Partners Group Holding Ag · SIX:PGHN
Partners — FY2023 Earnings Presentation
59 slides from Partners's earnings presentation, Mar 19, 2024
Slide 1: Built Differently to Build Differently
PARTNERS GROUP Built Differently to Build Differently
Slide 2: Table of contents
2 Table of contents 1 Industry 2 Business 3 Financials
Slide 3: The new 'traditional' asset class: financing the economy
Industry 3 The new 'traditional' asset class: financing the economy Public and private markets have swapped roles as IPOs have shifted away from the real economy 800 85% Transition into new IPO era IPOs as strategic corporate Private markets drive the broader Traditional development economy The % of
Slide 4: The new 'traditional' asset class: investors' considerations
Industry 4 The new 'traditional' asset class: investors' considerations As private markets overtake public markets, the private markets investor landscape will significantly develop and transform industry DNA Private markets capital formation has outpaced Private markets at the 1'200 global equity i
Slide 5: What truly shapes the private markets investment paradigm in the 'brave new world'?
Industry 5 What truly shapes the private markets investment paradigm in the 'brave new world'? Recalibration of the macroeconomy? Geopolitics-driven de-globalization? US Inflation and Interbank Rates Over Time1 Geopolitical tensions and increasing What could break under higher-for- protectionism are
Slide 6: Is the recalibration of the macroeconomy a game-changer?
Industry 6 Is the recalibration of the macroeconomy a game-changer? Private markets grow and deliver strong returns across macroeconomic cycles Private Equity Fundraising, USD tn1 Higher financing costs and lower debt availability impact returns… 1'000 25.0% Debt level in the capital structure 30% 3
Slide 7: Is geopolitics-driven de-globalization a game-changer?
Industry 7 Is geopolitics-driven de-globalization a game-changer? World trade has remained quite resilient as Globalization embarked on a profound transformation Global Exports of Goods & Services, USD tn1 30 27 Globalization Isn’t Dead. But It’s Changing. Multinational companies still want cheap an
Slide 8: Are labor and demographic dynamics a game-changer?
Industry 8 Are labor and demographic dynamics a game-changer? Productivity has become the key driver of global growth Employment Contribution (USD tn)1 Over the past two decades, productivity growth Trend is expected to Productivity Contribution (USD tn)1 has become a more than a 2x contributor to G
Slide 9: Is the next generation of technology a game-changer?
Industry 9 Is the next generation of technology a game-changer? There are an unusually broad range of perspectives on the potential impact of the new generation of technology AI pioneer says its threat to world Many top business leaders are seriously worried How A.I. can help create jobs for may be
Slide 10: The only constant is the ACCELERATION of change!
Industry 10 The only constant is the ACCELERATION of change! While it seems widely accepted that the only constant in the economy is change… Constant Transformation Is the Embracing Change as a Constant Embracing The One Constant In New Normal In today’s digitized and interconnected Business: Change
Slide 11: Digitization 1.0: digital integration of the global economy over the last 25 years
Industry 11 Digitization 1.0: digital integration of the global economy over the last 25 years Democratization of Digital Connectivity Institutionalization of Computation Power Access to internet, personal computers, smartphones ... …based on server / device-based computation & storage, faster CPUs
Slide 12: Digitization 2.0: self-learning autonomy in the global economy
Industry 12 Digitization 2.0: self-learning autonomy in the global economy in the coming 10-15 years Democratization of Artificial Intelligence Institutionalization of Cloud-Based Computation-aaS Access to deep learning, neural networks, reinforcement learning … …based on distributed data processing
Slide 13: Business process transformation
Industry 13 Business process transformation AI adoption is here. Organizations are no longer asking whether to add AI capabilities, but Co-pilots and intelligent systems will materially support performance of tasks and processes how they plan to use it August 2023 Personalized co-pilots to help deve
Slide 14: Business performance transformation
Industry 14 Business performance transformation Generative AI, experts assess that technology could achieve human-level performance in some A new generation of systems will provide for the full automation of entire tasks and jobs technical capabilities sooner than previously thought June 2023 Digita
Slide 15: Business innovation transformation
Industry 15 Business innovation transformation Generative AI poses fundamental disruption to Novel scientific methods driving faster innovation will drive radical shifts in business models and the traditional innovation cycle, […] enabling a further transform profit pools rate of change unseen in in
Slide 16: Recalling digitization 1.0: major changes across industries
Industry 16 Recalling digitization 1.0: major changes across industries Democratization of Digital Connectivity Institutionalization of Computation Power Access to internet, personal computers, smartphones ... …based on server / device-based computation & storage, faster CPUs etc. Industrials Consum
Slide 17: Recalling digitization 1.0: shifting profit pools
Industry 17 Recalling digitization 1.0: shifting profit pools Shifting profit pools in the music industry Shifting profit pools in the advertising industry 30 Music Sales by Medium, USD bn1 Share of Global Advertising Spend2 100% 20 75% 50% 10 25% 0% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Slide 18: Recalling digitization 1.0: reshuffling winners & losers
Industry 18 Recalling digitization 1.0: reshuffling winners & losers Shifting profit pools in the last 25 years led to a major redistribution of winners and losers across the economy Top 10 most valuable companies in the S&P 500 in 1998 vs. 20231 Top 10 1998 Top 10 2023 The redistribution not only f
Slide 19: The impact of the next transformation of the economy
Industry 19 The impact of the next transformation of the economy All [PG's] mega-themes are impacted by the next transformation of the economy Private Equity Infrastructure and Real Estate Goods & Products Distribution Industrial Food Value Chain Social Infrastructure Public Last Mile Logistics Disr
Slide 20: Transformational investing in a transforming economy
Industry 20 Transformational investing in a transforming economy Over the past 25 years, typical private markets investments would experience ~20% of the total transformation of the economy, requiring an intentional approach to value creation to generate outsized returns Sept Apr Jan Aug ~ 1998 1999
Slide 21: Private markets AuM hypothesis
Industry 21 Private markets AuM hypothesis Asset Class Breakdown Today1 Investor Demand Over Cycle1 Investment Opportunity At End of Cycle1 Private Equity Private Equity Current Private ~ USD 10 tn AuM ~ USD 15 tn Markets Aum ~ USD 15-20 tn Investment Opportunity Private Infrastructure Private Infra
Slide 22: Private equity investment opportunity
Industry 22 Private equity investment opportunity ~ USD 15-20 tn Private Equity investment opportunity ...<5 bn companies increasingly looking to private driven by… ownership … Private Equity AuM, USD tn1 Number of IPOs2 15% ~ 7.5% More Companies Are Going Private Than CAGR CAGR 15-20 6'500 Public a
Slide 23: Investment opportunity in private infrastructure
Industry 23 Investment opportunity in private infrastructure ~ USD 4-8 tn Private Infrastructure investment opportunity …the increased need for social infrastructure… driven by… Private Infrastructure AuM, USD tn1 Private markets can play a key role in Post-pandemic, government balance supporting go
Slide 24: Investment opportunity in private real estate
Industry 24 Investment opportunity in private real estate ~ USD 3-5 tn Private Real Estate investment opportunity ...the workforce transformation... driven by… 1 Private Real Estate AuM, USD tn Private capital needed to transform assets disrupted by work-from-home trends 10% 7-10% U.S. office vacanc
Slide 25: Investment opportunity in private credit
Industry 25 Investment opportunity in private credit ~ USD 4-8 tn Private Credit investment opportunity driven …shifting structural trends in banking… by… Private Credit AUM, USD tn1 High interest rates, driven by the Unlike most bank loans, private Federal Reserve’s higher-for- credit solutions can
Slide 26: Synergetic coexistence between private and public markets
Industry 26 Synergetic coexistence between private and public markets Public and private markets are becoming increasingly complementary and synergetic Private equity will take on many corporate Private markets are financing the creation Private markets are leading the largest real orphans from publ
Slide 27: Conclusion
Industry 27 Conclusion 1 Private markets continue to outgrow 2 The game changer is the next public markets in the Brave New transformation of the economy in World the next 10 to 15 years 3 Transformational investing is 4 Successful private market paramount when the only constant investors will unloc
Slide 28: Table of contents
28 Table of contents 1 Industry 2 Business 3 Financials
Slide 29: Business
mi PARTNERS GROUP iil Built Differently to Build Differently
Slide 30: In a challenging year for our industry, 2023 transaction volumes and fundraising proved more resilient
Business 30 In a challenging year for our industry, 2023 transaction volumes and fundraising proved more resilient than in public markets Industry: investment volumes Industry: exit volumes Industry: fundraising volumes (in USD bn)1 (in USD bn)2 (in USD bn)4 1’800 1’600 1'800 1'700 1’400 1'600 1'500
Slide 31: The current period has seen the lowest liquidity levels in decades
Business 31 The current period has seen the lowest liquidity levels in decades Industry liquidity level based on realizations in % of NAV Industry 50% ▪ Private equity: today's liquidity level last seen 45% during Great Financial Crisis and Dotcom bubble; historically, these periods did not last lon
Slide 32: Partners Group has demonstrated continued AuM growth over cycles
Business 32 Partners Group has demonstrated continued AuM growth over cycles… Total assets under management (in USD bn)1 147 8% $18bn AuM growth assets raised in 2023 in 2023 43 68% #1 of AuM in bespoke record mandate 11 solutions conversions2 2016 2020 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 33: …and showed resilient performance in 2023
Business 33 …and showed resilient performance in 2023 Partners Group: investments1 Partners Group: exits Partners Group: fundraising2 Portfolio Portfolio Traditional Assets Assets fund programs 40% 35% 28% $13 bn $12 bn $18 bn Directs Directs Bespoke 60% 65% 72% H2 investment activity increased 22%
Slide 34: Thematic sourcing approach allowed us to invest in attractive companies in growing sectors
Business 34 In 2023, our thematic sourcing approach allowed us to invest in attractive companies in growing sectors Thematic sourcing identifies winning business in growing sectors Entrepreneurial ownership drives attractive returns for clients Expand into new future energy sources such as Global pr
Slide 35: Private equity: transformational investing approach drives hands-on value creation
Business 35 Private equity: our transformational investing approach drives hands-on value creation in growing themes 2023 performance Realized portfolio outcomes3 11% 33% 32% Revenue growth1 91% of realized portfolio outcomes >2.0x 26% 13% EBITDA growth1 23% 5% EBITDA margin1 4% 4.4% <1.0x 1.0 - 2.0
Slide 36: Infrastructure: we build next-generation infrastructure platforms
Business 36 Infrastructure: we build next-generation infrastructure platforms 2023 performance Realized portfolio outcomes3 11% 41% Revenue growth1 No portfolio realizations 33% <1.0x 15% 23% EBITDA growth1 >150 Value creation initiatives 0% 3% 12.6% <1.0x 1.0 - 2.0x 2.0 - 3.0x 3.0 - 4.0x >4.0x 1-ye
Slide 37: Private credit: diligent underwriting coupled with active asset management
Business 37 Private credit: diligent underwriting coupled with active asset management has led to strong performance across the direct lending portfolio 2023 performance Consistent, above average returns Default rates since inception3 through variable market conditions4 ~90% 1.62% Outperformance Low
Slide 38: Real estate: NOI growth and improving occupancy rates
Business 38 Real estate: we mitigated an ongoing disruptive change through our active approach by delivering NOI growth and improving occupancy rates 2023 performance Operational performance remains solid 100% 3-9% +1%pt YoY +6%pt YoY +5%pt NOI1 growth YoY Occupancy rates +3%pt YoY 4% Occupancy impr
Slide 39: Our ability to tailor client solutions leads to growth opportunities
Business 39 Our ability to successfully tailor client solutions has and will continue to lead to compelling growth opportunities AuM1 CAGR Growth (USD bn) last 10 years last 10 years Mandates 56 19% 6x 350+ unique investment Evergreens 44 20% 6x programs2 Traditional funds 46 6% 2x 1 Assets under Ma
Slide 40: Partners Group raised a record number of mandates in 2023
Business 40 Partners Group raised a record number of mandates in 20231 The average mandate client has tripled their A Partners Group mandate can be tailored across investment size over the course of the relationship2 asset classes, vintage years, and strategies3 81% of mandate 3x - AuM in 2+ asset c
Slide 41: We are a pioneer in democratizing private markets with evergreen structures
Business 41 We are a pioneer in democratizing private markets with evergreen structures Number of asset classes offered through evergreen funds Years of experience providing evergreen solutions 4.0 - 22.5 1.5 4.7 1,2 1,2 Partners Group Direct competitors (average) Partners Group Direct competitors (
Slide 42: We will build a multi-sector royalty strategy in 2024
Business 42 We will build a dedicated, scalable, multi-sector royalty strategy in 2024 Opportunity Strategy Globally scaled Well-established Developing high dedicated offering sectors growth sectors Relative value Cross sector approach strategy Evergreen Pharma $1 trillion Sports & Brands structure
Slide 43: Robust and geographically diversified fundraising pipeline
Business 43 Robust and geographically diversified fundraising pipeline Illustrative 2024 fundraising pipeline Current AuM split by region (indicative size of pipeline per region) (as of 31 December 2023) Middle East Australia Switzerland Asia Germany & South Austria America $147 billion North Americ
Slide 44: Fundraising outlook for 2024
Business 44 Fundraising outlook for 2024 AuM, client demand and other effects (in USD bn)1 2024 guidance (mid-point: ~10% AuM growth) 20 to 25 ▪ Client demand guidance: based on strong pipeline and driven by differentiated Client demand offerings across all asset classes 18.2 147 ▪ Tail-downs guidan
Slide 45: Sustainability Report 2024 coming April 2024
Business Sustainability Report 2024 Coming 24 April 2024
Slide 46: Table of contents
46 Table of contents 1 Industry 2 Business 3 Financials
Slide 47: Overview financials 2023
Financials 47 Overview financials 2023 AuM Revenues1 Performance fees EBIT Dividend2 (in USD bn) (in CHF m) (in CHF m) (in CHF m) (in CHF per share) +8% +4% +37% +5% +5% 147 1'872 1'945 135 Avg. 39.00 125 Perf. 37.00 124 +1% AuM in fees -2% 1'193 CHF 1'132 Mgmt. 369 EBIT fees 269 60.5% 61.3% margin
Slide 48: Revenues underpinned by stable contractually recurring management fees
Financials 48 Revenues underpinned by stable contractually recurring management fees Revenues1 (in CHF m) 5%-points less 2'629 growth due to FX ▪ Revenues: growth driven by performance fees; FX adversely 1'197 69 1'945 Revenues impacted revenue growth by 5% 1'872 269 369 Performance fees ▪ Managemen
Slide 49: Continued stability of management fee margin
Financials 49 Continued stability of management fee margin Revenue margin1 2.41% Performance fees Management fees2 1.89% 1.82% 46% 1.74% 1.71% 30% 29% 1.51% 1.56% 1.51% Performance 1.36% 1.39% 1.35% 1.36% 1.33% 1.39% 1.38% 24% 14% 19% fees as % of 1.26% 1.25% 1.26% 1.23% 30% 19% total revenues avera
Slide 50: In 2023, 90+ programs generated performance fees
Financials 50 In 2023, 90+ programs generated performance fees, with infrastructure being another strong contributor following a catch-up effect in H1 Private equity Infrastructure Private credit Real estate (in CHF m) (in CHF m) (in CHF m) (in CHF m) -21% +712% +108% -30% 229 182 153 19 30 15 6 5 2
Slide 51: Performance fee outlook
Financials 51 Performance fee outlook Performance fees as % of total revenues ▪ 2023: infrastructure drives strong 25-40% Performance fees1 performance fees in H1; H2 impacted by low transaction volumes 20-30% ▪ Next 1-2 years: range of 20-30% of total revenues for 1-2 years in a normalizing H1 19%
Slide 52: Performance fee potential is expected to follow AuM growth over time
Financials 52 Performance fee potential is expected to follow AuM growth over time $56 billion AuM (in USD bn) Direct investments Performance fees (in CHF m) 147 Past investments 135 translate into 140 1500 2015- 127 future performance $10 billion fee potential 120 Direct investments 2019 109 1'197
Slide 53: Total operating costs driven by performance fee-related costs
Financials 53 Total operating costs driven by performance fee-related costs From revenues to EBIT (in CHF m) 2023 2022 Revenues1 1'945 +4% 1'872 ▪ Total costs: driven by variable perf. fee- Total operating costs, of which -752 +2% -740 related personnel expenses; up to 40% of perf. fees allocated to
Slide 54: Movements in the EUR or USD against the CHF affect our revenues and costs
Financials 54 Movements in the EUR or USD against the CHF affect our revenues and costs Currency exposure in 2023 AuM ≈ Management fees1 Total costs2 Others GBP 6% 6% ▪ Appreciation of CHF against many EUR Other other currencies in 2023 negatively EUR 4% 5% impacted absolute EBIT 44% SGD CHF 10% 39%
Slide 55: We continue to make investments at ~60% EBIT margin target
Financials 55 We continue to make investments at ~60% EBIT margin target to support growth EBIT margin development AuM $147 billion 65% 65% 63% 62% 63% 60% 59% 59% 61% 60% 61% 58% ~60% target1 AuM $37 billion 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1 For all performance fees and
Slide 56: Strong financials, balance sheet, and liquidity
Financials 56 Strong financials, balance sheet, and liquidity From EBIT to profit Balance sheet (in CHF m, except for earnings per share data in CHF) (as of 31 December 2023) 2023 2022 Revenues1, of which 1'945 +4% 1'872 Management fees2 Performance fees 1,575 369 -2% +37% 1,603 269 2.9 41% CHF bill
Slide 57: Strong track record of compounding dividends
Financials 57 Strong track record of compounding dividends Dividend per share Strong dividend track record (in CHF) AuM 50.00 180 $147 billion 45.00 1 160 39.00 40.00 35.00 33.00 37.00 140 17% 16 27.50 120 dividend growth years of consistent 30.00 p.a. since 2006 dividend growth 25.50 100 25.00 22.0
Slide 58: Disclaimer
Important Notice 58 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
Slide 59: Contacts
59 Contacts Zugerstrasse 57 Philip Sauer Head Corporate Development T +41 41 784 66 60 6341 Baar-Zug philip.sauer@partnersgroup.com Switzerland T +41 41 784 60 00 shareholders@partnersgroup.com www.partnersgroup.com Danica Ruso Corporate Development T +41 41 784 67 67 danica.ruso@partnersgroup.com
Partners Group Holding — FY2023 Earnings Presentation on 6ix