1 st August 2024
Slide 10: Pinnacle Investment Management Group Limited
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 1 August 2024. PNI has prepared this presentation based on information available to
Slide 11: Agenda
Agenda 3 01 Introduction and Highlights Ian Macoun 4 02 Financial Performance Dan Longan 18 Market Update – Institutional & 03 International Andrew Chambers 22 Market Update – Wholesale & 04 Retail Kyle Macintyre 24 05 Growth Agenda Ian Macoun 26 06 Corporate Responsibility Ian Macoun 42 07 Conclusi
Slide 12: Introduction and Highlights
01 Introduction and Highlights Ian Macoun, Managing Director
Slide 13: FY24 Themes
FY24 Themes 5 Private markets and international momentum underpin robust FUM, revenue and earnings growth and deliver record opening FUM for FY25 • Continuing growth in private markets and other alternatives strategies • International distribution momentum building • Robust overall retail net inflow
Slide 14: FY24 Themes
FY24 Themes 6 Private markets and international momentum underpin robust FUM, revenue and earnings growth and deliver record opening FUM for FY25 1. Continuing growth in private markets and other alternatives strategies • Fundraising conditions remained challenging for public equities managers durin
Slide 15: FY24 Themes
FY24 Themes 7 Private markets and international momentum underpin robust FUM, revenue and earnings growth and deliver record opening FUM for FY25 4. Net Horizon 2 spend reduced as expected, as revenues grew, demonstrating operating leverage across the platform in 2H FY24 • Pinnacle and Affiliates co
Slide 16: FY24 financial highlights
FY24 financial highlights 8 Diversified platform demonstrating resilience in volatile market conditions. Investments made to support earnings growth in the future Af f il ia te F U M / Re v e nue ( 1 0 0 % ) C a s h / I n v e s tm e n ts Affiliate FUM (100%) 30 Jun 24 30 Jun 23 Change 30 Jun 24 Aggr
Slide 17: Track record of earnings growth throughout market cycles
Track record of earnings growth throughout market cycles 9 The strength and diversity of our platform generates material earnings growth for our shareholders through cycles and over the long-term NPAT growth: 2016 – 2024 Diluted EPS growth: 2016 - 2024 CAGR (five years to 30 June 2024) – CAGR (five
Slide 18: 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. (before fees
Slide 19: 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 fir
Slide 20: Track record of earnings growth throughout market cycles
Track record of earnings growth throughout market cycles 12 • Pinnacle has pursued a deliberate strategy of diversification, incubating new Affiliates and strategies, enhanced by careful acquisitive growth into new asset classes and markets. This moderates short-term profitability, however past init
Slide 21: Performance fees
Performance fees 13 Pinnacle Affiliates continue to outperform benchmarks, resulting in continued FUM growth and performance fee generation Closing FUM & number of strategies subject to performance fee • It remains a fundamental strategy of Pinnacle and Affiliates to grow FUM subject to 5 6 8 14 18
Slide 22: Funds under management
Funds under management 14 FUM ($bn)1 • FUM1 has grown at a CAGR of 24.5% p.a. over the last ten years (23.2% excluding $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021) • Markets were broadly up across FY24: • S&P/ASX 300 index up 7.7%; 2.3% i
Slide 23: Evolution in funds under management
Evolution in funds under management – private markets and international 15 Private Markets Asset Growth1 • FUM in private markets asset classes was $22.8bn at 30 June 2024 • 21% of total FUM • Up from $1.5bn / 6% of total FUM as at 30 June 2016 • Pinnacle has been a participant in private markets si
Slide 24: Diversification and resilience of core earnings
Diversification → resilience of core earnings 16 A broadly diversified platform in place to move ahead with sustained growth F Y24 F UM 2 by Affiliate (% ) 1 Change in F UM 2 by Asset Class (%) 30 Jun 24 2.1% 0.8% 0.2% 1.5% 0.2% Metrics 30 Jun 16 15% 3.6% Resolution Capital 7 38% 6.7% Hyperion 9% 17
Slide 25: Continued industry awards
Continued industry awards 17 2024 Morningstar Awards 2024 Momentum Media 2024 Money Management 2023 Zenith Fund for Investing Excellence in Australian Wealth Annual Fund Manager of Awards: Australia: Management Awards the Year Awards, partnering with Lonsec: • Metrics Credit Partners – Australian Fi
Slide 26: Financial Performance
02 Financial Performance Dan Longan
Slide 27: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 19 Continuing improvement in average base rate fees and client diversity; deliberate Horizon 2 investment in growth initiatives moderates profits in the short-term, but drives strategic growth over the medium- to long-term Revenue (Pinnacle and Affiliat
Slide 28: FY24 financial results
FY24 financial results 20 FY24 ($M) FY23 ($M) % Change • NPAT attributable to shareholders of $90.4m PINNACLE Revenue1 49.0 45.5 8% • 18% increase on FY23 (17% increase in diluted EPS) Expenses 2,3,4 (49.4) (36.4) 36% • Performance fees earned by Pinnacle Affiliates, post-tax, contributed $31.2m of
Slide 29: FY24 financial results
FY24 financial results 21 30 Jun 2024 ($M) 30 Jun 2023 ($M) Change • Cash and PI of $186.3m CURRENT ASSETS Cash and cash equivalents 32.6 27.6 18% • Includes $141.4m invested in strategies managed by Pinnacle Affiliates Financial assets 153.7 159.6 (4%) • CBA facility of $100m fully-drawn and deploy
Slide 30: Market Update – Institutional & International
03 Market Update – Institutional & International Andrew Chambers
Slide 31: Institutional & International: Market Update
Institutional & International: Market Update 23 Expansion of International platform driving growth Institutional (Australia) International • $900m net outflows in FY24 • $7bn net inflows in FY24 ($575m from wholesale/retail) • Institutional investor consolidation continues to weigh on net inflows •
Slide 32: Market Update – Wholesale & Retail
04 Market Update – Wholesale & Retail Kyle Macintyre
Slide 33: Wholesale & Retail: Market Update
Wholesale & Retail: Market Update 25 A s of 30 June 2024 • $3.9bn net inflows into Wholesale and Retail in FY24 • $1.8bn in net inflows in 1H Wholesale and Ret ail flows (Net ) • $2.1bn in net inflows in 2H • Improving flow trends in Wholesale and Retail market $3.9bn $3.6bn • First 3 quarters of fl
Slide 34: Growth Agenda
05 Growth Agenda Ian Macoun, Managing Director
Slide 35: Three Horizons of growth
Three Horizons of growth 27 Prepared for, and seeking, further expansion opportunities – committed to taking advantage of the significant opportunity to evolve into a global multi-affiliate by ‘exporting our model’ – but maintaining discipline on quality and valuation • Continue to build Pinnacle by
Slide 36: Future growth drivers
Future growth drivers 28 An excellent platform in place to move ahead with sustained growth Distribution Robust, Flexible Start-Up Affiliate Existing Affiliate Acquisitive Platform Expansion Operating Platform Enablement Expansion Growth • Investment in (and • Robust, flexible • Develop investment •
Slide 37: Horizon 2 – broad range of diversified initiatives
Horizon 2 – broad range of diversified initiatives 29 Examples of previous Horizon 2 initiatives, within Affiliates, include: • Hyperion Global Equity, Palisade Renewable Infrastructure, Plato Australian Income, Resolution Capital Global REITS, Solaris Equity Long/Short Current initiatives, within A
Slide 38: Horizon 2 – current status
Horizon 2 – current status 30 Revenues building from current Horizon 2 initiatives, reducing net cost impact to Pinnacle and providing early evidence of anticipated future growth Current Horizon 2 initiatives, within Pinnacle, include: • Supporting new Affiliates – Pinnacle provides all distribution
Slide 39: Horizon 2 – highly valuable accelerator for new Affiliates
Horizon 2 – highly valuable accelerator for new Affiliates and strategies 31 • The aggregate net cost to Pinnacle of these initiatives, within Pinnacle and Affiliates, reduced significantly in 2H FY24 to approximately $4.5m (Pinnacle share, after tax), down from approximately $7m in 1H FY24 • Revenu
Slide 40: Introducing – Life Cycle Investment Partners
Introducing – Life Cycle Investment Partners 32 • Pinnacle’s newest, international Horizon 2 Affiliate • Domiciled in London, UK • Initial investment team of 7 • Led by Peter Rutter, former Head of Equities at Royal London Asset Management • Pinnacle will own 25% of the firm • Style-neutral, long-on
Slide 41: Horizon 3 - update
Horizon 3 - update 33 • 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 41 professionals; enlarged mid-market PE and VC team; established Growth Equity and Ne
Slide 42: Five V: Accelerating Growth through Growth Capital and New Market Access
Five V: Accelerating Growth through Growth Capital and New Market Access 34 Fund V fundraise of Five V Capital (Private Equity) $770m oversubscribed and 2,500 closed in 3 months. Pinnacle helps raise $72m raised for VC first to market Fund II Five V expand team ‘evergreen' private from 12 to 41 FTE
Slide 43: Metrics – building Australia’s leading private credit fund manager
Metrics – building Australia’s leading private credit fund manager 35 • Metrics is Australia and New Zealand’s largest non-bank corporate lender with A$19bn AUM • In June 2013, Pinnacle became Metrics distribution partner and helped them unlock institutional allocations to private debt • From Octobe
Slide 44: Metrics – building Australia’s leading private credit fund manager
Metrics – building Australia’s leading private credit fund manager 36
Slide 45: Metrics – building Australia’s leading private credit fund manager
Metrics – building Australia’s leading private credit fund manager 37
Slide 46: Metrics – building Australia’s leading private credit fund manager
Metrics – building Australia’s leading private credit fund manager 38
Slide 47: Metrics – building Australia’s leading private credit fund manager
Metrics – building Australia’s leading private credit fund manager 39
Slide 48: Coolabah: globally unique fixed income manager
Coolabah: globally unique fixed income manager 40 Coolabah Capital Investments Active Sovereign Bond Fund 12,000 launched and Pacific Coolabah cornerstoned by Global Active major institutional Credit Fund investor launched in Floating-Rate Coolabah opens Europe 10,000 High Yield Fund NZ office and l
Slide 49: Coolabah – market-leading performance
Coolabah – market-leading performance 41 • Pinnacle partnered with Coolabah in December 2019, acquiring an initial 25% state and a further 10% in September 2021 • At the time of acquisition, Coolabah was managing $3 billion and had a team of 21 • At 30 June 2024, Coolabah was managing $10.4 billion
Slide 50: Corporate Responsibility
06 Corporate Responsibility Ian Macoun, Managing Director
Slide 51: Our Sustainability Strategy
Our Sustainability Strategy 43 We are committed to building a sustainable, inclusive and resilient firm This means fostering a work environment that recruits, retains and supports exceptional people with diverse experience, aligning firm growth with our climate ambitions, expanding the reach and imp
Slide 52: PNI Foundation
PNI Foundation 44 • Pinnacle is passionate about enabling better lives through investment excellence. This belief is strongly reflected in Pinnacle’s commitment – together with Affiliates – to the PNI Foundation • The Foundation’s focus is on growing the reach, sustainability and impact of creative
Slide 53: PNI Foundation
PNI Foundation 45 • Total donations by the PNI Foundation in FY24 were over $677,000, primarily directed towards 17 long-term not-for-profit (NFP) partners. Support was also provided for initiatives aligned with employee volunteering and fundraising. • Affiliates provided a further $445,000 via dire
Slide 54: PNI Foundation
PNI Foundation Multiple partnerships with 17 NFPs are driving long-term sustainable impact across six core categories: MENTAL HEALTH AND WELLBEING Offering support through community connection, together with mental illness prevention and early intervention strategies SEXUAL, DOMESTIC AND FAMILY VIOL
Slide 55: Conclusion
06 Conclusion Ian Macoun, Managing Director
Slide 56: Pinnacle differentiation
Pinnacle differentiation 48 Australia’s leading ‘multi-affiliate’ investment firm 1. Distinguished from 2. High quality, experienced, 3. All the advantages, benefits competitors by comprising the dedicated, passionate and superior conditions of a highest quality investment investment professionals –
Slide 57: Summary
Summary 49 Pinnacle’s diverse Affiliate stable and extensive distribution channels fosters resilience and growth Highly regarded Affiliates with strong local and international investment consultant and research house ratings Fundamentals in • • Diverse stable of Affiliates (asset class, style, strat
Slide 58: Q&A
Q&A
Slide 59: Appendix
Appendix
Slide 60: Continuing strong investment performance of Affiliates to 30 June 2024
52 Incepti on Incepti on 5Y ( p.a .) 10Y ( p.a .) ( p.a .) da te Pinnacle Investment Management Continuing strong investment Hype r i o n Asse t M an age m e n t - Gr o ss Pe r fo r m an c e Hyperion Australian Growth Companies Fund 12.20% 11.35% 12.38% 1/10/2002 Outperformance 4.98% 3.30% 3.41% per
Slide 61: Continuing strong investment performance of Affiliates to 30 June 2024
53 Incepti on Incepti on 5Y ( p.a .) 10Y ( p.a .) ( p.a .) da te Pinnacle Investment Management Continuing strong investment S ph e r i a Asse t M an age m e n t - Gr o ss Pe r fo r m an c e Spheria Australian Microcap Fund 19.28% - 16.01% 16/05/2016 Outperformance 15.58% - 9.85% performance of Affi
Slide 62: Performance of Affiliates to 30 June 2024
54 Incepti on Incepti on 1Y 3Y ( p.a .) 5Y ( p.a .) 10Y ( p.a .) ( p.a .) da te Pinnacle Investment Management Performance of Affiliates to 30 Hype r io n Asse t M an age m e n t - Gr o ss Pe r fo r m an c e Hyperion Australian Growth Companies Fund 18.55% 2.29% 12.20% 11.35% 12.38% 1/10/2002 June 2
Slide 63: Performance of Affiliates to 30 June 2024
55 Incepti on Incepti on 1Y 3Y ( p.a .) 5Y ( p.a .) 10Y ( p.a .) ( p.a .) da te Pinnacle Investment Management Performance of Affiliates to 30 Palisade In ve st m e n t Par t n e r s - Gr o ss Pe r fo r m an c e Palisade Diversified Infrastructure Fund 10.58% 11.12% 10.19% 10.71% 10.25% 1/08/2008 Ju
Slide 64: Performance of Affiliates to 30 June 2024
56 Incepti on Incepti on 1Y 3Y ( p.a .) 5Y ( p.a .) 10Y ( p.a .) ( p.a .) da te Pinnacle Investment Management Performance of Affiliates to 30 M e t r ic s C r e dit Par t n e r s - Gr o ss Pe r fo r m an c e MCP Diversified Australian Senior Loan Fund 9.66% 7.32% 6.13% 5.62% 5.71% 4/06/2013 June 20
Slide 65: FY24 funds under management
FY24 funds under management 57 Pinnacle (total) Hyperion Plato Solaris RCL Palisade Antipodes Spheria Two Trees 5 Firetrail Metrics4 Omega3,5 Longwave Riparian Coolabah Aikya Five V6 Langdon ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m)1 ($m)1 ($m) ($m) ($m)2 ($m) ($m) ($m) FUM History (at
Slide 66: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 58 2024 Financial Newswire/SQM Research Fund Manager of the Year Awards 2023 Zenith Fund Awards: • Spheria – Australian Equities – Small/Mid Cap Finalist • Metrics Credit Partners – Australian Fixed Interest Winner • Resolution Capital – A-RE
Slide 67: Affiliate commitment to ESG
Affiliate commitment to ESG 59 All Pinnacle Affiliates embed ESG principles into their investment decision making process: Incorporate ESG into Investment Affiliate Signatory to PRI Have an ESG policy process Yes Aikya Yes Yes (Certified B Corporation) Antipodes Yes Yes Yes Coolabah Yes Yes Yes Fire
Slide 68: Pinnacle Affiliates
Pinnacle Affiliates 60 Global Emerging Market Equities • High quality • Absolute return with downside protection • Concentrated portfolio • Long-term sustainable growth • Stewardship and Sustainability • Founded in 2020 • Headquartered in London, United Kingdom Global and Emerging Markets Equities (
Slide 69: Pinnacle Affiliates
Pinnacle Affiliates 61 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 70: Pinnacle Affiliates
Pinnacle Affiliates 62 Global and Canadian Small Cap Equities • Active and engaged owners of world class smaller companies • Quality-orientation, focusing on cash flow growth • Seek to identify and evaluate businesses that can compound intrinsic value at high rates over the long-term • Founded in 20
Slide 71: Pinnacle Affiliates
Pinnacle Affiliates 63 Private Infrastructure, Impact & Real Assets • Mid-market focus results in attractive acquisition multiples and portfolio yield • Actively involved in operational management and governance of assets; unlocks embedded value • Owns core infrastructure assets such as airports, po
Slide 72: Pinnacle Affiliates
Pinnacle Affiliates 64 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 73: Disclaimer
Disclaimer 65 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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