Slide 1: OMAM Investor Presentation Fourth Quarter 2014
OMAM Investor Presentation Fourth Quarter 2014
Slide 2: Disclaimer
DISCLAIMER Forward Looking Statements This presentation may contain forward looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Forward‐looking statements are identified by words such as “expect,” “anticipate,” “may,” “intends,
Slide 3: A Market Leading Business
A MARKET LEADING BUSINESS • Diversified Multi‐Boutique • Leading Affiliates • Differentiated and Aligned Operating Model • Affiliate Profit Sharing and Equity Ownership • Experienced Management Team • Attractive Growth Strategy • Strong Financial Results • Further Upside from New Partnerships 3
Slide 4: What We Stand For
WHAT WE STAND FOR OMAM stands for institutionally driven active investment management, delivered in a diversified multi‐boutique framework that seeks to generate sustainable alpha for its clients around the globe OMAM provides genuinely strategic capabilities to its Affiliates, helping them to becom
Slide 5: OMAM Structure – Form Follows Function
OMAM STRUCTURE – FORM FOLLOWS FUNCTION Builds culture and structure which are highly strategic, collaborative, cross‐functional and Affiliate‐ focused, led by an experienced management team Affiliate Management & Finance & Corporate Development Capital Management The Affiliates Talent Global Managem
Slide 6: OMAM Today: At-Scale, Diversified, Profitable, and Growing
OMAM TODAY: AT‐SCALE, DIVERSIFIED, PROFITABLE, AND GROWING Business Highlights (1) AUM Mix (1) AUM • Global multi‐boutique asset management company AUM by Affiliate $B % Total • $221bn AUM across 7 Affiliates offering ~100 $70 32% strategies 100 45% • Over 600 diverse institutional and sub‐advisory
Slide 7: Growth Strategy
GROWTH STRATEGY OMAM’s multi‐boutique model is well positioned for growth, with four key areas of focus… Four Key Multi‐Boutique Value Proposition Drives Growth Areas New Incremental Growth Opportunities Partnerships Global Distribution Collaborative Organic Growth (Growth and Product Development Ca
Slide 8: High Quality Boutique Affiliates Drive Core Growth
HIGH QUALITY BOUTIQUE AFFILIATES DRIVE CORE GROWTH (1) OMAM’s Affiliates Are… HQ: Dallas, TX HQ: Boston, MA Founded: 1979 • At‐scale, leading Affiliates Founded: 1986 AUM: $99.7bn AUM: $70.3bn A widely recognized value‐oriented ‒ Excellent individual brands A leading quantitatively‐oriented investme
Slide 9: Diversified AUM Mix by Asset Class, Client and Geography
DIVERSIFIED AUM MIX BY ASSET CLASS, CLIENT AND GEOGRAPHY (1) Highlights Asset Class Client Type As % of AUM As % of AUM Commingled • Well positioned Alternatives Trust/UCITS Mutual Fund Other across asset classes, 15% U.S. Large‐Cap Value Old Mutual 3% 1% Group 2% 6% Sub‐advisory with strong Fixed I
Slide 10: Competitive Investment Performance
COMPETITIVE INVESTMENT PERFORMANCE Products representing 60%+ of revenue outperforming on a 1‐, 3‐, and 5‐year basis Commentary • OMAM uses revenue‐weighted performance as its primary investment metric ‒ Ties investment performance to business performance ‒ Reflects percent of management fee revenue
Slide 11: Rising Net Client Cash Flows and Revenue Impact
RISING NET CLIENT CASH FLOWS AND REVENUE IMPACT AUM Net Client Cash Flows (“NCCF”) Revenue Impact of NCCF(1) $B $M $20.0 $4 $3.8 $20 $19.1 $3.6 $18.4 $3.3 $3.2 $3.1 $16.5 $3.0 $15 $11.6 $2 $1.6 $10.0 $10 $1.2 $8.6 $1.0 $5.8 $4.5 $5 $0 $1.1 $0 ($1.0) ($1.0) ($1.4) ($3.0) ($2) ($5) ($4.4) 1Q 2Q 3Q 4Q
Slide 12: Strategic Engagement Framework
STRATEGIC ENGAGEMENT FRAMEWORK Collaborating with Affiliates begins with OMAM’s aligned incentive structure Alignment of Incentives Strategic Engagement • Establish incentives for Affiliate partners through: Collaborative Organic Growth i) meaningful equity ownership in their firms and ii) a profit‐
Slide 13: Center-Led Global Distribution Platform
CENTER‐LED GLOBAL DISTRIBUTION PLATFORM LED BY SPECIALIZED, EXPERIENCED SALES PROFESSIONALS Overview • Global Distribution broadens depth and reach of the Affiliates, drives growth and provides additional value through i) accessing new markets, ii) creating new business opportunities, and iii) furth
Slide 14: Strategic Engagement Case Studies
STRATEGIC ENGAGEMENT CASE STUDIES Diversification through Globalization and Product Line Expansion • Broaden Non‐US Product Line through EM and • Position Campbell for Global Growth: Expand ACWI: Leverage existing product suite and provide beyond Campbell’s market‐leading position in the additional
Slide 15: Disciplined Approach to Evaluating Potential New Partners
DISCIPLINED APPROACH TO EVALUATING POTENTIAL NEW PARTNERS OMAM utilizes a seven question approach to assess opportunities People Is there talent? Process Can talent be delivered in a rigorous, repeatable and articulable process? Is the process in an attractive asset class that is strategic to OMAM a
Slide 16: Financial Overview
ee FINANCIAL OVERVIEW EQ OMAM
Slide 17: Financial Highlights
FINANCIAL HIGHLIGHTS (1) With Model‐Driven Enhanced Operating Attractive Performance and Flows… Contribute to Strong Top‐line Growth… Margins and Earnings Investment Performance vs. Benchmark (2) AUM ENI Operating Margin (3)(4) % of revenue in products beating benchmark $bn % 100% 91% $250 40% 39% $
Slide 18: Key Drivers of Financial Performance
KEY DRIVERS OF FINANCIAL PERFORMANCE Economic Net Income (“ENI”) reflects the underlying economic earnings of the business Financial Highlights (1) Three Months Ended December 31, Years Ended December 31, Q‐O‐Q Y‐O‐Y $M 2014 2013 Growth 2014 2013 Growth 1 Management fees $152 $136 12% $590 $500 18%
Slide 19: Ongoing Financial Flexibility
ONGOING FINANCIAL FLEXIBILITY Attractive Financial Profile for Growth Approach to Capital Management High cash flow generating business Sustainable dividend payment – Target dividend payout of 25% of ENI earnings Balance sheet flexibility – Debt / EBITDA (1): .8x Collaborative organic growth
Slide 20: Investment Highlights – Overview
INVESTMENT HIGHLIGHTS – OVERVIEW Diversified by Brand, Strategy, Aligned Economic Operating Client, Asset Class Model Strong, Consistent Investment Collaborative Framework, Focused Performance Across Cycles on Active Engagement with Affiliates Positive Net Revenue Flows in Leading Collabor
Slide 21: Appendix
ee APPENDIX EQ OMAM
Slide 22: Economic Net Income Financials
ECONOMIC NET INCOME FINANCIALS • Management uses ENI to reflect its view of the underlying economic earnings of the business and shareholder value creation Overview • ENI used to determine resource allocation, dividend payout, appropriate balance sheet leverage and compensation • Reclassification of
Slide 23: Economic Net Income Financials (Cont'd)
ECONOMIC NET INCOME FINANCIALS (CONT’D) • Legacy Items: Exclusion of certain legacy expenses and revenues no longer applicable following Reorganization • Non-Cash Revaluations of Affiliate Equity: Exclusion of non-cash expenses related to revaluation of Affiliate employee-owned equity Exclusions • A
Slide 24: Reconciliation: GAAP to ENI
RECONCILIATION: GAAP TO ENI Three Months Ended, December 31, Years Ended December 31, ENI Adjustments $m 2014 2013 2014 2013 i.1 Exclude notional non‐cash corporate cost allocations U.S. GAAP net income attributable to controlling interests $34.3 $7.1 $51.7 $25.7 ii. 2 Exclude interest expense histo
Slide 25: Revaluation and Recycling of Employee Equity
REVALUATION AND RECYCLING OF EMPLOYEE EQUITY GAAP Accounting vs. ENI Economics Illustrative GAAP Revaluation Expense Cash Neutral Recycling of Affiliate Equity Affiliate employees own 30% of Affiliate Affiliate earnings increase from $20m to $25m $m Year 1 Year 2 Change Affiliate earnings $20.0