Partners Group Holding AG · SIX:PGHN
Partners — H1 2017 Earnings Presentation
51 slides from Partners's earnings presentation, Sep 12, 2017
Slide 1: Semi-annual results 2017
12 SEPTEMBER 2017 Semi-annual results 2017 André Frei | Christoph Rubeli | Dr. Cyrill Wipfli | Philip Sauer Manas Tandon Private Equity Asia | Cyrus Driver Head Private Equity Asia
Slide 2: Table of contents
SEMI-ANNUAL RESULTS 2017 2 Table of contents 1 Financials 2 Platform & clients 3 Portfolio management 4 Investments
Slide 3: Strong results across the board
FINANCIALS 3 Strong results across the board Financial highlights H1 2017 Average AuM Revenues¹ EBITDA IFRS profit (in EUR billion) (in CHF million) (in CHF million) (in CHF million) +20% +25% +37% +42% 57 565 374 48 453 359 272 254 H1 16 H1 17 H1 16 H1 17 H1 16 H1 17 H1 16 H1 17 Driven by Strong in
Slide 4: Revenues increase more than costs in H1 2017, driving EBITDA and IFRS profit
FINANCIALS 4 Revenues increase more than costs in H1 2017, driving EBITDA and IFRS profit Key financials (in CHF million) H1 2016 H1 2017 1 Revenues, of which 453 +25% 565 Management fees 2 322 +30% 418 Performance fees 131 +12% 147 EBITDA 272 +37% 374 EBITDA margin 60% 66% Financial result 23 30 In
Slide 5: Management fee growth outpaces AuM growth due to higher late management fees & other income
FINANCIALS 5 Management fee growth outpaces AuM growth due to higher late management fees & other income in H1 2017 Revenues (in CHF million) Revenues1 565 453 69 147 Performance fees (26%) 131 56 late management (29%) fees & other income 25 +20% Ø AuM 418 Management fees2 growth (EUR) (74%) 322 (71
Slide 6: Management fees may vary between calendar years during fundraising
FINANCIALS 6 Management fees may vary between calendar years during fundraising Illustrative example 2015 2016 2017 2018 2019 2020 2021 2027 H1 H2 Start Interim End fundraising closings fundraising & investing Management fees 10-12 years management fees¹ Fund size e.g. Partners Group Direct Equity;
Slide 7: Solid performance fee contribution in H1 2017
FINANCIALS 7 Solid performance fee contribution in H1 2017 In the long run, performance fees are expected to grow in line with AuM growth 350 57.8 54.2 49.1 294 300 46.0 250 37.6 200 31.6 27.8 24.1 147 150 131 20.7 6-9 years 100 15.5 16.6 12.6 64 64 8.6 43 39 50 5.5 34 16 13 0 2005 2006 2007 2008 20
Slide 8: Management fees will continue to be the main source of revenues
FINANCIALS 8 Management fees will continue to be the main source of revenues Outlook on performance fees around Performance fees around 10% 26% (H1) 20-30% Performance fees1 “quasi-recurring” Over 200 programs, highly diversified across vintage years, regions and industries around Management fees2 7
Slide 9: Continued solid management fee margin
FINANCIALS 9 Continued solid management fee margin Revenue margin (calculated as revenues divided by average daily AuM) 1.74% 1.84% 1.35% 1.36% 1.36% 1.39% 1.39% 1.38% 1.25% 1.26% 1.23% 1.33% 26% 4% 30% 0% 9% 6% 7% 9% 1% 8% 10% 4% 99% 100% 96% 96% 94% 93% 91% 91% 92% 90% 70% 74% 2006 2007 2008 2009
Slide 10: Revenues grew more than costs
FINANCIALS 10 Revenues grew more than costs Key financials (in CHF million) H1 2016 H1 2017 1 Revenues 453 +25% 565 Total costs, of which -181 +6% -191 Personnel expenses -156 +5% -163 Operating expenses -25 +16% -29 EBITDA 272 +37% 374 EBITDA margin 60% +6%-points 66% 1 Revenues include management
Slide 11: Long-term growth of employees in line with management fee growth
FINANCIALS 11 Long-term growth of employees in line with management fee growth Employee numbers grew in line with management fees Personnel expenses grew in line with revenues¹ Recurring management fees (in CHF million) Revenues¹ (indexed) Number of employees >1'000 Personnel expenses (indexed) 320%
Slide 12: EBITDA margin target of ~60% confirmed as the firm is committed to further investment
FINANCIALS 12 EBITDA margin target of ~60% confirmed as the firm is committed to further investment 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% 1.2 CHF 1.07 1.09 1.081.06 40% USD/ 1
Slide 13: Solid profit contribution and balance sheet
FINANCIALS 13 Solid profit contribution and balance sheet Profit (in CHF million) Balance sheet H1 2017 359 IFRS profit • CHF 702 million net liquidity¹ 254 • CHF 601 million in own investments • CHF 1'469 million shareholders' equity • 48% Return on Equity H1 2016 H1 2017 1 Comprises cash and cash
Slide 14: A straightforward growth model
FINANCIALS 14 A straightforward growth model AuM (average; EUR) Revenue margin Revenues1 (CHF) EBITDA margin IFRS profit (CHF) Continued AuM Robust Growth driven by both Target EBITDA Strong IFRS profit growth driven by a revenue management and margin of ~60% and EBITDA superior offering margin perf
Slide 15: Table of contents
SEMI-ANNUAL RESULTS 2017 15 Table of contents 1 Financials 2 Platform & clients 3 Portfolio management 4 Investments
Slide 16: H1 2017 corporate highlights
PLATFORM & CLIENTS 16 H1 2017 corporate highlights Offices Professionals Fundraising Organization Performance assessment Total fundraising Board of Directors Denver Quality ExCo ICs Manila 3.1 Corporate/ 2.1 1.4 411 Investment clients Singapore PE PD PI PR Departments Specialist ICs • Americas: Denv
Slide 17: Organizational structure
PLATFORM & CLIENTS 17 Organizational structure As of 1 July 2017 Members of the Board of Directors Peter Wuffli (Chairman), Charles Dallara (Vice Chairman) Group Internal Audit Steffen Meister (Delegate), Alfred Gantner, Grace del Rosario-Castaño, Marcel Erni, Michelle Felman, Urs Wietlisbach, Eric
Slide 18: Investment governance structure
PLATFORM & CLIENTS 18 Investment governance structure As of 1 July 2017 Relative Value Committee Investment Oversight Committee Definition of macroeconomic scenarios and Oversees processes in relation to assessment of private markets investment themes investment activities for clients Steffen Meiste
Slide 19: Committed to further investing in our platform
PLATFORM & CLIENTS 19 Committed to further investing in our platform March 2013 September 2017 Partners Group reports […] new investments of USD 11.7 billion in 2016… January 2017 • Further ramp-up of investment capacity Investments • Strategic hiring of senior professionals • Ensuring proximity to
Slide 20: Key private markets client trends
PLATFORM & CLIENTS 20 Key private markets client trends Clients Continued increase of private markets allocations Institutional investors’ intentions for their private • Continued growth of global markets allocations over the long term¹ institutional AuM Private Private Private Private equity debt r
Slide 21: Sustained growth in AuM and number of employees
PLATFORM & CLIENTS 21 Sustained growth in AuM and number of employees Total assets under management (in EUR billion) 57.8 AuM 54.2 46.0 #973 #930 employees 37.6 #840 31.6 #746 27.8 24.1 #701 20.7 #625 15.5 16.6 #574 12.6 #447 8.6 #361 5.5 #334 #273 #175 #137 2005 2006 2007 2008 2009 2010 2011 2012 2
Slide 22: AuM well-diversified across asset classes and client base
PLATFORM & CLIENTS 22 AuM well-diversified across asset classes and client base AuM by asset class (as of 30 June 2017) AuM by client (as of 30 June 2017) Largest client Private infrastructure 3% Top 2-5 clients 14% 8% Top 6-10 clients Private equity 6% Private debt 54% Top 11-20 clients EUR EUR 17%
Slide 23: AuM diversified across regions and types of clients
PLATFORM & CLIENTS 23 AuM diversified across regions and types of clients AuM by region (as of 30 June 2017) AuM by type (as of 30 June 2017) Australia Asia & Distribution partners/ 5% Middle East Switzerland private individuals 9% 17% 14% Public pension South America funds 2% Germany & Family offic
Slide 24: Expected gross client demand for the full-year 2017
PLATFORM & CLIENTS 24 Expected gross client demand for the full-year 2017 AuM, client demand and other effects (in EUR billion, estimates) Full-year 2017 expectations 10-12 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
Slide 25: Table of contents
SEMI-ANNUAL RESULTS 2017 25 Table of contents 1 Financials 2 Platform & clients 3 Portfolio management 4 Investments
Slide 26: Implementation of relative value, global deal sourcing and selection
PORTFOLIO MANAGEMENT 26 Implementation of relative value, global deal sourcing and selection Implementation across three main dimensions Global IC Considers current risk-return profiles across private markets and instruments when approving/ declining transactions and applying stress scenarios (top d
Slide 27: Partners Group's integrated investment philosophy
PORTFOLIO MANAGEMENT 27 Partners Group's integrated investment philosophy Expected Return Framework Relative value Investment themes Expected returns over typical Investment environment Transformation and value creation investment periods over the next 6-18 months themes in different sectors Focus o
Slide 28: Relative value: core views and investment themes change over time
PORTFOLIO MANAGEMENT 28 Relative value: core views and investment themes change over time 2010: buying 2012: in a period of 2014/16: assetflation H2 2017: in search of quality assets stagnation, proactive losing steam, search for platform-building at trough earnings ownership is pivotal transformati
Slide 29: Expected Return Framework: the importance of scenario thinking
PORTFOLIO MANAGEMENT 29 Expected Return Framework: the importance of scenario thinking One base case and three test scenarios Base case scenario Stock market rally • Low but steady growth, modest upward • Highly accommodative monetary policy trajectory for real economic growth combined with outsized
Slide 30: Implement targeted risk/return profiles for clients by combining equity and debt
PORTFOLIO MANAGEMENT 30 Implement targeted risk/return profiles for clients by combining equity and debt instruments across asset classes Portfolio management Value-add for investors For illustrative purposes only • ~40% of AuM in mandates¹ Private debt 30% Private equity 20% oriented Strengthen: bu
Slide 31: Strategic asset allocation
PORTFOLIO MANAGEMENT 31 Strategic asset allocation Risk Duration Return Yield Crucial investment Liquidity aspects to be considered Cash flows by each investor Responsible Diversification investment Ramp-up Investment time level steering Agreement on investment goals and definition of key investment
Slide 32: Creating a bespoke portfolio proposal
PORTFOLIO MANAGEMENT 32 Creating a bespoke portfolio proposal TVPI development Target returns Target allocation (type) Target allocation (asset class) 1.8 Return Investment Net 15% 1.6 Scenario IRR Multiple IRR Multiple 42% 40% 1.4 Middle range 15.6% 1.75x 11.6% 1.57x 20% 50% 1.2 Statistics (base ca
Slide 33: Additional investments required to maintain/increase private markets allocation
PORTFOLIO MANAGEMENT 33 Additional investments required to maintain/increase private markets allocation NAV target development 5% growth p.a. NAV target development 15% growth p.a. 600 Modest 600 Accelerated USD 300m additional USD 500m additional 400 investments needed 400 investments needed 200 20
Slide 34: Table of contents
SEMI-ANNUAL RESULTS 2017 34 Table of contents 1 Financials 2 Platform & clients 3 Portfolio management 4 Investments
Slide 35: Partners Group H1 2017 investment platform overview
INVESTMENTS 35 Partners Group H1 2017 investment platform overview Investment platform update 42 direct investments across the globe • Over 950 total employees North Asia-Pacific/ Europe America RoW • USD 5.6 billion invested in private markets opportunities on behalf of our clients 17 direct 19 dir
Slide 36: Continued significant deal flow
INVESTMENTS 36 Continued significant deal flow First screenings in H1 2017 Directs Secondaries Primaries Private equity 798 USD 42 billion 111 Private debt 246 n/a n/a Private real estate 694 USD 26 billion 100 Private infrastructure 473 USD 5 billion 47 Total screened 2'211 USD 73 billion 258 USD 3
Slide 37: Private markets investment activities across the globe and across all asset classes
INVESTMENTS 37 Private markets investment activities across the globe and across all asset classes Private markets investments in H1 2017 North America Primaries 39% Europe 25% Equity Directs 51% 57% USD USD 5.6 billion 5.6 billion Debt Secondaries 18% Asia-Pacific/ RoW 10% Note: figures exclude inv
Slide 38: Private equity
INVESTMENTS 38 Private equity Environment Relative decrease in dry powder in a growing market Private markets AuM (NAV + dry powder), in USD billion¹ 5'000 4'240 4'000 • Historic volumes of dry powder to be 3'000 +10% p.a. deployed … 2'000 1'647 3x 1'000 • … lifting valuations to all-time 0 2006 200
Slide 39: Private equity: developing category leaders
INVESTMENTS 39 Private equity Investment strategies Focus on transformative trends Developing category leaders Outsourced digital Cost-efficient Business services infrastructure support healthcare delivery outsourcing Platform Curvature¹ Cerba HealthCare SPi Global 1 companies Category 2 winners Glo
Slide 40: Private debt
INVESTMENTS 40 Private debt Environment Equity cushions remain high¹ 50% 47% Europe U.S. 40% 40% • Leveraged loan issuance is strong 30% • Spreads have tightened 20% • Equity cushions remain high 2000 2003 2006 2009 2012 2015 Spreads have tightened¹ Weighted new-issue senior debt spread over Euribor
Slide 41: Private debt: realizing the potential of privately originated loans
INVESTMENTS 41 Private debt Investment strategies Focus on transformative trends Realizing the potential of privately originated loans Growth in quick service Need for telecom and Increasing regulatory restaurant sales IT support services complexity Creative Checkers Claranet SAI Global 1 structures
Slide 42: Private real estate
INVESTMENTS 42 Private real estate Environment Prime cap rates remain at low levels (example Europe) 9% Europe (ex Paris and London) 8% 7.0% • Investor appetite and transaction 7% Cap rate 6% Paris Prime activity is strong 5% 4% 3.8% • Prime cap rates remain at 3% London Prime 3.7% low levels 2007 2
Slide 43: Private real estate: looking for value creation opportunities
INVESTMENTS 43 Private real estate Investment strategies Focus on transformative trends Looking for value creation opportunities Structural undersupply Recovering demand in Reshaping of Australian in urban locations decentralized locations apartment market Buy below re- Class A office tower La Défen
Slide 44: Private infrastructure
INVESTMENTS 44 Private infrastructure Environment Private infrastructure investment volume has grown Global annual infrastructure deal volume, aggregated, 2010-2016, in USD bn1 500 Avg. 413 400 362 c.20% • Private infrastructure investment 300 284 255 276 327 equity2 volume has grown 200 196 Avg. c.
Slide 45: Private infrastructure: scaling up anchor assets
INVESTMENTS 45 Private infrastructure Investment strategies Focus on transformative trends Scaling up anchor assets Petrochemical Expansion of terrestrial Growth of renewable downstream processing fiber networks power assets Platform Raven Tutor Group Sapphire Wind Farm 1 opportunities Build 2 core
Slide 46: Key drivers of private markets performance
INVESTMENTS 46 Key drivers of private markets performance Value creation approach 2016 results1 Sector growth Value creation Exposure Equity control/ Long-term / Governance / Full insight Economic Financial Corporate Business >160 ongoing value Revenue growth development development development cr
Slide 47: Partners Group retains high scores from UN PRI for Responsible Investment
INVESTMENTS 47 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 48: Contacts
48 Contacts Zugerstrasse 57 Investor relations contact: 6341 Baar-Zug Philip Sauer Switzerland T +41 41 784 6660 T +41 41 784 60 00 philip.sauer@partnersgroup.com partnersgroup@partnersgroup.com Media relations contact: www.partnersgroup.com Jenny Blinch T +41 41 784 6526 jenny.blinch@partnersgroup.
Slide 49: Disclaimer
IMPORTANT NOTICE 49 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 50: Disclaimer
IMPORTANT NOTICE 50 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 51: Disclaimer
IMPORTANT NOTICE 51 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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