Partners Group Holding AG · SIX:PGHN
Partners — H1 2019 Earnings Presentation
33 slides from Partners's earnings presentation, Sep 10, 2019
Slide 1: Semi-annual results 2019
10 SEPTEMBER 2019 Semi-annual results 2019 André Frei, Co-CEO | David Layton, Co-CEO | Philip Sauer, Co-Head Group Finance & Corporate Development Christina Han Industry Value Creation | Alex Cho Head Client Solutions Korea For Institutional Use Only – Not for Public Distribution
Slide 2: Table of contents
SEMI-ANNUAL RESULTS 2019 2 Table of contents 1 Investments 2 Clients 3 Financials
Slide 3: About our portfolio
INVESTMENTS 3 About our portfolio Partner to business Entrepreneurial ownership Corporate assets (EUR 40 billion AuM1) Healthcare Industrials Consumer & services Technology Real assets / financing (EUR 40 billion AuM2) Infrastructure Real estate Real asset services Financing We are "responsible for
Slide 4: Q4 2018 market correction affected exit and investment activity in private equity
INVESTMENTS 4 The pick-up in volatility caused by the Q4 2018 market correction affected exit and investment activity in private equity Rebounding exit activity shows correction was short-lived Partners Group Global private equity buyout exit activity1 Private markets investment activity2 (in USD bi
Slide 5: Significant potential ahead for private markets investors
INVESTMENTS 5 Significant potential ahead for private markets investors Global equity investment volumes in private equity, real estate and infrastructure since 20171 USD >3 trillion equity investments since 2017 globally Americas Europe Asia-Pacific & Rest of World USD ~1.6 USD ~0.9 USD ~0.7 trilli
Slide 6: Only the most attractive assets on a global basis are selected for investment
INVESTMENTS 6 Only the most attractive assets on a global basis are selected for investment Deal flow H1 2019 Direct assets Portfolio assets ~300 private markets Private equity managers ~1,300 assets Private debt ~USD 85 billion Private real estate portfolios Private infrastructure 2% invested # 29
Slide 7: Private markets investment activities in H1 2019 across the globe and all asset classes
INVESTMENTS 7 Private markets investment activities in H1 2019 across the globe and all asset classes Private markets investments during H1 20191 Europe Prim. Equity 30% Portfolio North USD assets USD America 7 billion 7 billion Direct 57% 40% assets Sec. 60% Debt Asia-Pacific/ Rest of World 13% 1 F
Slide 8: Macro summary: thematic sourcing and value add to create growth and resilience
INVESTMENTS 8 Macro summary: thematic sourcing and value add to create growth and resilience Global GDP growth Lower rates for longer Investment implications • Late stage expansion continues at • Fed to support (global) growth but • Rethink defensiveness. Create a modest pace. US more resilient not
Slide 9: Private equity
INVESTMENTS 9 Private equity 62 20.2% >300 >60 USD billion net IRR on private direct invested in direct equity private equity private equity1 investments2 professionals3 investments4 Key investment strategies Selected investment sub-sectors that exhibit transformative growth themes Platform companie
Slide 10: Private debt
INVESTMENTS 10 Private debt 32 4.6% 8.5% >100 USD billion unlevered net IRR unlevered net IRR private invested in on first lien on second lien debt private debt1 investments2 investments2 professionals3 Key investment strategies Selected investment sub-sectors that exhibit transformative growth them
Slide 11: Private real estate
INVESTMENTS 11 Private real estate 18 12.7% >100 >80 net IRR on USD billion private direct real estate invested in private real estate real estate opportunities real estate1 professionals3 investments1 portfolio2 Key investment strategies Selected investment sub-sectors that exhibit transformative g
Slide 12: Private infrastructure
INVESTMENTS 12 Private infrastructure 10 14.8% >100 >40 USD billion net IRR on private direct invested in private infrastructure infrastructure infrastructure infrastructure1 direct investments2 professionals3 investments1 Key investment strategies Selected investment sub-sectors that exhibit transf
Slide 13: Table of contents
SEMI-ANNUAL RESULTS 2019 13 Table of contents 1 Investments 2 Clients 3 Financials
Slide 14: Sustained growth in assets under management over the last decade
CLIENTS 14 Sustained growth in assets under management over the last decade Total assets under management1 (in EUR billion) 79.8 AuM Private 72.8 10 infrastructure 1326 # employees 61.9 Private 13 1203 real estate 54.2 46.0 1036 Private 17 debt 930 37.6 31.6 840 27.8 746 24.1 20.7 701 40 Private 15.
Slide 15: Intensified hiring activity over the last twelve months
CLIENTS 15 Intensified hiring activity over the last twelve months1 Annual growth of average AuM and number of employees (until 30 June 2019) Since 2010 Since 2014 Since 2017 Since H1 2018 (last 9.5 years) (last 4.5 years) (last 2.5 years) (last 12 months) +22% +18% +19% +16% +14% +14% +14% +15% Avg
Slide 16: Despite increasing complexity, clients continue to seek private markets exposure
CLIENTS 16 Despite increasing complexity, clients continue to seek private markets exposure Changing rate environment Retirement savers' access to private markets Jan. '19 Aug. '19 Aug. '19 Aug. '19 Public Pensions Brexit is back, How pension funds Japanese pension Pour More Money and investors are
Slide 17: AuM diversified across regions and types of clients
CLIENTS 17 AuM diversified across regions and types of clients AuM by region (as of 30 June 2019) AuM by type of clients (as of 30 June 2019) Asia & Australia Distribution partners / Middle East 6% Switzerland private individuals Public pension 9% 16% 16% funds South America Asset managers, 21% 2% G
Slide 18: AuM well-diversified across client base and program structure
CLIENTS 18 AuM well-diversified across client base and program structure AuM by client (as of 30 June 2019) AuM by program structure (as of 30 June 2019) Largest client 3% Top 2-5 clients Perpetual/structured 7% programs Top 6-10 clients >20% 6% Mandate Top 11-20 clients solutions EUR 7% EUR <40% 80
Slide 19: Expected client demand in 2019: full-year guidance reconfirmed
CLIENTS 19 Expected client demand in 2019: full-year guidance reconfirmed AuM, client demand and other effects (in EUR billion) Full-year 2019 expectations 13 - 16 Client demand 13.3 72.8 13.3 61.9 9.2 54.2 (-6.5 to -7.5) Tail-downs &1 (-2.4) redemptions 8.4 46.0 (-5.5) -4.8 +/- FX & others2 37.6 (-
Slide 20: ESG initiatives enhance operational results
CLIENTS 20 ESG initiatives enhance operational results Energy Management Driver Safety Program Community Investment Employee Satisfaction Food Waste Reduction Relieving local facility Detailed visibility of First community Empowered HR functions Deployment of directors from manual driving habits and
Slide 21: Partners Group retains high scores from UN PRI for Responsible Investment
CLIENTS 21 Partners Group retains high scores from UN PRI for Responsible Investment Partners Group's 2019 UN PRI report for Responsible Investment Partners Group Median score score Strategy & Governance A+ A Direct private equity A+ B Direct private infrastructure A A Direct private real estate A B
Slide 22: Table of contents
SEMI-ANNUAL RESULTS 2019 22 Table of contents 1 Investments 2 Clients 3 Financials
Slide 23: Strong increase in management fees with lower performance fees result in moderate EBIT growth
FINANCIALS 23 Strong increase in revenues from management fees in combination with lower performance fees result in moderate EBIT growth H1 2019 financial highlights Avg. AuM¹ Management fees Revenues2 EBIT (in CHF billion) (in CHF million) (in CHF million) (in CHF million) +16% +14% +4% +1% 86 74 6
Slide 24: Sustained development of management and performance fees
FINANCIALS 24 Sustained development of management and performance fees Revenues1 (in CHF million) 659 682 Revenues1 130 565 69 175 (19%) Performance fees (27%) 147 51 late management fees (26%) & other income3 34 552 Management fees2 53 (81%) 484 (73%) 418 (74%) H1 2017 H1 2018 H1 2019 1 Revenues in
Slide 25: Management fees will continue to be the main source of revenues
FINANCIALS 25 Management fees will continue to be the main source of revenues Outlook on performance fees around Performance fees around 10% 19% 20-30% Performance fees1 “quasi-recurring” Over 300 programs, highly diversified across vintage years, regions and industries around Management fees2 70-80
Slide 26: In the long run, performance fees are expected to grow in line with AuM
FINANCIALS 26 In the long run, performance fees are expected to grow in line with AuM AuM development in EUR billion and performance fee development in CHF million 700 ~20-30% 79.8 of total 600 72.8 revenues 500 61.9 …equals future performance 54.2 400 372 fee potential 46.0 (CHF million) 324 294 30
Slide 27: Stable revenue margin on management fees
FINANCIALS 27 Stable revenue margin on management fees Revenue margin1 1.89% 1.74% 1.71% 1.55% 1.35% 1.36% 1.39% 1.25% 1.26% 1.36% 1.33% 1.39% 1.38% 19% 1.23% 1.30% 1.31% 1.33% 1.29% 1.28% 1.25% 1.24% 1.23% 1.26% 1.26% 1.23% 1.24% 1.22% 1.18% 81% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 201
Slide 28: Platform build-out accelerated; personnel expenses grew disproportionally
FINANCIALS 28 Platform build-out accelerated; personnel expenses grew disproportionally Revenues, costs and EBIT development (in CHF million) H1 2018 H1 2019 Revenues1 659 +4% 682 Total costs, of which -230 +9% -250 Personnel expenses -189 +6% -201 Personnel expenses (regular) -119 +25% -149 Personn
Slide 29: Target EBIT margin of ~60% for newly generated management fees
FINANCIALS 29 Target EBIT margin of ~60% for newly generated management fees as well as for performance fees on existing and new AuM EBIT1 margin development 80% 2 1.8 70% 65% 65% 63% 59% 60% 59% 59% 61% 1.6 58% 60% 1.4 ~60% 1.23 EUR/ 1.21 1.23 1.21 50% 1.11 1.15 1.13 CHF 1.07 1.09 1.06 1.2 40% 1 US
Slide 30: Foreign exchange rate changes can impact the firm's EBIT margin
FINANCIALS 30 Foreign exchange rate changes can impact the firm's EBIT margin Currency exposure in H1 2019 others others GBP 5% GBP 5% 9% 9% Others EUR EUR EUR SGD ~5% ~5% 50% 50% ~10% USD ~25% ≈ ≠ EUR Management GBP AuM Costs1 56% fees ~15% CHF USD USD ~40% 36% 36% EUR/USD foreign exchange fluctuat
Slide 31: Overview of key financials and solid balance sheet
FINANCIALS 31 Overview of key financials and solid balance sheet Key financials (in CHF million, except for per share data) Balance sheet (as of 30 June 2019) H1 2018 H1 2019 Revenues1, of which 659 +4% 682 Management fees2 Performance fees 484 175 552 130 0.9 41% CHF billion return on Total costs3
Slide 32: Contacts
32 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 33: Disclaimer
IMPORTANT NOTICE 33 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
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