Baar-Zug, Switzerland, 11 September 2018
Summary H1 2018
- USD 7.7 billion invested across all private markets asset classes (H1 2017: USD 5.6 billion) on behalf of the firm's clients
- Gross client inflows of EUR 6.2 billion (H1 2017: EUR 6.9 billion); anticipated bandwidth of EUR 11-14 billion in gross client demand for the full year 2018 reconfirmed
- Revenues increased by 17% to CHF 659 million (H1 2017: CHF 565 million) attributable to an increase in revenues from management fees and a continued solid performance fee development
- EBITDA margin remained stable at 66% (H1 2017: 66%); EBITDA margin is expected to slowly revert to its target of ~60% over the mid-term due to the continued build out of the global investment platform
- EBITDA increased by 17% to CHF 437 million (H1 2017: CHF 374 million)
- Financial result of CHF 17 million (H1 2017: CHF 30 million)
- Profit increased by 10% to CHF 394 million (H1 2017: CHF 359 million)
H1 2018 was a successful start to the year. Clients entrusted the firm with EUR 6.2 billion in new commitments, with demand well-diversified across regions. Despite a challenging investment environment, the investment platform was able to invest a total of USD 7.7 billion on behalf of the firm's clients in geographies and industry sectors that exhibit favorable relative value characteristics and in private markets assets that offered attractive value creation potential.
André Frei, Partner and Co-Chief Executive Officer, comments: "In addition to these positive results, during the course of 2018 we passed USD 100 billion in capital invested on behalf of our clients since our foundation in 1996. We have not only generated substantial value for our clients over two decades but also translated our investment success into solid financial returns for our shareholders. To continue to generate attractive returns going forward, it is essential that we carry on excelling in our value creation capabilities and capture a larger set of investment opportunities globally. We remain committed to building out our global platform to increase investment capacity for the benefit of our clients."
Key financial figures
(in CHF m)
1 Revenues include management fees and performance fees.
2 Management fees include recurring management fees and other revenues, net, other operating income and share of results of associates.
Revenues increased by 17% year-on-year to CHF 659 million (H1 2017: CHF 565 million). The management fee margin remained largely stable amounting to 1.30% (full year 2017: 1.33%). Performance fees brought the total revenue margin to 1.77% (full year 2017: 1.89%) during the same period.
Management fees increased by 16% year-on-year and amounted to a total of CHF 484 million (H1 2017: CHF 418 million). As there were no significant closings of flagship programs in H1 2018, late management fees and other income were lower than in the previous year. Management fees will continue to be the main source of revenue and are based on long-term contracts with our clients, providing highly visible cash flows. Their share as a proportion of total revenues is expected to represent around 70-80% in the longer term (H1 2018: 73%).
Performance fees increased by 19% to CHF 175 million (H1 2017: CHF 147 million) and remained a solid contributor to revenues. The firm continued to make active use of the supportive exit environment to realize a number of mature private markets assets on behalf of its clients. Over two dozen investment programs and mandates from a wide range of vintages contributed to the payout of performance fees. The firm expects to continue to generate significant performance fees from its underlying client portfolios.
EBITDA increased by 17% year-on-year and amounted to CHF 437 million (H1 2017: CHF 374 million). The EBITDA margin remained stable at 66% (H1 2017: 66%). With the anticipated build out of the firm's investment platform, the firm expects the EBITDA margin to slowly revert to its mid-term target of ~60%.
The financial result amounted to CHF 17 million (H1 2017: CHF 30 million). Partners Group invests into its investment programs alongside clients (typically around 1% of the program's size). The value creation and performance generated on these investments were the largest contributors to the financial result and amounted to CHF 28 million (H1 2017: CHF 24 million). However, the positive contribution was partially offset by a negative foreign exchange result. In combination with higher corporate taxes, this led the firm's profit to increase by 10% year-on-year to CHF 394 million (H1 2017: CHF 359 million).
For the full year 2018, Partners Group reconfirms its expectation that client demand for its investment programs and customized mandates will be spread across all asset classes, regions and types of investors. The firm expects gross client demand of EUR 11-14 billion in 2018 as well as EUR -4.5 to -5.5 billion in tail-down effects from the more mature Partners Group programs, including potential redemptions from liquid and semi-liquid programs.
Christoph Rubeli, Partner and Co-Chief Executive Officer, states: "We are pleased about the performance we have delivered to our clients. Despite the challenging investment environment, we are confident that businesses owned within private markets have a structural advantage as they benefit from a corporate governance regime that enables entrepreneurialism in its purest form. For this reason, we believe that the relative outperformance of private markets against public markets will continue and see private markets as a preferable long-term alternative to public markets."
Press conference and Interim Report
Partners Group's senior management will hold a press conference to discuss the interim results today at 9.00am CET at the Marriott Hotel in Zurich. Dial-in details for the conference can be obtained using the contact details below.
The firm's Interim Report as of 30 June 2018 was published today at 7.00am CET and is available for download at www.partnersgroup.com/financialreports.
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