Partners Group Holding AG · SIX:PGHN
Partners — FY2017 Earnings Presentation
40 slides from Partners's earnings presentation, Mar 20, 2018
Slide 1: Annual Results 2017
Annual Results 2017 Dr. Peter Wuffli, Chairman | André Frei, Co-CEO | Christoph Rubeli, Co-CEO | Philip Sauer, Co-Head Group Finance & Corporate Development Bilge Ogut Private Equity Europe | David Layton Head Private Equity
Slide 2: Table of contents
ANNUAL RESULTS 2017 2 Table of contents 1 Introduction by the Chairman 2 Clients 3 Investments 4 Financials
Slide 3: The Partners Group formula
INTRODUCTION BY THE CHAIRMAN 3 The Partners Group formula Attractive industry Partners Group business model Rising private Institutional Outperformance Multi-asset class markets asset growth across cycles offerings allocations + Complex client Globally needs/market integrated service consolidation o
Slide 4: Partners Group was one of the most valuable listed private markets investment managers globally
INTRODUCTION BY THE CHAIRMAN 4 Partners Group was one of the most valuable listed private markets investment managers globally at year-end 2017 Market capitalization in USD billion1 Key figures 20172 Rank Firm Market Cap 1'245 1 The Blackstone Group 38 CHF million revenue 2 Partners Group 18 3 KKR 1
Slide 5: Entrepreneurial governance enables a long-term approach to value creation
INTRODUCTION BY THE CHAIRMAN 5 Entrepreneurial governance enables a long-term approach to value creation Rotation in Board responsibilities proposed Private market governance • The Board will propose Steffen Meister as its next Chairman1 practices enable long-term value • Steffen Meister will succee
Slide 6: Table of contents
ANNUAL RESULTS 2017 6 Table of contents 1 Introduction by the Chairman 2 Clients 3 Investments 4 Financials
Slide 7: 2018 Annual General Meeting for clients
CLIENTS 7 2018 Annual General Meeting for clients • 13-16 March • >275 clients attended • >25 countries represented • EUR >5 trillion AuM represented
Slide 8: Continued increase in institutional investors' allocation to private markets globally
CLIENTS 8 Continued increase in institutional investors' allocation to private markets globally Partners Group's clients Private markets allocation over the long term Over 1'000 institutional clients Institutional investors’ intentions for their private markets allocations over the long term¹ Decrea
Slide 9: 14% net AuM growth in 2017
CLIENTS 9 14% net AuM growth in 2017 Total AuM development (in EUR billion) +13.3 -4.1 -1.5 Tail-downs: -3.2 Other +1.4 Redemptions: -0.9 EUR 61.9 = USD 74.4 = CHF 72.5 FX -2.9 EUR 54.2 Guidance Guidance No guidance provided: provided: provided +10 to +12 -3 to -4 2016 New money/ Tail-downs & Other
Slide 10: AuM diversified across regions and types of clients
CLIENTS 10 AuM diversified across regions and types of clients AuM by region (as of 31 December 2017) AuM by type (as of 31 December 2017) Asia & Australia Distribution partners / Middle East 5% private individuals Switzerland Public pension 9% 14% 17% funds South America 23% 2% Germany & Family off
Slide 11: Expected gross client demand in 2018
CLIENTS 11 Expected gross client demand in 2018 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) -2.6 Tail-downs & = To
Slide 12: The private markets industry put into perspective
CLIENTS 12 The private markets industry put into perspective Market AuM 2017 Market size3 Market growth (CAGR last five years)5 Debt markets1 USD Private equity ~1.6% market share4 2.8 USD 189 trillion trillion 9% USD 0.8 Private real estate trillion 7% Stock markets2 USD 81 trillion USD 0.6 Private
Slide 13: Private markets have evolved
CLIENTS 13 Private markets have evolved Transformative growth in private markets "Scaling private markets" "Moment of truth" (1995-2010) (2010-2025) • From private equity to real Institutionalization 1 assets of business • From financial engineering to New challenges/ Commoditization of certain fina
Slide 14: Scale and specialization are pre-requisites for success in private markets today
CLIENTS 14 Scale and specialization are pre-requisites for success in private markets today 1 Institutionalization 2 Commoditization 3 Transformation of valuations Driving intermediation and execution Growing beta characteristics in liquid Structurally elevated valuation levels speed loan and parts
Slide 15: Table of contents
ANNUAL RESULTS 2017 15 Table of contents 1 Introduction by the Chairman 2 Clients 3 Investments 4 Financials
Slide 16: Partners Group 2017 investment platform overview
INVESTMENTS 16 Partners Group 2017 investment platform overview Investment platform update 77 direct investments across the globe • Over 1'000 professionals North Asia-Pacific/ Europe America RoW • USD 13.3 billion invested in private markets opportunities on behalf of our clients 27 direct 34 direc
Slide 17: Continued significant deal flow
INVESTMENTS 17 Continued significant deal flow First screenings in 2017 Directs Secondaries Primaries Private equity 1'482 USD 88 billion 193 Private debt 424 n/a n/a Private real estate 1'084 USD 39 billion 204 Private infrastructure 853 USD 10 billion 77 Total screened 3'843 USD 137 billion 474 US
Slide 18: Private markets investment activities in 2017 across the globe and all asset classes
INVESTMENTS 18 Private markets investment activities in 2017 across the globe and all asset classes Private markets investments during 2017 Primaries North America Europe 21% 36% 51% Equity USD USD Directs 13.3 billion 13.3 billion 62% Secondaries 17% Debt Asia-Pacific/ RoW 13% Note: figures exclude
Slide 19: Private equity
INVESTMENTS 19 Private equity Investment strategies Transformative trends & select focus areas Active management is the only road to growth Cost structure Industry Growing optimization 4.0 middle class Europe US Asia & EMs Platform Business process Specialization & International 1 outsourcing digita
Slide 20: Private real estate
INVESTMENTS 20 Private real estate Investment strategies Transformative trends & select focus areas Unlocking hidden potential Demographic shifts Technology growth E-commerce Europe US Asia-Pacific Buy below re- Urbanization & Substantially leased XXL 1 affordable housing assets placement cost wareh
Slide 21: Private infrastructure
INVESTMENTS 21 Private infrastructure Investment strategies Transformative trends & select focus areas Investing in construction-stage assets Global growth of Communication Energy renewable energy infrastructure infrastructure Europe Europe US Platform 1 Offshore wind Fiber networks Natural gas oppo
Slide 22: Private debt
INVESTMENTS 22 Private debt Investment strategies Focus on attractive assets across debt markets Recession resilience, stable revenues, high cash conversion Liquid Direct & loans subordinated loans Creative US Europe Asia-Pacific 1 structures Attractive sub- 2 sectors Global company providing World'
Slide 23: Key drivers of private markets performance
INVESTMENTS 23 Key drivers of private markets performance Value creation approach 2017 results1 Sector growth Value creation Exposure Equity control / Long-term / Governance / Full insight Economic Financial Corporate Business >200 ongoing value Revenue growth development development development c
Slide 24: Partners Group retains high scores from UN PRI for responsible investment
INVESTMENTS 24 Partners Group retains high scores from UN PRI for responsible investment Partners Group's 2017 UN PRI report for responsible investment • Strategy & Governance A+ • Private equity A+ • Private real estate A • Private debt A Results highlight strong ESG program and leadership in respo
Slide 25: Table of contents
ANNUAL RESULTS 2017 25 Table of contents 1 Introduction by the Chairman 2 Clients 3 Investments 4 Financials
Slide 26: Sustained growth in AuM and number of employees over the last decade
FINANCIALS 26 Sustained growth in AuM and number of employees over the last decade Total AuM (in EUR billion) 61.9 AuM 54.2 46.0 #1'036 #930 employees 37.6 #840 31.6 #746 27.8 24.1 #701 20.7 #625 15.5 16.6 #574 12.6 #361 #447 8.6 #334 5.5 #273 #175 #137 2005 2006 2007 2008 2009 2010 2011 2012 2013 2
Slide 27: Strong results across the board
FINANCIALS 27 Strong results across the board Financial highlights 2017 Avg. AuM¹ Revenues2 EBITDA Profit (in CHF billion) (in CHF million) (in CHF million) (in CHF million) +18% +28% +37% +35% 66 1'245 56 825 973 752 601 558 2016 2017 2016 2017 2016 2017 2016 2017 Driven by Supported by high late R
Slide 28: Revenues increase more than costs, driving EBITDA and IFRS profit
FINANCIALS 28 Revenues increase more than costs, driving EBITDA and IFRS profit Key financials (in CHF million) 2016 2017 Revenues,1 of which 973 +28% 1'245 Management fees 2 679 +29% 873 Performance fees 294 +26% 372 EBITDA 601 +37% 825 EBITDA margin 62% 66% Financial result 38 36 Income tax expens
Slide 29: Management fee growth outpaces AuM growth
FINANCIALS 29 Management fee growth outpaces AuM growth due to higher late management fees & other income and higher-margin management fees Revenues (in CHF million) 1'245 Revenues1 973 69 372 Performance fees (30%) 294 105 (30%) late management fees & other income 57 873 Management fees2 (70%) 679
Slide 30: Management fees may vary between calendar years during fundraising
FINANCIALS 30 Management fees may vary between calendar years during fundraising Illustrative example 2015 2016 2017 2018 2019 2020 2021 2027 Start Interim End fundraising closings fundraising & investing Management fees 10-12 years management fees¹ Fund size e.g. Partners Group Direct Equity Time 1
Slide 31: Continued solid performance fee development
FINANCIALS 31 Continued solid performance fee development In the long run, performance fees are expected to grow in line with AuM growth 450 61.9 400 54.2 372 350 46.0 294 300 37.6 250 31.6 6-9 years 27.8 200 24.1 20.7 150 15.5 16.6 100 12.6 8.6 64 5.5 43 39 34 50 16 13 0 2005 2006 2007 2008 2009 20
Slide 32: Management fees will continue to be the main source of revenues
FINANCIALS 32 Management fees will continue to be the main source of revenues Outlook on performance fees around Performance fees around 10% 30% 20-30% Performance fees1 “quasi-recurring” Over 250 programs, highly diversified across vintage years, regions and industries around Management fees2 70-80
Slide 33: Stable revenue margin on management fees; higher margins due to higher performance fees
FINANCIALS 33 Stable revenue margin on management fees; higher margins due to higher level of performance fees Revenue margin (calculated as revenues divided by average daily AuM) 1.89% 1.74% 30% 1.35% 1.36% 1.36% 1.39% 1.39% 1.38% 1.25% 1.26% 1.23% 1.33% 1.33% 1.25% 1.26% 1.30% 1.26% 1.31% 1.24% 1.
Slide 34: Revenues grew more than costs
FINANCIALS 34 Revenues grew more than costs Revenues, costs and EBITDA development (in CHF million) 2016 2017 1 Revenues 973 +28% 1'245 Total costs, of which -372 +13% -420 Personnel expenses -318 +13% -359 Operating expenses -55 +10% -60 EBITDA 601 +37% 825 EBITDA margin 62% +4%-points 66% 1 Revenu
Slide 35: EBITDA margin target of ~60% confirmed
FINANCIALS 35 EBITDA margin target of ~60% confirmed as the firm is committed to further invest in its platform EBITDA margin development New revenues & performance fees 80% 2 70% 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 CHF 1.07 1.09 1.06 1.2 40% USD/ 1 CHF
Slide 36: Foreign exchange rates and their impact on the EBITDA margin
FINANCIALS 36 Foreign exchange rates and their impact on the EBITDA margin Currency exposure in 2017 others others GBP GBP 4% 4% 7% 7% Others EUR ~15% ~5% EUR EUR USD 53% 53% ~20% ≈ ≠ Management GBP AUM EUR fees ~15% Costs1 56% USD USD 36% 36% CHF ~45% EUR/USD foreign exchange fluctuations have a gr
Slide 37: Solid profit contribution and balance sheet
FINANCIALS 37 Solid profit contribution and balance sheet IFRS profit1 (in CHF million) Balance sheet 2017 752 1'266 43% CHF million return on 558 net liquidity2 equity 396 648 1'956 CHF million CHF million in own investments3 equity 2015 2016 2017 1 For the financial year ended 31 December 2017. 2
Slide 38: Proposed dividend of CHF 19.00 per share
FINANCIALS 38 Proposed dividend of CHF 19.00 per share based on solid operating results and confidence in the future potential of the business Dividend payment since IPO (CHF per share) 20.00 Dividend/share 19.00* 70 Total AuM (in EUR billion) 60 16.00 15.00 Dividend / share in CHF Total AuM in EUR
Slide 39: Contacts
39 Contacts Zugerstrasse 57 Philip Sauer 6341 Baar-Zug Co-Head Group Finance & Corporate Development Switzerland T +41 41 784 66 60 T +41 41 784 60 00 Email: philip.sauer@partnersgroup.com partnersgroup@partnersgroup.com www.partnersgroup.com ZUG | DENVER | HOUSTON | NEW YORK | SÃO PAULO | LONDON |
Slide 40: Disclaimer
IMPORTANT NOTICE 40 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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