Partners Group Holding AG · SIX:PGHN
Partners — FY2016 Earnings Presentation
44 slides from Partners's earnings presentation, Mar 21, 2017
Slide 1: Annual results 2016
21 MARCH 2017 Annual results 2016 Dr. Peter Wuffli, Chairman of the Board of Directors | André Frei, Co-CEO | Christoph Rubeli, Co-CEO | Dr. Cyrill Wipfli, CFO Dr. Peter Wuffli Chairman of the Board of Directors | Dr. Kevin Lu Chairman of Asia and Head Investment Solutions Asia
Slide 2: Table of contents
ANNUAL RESULTS 2016 2 Table of contents 1 Introduction by the Chairman 2 AuM & value creation 3 Investments & exits 4 Financials 2016
Slide 3: Partners Group Expected Return Framework by asset class
INTRODUCTION BY THE CHAIRMAN 3 The Partners Group Expected Return Framework: expected broad industry returns per annum by asset class Private equity Private real estate Private infrastructure Public markets 18 Equity/debt 18 Equity/debt 18 Equity/debt 18 Equity/debt Gross return by component 16 16 1
Slide 4: Institutional investors continue to embrace private market assets
INTRODUCTION BY THE CHAIRMAN 4 Institutional investors continue to embrace private market assets 5% outperformance of private markets1 Anticipated long-term changes to asset allocations2 Private equity outperformance vs. Survey of institutional investors’ intentions for MSCI World TR (indexed) – las
Slide 5: Distinctive perspective on asset allocation
INTRODUCTION BY THE CHAIRMAN 5 Distinctive perspective on asset allocation Liquidity profile & performance potential Less liquid Small caps Subordinated Development Private credit -stage markets Mid caps First lien credit real assets Large syndicated Core real Large caps assets Return credit Emergin
Slide 6: The Partners Group "formula"
INTRODUCTION BY THE CHAIRMAN 6 The Partners Group "formula" Attractive industry Partners Group business model Rising private Investment Institutional Multi-asset class markets platform delivering asset growth offerings allocations outperformance + Complex client Globally needs/market integrated serv
Slide 7: Second most valuable listed private markets investment manager globally
INTRODUCTION BY THE CHAIRMAN 7 Partners Group ranks as the second most valuable listed private markets investment manager globally at year-end 2016 Market capitalization1 Key figures 2016 Rank Firm Market Cap 973 CHF million 1 The Blackstone Group 32 revenue 2 Partners Group 13 3 KKR 12 4 Apollo Glo
Slide 8: Table of contents
ANNUAL RESULTS 2016 8 Table of contents 1 Introduction by the Chairman 2 AuM & value creation 3 Investments & exits 4 Financials 2016
Slide 9: 18% net AuM growth in 2016
AUM & VALUE CREATION 9 18% net AuM growth in 2016 Total assets under management (in EUR billion) +9.2 -2.6 +1.6 Tail-downs: -2.0 FX +0.4 EUR 54.2 = USD 57.2 Redemptions: -0.6 Performance & = CHF 58.1 others +1.2 EUR 46.0 Guidance No guidance provided provided 2015 New money/ Tail-downs & Other facto
Slide 10: Demand driven by clients across all private markets asset classes
AUM & VALUE CREATION 10 Demand driven by new and existing clients across all private markets asset classes Breakdown of assets raised by asset class Private • Global integrated Private infrastructure equity • Global direct 19% Programs & customized mandates (AuM growth: +33%) Private • Global integr
Slide 11: Diversified client base across regions and type of investors
AUM & VALUE CREATION 11 Diversified client base across regions and type of investors AuM by region (as of 31 December 2016) AuM by type (as of 31 December 2016) Australia Distribution partners/ Asia/ 5% Switzerland private individuals Middle East 16% 13% 8% South America Public pension Family office
Slide 12: Diversified client base across individual institutions; cross-asset class investing continues
AUM & VALUE CREATION 12 Diversified client base across individual institutions; cross-asset class investing continues AuM by client (as of 31 December 2016) Number of asset classes per client1 (as of 31 December 2016) Largest Invested in more than client Top 2-5 42% 60% one asset class 4% clients 9%
Slide 13: Expected gross client demand in 2017
AUM & VALUE CREATION 13 Expected gross client demand in 2017 AuM, client demand and other effects (in EUR billion, estimates) Full-year 2017 expectations 8-10 9.2 Client demand 54.2 8.4 46.0 (-3 to -4) Tail-downs & 6.1 37.6 (-1.0) redemptions* 31.6 (0.0) -2.6 +/- FX & others** (0.0) -2.4 Tail-downs
Slide 14: Expected Return Framework applied to private equity
AUM & VALUE CREATION 14 Partners Group's Expected Return Framework applied to private equity Expected return components Expected return Return from income Return from growth Valuation change R ≡ Y + G + ∆P Annual cash flows from The rate at which the The change in the price the investment and value
Slide 15: Universal Services of America: focus on platform roll-out
AUM & VALUE CREATION 15 Universal Services of America: focus on platform roll-out Expected Return from Return from Valuation return R ≡ income Y + growth G + change ∆P β α Top line • 22 add-on acquisitions Provider of security guard • USD 100m net accounts growth services, janitorial services Key dr
Slide 16: VAT: focus on top- and bottom-line growth
AUM & VALUE CREATION 16 VAT: focus on top- and bottom-line growth* Expected Return from Return from Valuation return R ≡ income Y + growth G + change ∆P β Top line α • Build-out of sales and technical reach into East Asian markets VAT is a leading developer, • Increase after-sales services manufactu
Slide 17: Local deal teams with global Industry Value Creation specialists
AUM & VALUE CREATION 17 The power of combining local deal teams with global Industry Value Creation specialists The hard work in 2016 The tangible impact The financial results1 >160 on-going >80 initiatives >10'000 +13 14% value creation realized in new customer jobs added initiatives 2016 segments
Slide 18: Table of contents
ANNUAL RESULTS 2016 18 Table of contents 1 Introduction by the Chairman 2 AuM & value creation 3 Investments & exits 4 Financials 2016
Slide 19: 2016 investment platform overview
INVESTMENTS & EXITS 19 Partners Group's 2016 investment platform overview Investment platform update 74 direct investments across the globe Asia-Pacific/ • More than 700 private markets professionals North America Europe RoW globally • Over 900 total employees 36 direct 28 direct 10 direct investmen
Slide 20: Continued significant deal flow in 2016
INVESTMENTS & EXITS 20 Continued significant deal flow in 2016 First screenings in 2016 Directs Secondaries Primaries Private equity 1'168 USD 82 billion 269 Private debt 476 n/a 2 Private real estate 1'448 USD 36 billion 249 Private infrastructure 702 USD 12 billion 88 Total screened 3'794 USD 129
Slide 21: Private markets investment activities in 2016 across the globe
INVESTMENTS & EXITS 21 Private markets investment activities in 2016 across the globe and all asset classes Private markets investments during 2016 Primaries North America Europe 20% 44% 39% Equity USD USD 11.7 billion Secondaries 11.7 billion Directs 15% 65% Debt Asia-Pacific/ RoW 17% Note: figures
Slide 22: Current challenges in private markets
INVESTMENTS & EXITS 22 Current challenges in private markets Continuing low global GDP growth¹ Abundant liquidity and increasing competition 10 Dry powder in USD bn, 2014 – 2016² Real GDP growth 8 Emerging economies 1'470 6 • Absolute amount of dry 4 1'380 powder at record high in % 2 World 1'254 •
Slide 23: Private equity: Building on growth
INVESTMENTS & EXITS 23 Private equity Investment focus 2016 investment examples Building on growth Australia: one of the largest Australian US: leading global provider of childcare groups and providers of IT systems maintenance early childhood education and support services 1 Platform companies 2 De
Slide 24: Private debt: Opportunities remain outside traditional debt markets
INVESTMENTS & EXITS 24 Private debt Investment focus 2016 investment examples Opportunities remain outside traditional debt markets Australia: global provider of risk US: retail insurance brokerage that management and services and provides insurance and 1 Attractive niches mortgage settlement servic
Slide 25: Private infrastructure: Looking for trend-based investment opportunities
INVESTMENTS & EXITS 25 Private infrastructure Investment focus 2016 investment examples Looking for trend- based investment opportunities US: developer, owner and operator Australia: High Capacity Metro Trains of solar power production Public Private Partnership Project 1 Transformative facilities i
Slide 26: Private real estate: Transformative trends redefine real estate
INVESTMENTS & EXITS 26 Private real estate Investment focus 2016 investment examples Transformative Riverplace Tower, Real estate portfolio, Jacksonville FL Nordics trends redefine real estate US: Riverplace Tower is an over Nordics: 99 assets are concentrated 441sqft Class A office building across
Slide 27: 2016 realizations: USD 10 billion gross portfolio distributions
INVESTMENTS & EXITS 27 2016 realizations: USD 10 billion gross portfolio distributions in 20161 Private equity Private debt Leading supplier of medical uniforms US' largest healthcare cost Norwegian garden outlet chain with US provider of premium snacks and and footwear in the US management company
Slide 28: Table of contents
ANNUAL RESULTS 2016 28 Table of contents 1 Introduction by the Chairman 2 AuM & value creation 3 Investments & exits 4 Financials 2016
Slide 29: Strong financial performance across the board
FINANCIALS 2016 29 Strong financial performance across the board Financial highlights 2016 Management fees1 Performance fees EBITDA margin IFRS profit (in CHF million) (in CHF million) (in CHF million) +22% >4x +3%-points +41% 679 554 558 59% 62% 396 294 Pearl2 64 2015 2016 2015 2016 2015 2016 2015
Slide 30: Sustained growth in AuM over the last decade
FINANCIALS 2016 30 Sustained growth in AuM over the last decade, in line with growth of employees Total assets under management (in EUR billion) 54.2 AuM 46.0 #930 employees 37.6 #840 31.6 #746 27.8 #701 24.1 20.7 #625 15.5 16.6 #574 12.6 #447 8.6 #361 #334 5.5 #273 #175 #137 2005 2006 2007 2008 200
Slide 31: A straightforward growth model
FINANCIALS 2016 31 A straightforward growth model AuM (average; EUR) Revenue margin Revenues1 (CHF) EBITDA margin Profit (CHF) Continued AuM Revenue margin Strong growth of FX support; Profit and growth driven by a driven by management and stable margin EBITDA superior client performance fees perfor
Slide 32: Strong growth across all key financials
FINANCIALS 2016 32 Strong growth across all key financials; EBITDA margin slightly over 60% target Key financials (in CHF million) 2015 2016 1 Revenues, of which 619 +57% 973 2 Management fees 554 +22% 679 Performance fees 64 >4x 294 EBITDA 367 +63% 601 EBITDA margin 59% 62% Financial result (adj.)
Slide 33: Revenue growth outpaces AuM growth due to higher performance fees
FINANCIALS 2016 33 Revenue growth outpaces AuM growth due to higher performance fees Revenues (in CHF million) 973 Revenues1 69 294 Performance fees 619 64 678 Management fees2 554 2015 2016 1 Revenues include revenues from management services, net, other operating income and share of results of ass
Slide 34: Performance fee payments shifted from 2010-2015 to 2016-2020
FINANCIALS 2016 34 Performance fee payments “shifted” from 2010-2015 to 2016-2020 In the long run, performance fees are expected to grow in line with AuM growth 54.2 300 294 46.0 250 37.6 200 31.6 27.8 150 24.1 20.7 6-9 years 100 15.5 16.6 12.6 64 8.6 43 50 39 34 5.5 16 13 0 2005 2006 2007 2008 2009
Slide 35: Outlook on long-term average performance fee contribution
FINANCIALS 2016 35 Outlook on the long-term average performance fee contribution Revenue composition around Performance fees around 10% catch-up: 30% 20-30% Performance fees1 “quasi-recurring” Over 200 programs highly diversified across vintage years, regions and industries around Management fees2 7
Slide 36: Stable revenue margin with focus on management fees
FINANCIALS 2016 36 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% 30% 1.25% 1.23% 4% 9% 6% 10% 7% 9% 1% 0% 8% 4% 99% 100% 70% 93% 96% 96% 91% 92% 94% 91% 90% 2006 2007 2008
Slide 37: Total costs driven mainly by personnel costs
FINANCIALS 2016 37 Total costs driven mainly by personnel costs Key financials (in CHF million) 2015 2016 1 Revenues 619 +57% 973 Total costs, of which 251 +48% 372 2 Personnel expenses (regular) -176 +14% -200 Personnel expenses (performance fee-related) -26 4.5x -117 Operating expenses -49 +12% -5
Slide 38: ~60% EBITDA margin target on new business unchanged
FINANCIALS 2016 38 ~60% EBITDA margin target on new business unchanged EBITDA margin development New revenues & Foreign exchange influences EBITDA margin of existing business performance fees 80% 2 70% 1.8 61% 62% 61% 60% 59% 62% 1.6 ~60% 60% 1.4 1.23 EUR/ 1.21 1.23 1.21 50% 1.2 CHF 1.07 1.09 1.06 4
Slide 39: Foreign exchange rates and their impact on EBITDA margin
FINANCIALS 2016 39 Foreign exchange rates and their impact on EBITDA margin Currency exposure in 2016 others others GBP GBP 5% 5% 4% 4% Others EUR ~15% ~5% EUR EUR USD 54% 54% ~20% ≈ ≠ Management GBP AUM EUR fees Costs ~15% ~40%1 56% 100% USD USD 37% 37% CHF ~45% EUR/USD foreign exchange fluctuation
Slide 40: Strong balance sheet, ROE of 40% in 2016
FINANCIALS 2016 40 Strong balance sheet, ROE of 40% in 2016 and continued high earnings visibility Assets, of which Liabilities2, of which Dividend 895 1'541 3% dividend CHF million CHF million yield² net liquidity¹ equity 401m 277m 226m 72% 576 40% 68% 71% CHF million return on 2014 2015 2016 in ow
Slide 41: Dividend of CHF 15.00 proposed
FINANCIALS 2016 41 Dividend of CHF 15.00 proposed based on solid operating results and confidence about the future potential of the business Dividend payment since IPO (CHF per share) 16.00 Dividend/share Total AuM (in EUR billion) 15.00* 60 14.00 50 Dividend / share in CHF 12.00 2016: 72% Total AuM
Slide 42: Contacts
42 Contacts Investor relations contact: Zugerstrasse 57 Philip Sauer 6341 Baar-Zug Tel.: +41 41 784 66 60 Switzerland Email: philip.sauer@partnersgroup.com Tel.: +41 41 784 60 00 Fax: +41 41 784 60 01 Media relations contact: Jenny Blinch www.partnersgroup.com Tel.: +41 41 784 65 26 partnersgroup@pa
Slide 43: Disclaimer
IMPORTANT NOTICE 43 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 44: Disclaimer
IMPORTANT NOTICE 44 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
Partners Group Holding — FY2016 Earnings Presentation on 6ix