Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Investor Presentation (February 2024)
64 slides from Pinnacle Investment Management's investor presentation, Feb 1, 2024
Slide 1: FY2024 interim financial results ASX announcement
1st February, 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 interim financial results Pinnacle Investment Management Group Limited (PNI) is pleased to advise shareholders
Slide 2: Cash and Principal Investments; Composition of Group Results
> Cash and Principal Investments (PI) of $151.1 million at 31 December 2023 supported by CBA facility of $100m, fully-drawn and deployed into liquid funds managed by Affiliates until required, resulting in net cash and PI of $51.1 million at 31 December 2023. At 31 December 2022, the facility amount
Slide 3: Outlook and reporting practice
Pinnacle has an excellent platform in place to continue to prosper – driven by growth within existing Affiliates, incubating new Affiliates and strategies, domestically and internationally, as well as careful acquisitive growth into new asset classes and markets. We believe we enter the second half
Slide 4: FUM Update
FUM Update The FUM of the fifteen Pinnacle Affiliates as at 31 December 2023 was $100.1 billion, at 100%, reflecting: > an increase in FUM of $8.2 billion or 9% during 1H FY24, comprising net inflows of $4.5 billion and increases due to market movements/investment performance of $3.7 billion > a com
Slide 5: Retail FUM Update and Affiliates financial highlights
Retail FUM Update Retail FUM stood at $25.9 billion at 31 December 2023, reflecting an increase of $3.2 billion or 14% during 1H FY24, comprising net inflows of $1.8 billion and increases due to market movements/investment performance of $1.4 billion. Pinnacle Affiliates – Financial Highlights1 1H F
Slide 6: Dividend and results teleconference
Dividend The Board has resolved to maintain the fully franked interim dividend of 15.6 cents per share (in line with 1H FY23), payable to shareholders recorded on the register on 8 March 2024 and payable on 22 March 2024. The Dividend Reinvestment Plan (DRP) is applicable to this dividend. Please co
Slide 7: 1H FY24 Results Presentation
PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) 1H FY24 Results Presentation 1 st February 2024
Slide 8: Important notice
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 February 2024. PNI has prepared this presentation based on information available
Slide 9: Agenda
Agenda 3 01 Introduction and Highlights Ian Macoun 4 02 Financial Performance Dan Longan 19 Market Update – Institutional & 03 International Andrew Chambers 23 Market Update – Wholesale & 04 Retail Kyle Macintyre 25 05 Growth Agenda Ian Macoun 27 06 Corporate Responsibility Ian Macoun 35 07 Conclusi
Slide 10: Introduction and Highlights
01 Introduction and Highlights Ian Macoun, Managing Director
Slide 11: 1H FY24 Themes: Record $100bn FUM
1H FY24 Themes 5 Record $100bn FUM entering 2H FY24 as inflows build, platform positioned for growth • Robust net inflows, particularly across retail and international channels, in challenging fundraising conditions • Net inflows into private market and alternative strategies have continued to build
Slide 12: 1H FY24 Themes: net inflows and private markets
1H FY24 Themes 6 Record $100bn FUM entering 2H FY24 as inflows build, platform positioned for growth 1. Robust net inflows, particularly across retail and international channels, in challenging fundraising conditions • Conditions for generating new business remained challenging during the half • Dis
Slide 13: 1H FY24 Themes: international expansion and record FUM
1H FY24 Themes 7 Record $100bn FUM entering 2H FY24 as inflows build, platform positioned for growth 3. International expansion both in Affiliates and distribution continues to gather momentum • $14bn of FUM from 40+ countries outside of Australia • $8bn+ net international flows over past 3.5 years
Slide 14: 1H FY24 Themes: Horizon 2 and alpha generation
1H FY24 Themes 8 Record $100bn FUM entering 2H FY24 as inflows build, platform positioned for growth 5. Net cost of current Horizon 2 initiatives remained at anticipated high levels during the first half but expected to reduce in 2H and beyond as revenues generated by these initiatives continue to b
Slide 15: 1H FY24 financial highlights
1H FY24 financial highlights 9 Diversified platform demonstrating resilience in challenging market conditions. Investments made to support earnings growth in the future A f f i l i a te F U M / R e v e n u e ( 1 0 0 % ) C a s h / I n v e s tm e n ts Affiliate FUM (100%) 31 Dec 23 30 Jun 23 Change 31
Slide 16: Track record of earnings growth throughout market cycles
Track record of earnings growth throughout market cycles 10 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 31 CAGR (five years to 31 December
Slide 17: Investment Performance
Investment Performance 11 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 18: Diversified Affiliate platform
Pinnacle has a diversified Affiliate platform 12 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 19: Track record of earnings growth throughout market cycles
Track record of earnings growth throughout market cycles 13 • Pinnacle equity Affiliate revenues are linked, in part, to movements in equity markets. Whilst markets ended the year predominantly in positive territory, there was again significant volatility throughout • Pinnacle has pursued a delibera
Slide 20: Performance fees
Performance fees 14 Our industry leading portfolio of high performing Affiliates continues 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 Affi
Slide 21: Performance fees a deliberate and ongoing component of earnings
Performance fees a deliberate and ongoing component of Pinnacle’s earnings 15 The breadth of Affiliates and strategies that have the potential to deliver performance fees should deliver a meaningful contribution to Pinnacle’s earnings in each financial year • 25 strategies with the ability to delive
Slide 22: Funds under management
Funds under management 16 Gross FUM ($bn)1 • FUM has grown at a CAGR of 24.1% p.a. over the last ten years (22.6% excluding $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021) • Markets were mixed over 1H FY24 yet finished the period strongly: •
Slide 23: Diversification and resilience of core earnings
Diversification resilience of core earnings 17 A broadly diversified platform in place to move ahead with sustained growth 1H F Y24 F U M by Affiliate (% ) 1 Change in F U M by Asse t Class (% ) 31 Dec 23 Metrics 1.5 1.6 0.4 3.5 Resolution Capital 13% 30 Jun 16 4.4 Hyperion 7 10% 41% Plato 24 7.0
Slide 24: Continued industry awards
Continued industry awards 18 2023 Zenith Fund 2023 Financial 2023 Money Management 2022 Financial Standard Awards: Newswire/SQM Research Annual Fund Manager of Investment Leadership Fund Manager Awards: the Year Awards, Awards 2022: • Metrics Credit Partners – partnering with Lonsec: Australian Fixe
Slide 25: Financial Performance
02 Financial Performance Dan Longan
Slide 26: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 20 Continuing improvement in average base rate fees and client diversity; Horizon 2 investment in growth initiatives moderates profits in the short term, but will drive strategic growth through the cycle Revenue (Pinnacle and Affiliates)1 • Total Affili
Slide 27: 1H FY24 financial results
1H FY24 financial results 21 1H FY24 ($M) 1H FY23 ($M) % Change • NPAT attributable to shareholders of $30.2m PINNACLE Revenue1 23.7 22.8 4% • Performance fees earned by Pinnacle Affiliates, post-tax, contributed $12.3m of Pinnacle’s NPAT in 1H FY24 ($0.9m in 1H FY23) Expenses 2,3,4 (30.8) (20.7) 49
Slide 28: 1H FY24 financial results: balance sheet
1H FY24 financial results 22 31 Dec 2023 ($M) 30 Jun 2023 ($M) Change CURRENT ASSETS • Cash and PI of $151.1m Cash and cash equivalents 15.0 27.6 (46%) • Includes $119.7m invested in strategies managed by Pinnacle Affiliates Financial assets 136.1 159.6 (15%) Total cash and financial assets 151.1 18
Slide 29: Market Update – Institutional & International
03 Market Update – Institutional & International Andrew Chambers
Slide 30: Institutional & International: Market Update
Institutional & International: Market Update 24 International distribution platform emerging as an ‘engine of growth’ Australia International • -$365m net flows in 1H FY24 • $3.1bn net flows in 1H FY24 • Noteworthy inflows into high grade public credit, private credit and • $8bn+ net flows over past
Slide 31: Market Update – Wholesale & Retail
04 Market Update – Wholesale & Retail Kyle Macintyre
Slide 32: Wholesale & Retail: Market Update
Wholesale & Retail: Market Update 26 A s of 31 D ecember 2 0 2 3 • Australian equities • Australian equity flows were resilient in 1H FY24 despite tough market conditions Wholesale and Ret ail flows (Net ) • Income and core products received strong net inflows during the half $3.6bn • Global equitie
Slide 33: Growth Agenda
05 Growth Agenda Ian Macoun, Managing Director
Slide 34: Three Horizons of growth
Three Horizons of growth 28 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 35: Future growth drivers
Future growth drivers 29 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 36: Horizon 2 – current status
Horizon 2 – current status 30 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 37: Horizon 2 – broad range of diversified initiatives
Horizon 2 – broad range of diversified initiatives 31 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 38: Horizon 2 – accelerator for new Affiliates and strategies
Horizon 2 – highly valuable accelerator for new Affiliates and strategies 32 • The aggregate net cost to Pinnacle of these initiatives, within Pinnacle and Affiliates, was approximately $7m in 1H FY24 (Pinnacle share, after tax), in line with expectations and broadly the same as in 2H FY23 • Investm
Slide 39: Horizon 2 – International
Horizon 2 – International 33 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, US and Canada Aikya (London) • Commenced 2020
Slide 40: Horizon 3
Horizon 3 34 • 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 41: Corporate Responsibility
06 Corporate Responsibility Ian Macoun, Managing Director
Slide 42: Our Sustainability Strategy
Our Sustainability Strategy 36 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 partnersh
Slide 43: Our GHG Emission Breakdown
Our GHG Emission Breakdown 37 Our business activities, guided by our strategy and climate goals have supported a 15% reduction in total emissions since our FY20 base year Breakdown of our Largest Australian GHG Emission Sources We enhanced our GHG emission reduction target. 800.0 14.00 We set an int
Slide 44: PNI Foundation
PNI Foundation 38 • 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 45: PNI Foundation donations
PNI Foundation 39 • Total donations by the Foundation in 2023 were over $665,000, 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 direct su
Slide 46: PNI Foundation partnerships across six categories
PNI Foundation Multiple partnerships with 17 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 legislative reform,
Slide 47: Conclusion
06 Conclusion Ian Macoun, Managing Director
Slide 48: Pinnacle differentiation
Pinnacle differentiation 42 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 49: Summary
Summary 43 Pinnacle’s diverse Affiliate stable and extensive distribution channels fosters resilience and growth Fundamentals in • Highly regarded Affiliates with strong local and international investment consultant and research house ratings place for organic • Diverse stable of Affiliates (asset c
Slide 50: Q&A
Q&A
Slide 51: Appendix
Appendix
Slide 52: Continuing strong investment performance of Affiliates
46 Continuing strong investment performance of Affiliates to 31 December 2023 81% of Pinnacle Affiliates’ strategies and products (with a track record exceeding 5 years) have out- performed their benchmarks over the 5 years to 31 December 2023 The investment returns for each fund or strategy shown a
Slide 53: Continuing strong investment performance of Affiliates
47 Continuing strong investment performance of Affiliates to 31 December 2023 81% of Pinnacle Affiliates’ strategies and products (with a track record exceeding 5 years) have out- performed their benchmarks over the 5 years to 31 December 2023 The investment returns for each fund or strategy shown a
Slide 54: Affiliates' investment performance
48 In ce p ti o n In ce p ti o n 1Y 3Y (p . a . ) 5Y (p . a . ) 10Y (p . a . ) (p . a . ) d a te Pin n a cle In vestm en t Ma n a g em en t H yp eri o n Asset M a n a g em en t - Gro ss Perfo rm a n ce Hyp erio n Au stra lia n Gro w th Co m p a n ies Fu n d 24.50% 2.62% 13.78% 11.01% 12.22% 1/10/200
Slide 55: Affiliates' investment performance December 2023
49 Affiliates’ investment performance 31 December 2023 The investment returns for each fund or strategy shown are for information purposes only. Unless otherwise stated, the investment returns have been calculated for the relevant period in AUD (with distributions reinvested) and are gross of applic
Slide 56: 1H FY24 funds under management
1H FY24 funds under management 50 Two Trees Pinnacle (total) Hyperion Plato Solaris RCL Palisade Antipodes Spheria 5 Firetrail Metrics 4 Omega 3,5 Longwave Riparian Coolabah Aikya Five V 6 Langdon ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m)1 ($m)1 ($m) ($m) ($m)2 ($m) ($m) ($m) FUM Histor
Slide 57: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 51 2023 Zenith Fund Awards: 2022 Financial Newswire/SQM Research Fund Manager of the Year Awards • Metrics Credit Partners – Australian Fixed Interest Winner • Spheria – Australian Equities – Small/Mid Cap Winner • Aikya Investment Management
Slide 58: Affiliate commitment to ESG
Affiliate commitment to ESG 52 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 59: Pinnacle Affiliates: emerging markets, global and credit
Pinnacle Affiliates 53 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 60: Pinnacle Affiliates: equities and private equity
Pinnacle Affiliates 54 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 61: Pinnacle Affiliates: small cap equities and private debt
Pinnacle Affiliates 55 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 • Headquartered
Slide 62: Pinnacle Affiliates: Private Infrastructure, Impact & Real Assets
Pinnacle Affiliates 56 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 63: Pinnacle Affiliates: Agriculture, Food & Water
Pinnacle Affiliates 57 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 64: Disclaimer: research ratings
Disclaimer 58 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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