Partners Group Holding AG · SIX:PGHN
Partners — H1 2018 Earnings Presentation
43 slides from Partners's earnings presentation, Sep 11, 2018
Slide 1: Semi-annual results 2018
11 SEPTEMBER 2018 Semi-annual results 2018 Steffen Meister | André Frei | Christoph Rubeli | Philip Sauer Scott Essex Head Private Debt Americas | Marlis Morin Head Client Services For Institutional Use Only – Not for Public Distribution
Slide 2: Table of contents
SEMI-ANNUAL RESULTS 2018 2 Table of contents 1 Clients 2 Financials 3 Investments 4 Co-CEO office change 5 Private markets perspectives
Slide 3: Key private markets client trends
CLIENTS 3 Key private markets client trends Investors' private markets Long-term return expectations1 private markets allocations2 Fallen short Met Exceeded Decrease Increase / maintain Private -5% 69% 26% -4% 96% equity Private -10% 65% 10% -11% 89% debt Private -12% 66% 22% -2% 98% real estate Pri
Slide 4: Client demand is driven by both program offerings and customized mandate solutions
CLIENTS 4 Client demand is driven by both program offerings and customized mandate solutions Breakdown of assets raised by asset class in H1 2018 Breakdown of assets raised by structure in H1 2018 Private infrastructure Assets raised through 9% more than 25 mandates & programs (2017: 16%) Private eq
Slide 5: Sustained growth in AuM over the last decade
CLIENTS 5 Sustained growth in AuM over the last decade Total assets under management (in EUR billion) AuM 67.1 61.9 Private # employees 9 infrastructure 54.2 12 Private 46.0 1088 real estate 1036 37.6 930 13 Private 31.6 debt 27.8 840 24.1 746 20.7 701 Private 15.5 16.6 625 34 equity 12.6 8.6 574 5.
Slide 6: AuM diversified across regions and types of clients
CLIENTS 6 AuM diversified across regions and types of clients AuM by region (as of 30 June 2018) AuM by type of clients (as of 30 June 2018) Asia & Australia Distribution partners / Middle East 6% private individuals Switzerland Public pension 9% 16% 17% funds South America Asset managers, 22% 2% Ge
Slide 7: AuM well-diversified across client base and program structure
CLIENTS 7 AuM well-diversified across client base and program structure AuM by client (as of 30 June 2018) AuM by program structure (as of 30 June 2018) Largest client 3% Top 2-5 clients Perpetual/structured 8% programs Top 6-10 clients ~20% 6% Mandate Top 11-20 clients solutions EUR 7% EUR ~40% 67
Slide 8: Typical investment program vs. mandate structures
CLIENTS 8 Typical investment program vs. mandate structures Typical program Typical mandate Commitment decision Strategic allocation decision (in USD) (in USD or % of overall AuM) re-up? Exposure Exposure Increase? maintain commit build up y1 y2 y12 y1 y2 y12 y15 Clients diversify Investment manager
Slide 9: Expected client demand 2018: full-year guidance reconfirmed
CLIENTS 9 Expected client demand 2018: full-year guidance reconfirmed AuM, client demand and other effects (in EUR billion) Full-year 2018 expectations 11 - 14 Client demand 13.3 61.9 9.2 54.2 Tail-downs & (-4.5 to -5.5) 8.4 46.0 redemptions* 6.1 (-5.5) 37.6 (-1.0) -4.1 +/- FX & others** 31.6 (0.0)
Slide 10: Table of contents
SEMI-ANNUAL RESULTS 2018 10 Table of contents 1 Clients 2 Financials 3 Investments 4 Co-CEO office change 5 Private markets perspectives
Slide 11: Strong results across the board
FINANCIALS 11 Strong results across the board Financial highlights H1 2018 Avg. AuM¹ Revenues2 EBITDA Profit (in CHF billion) (in CHF million) (in CHF million) (in CHF million) +20% +17% +17% +10% 74 659 62 565 437 394 374 359 H1 17 H1 18 H1 17 H1 18 H1 17 H1 18 H1 17 H1 18 Driven by Attributable to
Slide 12: Revenues and EBITDA grew in parallel
FINANCIALS 12 Revenues and EBITDA grew in parallel Key financials (in CHF million) H1 2017 H1 2018 1 Revenues, of which 565 +17% 659 Management fees 2 418 +16% 484 Performance fees 147 +19% 175 EBITDA 374 +17% 437 EBITDA margin 66% 66% Financial result 30 17 Income tax expenses -38 -51 Profit 359 +1
Slide 13: Sustained development of management and performance fees
FINANCIALS 13 Sustained development of management and performance fees Revenues1 (in CHF million) 659 Revenues1 565 Performance fees 69 175 (27%) 453 147 (26%) 43 late management fees 131 & other income (29%) 56 25 484 Management fees2 (73%) 418 (74%) 322 (71%) H1 2016 H1 2017 H1 2018 1 Revenues inc
Slide 14: Management fees may vary between calendar years during fundraising
FINANCIALS 14 Management fees may vary between calendar years during fundraising Illustrative example 2018 2019 2020 2021 2022 2023 2024 2030 Start Interim End fundraising closings fundraising & investing Management fees 10-12 years management fees¹ Fund size e.g. Partners Group Global Value program
Slide 15: Continued solid performance fee development
FINANCIALS 15 Continued solid performance fee development In the long run, performance fees are expected to grow in line with AuM growth 450 67.1 61.9 400 372 54.2 350 46.0 294 294 300 250 37.6 6-9 years 31.6 200 175 27.8 24.1 150 20.7 15.5 16.6 100 12.6 H1 8.6 64 5.5 43 39 34 50 16 13 0 2005 2006 2
Slide 16: Management fees will continue to be the main source of revenues
FINANCIALS 16 Management fees will continue to be the main source of revenues Outlook on performance fees around Performance fees around 10% 27% 20-30% Performance fees1 “quasi-recurring” Over 250 programs, highly diversified across vintage years, regions and industries around Management fees2 70-80
Slide 17: Stable revenue margin on management fees and total revenues
FINANCIALS 17 Stable revenue margin on management fees and total revenues Revenue margin1 1.89% 1.74% 1.77% 27% 1.35% 1.36% 1.36% 1.39% 1.39% 1.38% 1.25% 1.26% 1.23% 1.33% 1.33% 1.30% 1.25% 1.26% 1.30% 1.26% 1.31% 1.24% 1.23% 1.18% 1.23% 1.24% 1.22% 73% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 18: Costs grew in line with revenues
FINANCIALS 18 Costs grew in line with revenues Revenues, costs and EBITDA development (in CHF million) H1 2017 H1 2018 1 Revenues 565 +17% 659 Total costs, of which -191 +16% -222 Personnel expenses -163 +16% -189 Operating expenses -29 +15% -33 EBITDA 374 +17% 437 EBITDA margin 66% +0%-points 66% 1
Slide 19: Target EBITDA margin of ~60% confirmed
FINANCIALS 19 Target EBITDA margin of ~60% confirmed as the firm is committed to further investing in its global platform EBITDA margin development New AuM, performance fees 80% 2 70% 66% 66% 1.8 61% 62% 61% 60% 59% 62% 1.6 ~60% 60% 1.4 1.23 EUR/ 1.21 1.23 1.21 50% 1.11 1.17 CHF 1.07 1.09 1.06 1.2 4
Slide 20: Foreign exchange rates and their impact on the EBITDA margin
FINANCIALS 20 Foreign exchange rates and their impact on the EBITDA margin Currency exposure in H1 2018 others others GBP 6% GBP 6% 7% 7% Others EUR EUR EUR ~15% ~5% 51% 51% USD ~20% ≈ ≠ GBP AuM EUR Management ~15% Costs1 56% fees CHF USD USD ~45% 36% 36% EUR/USD foreign exchange fluctuations have a
Slide 21: Solid profit contribution and balance sheet
FINANCIALS 21 Solid profit contribution and balance sheet Profit (in CHF million) Balance sheet 30 June 2018 394 1.0 42% 359 CHF billion return on net liquidity1 equity 254 654 1'794 CHF million CHF million in own investments2 equity H1 2016 H1 2017 H1 2018 1 Comprises cash and cash equivalents and
Slide 22: Table of contents
SEMI-ANNUAL RESULTS 2018 22 Table of contents 1 Clients 2 Financials 3 Investments 4 Co-CEO office change 5 Private markets perspectives
Slide 23: Partners Group's investment implications based on its current core macro views
INVESTMENTS 23 Partners Group's investment implications based on its current core macro views Global GDP growth Diverging monetary policy Investment implications • Global growth easing; probability • Fed tightening via rising rates, • Identify established companies in of temporary downturn has risen
Slide 24: Partners Group H1 2018 investment platform overview
INVESTMENTS 24 Partners Group H1 2018 investment platform overview Investment platform update USD 7.7 billion invested across the globe • Over 1'000 professionals North Asia-Pacific/ Europe Investments America RoW • USD 7.7 billion invested in private markets 17 direct 19 direct 4 direct opportuniti
Slide 25: Continued significant deal flow
INVESTMENTS 25 Continued significant deal flow Deal flow H1 2018 Directs Secondaries Primaries Private equity >1,400 USD 250 Private debt assets 73 billion partnerships Private real estate Private infrastructure 3% invested 3% invested 10% invested # 40 executed1 n/a # 24 executed USD 2.8 billion in
Slide 26: Private markets investment activities in H1 2018 across the globe and all asset classes
INVESTMENTS 26 Private markets investment activities in H1 2018 across the globe and all asset classes Private markets investments during H1 2018 Primaries 16% North Europe Equity America USD 36% USD 48% 7.7 billion Secondaries 7.7 billion Directs 24% 60% Debt Asia-Pacific/ Row 16% Note: figures exc
Slide 27: Relative value differentiates our approach
INVESTMENTS 27 Relative value differentiates our approach Expected return framework Relative value Investment themes Expected broad industry returns Transformation and value creation Investment environment over typical investment periods themes in sectors over the next 6-18 months Focus on core view
Slide 28: Relative value: core views and investment themes change over time
INVESTMENTS 28 Relative value: core views and investment themes change over time 2010: buying 2012: in a period of 2014/16: assetflation 2018: leveraging global quality assets stagnation, proactive losing steam, search for megatrends at the core of at trough earnings ownership is pivotal transformat
Slide 29: Outlook 2018: a majority of our pipeline deals fall within our areas of focus
INVESTMENTS 29 Outlook 2018: a majority of our pipeline deals fall within our areas of focus Sourcing activity: High Medium Low Outside of focus Consumer Industrials Healthcare Fin. & bus. services TMT Personalization and Automation Ambulatory multi-site Financial digitization Enterprise software cu
Slide 30: Private equity & private infrastructure example: Techem
INVESTMENTS 30 Private equity & private infrastructure example: Techem Focus Commercial service: industrial/onsite services & residential services Seek firms with dominant market share Platform leaders in markets at advanced Industry: Business services Investment rationale stage of consolidation Ass
Slide 31: Private equity example: Vishal Mega Mart
INVESTMENTS 31 Private equity example: Vishal Mega Mart Focus Premiumization & emerging middle class: high growth categories Entrepreneurial ownership drives growth Platform companies where we buy add-on firms Industry: Consumer Investment rationale to grow the platform Asset: Franchisor of VMM • St
Slide 32: Private real estate example: Project Cobalt
INVESTMENTS 32 Private real estate example: Project Cobalt Focus Portfolio refinancing Unlocking hidden potential Buy below replacement cost Property: Office Investment rationale in rebounding markets Asset: Recapitalization of a • Discounted entry basis relative to replacement portfolio of seven co
Slide 33: Private infrastructure example: Murra Warra Wind Farm
INVESTMENTS 33 Private infrastructure example: Murra Warra Wind Farm Focus Renewable energy: onshore wind Investments into next-generation infrastructure platforms Murra Warra Wind Farm, Australia Platform opportunities offer the opportunity to Sector: Renewables Investment rationale build scale • S
Slide 34: Over USD 100 billion invested since inception
INVESTMENTS 34 Over USD 100 billion invested since inception Invested capital1 Long-term track record2 Investments since inception on 20.5% Private equity behalf of the firm's clients net IRR on all direct (lead/joint lead) investments 7.1% Private debt USD net IRR on all private debt investments >1
Slide 35: Table of contents
SEMI-ANNUAL RESULTS 2018 35 Table of contents 1 Clients 2 Financials 3 Investments 4 Co-CEO office change 5 Private markets perspectives
Slide 36: Co-CEO succession
CO-CEO OFFICE CHANGE 36 Co-CEO succession David Layton to succeed Christoph Rubeli as of 1 January 2019 • Joined in 2005 and is based in the firm's Denver office • Risen through the ranks on the investment side based on merit • Member of the ExCo & GExB • Head of the Private Equity business departme
Slide 37: Table of contents
SEMI-ANNUAL RESULTS 2018 37 Table of contents 1 Clients 2 Financials 3 Investments 4 Co-CEO office change 5 Private markets perspectives
Slide 38: Active value creation drives returns
PRIVATE MARKETS PERSPECTIVES 38 Active value creation drives returns Evolution of return drivers in the PE industry1 Systematic methodology for driving value creation 100% Operational improvement Multiple creation Capital structure • Industry value creation (IVC) team acts as an integral part of our
Slide 39: Entrepreneurial governance drives active value creation
PRIVATE MARKETS PERSPECTIVES 39 Entrepreneurial governance drives active value creation Public markets Private markets Overseeing Driving Board Management Board Management Teamwork 1 Controls 2 Processes 3 Corporate KPIs 1 Business KPIs 2 Processes 3 Controls "Governance correctness" "Entrepreneuria
Slide 40: Long-term entrepreneurial ownership drives category leadership
PRIVATE MARKETS PERSPECTIVES 40 Long-term entrepreneurial ownership drives category leadership Platform companies/assets in a Niche companies with strong Franchise companies/assets highly fragmented market product/service offering that benefit from stability Companies with a Companies in sub- Typica
Slide 41: Category leadership drives long-term investment
PRIVATE MARKETS PERSPECTIVES 41 Category leadership drives long-term investment Conceptual illustration of the asset universe • Relative value assets Asset profile • Often transformative investments Higher • Traditional private markets time horizon (holding periods 4-8 years) Relative value • Majori
Slide 42: Contacts
42 Contacts Zugerstrasse 57 Investor relations contact: 6341 Baar-Zug Philip Sauer Switzerland Tel.: +41 41 784 66 60 T +41 41 784 60 00 Email: philip.sauer@partnersgroup.com partnersgroup@partnersgroup.com Media relations contact: www.partnersgroup.com Jenny Blinch Tel.: +44 207 575 25 71 Email: je
Slide 43: Disclaimer
IMPORTANT NOTICE 43 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 t
Partners Group Holding — H1 2018 Earnings Presentation on 6ix