Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Shareholder Meeting (October 2023)
83 slides from Pinnacle Investment Management's shareholder meeting presentation, Oct 26, 2023
Slide 1: Welcome to the 2023 Annual General Meeting
For personal use only PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) Welcome to the 2023 Annual General Meeting The meeting will commence at 9:00am (Sydney time) 27 th October, 2023
Slide 2: Disclaimer
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 26 October 2023. PNI has prepared this presentation based on information available
Slide 3: Agenda
Agenda 3 Formal Business 4 For personal use only Managing Director’s Address 17 FY23 Themes 19 FY23 Financial Results 22 Latest Update – Q1 FY24 28 Growth Agenda 35 Affiliate Updates 45 Corporate Sustainability 50 Q&A 59 Additional Information 60
Slide 4: Formal Business
For personal use only Formal Business
Slide 5: Formal business
Formal business 5 • Item 1 – Tabling of FY23 financial statements For personal use only • Item 2 – Adoption of Remuneration Report • Item 3 – Re-election of Directors • Item 4 – Issue of shares to Andrew Chambers as part of the Omnibus Incentive Plan
Slide 6: How to ask a question (for shareholders joining online)
How to ask a question (for shareholders joining online) 6 • To ask a written question, select the Q & A icon For personal use only • Select the topic your question relates to from the drop-down list • Type your question in the text box and press the send button • To ask a verbal question, follow the
Slide 7: How to vote (for shareholders joining online)
How to vote (for shareholders joining online) 7 • When the poll is open, select the vote icon at the top of the screen For personal use only • To vote, select either For, Against or Abstain • You will see a vote confirmation • To change or cancel your vote, click on "click here to change your vote"
Slide 8: Item 1 – Tabling of FY23 financial statements
For personal use only Item 1 – Tabling of FY23 financial statements 8
Slide 9: Item 2 – Adoption of Remuneration Report
Item 2 – Adoption of Remuneration Report 9 • To consider and, if thought fit, pass the following as an ordinary resolution: For personal use only “To adopt the Remuneration Report for the financial year ended 30 June 2023.”
Slide 10: Item 2 – Adoption of Remuneration Report
Item 2 – Adoption of Remuneration Report 10 RESOLUTION 2 Resolution by proxy Adoption of Remuneration Report % of eligible proxies in favour 99.38 For personal use only Total number votes cast 103,402,940 For 102,767,673 Against 475,882 Open usable 159,385 Excluded votes 18,369,030 Abstain 33,469
Slide 11: Item 3(a) - Re-election of Alan Watson
Item 3(a) - Re-election of Alan Watson 11 • To consider and, if thought fit, pass the following as an ordinary resolution: For personal use only “That Alan Watson, who retires from the office of Director by rotation and, being eligible, offers himself for re-election, is re-elected as a Director.”
Slide 12: Item 3(a) - Re-election of Alan Watson
Item 3(a) - Re-election of Alan Watson 12 RESOLUTION 3(a) Resolution by proxy Re-election of Alan Watson % of eligible proxies in favour 99.3 For personal use only Total number votes cast 121,774,175 For 120,921,616 Against 692,062 Open usable 160,497 Excluded votes Nil Abstain 31,264
Slide 13: Item 3(b) - Re-election of Lorraine Berends
Item 3(b) - Re-election of Lorraine Berends 13 • To consider and, if thought fit, pass the following as an ordinary resolution: For personal use only “That Lorraine Berends, who retires from the office of Director by rotation and, being eligible, offers herself for re-election, is re-elected as a Di
Slide 14: Item 3(b) - Re-election of Lorraine Berends
Item 3(b) - Re-election of Lorraine Berends 14 RESOLUTION 3(b) Resolution by proxy Re-election of Lorraine Berends % of eligible proxies in favour 98.93 For personal use only Total number votes cast 121,747,396 For 120,439,678 Against 1,147,221 Open usable 160,497 Excluded votes Nil Abstain 58,043
Slide 15: Item 4 - Issue of shares to Andrew Chambers under Omnibus Incentive Plan
Item 4 - Issue of shares to Andrew Chambers as part of the Omnibus Incentive Plan 15 • To consider and, if thought fit, pass the following as an ordinary resolution: For personal use only “That, for the purposes of Listing Rule 10.14 and for all other purposes, approval is given for the issue of ful
Slide 16: Item 4 - Issue of shares to Andrew Chambers under Omnibus Incentive Plan
Item 4 - Issue of shares to Andrew Chambers as part of the Omnibus Incentive Plan 16 RESOLUTION 4 Resolution by proxy Issue of Loan Shares to Andrew Chambers % of eligible proxies in favour 97.91 For personal use only Total number votes cast 119,342,256 For 116,840,455 Against 2,342,183 Open usable
Slide 17: Managing Director's Address
For personal use only Managing Director’s Address Ian Macoun
Slide 18: Managing Director's Address
Managing Director’s Address 18 • FY23 Themes • FY23 Results • Financial Results For personal use only • Performance Fees • Funds Under Management • Latest Update – Q1 FY24 • FUM & Flows • Performance • Growth Agenda • Three Horizons of Growth • Horizon 2 - deliberate investment drives high returns o
Slide 19: FY23 Themes
FY23 Themes 19 Investment for future growth continued; performance fees show benefits of diversified platform; new business conditions remain challenging, particularly in retail • Benefits of Pinnacle’s diversified platform continue to be demonstrated For personal use only • Strong performance rebou
Slide 20: FY23 Themes
FY23 Themes 20 1. Benefits of Pinnacle’s diversified platform continue to be demonstrated • Diversified base of Affiliates – by asset class and style – and investors – by channel and geography – has delivered positive net inflows, solid performance fees and steady revenues in a challenging and volat
Slide 21: FY23 Themes
FY23 Themes 21 5. Horizon 2 investment program continued and set to deliver future growth, within Pinnacle and Affiliates – significant, short-term profit impacts • Pinnacle and Affiliates have continued to invest – will drive strategic growth over the medium term Short-term profit impact in FY23 (P
Slide 22: FY23 financial highlights
FY23 financial highlights 22 Diversified platform demonstrating resilience in challenging market conditions. Investments made to support earnings growth in the future Affiliate FUM / Revenue (100%) NPAT / EPS Affiliate FUM (100%) 30 Jun 23 30 Jun 22 Change FY23 FY22 Change For personal use only Aggr
Slide 23: Track record of earnings growth throughout market cycles
Track record of earnings growth throughout market cycles 23 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 For personal use only CAGR (five years to CAGR (five y
Slide 24: Track record of earnings growth throughout market cycles
Track record of earnings growth throughout market cycles 24 • Pinnacle Affiliate revenues are linked, in part, to movements in equities markets. Whilst markets ended the year predominantly in positive territory, there was significant volatility throughout, with REIT markets in particular remaining u
Slide 25: Performance fee strategies
Performance fees 25 24 strategies with the potential to deliver performance fees – solid result for the FY after a very modest 1H FY23 Closing FUM & number of strategies subject to performance fee The annual reliability of overall performance fee revenue has been For personal use only • improved by:
Slide 26: Strong performance rebound across multiple Affiliates in 2H FY23
Strong performance rebound across multiple Affiliates in 2H FY23 26 Performance fees disappointed in 1H FY23 with the volatility in equities markets and rapid changes in lending rates, but rebounded in 2H FY23, demonstrating the value of Pinnacle’s diversified platform of Affiliates Of particular no
Slide 27: Funds under management
Funds under management 27 Gross FUM ($bn) 1 • FUM has grown at a CAGR of 23.8% p.a. over the last ten years (22.2% excluding $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021) • Markets were mixed over FY23: S&P/ASX 300 index up 9.4% For person
Slide 28: Latest Update Q1 FY24 – FUM and flows
Latest Update Q1 FY24 – FUM and flows 28 • Total Affiliate FUM (at 100%) at 30 September 2023 of $90.4 billion – down $1.5 billion or 2% from $91.9 billion at 30 June 2023 • Total Affiliate Retail FUM (at 100%) at 30 September 2023 of $23.5 billion – up $0.8 billion or 3.5% from $22.7 billion at 30
Slide 29: Latest Update Q1 FY24 – FUM and flows
Latest Update Q1 FY24 – FUM and flows 29 • Headline net flows positive for the quarter in markets that remain volatile and challenging For personal use only • Retail net inflows resilient with notable inflows in private credit, private equity and fixed income • International momentum continuing to b
Slide 30: Continuing strong investment performance of Affiliates
30 Continuing strong investment performance of Affiliates to 30 September 2023 81% of Pinnacle Affiliates’ strategies For personal use only and products (with a track record exceeding 5 years) have out- performed their benchmarks over the 5 years to 30 September 2023 The investment returns for each
Slide 31: Continuing strong investment performance of Affiliates
31 Continuing strong investment performance of Affiliates to 30 September 2023 81% of Pinnacle Affiliates’ strategies For personal use only and products (with a track record exceeding 5 years) have out- performed their benchmarks over the 5 years to 30 September 2023 The investment returns for each
Slide 32: Affiliates' investment performance 30 September 2023
32 Inception Inception 1Y 3Y (p.a.) 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment Management Hyperion Asset Management - Gross Performance Hyperion Australian Growth Companies Fund 12.25% 2.98% 7.71% 9.55% 11.57% 1/10/2002 Outperformance -0.67% -7.80% 1.09% 2.15% 2.90% Hyperion Small Growth C
Slide 33: Affiliates' investment performance September 2023
33 Affiliates’ investment performance 30 September 2023 For personal use only 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)
Slide 34: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 34 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 35: Growth Agenda
For personal use only Growth Agenda
Slide 36: Three Horizons of growth
Three Horizons of growth 36 Prepared for, and seeking, further expansion opportunities – committed to taking advantage of the significant offshore opportunity to evolve into a global multi-affiliate by ‘exporting our model’ – but maintaining discipline on quality and valuation • Continue to build Pi
Slide 37: Future growth drivers
Future growth drivers 37 An excellent platform in place to move ahead with sustained growth Distribution Platform Robust, Flexible, Start-Up Affiliate Existing Affiliate Acquisitive Expansion Operating Platform Enablement Expansion Growth For personal use only • Investment in (and • Stable / robust,
Slide 38: Horizon 2 – deliberate investment drives high returns over time
38 Horizon 2 – deliberate investment drives high returns over time 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 Examples of previous Hor
Slide 39: Horizon 2 – current status
39 Horizon 2 – current status 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: For
Slide 40: Horizon 2 – broad range of diversified initiatives
40 Horizon 2 – broad range of diversified initiatives 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, incl
Slide 41: Horizon 2 – accelerator for new Affiliates and strategies
41 Horizon 2 – highly valuable accelerator for new Affiliates and strategies • The aggregate net cost to Pinnacle of these initiatives, within Pinnacle and Affiliates, was approximately $14m in FY23 (Pinnacle share, after tax) • Investment made in partnership with Affiliates, demonstrating the commi
Slide 42: Horizon 2 - Metrics
Horizon 2 - Metrics 42 Metrics continues to invest heavily to further diversify and grow their business and create additional origination capability • Metrics has +120 employees including 70+ origination professionals located in Sydney, Melbourne and Auckland For personal use only • Metrics also con
Slide 43: Horizon 2 - Metrics
Horizon 2 - Metrics 43 Metrics continues to invest heavily to further diversify and grow their business and create additional origination capability • Metrics’ profit in FY23, particularly 2H, was negatively impacted by these Horizon 2 investments, as well as the impact of For personal use only cons
Slide 44: Horizon 3
44 Horizon 3 • 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 (see slide 49 for latest update) For personal use only • We have explored many Horizon 3 opportunities with the following characterist
Slide 45: Affiliate Updates
For personal use only Affiliate Updates
Slide 46: Latest Update – Coolabah Capital Investments
46 Latest Update – Coolabah Capital Investments Market-leading returns • No.1 long duration fixed-income manager in Composite Bond Index universe over 1yr, 3yrs, 5yrs and since its inception in 2017* For personal use only • Long Short Credit Fund returned 10.3% to 10.5% net of fees over the last 12m
Slide 47: Latest Update – Langdon Equity Partners
Latest Update – Langdon Equity Partners 47 Global small cap investment boutique based in Toronto, Canada • Pinnacle’s first Affiliate partnership in North America Registered with the Ontario Securities Commission in June 2022 For personal use only • • Pinnacle holds a 32.5% equity interest in Langdo
Slide 48: Latest Update - Aikya
48 Latest Update - Aikya Global emerging market equity investment boutique based in London, UK • First Pinnacle Affiliate based outside of Australia Established 2020, London, England For personal use only • • Highly regarded investment team • Profitable within 3 years, entering FY24 with strong mome
Slide 49: Latest Update – Five V Capital
Latest Update – Five V Capital 49 Leading Australian and New Zealand mid-market private equity firm • Growth partner to some of Australia and New Zealand's market-leading, innovative companies in industries with strong tailwinds Team of 34 (up from 12 in December 2021, when Five V and Pinnacle forme
Slide 50: Corporate Responsibility
For personal use only Corporate Responsibility
Slide 51: Our Sustainability Strategy
Our Sustainability Strategy 51 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 52: Our GHG Emissions Breakdown
Our GHG Emissions Breakdown 52 Our business activities, guided by our strategy and climate goals have supported a 15% reduction in total emissions since our FY20 base year For personal use only We enhanced our GHG emission reduction target. 800.0 14.00 We set an intensity target to reduce our tonnes
Slide 53: Pinnacle Charitable Foundation
53 Pinnacle Charitable Foundation • Pinnacle is passionate about enabling better lives through investment excellence. This belief is strongly reflected in Pinnacle’s commitment – together with Affiliates – to the Pinnacle Charitable Foundation • The Foundation’s focus is on growing the reach, sustai
Slide 54: Pinnacle Charitable Foundation
54 Pinnacle Charitable Foundation • Total donations by the Foundation in FY23 were over $620,000, primarily directed towards 14 long term not-for-profit (NFP) partners as well as two additional recipients of the 2023 PNI employee choice one-off donations. Support was also provided for initiatives al
Slide 55: Pinnacle Charitable Foundation
Pinnacle Charitable Foundation 55 • Multiple partnerships with 14 NFPs are driving long term sustainable impact across six core categories: For personal use only Mental wellbeing – supporting positive mental health together with illness prevention and early intervention Sexual, domestic and family v
Slide 56: Managing Director's Address – Conclusion
For personal use only Managing Director’s Address – Conclusion 56 • Platform and distinctive business model remain intact • Ambitions, strategies and growth plans not diminished
Slide 57: Pinnacle differentiation
Pinnacle differentiation 57 Australia’s leading ‘multi-affiliate’ investment firm For personal use only 1. Distinguished from competitors 2. High quality, experienced, 3. All the advantages, benefits and by comprising the highest quality dedicated, passionate superior conditions of a investment mana
Slide 58: Summary
Summary 58 Pinnacle’s diverse Affiliate stable and extensive distribution channels fosters resilience and growth Fundamentals in place • Highly regarded Affiliates with strong local and international investment consultant and research house ratings for organic sales growth Diverse stable of Affiliat
Slide 59: Q&A
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Slide 60: Additional information
For personal use only Additional information
Slide 61: FY23 In Review
For personal use only FY23 In Review
Slide 62: FY23 financial results
FY23 financial results 62 FY23 ($M) FY22 ($M) % Change • NPAT attributable to shareholders of $76.5m (marginal increase on PINNACLE FY22) Revenue1 45.5 46.0 -1% • Performance fees earned by Pinnacle Affiliates, post-tax, 2,3 contributed $14.7m of Pinnacle’s NPAT in FY23 ($16.6m in FY22) For personal
Slide 63: Balance sheet
Balance sheet 63 30 Jun 2023 ($M) 30 Jun 2022 ($M) Change • Cash and PI of $187.2m CURRENT ASSETS Cash and cash equivalents 27.6 38.3 (28%) • Includes $148.5m invested in strategies managed by Financial assets 159.6 139.9 14% Pinnacle Affiliates For personal use only Total cash and financial assets
Slide 64: Investment performance
Investment performance 64 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. For personal
Slide 65: Pinnacle has a diversified Affiliate platform
Pinnacle has a diversified Affiliate platform 65 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 f
Slide 66: Diversification and resilience of core earnings
Diversification resilience of core earnings 66 A broadly diversified platform in place to move ahead with sustained growth Change in FUM by Asset Class (%) 30 Jun 23 For personal use only FY23 FUM by Affiliate (%) 1 13% 30 Jun 16 1.6 8% 1.5 0.4 Resolution Capital 1.6 7 41% 3.6 Hyperion 24 4% Plato
Slide 67: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 67 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 Affil
Slide 68: Continued industry awards
For personal use only Continued industry awards 68 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: partnering with Lonsec: • Metrics Credit Part
Slide 69: FY23 Market Update – Institutional & International
For personal use only FY23 Market Update – Institutional & International Andrew Chambers
Slide 70: Institutional & International: Market Update
Institutional & International: Market Update 70 International flows exceed $1bn; domestic flows rebound in second half Australia International -$150m net flows in FY23 $1.1bn net flows in FY23 For personal use only • • • $2.3bn net flows in 2H 23 • $420m net flows in 2H 23 • Robust 2H inflows into A
Slide 71: Institutional & International: Market Outlook
Institutional & International: Market Outlook 71 Robust sales pipeline, diverse demand Australia International Australian equities (large & small cap) Global emerging market equites For personal use only • • • Global value equities • Global value equities • Global emerging market equities • Global s
Slide 72: FY23 Market Update – Wholesale & Retail
For personal use only FY23 Market Update – Wholesale & Retail Kyle Macintyre
Slide 73: Wholesale & Retail: Market Update
Wholesale & Retail: Market Update 73 Wholesale and Retail flows subdued, albeit positive in FY23 due to volatile market conditions Wholesale and Retail flows (Net) • Australian and Global equities • Outflows elevated in FY23 Global equities have experienced elevated outflows with a risk off sentimen
Slide 74: Wholesale & Retail: Market Outlook
Wholesale & Retail: Market Outlook 74 Pinnacle is well positioned to meet the evolving needs of Australian investors Investor demand for private assets is driving innovation Pinnacle affiliated private asset managers • • Strong demand for private assets in the wholesale market • Attractive risk adju
Slide 75: FY23 funds under management
75 For personal use only FY23 funds under management
Slide 76: Affiliate commitment to ESG
Affiliate commitment to ESG 76 All Pinnacle Affiliates embed ESG into their investment decision making process: For personal use only 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 Y
Slide 77: Affiliate Summaries
For personal use only Affiliate Summaries
Slide 78: Pinnacle Affiliates
Pinnacle Affiliates 78 Global Emerging Market Equities • High quality • Absolute return with downside protection • Concentrated portfolio For personal use only • Long term sustainable growth • Stewardship and Sustainability • Headquartered in London, United Kingdom Global and Emerging Markets Equiti
Slide 79: Pinnacle Affiliates
Pinnacle Affiliates 79 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 For pe
Slide 80: Pinnacle Affiliates
Pinnacle Affiliates 80 Global and Canadian Small Cap Equities • Active and Engaged owners of world class smaller companies • Blue Chip small cap, focusing on cash flow growth • Seek to identify and evaluate businesses that can compound intrinsic value at high rates over the For personal use only lon
Slide 81: Pinnacle Affiliates
Pinnacle Affiliates 81 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 82: Pinnacle Affiliates
Pinnacle Affiliates 82 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 83: Disclaimer
Disclaimer 83 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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