Partners Group Holding AG · SIX:PGHN
Partners — H1 2016 Earnings Presentation
38 slides from Partners's earnings presentation, Sep 13, 2016
Slide 1: Semi-annual results 2016
Semi-annual results 2016 13 September 2016 - André Frei, Co-CEO | Christoph Rubeli, Co-CEO | Dr. Cyrill Wipfli, CFO André Frei Co-CEO | David Layton Co-Head Private Equity
Slide 2: Corporate highlights H1 2016
SEMI-ANNUAL RESULTS 2016 2 Corporate highlights H1 2016 Clients Investments Platform EUR 4.6 billion USD 4.9 billion +2 offices new new >850 client private markets professionals commitments investments globally Denver, US Manila, Philippines Note: Clients listed include direct clients of Partners Gr
Slide 3: Table of contents
SEMI-ANNUAL RESULTS 2016 3 Table of contents 1 Financials 2 Investments 3 Clients
Slide 4: A strong financial result across the board
FINANCIALS 4 A strong financial result across the board Financial highlights H1 2016 Management fees1 Performance fees EBITDA margin IFRS net profit (in CHF million) (in CHF million) (in CHF million) +26% 4x +2%-points +19% 322 255 58% 60% 254 214 Pearl 131 32 H1 15 H1 16 H1 15 H1 16 H1 15 H1 16 H1
Slide 5: Sustained growth in AuM and number of employees
FINANCIALS 5 Sustained growth in AuM and number of employees Total assets under management (in EUR billion) 49.1 AuM 46.0 #877 37.6 #840 employees 31.6 #746 27.8 24.1 #701 20.7 #625 16.6 #574 15.5 #447 12.6 8.6 #334 #361 5.5 #273 #175 #137 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 20
Slide 6: Strong growth across all key financials; EBITDA margin back to 60%
FINANCIALS 6 Strong growth across all key financials; EBITDA margin back to 60% Key financials (in CHF million) H1 2015 H1 2016 1 Revenues, of which 287 +58% 453 Management fees 2 255 +26% 322 Performance fees 32 4x 131 EBITDA 166 +64% 272 EBITDA margin 58% 60% Financial result (adj.) 19 23 3 Pearl
Slide 7: Revenue growth outpaces AuM growth due to higher performance fees
FINANCIALS 7 Revenue growth outpaces AuM growth due to higher performance fees Revenues (in CHF million) 453 Revenues1 131 Performance fees 69 287 32 322 Management fees2 255 H1 2015 H1 2016 1 Revenues include revenues from management services, net, other operating income and share of results of ass
Slide 8: Performance fee payments “shifted” from 2010-2015 to 2016-2020
FINANCIALS 8 Performance fee payments “shifted” from 2010-2015 to 2016-2020 In the long run, performance fees are expected to grow in line with past AuM growth • H1 2016 “catch-up” mature programs passing their performance hurdles, following 300 49.1 50.0 46.0 strong value creation over the last six
Slide 9: Stable management fees will continue to be the main source of revenues
FINANCIALS 9 Stable management fees will continue to be the main source of revenues Outlook on performance fees Performance fees around catch-up: 29% (H1) around 10% More modest catch-ups above 20% long-term average expected between 2017-2020 Performance fees1 “quasi-recurring” Over 250 programs hig
Slide 10: Stable revenue margin with focus on management fees
FINANCIALS 10 Stable revenue margin with focus on management fees Revenue margin (calculated as revenues divided by average daily AuM) 1.74% 1.36% 1.36% 1.39% 1.39% 1.38% 1.35% 1.26% 1.33% 29% 1.25% 1.23% 4% 9% 6% 10% 7% 9% 1% 0% 8% 4% 99% 100% 93% 96% 96% 91% 92% 94% 91% 90% 71% 2006 2007 2008 2009
Slide 11: Fixed costs increase in line with AuM growth; variable costs increase alongside performance fees
FINANCIALS 11 Fixed costs increase in line with AuM growth; variable costs increase alongside performance fees Key financials (in CHF million) H1 2015 H1 2016 Revenues1 287 +58% 453 Total costs, of which 121 +49% 181 Personnel expenses (fix) -84 +27% -106 Personnel expenses (perf. fee-related) -13 4
Slide 12: ~60% EBITDA margin target on new business unchanged
FINANCIALS 12 ~60% EBITDA margin target on new business unchanged EBITDA margin development New AuM; FX (EUR/CHF) influences EBITDA margin of existing business performance fees 80% 2 73% 74% 73% 70% 1.8 70% 66% 61% 61% 62% 61% 60% 59% 60% 1.6 ~60% 60% 1.64 1.59 1.55 1.57 1.51 1.4 50% 1.38 1.06 1.2 1
Slide 13: Foreign exchange rates and their impact on EBITDA margin
FINANCIALS 13 Foreign exchange rates and their impact on EBITDA margin Currency exposure in H1 2016 Others Others GBP 4% GBP 4% Others EUR 3% 3% ~15% ~5% USD ~20% ≈ ≠ Management GBP AuM EUR EUR Costs fees ~15% ~40%1 56% 56% USD USD 100% 37% 37% CHF ~45% EUR/USD foreign exchange fluctuations have a g
Slide 14: Strong balance sheet, ROE of 42% in H1 2016 and continued high earnings visibility
FINANCIALS 14 Strong balance sheet, ROE of 42% in H1 2016 and continued high earnings visibility Balance sheet (as of 30 June 2016) • Equity: CHF 1.2 billion • Net liquidity (incl. working capital facilities to investment programs): CHF 479 million • Investments in own programs: around CHF 575 milli
Slide 15: Table of contents
SEMI-ANNUAL RESULTS 2016 15 Table of contents 1 Financials 2 Investments 3 Clients
Slide 16: Partners Group H1 2016 investment platform overview
INVESTMENTS 16 Partners Group H1 2016 investment platform overview Investment platform update 35 direct investments across the globe Asia-Pacific/ • More than 600 private markets professionals North America Europe RoW globally • Over 850 total employees 17 direct 12 direct 6 direct investments inves
Slide 17: Continued significant deal flow in H1 2016
INVESTMENTS 17 Continued significant deal flow in H1 2016 Deal flow H1 2016 Directs Secondaries Primaries Private equity 615 USD 41 billion 96 Private debt 251 n/a 2 Private real estate 660 USD 19 billion 121 Private infrastructure 430 USD 5 billion 58 Total 1’956 USD 65 billion 277 USD 2.7 billion
Slide 18: Private markets investment activities in H1 2016 across the globe and across all asset classes
INVESTMENTS 18 Private markets investment activities in H1 2016 across the globe and across all asset classes Private markets investments during H1 2016 (based on volumes) Europe Primaries Directs North America 28% 22% 55% 47% Equity USD USD 4.9 billion 4.9 billion Debt Secondaries Asia-Pacific/ 23%
Slide 19: In times of high valuations, focus on structural growth drivers
INVESTMENTS 19 In times of high valuations, focus on structural growth drivers Valuations are stretched and may be peaking Private equity 10 "Value preservation and growth potential are key" 8 Private debt 6 "Private lenders continue in % 4 to be in demand" 2 Private infrastructure "Capitalizing on
Slide 20: Private equity
INVESTMENTS 20 Private equity 1 Defensive leaders 2 Platform companies 3 Category winners Identify customer needs in Grow a company beyond Identify growth trends through specialty markets current markets and set-up vertical sector research US-based global provider of outsourced Market-leading proper
Slide 21: Private debt
INVESTMENTS 21 Private debt 1 Attractive niches 2 Creative structures 3 Add-on financings Attractive risk/return profiles Financing of successful Support buy-and-build in niche markets entrepreneurs and businesses strategies Sweden-based solution provider for patients US-based provider of cloud-base
Slide 22: Private infrastructure
INVESTMENTS 22 Private infrastructure 1 Value enhancement potential 2 Transformative growth 3 Market-leading platforms Focus on growth and Capitalize on fundamental Build scale in markets with efficiency improvement shifts in infrastructure needs consolidation potential Merkur Taiwanese solar Offsho
Slide 23: Private real estate
INVESTMENTS 23 Private real estate 1 Buy below replacement cost 2 Buy, fix, sell 3 Develop core Reposition and re-lease by Apply owner-oriented Develop properties that will under-cutting market rents initiatives to older buildings meet end-user demand IPS Logistics, Port of Brisbane, Australia Bank
Slide 24: H1 2016 realization examples
INVESTMENTS 24 H1 2016 realization examples1 Private equity Private debt Private infrastructure Private real estate Heyford Park US' largest transaction-based Norwegian garden outlet Desalination plant in San A 1'250-acre master-planned healthcare cost management chain with operations in Diego, Cali
Slide 25: Table of contents
SEMI-ANNUAL RESULTS 2016 25 Table of contents 1 Financials 2 Investments 3 Clients
Slide 26: More than 850 institutional investors worldwide
CLIENTS 26 More than 850 institutional investors worldwide Public pension funds and SWFs Insurance companies Private pension funds Banks and distribution partners Note: Clients listed include direct clients of Partners Group (USA) Inc., Partners Group AG or their affiliates, and investors in funds m
Slide 27: 13% annualized net AuM growth in H1 2016
CLIENTS 27 13% annualized net AuM growth in H1 2016 Total assets under management (in EUR billion) +4.6 -1.4 -0.1 Tail-downs: -1.0 Other +0.4 EUR 49.1 = USD 54.5 = CHF 53.1 Redemptions: -0.3 FX -0.5 EUR 46.0 Guidance No guidance provided provided 2015 New money/ Tail-downs & Other factors* H1 2016 c
Slide 28: Client demand in H1 2016 continued to be highly diversified
CLIENTS 28 Client demand in H1 2016 continued to be highly diversified across regions, size and types of clients AuM by region (as of 30 June 2016) AuM by type (as of 30 June 2016) Australia Distribution partners/ Asia & 5% private individuals Middle East Switzerland 12% 8% 16% Family offices, banks
Slide 29: Diversified client demand for standard and customized portfolio solutions
CLIENTS 29 Diversified client demand for standard and customized portfolio solutions across all asset classes AuM by asset class (as of 30 June 2016) AuM by client (as of 30 June 2016) Largest client Private infrastructure 4% Top 2-5 clients 11% 9% Top 6-10 clients Private debt Private equity 7% 13%
Slide 30: Fundamental return drivers differ in private and public markets
CLIENTS 30 Fundamental return drivers differ in private and public markets 5-year excess return by investment year in % p.a. Fundamental return drivers Outperformance strongest in an environment characterized Y Return from income by at least modest growth but elevated valuations + G Return from grow
Slide 31: The Partners Group Expected Return Framework
CLIENTS 31 The Partners Group Expected Return Framework: Expected broad industry annual returns by asset class Private equity Private real estate Private infrastructure Public markets 18 18 18 18 Gross return by component 16 16 16 16 14 14 14 14 12 12 12 12 10 10 10 10 8 8 8 8 6 6 6 6 4 4 4 4 2 2 2
Slide 32: More details on Expected Return Framework in Private Markets Navigator
CLIENTS 32 More details on Partners Group's Expected Return Framework can be found in the latest edition of our Private Markets Navigator Partners Group's Private Markets Navigator for H2 2016 Source: Callan Associates, 2016 Capital Market Projections.
Slide 33: Expected gross client demand of EUR 8-9 billion for full-year 2016
CLIENTS 33 Expected gross client demand of EUR 8-9 billion for full-year 2016 AuM, client demand and other effects (in EUR billion, estimates) Full-year 2016 expectations 8.0-9.0 Client demand 8.4 46.0 6.1 37.6 Tail-downs & (2.5-3.5) redemptions* 31.6 (0.0) +/- FX & others** (0.0) -2.4 -2.1 Tail-dow
Slide 34: Outlook
CLIENTS 34 Outlook Platform growth Employee growth Culture, value & philosophy Continuing to expand Attracting talented Preserving our culture, our presence individuals who are values and philosophy along around the globe committed to our purpose our growth path Number of employees ~900 840 Denver,
Slide 35: Contacts
35 Contacts Zugerstrasse 57 Investor relations contact: 6341 Baar-Zug Philip Sauer Switzerland Tel.: +41 41 784 6660 T +41 41 784 60 00 Email: philip.sauer@partnersgroup.com partnersgroup@partnersgroup.com Media relations contact: www.partnersgroup.com Jenny Blinch Tel.: +41 41 784 6526 Email: jenny
Slide 36: Disclaimer
IMPORTANT NOTICE 36 Disclaimer This material has been prepared solely for purposes of illustration and discussion. Under no circumstances should the informa tion contained herein be used or considered as an offer to sell, or solicitation of an offer to buy any security. Any security offering is subj
Slide 37: Disclaimer
IMPORTANT NOTICE 37 Disclaimer Material notes to investors based in the Dubai International Financial Centre This material relates to a financial product which is not subject to any form of regulation or approval by the Dubai Financial Services Authority ("DFSA"). The DFSA has no responsibility for
Slide 38: Disclaimer
IMPORTANT NOTICE 38 Disclaimer Material notes to investors based in Singapore: Partners Group (Singapore) Pte. Ltd.holds a Capital Markets Services Licence (Fund Management) of the Monetary Authority of Singapore (MAS), Licence No. CMS1000493-1. The collective investment scheme(s) mentioned in this
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