Partners Group Holding AG · SIX:PGHN
Partners — FY2015 Earnings Presentation
50 slides from Partners's earnings presentation, Mar 22, 2016
Slide 1: Annual results 2015
Annual results 2015 Dr. Peter Wuffli, Chairman of the Board of Directors | André Frei, Co-CEO | Christoph Rubeli, Co-CEO | Dr. Cyrill Wipfli, CFO Marlis Morin Head Client Services | Stephan Schäli Co-Head Private Equity For use with institutions only – not for use in the United States
Slide 2: Table of contents
ANNUAL RESULTS 2015 2 Table of contents 1 Ten years on the SIX Swiss Exchange 2 State of affairs 3 Clients 4 Investments 5 Financials 2015
Slide 3: Partners Group's first trading day at the SIX Swiss Exchange
TEN YEARS ON THE SIX SWISS EXCHANGE 3 Partners Group’s first trading day at the SIX Swiss Exchange 24 March 2006 Facts & figures • Free float: 33% • IPO valuation CHF 1.7 billion • Opening price CHF 63/share • Closing price (1st day) CHF 84/share (+33%)
Slide 4: Substantially built-out asset base and global footprint attracted institutional clientele
TEN YEARS ON THE SIX SWISS EXCHANGE 4 Substantially built-out asset base and global footprint, combined with strong returns, attracted institutional clientele Assets under management1 Employees Offices EUR 46.0 billion 840 18 24% 13 offices >700 jobs annualized opened created growth globally 5 5.5 1
Slide 5: Solid corporate development translated into sound financials for shareholders
TEN YEARS ON THE SIX SWISS EXCHANGE 5 Solid corporate development translated into sound financials, which were also beneficial for Partners Group’s shareholders Revenues1 EBITDA Proposed dividend per share CHF 619 million CHF 367 million CHF 10.50 19% 19% 17% annualized annualized annualized growth
Slide 6: Table of contents
ANNUAL RESULTS 2015 6 Table of contents 1 Ten years on the SIX Swiss Exchange 2 State of affairs 3 Clients 4 Investments 5 Financials 2015
Slide 7: The Partners Group formula
STATE OF AFFAIRS 7 The Partners Group formula Attractive industry Partners Group business model Investment Rising private Institutional platform delivering Multi-asset class markets asset growth outperformance offerings allocations across cycles + Complex client Globally needs/market integrated serv
Slide 8: Partners Group as a listed company
STATE OF AFFAIRS 8 Partners Group as a listed company Market capitalization (as of 31 December 20151) Share price development (since March 2006 (IPO)2) Rank Firm Market cap Rank Firm Performance (in USD billion) since IPO 1 Blackstone 34 1 Partners Group +476% 2 KKR 13 2 KKR +17% 3 Partners Group 10
Slide 9: High earnings visibility and business stability drive share price development
STATE OF AFFAIRS 9 High earnings visibility and business stability drive share price development Last 6 months: changes to earnings estimates and share price, including weekly stock price volatility Rank Firm Changes to 2016 Share Weekly earnings estimates price volatility (last 6 months) (last 6 mo
Slide 10: Table of contents
ANNUAL RESULTS 2015 10 Table of contents 1 Ten years on the SIX Swiss Exchange 2 State of affairs 3 Clients 4 Investments 5 Financials 2015
Slide 11: Partners Group 2015 client AGM
CLIENTS 11 Partners Group 2015 client AGM Berlin 2015 client AGM • 15-18 March 2016 • >240 institutional clients • >25 countries represented • EUR 4 trillion AuM
Slide 12: Long-term growth drivers in private markets
CLIENTS 12 Long-term growth drivers in private markets 1. Growing global institutional assets1 2. Private markets allocation on the rise2 Global pension Pension schemes scheme assets (2015) portfolio allocations (2015) >84% AuM +6% p.a. Stocks, bonds, cash and others of investors plan to growth expe
Slide 13: Solid business development based on strong returns generated for our clients
CLIENTS 13 Solid business development based on strong returns generated for our clients Partners Group has outgrown the industry Private markets are expected to outperform Global private markets AuM1 Institutional investors’ return expectations for private equity portfolios (vs. public markets)3 USD
Slide 14: 22% net AuM growth in 2015
CLIENTS 14 22% net AuM growth in 2015 Total assets under management (in EUR billion) +8.4 -2.4 +2.4 EUR 46.0 Tail-downs FX +1.8 = USD 50.0 -1.8 Redem. -0.6 Other +0.6 = CHF 50.0 EUR 37.6 Guidance No guidance provided provided 2014 New money/ Tail-downs & Other factors* 2015 commitments redemptions *
Slide 15: Demand driven by new and existing clients across all asset classes
CLIENTS 15 Demand driven by new and existing clients across all private markets asset classes Breakdown of assets raised by asset class Breakdown of assets raised by new vs. existing clients Private infrastructure 18% (2014: 12%) Private equity Existing clients New clients Private debt 54% 51% 49% 2
Slide 16: Diversified client base across regions and type of investors
CLIENTS 16 Diversified client base across regions and type of investors AuM by region (as of 31 December 2015) AuM by type (as of 31 December 2015) Australia Distribution partners/ Asia/ 4% private individuals Middle East Switzerland 11% 15% Family offices 8% and others South America 7% Public pensi
Slide 17: Diversified client base across individual institutions; customization trend continues
CLIENTS 17 Diversified client base across individual institutions; customization trend continues AuM by client (as of 31 December 2015) AuM by program type (as of 31 December 2015) Largest client 5% Top 2-5 clients 9% Top 6-10 clients 6% Mandates and Standard Top 11-20 clients customized programs 9%
Slide 18: Institutional investors continue to embrace illiquid assets
CLIENTS 18 Institutional investors continue to embrace illiquid assets Anticipated changes to 2016 asset allocations of institutional investors representing USD 6.6 trillion in AuM reduce increase Core fixed income -18% Demand for the Equities -15% return premia offered by illiquid assets Cash -13%
Slide 19: Expected gross client demand in 2016
CLIENTS 19 Expected gross client demand in 2016 AuM, client demand and other effects (in EUR billion) Full-year 2016 expectations 7.0-9.0 8.4 Client demand 46.0 6.1 37.6 (2.5-3.5) Tail-downs & 31.6 redemptions* (0.0) +/- FX & others** (0.0) -2.4 -2.1 Tail-downs & = Total AuM redemptions* Tail-downs
Slide 20: Focus topics 2016
CLIENTS 20 Focus topics 2016 Client offering Key initiatives Private Private Private Private debt infra- equity real estate structure • Extend coverage in existing markets with existing clients by building private markets Global direct programs portfolios across asset classes Invest directly in asse
Slide 21: Table of contents
ANNUAL RESULTS 2015 21 Table of contents 1 Ten years on the SIX Swiss Exchange 2 State of affairs 3 Clients 4 Investments 5 Financials 2015
Slide 22: Partners Group 2015 investment platform overview
INVESTMENTS 22 Partners Group 2015 investment platform overview Investment platform update 75 direct investments across the globe Asia-Pacific/ • More than 550 private markets professionals North America Europe RoW globally • Over 800 total employees 36 direct 29 direct 9 direct investments investme
Slide 23: Continued significant deal flow in 2015
INVESTMENTS 23 Continued significant deal flow in 2015 First screenings in 2015 Directs Secondaries Primaries Private equity 1'018 USD 91 billion 372 Private debt 599 n/a 15 Private real estate 1'652 USD 24 billion 250 Private infrastructure 582 USD 10 billion 96 Total screened 3'851 USD 125 billion
Slide 24: Private markets investment activities in 2015 across the globe and asset classes
INVESTMENTS 24 Private markets investment activities in 2015 across the globe and across all asset classes Private markets investments during 2015 (based on volumes) Primaries Directs North America Europe 20% 58% 46% 37% Equity Secondaries Debt 22% Asia/emerging markets 17% Note: investment figures
Slide 25: Private equity – investment strategy and 2015 examples
INVESTMENTS 25 Private equity – investment strategy and 2015 examples 1 Platform companies 2 Category winners 3 Defensive leaders Grow a company beyond Identify growth trends through Identify customer needs in current markets and set-up vertical sector research specialty markets Largest for-profit p
Slide 26: Private debt – investment strategy and 2015 examples
INVESTMENTS 26 Private debt – investment strategy and 2015 examples 1 Attractive niches 2 Creative structures 3 Buy-and-build strategies Attractive risk/return profiles Financing of successful Strengthen existing and in niche markets entrepreneurs and businesses trusted relationships Leading global
Slide 27: Private infrastructure – investment strategy and 2015 examples
INVESTMENTS 27 Private infrastructure – investment strategy and 2015 examples 1 Transformative growth 2 Value enhancement potential 3 Market-leading platforms Capitalize on transformative Creating value beyond a pure Build scale in markets with infrastructure needs financial investment consolidation
Slide 28: Private real estate – investment strategy and 2015 examples
INVESTMENTS 28 Private real estate – investment strategy and 2015 examples 1 Buy below replacement cost 2 Buy, fix, sell 3 Develop core Reposition and re-lease by Execute capex program and Build modern property with under-cutting rents bring rents back to market low construction cost basis 200 North
Slide 29: 2015 realization examples
INVESTMENTS 29 2015 realization examples1 Private equity Private debt Private infrastructure Private real estate Novotel Nathan Road • Securities firm, US • Elderly care, Nordics • Coal port, Australia • Hotel, Hong Kong • Multiple: 2.9x • Multiple (senior): 1.1x • Multiple: 1.7x • Multiple: 3.0x •
Slide 30: Private equity value creation efforts in 2015
INVESTMENTS 30 Private equity value creation efforts in 2015 Measurable results in 2015 … Results1 >150 ongoing value Projects by Levers creation initiatives In % 15 100 23 6 13.4% Revenue growth >80 initiatives realized 56 in 2015 EBITDA 16.1% growth Top Line Bottom Line Finance Multiple Total
Slide 31: Table of contents
ANNUAL RESULTS 2015 31 Table of contents 1 Ten years on the SIX Swiss Exchange 2 State of affairs 3 Clients 4 Investments 5 Financials 2015
Slide 32: Sustained growth in AuM over the last ten years, in line with employees
FINANCIALS 2015 32 Sustained growth in AuM over the last ten years, in line with growth of employees Total assets under management (in EUR billion) 46.0 AuM #840 37.6 employees 31.6 #746 27.8 #701 24.1 #625 20.7 #574 15.5 16.6 #447 12.6 #361 8.6 #334 5.5 #273 #175 #137 2005 2006 2007 2008 2009 2010
Slide 33: A straightforward growth model
FINANCIALS 2015 33 A straightforward growth model AuM (average; EUR) Revenue margin Revenues1 (CHF) EBITDA margin Adj. net profit2 (CHF) Continued AuM Stable Revenues Stable margin Adjusted net profit growth driven by a revenue affected by FX through stringent and superior offering margin headwinds
Slide 34: Continued growth across all financials despite currency headwinds
FINANCIALS 2015 34 Continued growth across all financials despite currency headwinds Key financials (in CHF million) 2014 2015 Revenues1 574 +8% 619 EBITDA 347 +6% 367 Financial result 37 81 2 Adjusted net profit 336 +18% 396 IFRS profit 375 +6% 396 Diluted EPS 14.24 14.81 Adjusted diluted EPS 12.75
Slide 35: Stable revenue margin
FINANCIALS 2015 35 Stable revenue margin Revenue margin (calculated as revenues divided by average daily AuM) 1.33% 1.39% 1.38% Revenue margin 10y Ø: ~1.33% Performance fee Other income, incl. late management fees Recurring revenues 2013 2014 2015 Note: revenues include revenues from management serv
Slide 36: Higher performance fees in 2015 partially offset by lower other income
FINANCIALS 2015 36 Higher performance fees in 2015 partially offset by lower other income, mainly late management fees Revenues (in CHF million) 619 Revenues 574 64 Performance fees 34 492 52 Other income, including 69 late management fees 39 (six year average of other income: 40 CHF 44 million) 503
Slide 37: A significant increase in performance fee potential is expected
FINANCIALS 2015 37 A significant increase in performance fee potential is expected in the future Performance fees (in CHF million) Future performance fee potential Realized performance fees Realized performance fees 64 43 39 34 16 13 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 38: Increase in performance fee-generating investments expected to translate into revenues
FINANCIALS 2015 38 The increase in performance fee-generating investments is expected to translate into performance fee-related revenues AuM, investments and expected revenue composition 46.0 37.6 31.6 24.1 27.8 AuM 20.7 15.5 16.6 12.6 (in EUR billion) 5.5 8.6 2005 2006 2007 2008 2009 2010 2011 2012
Slide 39: Stable revenue margin with focus on management fees
FINANCIALS 2015 39 Stable revenue margin with focus on management fees Revenue margin (calculated as revenues divided by average daily AuM) 1.35% 1.36% 1.36% 1.39% 1.33% 1.39% 1.38% 1.25% 1.26% 1.23% 4% 9% 6% 10% 7% 9% 1% 0% 8% 4% 93% 91% 99% 100% 96% 96% 91% 92% 94% 90% Ø 94% mgmt. fees since IPO i
Slide 40: ~60% EBITDA margin target on new business unchanged
FINANCIALS 2015 40 ~60% EBITDA margin target on new business unchanged EBITDA margin development New business; FX (EUR/CHF) influences EBITDA margin of existing business performance fees 80% 74% 2 73% 73% 70% 1.8 70% 66% 61% 61% 62% 61% 60% 59% 1.6 ~60% 60% 1.57 1.64 1.59 1.55 1.51 1.4 50% 1.38 1.06
Slide 41: The strengthened Swiss franc affected costs differently compared to revenues
FINANCIALS 2015 41 The strengthened Swiss franc affected costs differently compared to revenues Currency exposure in 2015 AuM Revenues Costs Others Others EUR 7% 7% GBP ~5% ~15% USD USD USD ~20% 36% EUR ≈ 36% EUR ≠ Others ~15% 57% 57% CHF ~45% Note: all figures are based on estimates and currency de
Slide 42: Financial result of CHF 81 million driven by increase in value of investments
FINANCIALS 2015 42 Financial result of CHF 81 million driven by strong increase in value of investments made alongside our clients and our investment in Pearl Financial result (in CHF million) 2014 2015 EBITDA 347 +6% 367 Financial result 37 81 Depreciations and adj. amortizations and taxes -48 -53
Slide 43: Pearl investment generated CHF 52 million additional performance upside
FINANCIALS 2015 43 Partners Group's investment in Pearl generated CHF 52 million additional performance upside when Pearl was converted into a closed-end structure on request of its investors Financial result (in CHF million) 81 Financial result, of which: Performance from +52 Pearl conversion/ NAV
Slide 44: Pearl will have limited profit contribution potential in the future
FINANCIALS 2015 44 Pearl will have limited profit contribution potential in the future due to income-neutral cash distributions Development of ownership and cash flow view Value Total value Income increase of Pearl statement-neutral cash of Pearl shares distributions Conversion of shares (i.e. NAV)
Slide 45: Adjusted net profit = IFRS net profit from 2015 onwards
FINANCIALS 2015 45 Adjusted net profit = IFRS net profit from 2015 onwards due to conversion of Pearl Adjusted net profit1 (in CHF million) IFRS net profit (in CHF million) 396 396 375 336 317 +6% 292 +18% +15% +18% 2013 2014 2015 2013 2014 2015 1 Since its IPO in 2006, Partners Group has adjusted i
Slide 46: Strong balance sheet, ROE of 35% in 2015 and high earnings visibility
FINANCIALS 2015 46 Strong balance sheet, ROE of 35% in 2015 and high earnings visibility Earnings visibility • AuM share of medium/long-term duration investment programs: >90% Balance sheet (as of 31 December 2015) • Equity: CHF 1.2 billion • Net liquidity (incl. working capital facilities to invest
Slide 47: Dividend of CHF 10.50 based on solid operating results
FINANCIALS 2015 47 Dividend of CHF 10.50 based on solid operating results and confidence about the future potential of the business Dividend payment since IPO (CHF per share) Dividend/share Total AuM (in EUR billion) 12.00 60 10.50* 59% average 10.00 50 payout ratio 8.50 Dividend / share in CHF (200
Slide 48: Contacts
48 Contacts Philip Sauer Zugerstrasse 57 Business Development 6341 Baar-Zug T +41 41 784 66 60 Switzerland Email: philip.sauer@partnersgroup.com T +41 41 784 60 00 partnersgroup@partnersgroup.com www.partnersgroup.com ZUG | SAN FRANCISCO | HOUSTON | NEW YORK | SÃO PAULO | LONDON | GUERNSEY | PARIS |
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 France This information material is presented to investors at their request by Partners Group (France) SAS, which is regulated by the French Securities and Exchange Commission (“Autorités des marches financiers”, “AMF”) as a result
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