Baar-Zug, Switzerland, 8 September 2015
Partners Group reports continued platform build-out and solid results despite FX headwinds in H1 2015
Summary H1 2015
- USD 4.5 billion invested across all private markets asset classes
- EUR 3.8 billion client demand for investment programs and mandates
- Increased pipeline of investment opportunities allowed the firm to raise the full-year guidance for gross client demand by EUR 1 billion and lift the 2015 range to EUR 6-8 billion
- Revenues tempered by FX effects and lower late management fees
- EBITDA margin of 58% (H1 2014: 62%) due to strong CHF and lower late management fees, target margin of ~60% for new business remains unchanged
- Financial result driven by strong value creation in clients' portfolios and performance of CHF 51 million from investment program Pearl
In the first half of 2015, Partners Group continued to build out its global investment platform across all four private markets asset classes to over 780 employees across 18 offices worldwide, enabling the company to deploy USD 4.5 billion in private markets investment opportunities. Record inflows of EUR 3.8 billion of gross client demand brought total assets under management to EUR 42.1 billion as of 30 June 2015 (31 December 2014: EUR 37.6 billion).
André Frei, Partner and Co-Chief Executive Officer, comments: "In H1 2015, client demand for new investment programs and mandates was well-diversified globally and almost equally split between new and existing institutional investors, while pension schemes were again the single largest contributor to AuM growth globally. With our global set-up, we continue to see a growing set of investment opportunities across regions, industries and sectors. Therefore the continued build-out of our investment teams and industry value creation practice remains a priority for the firm in order to selectively invest in the best opportunities and generate attractive returns for our clients."
Summary of financial figures
Key figures H1 2014 and H1 2015
(in CHF m)
Adjusted net profit3
IFRS net profit
1 Revenues from management and advisory services, net, including other operating income and share of results of associates
2 Management fees include recurring management fees, late management fees and other non-recurring income
3 Since the firm’s IPO in 2006, net profit has been adjusted for specific non-cash items related to one investment product, Pearl; the successful conversion of Pearl in September 2014 will consequently make Partners Group’s adjusted net profit equal to its IFRS net profit from 2015 onwards
Financials: a successful H1 2015, despite FX headwinds
The significant AuM growth in EUR in H1 2015 did not translate directly into higher management fees. Management fees decreased by CHF 19 million for two reasons: the strengthening of the CHF against other currencies and lower late management fees due to the launch of many new investment programs during the reporting period. Higher performance fees of CHF 32 million (H1 2014: CHF 12 million) largely compensated for lower late management fees. As a result, total revenues remained flat at CHF 287 million in H1 2015 (H1 2014: CHF 287 million).
The two factors mentioned above also affected the firm's overall EBITDA development, which totaled CHF 166 million (H1 2014: CHF 178 million). As a result, the firm's EBITDA margin eased to 58% (H1 2014: 62%) during the period whereas the target EBITDA margin for newly generated business of ~60% remains unchanged.
In H1 2015, strong value creation and performance generation was the largest contributor to the net financial result. On the one hand, the investment program Pearl, which was successfully converted from bonds to shares, generated additional performance of CHF 51 million. The NAV gain supported the firm's profit in H1 2015, but is expected to have limited contribution potential in the future, as proceeds from exits of the underlying portfolio will be converted into cash through income statement-neutral distributions. Also, the firm's investments in its own programs alongside its clients increased in value and contributed CHF 25 million (H1 2014: CHF 20 million) during the period. Overall, the net finance income, including costs of interest and FX movements, amounted to CHF 70 million in H1 2015 (H1 2014: CHF 17 million).
In summary, the firm's adjusted net profit increased by 26% to a record amount of CHF 214 million (H1 2014: CHF 169 million) in H1 2015. The IFRS net profit increased by 11% to CHF 214 million (H1 2014: CHF 193 million) in the same period. With the successful conversion of Pearl, Partners Group’s adjusted net profit will equal its IFRS net profit from 2015 onwards.
An increased pipeline of quality investment opportunities has allowed Partners Group to accept a greater number of commitments from clients and the firm therefore raised the full-year guidance for new client demand by EUR 1 billion in its July AuM announcement, lifting the range for gross assets raised to EUR 6-8 billion for 2015. The firm's full-year 2015 guidance on tail-down effects (i.e. the step-by-step reduction in client commitments as an investment program matures) and redemptions from liquid and semi-liquid vehicles have not changed and are estimated to total EUR -2 to -3 billion (2014: EUR -2.1 billion). Furthermore, ongoing distribution activity in underlying client portfolios has driven forward the maturity profile of numerous client portfolios and increased the visibility of performance fees, which are expected to ramp up in the years 2016/17 and beyond.
Christoph Rubeli, Partner and Co-Chief Executive Officer, comments: "We have made active use of the attractive exit environment and have generated significant underlying portfolio distributions over the past half year. At the same time, there is still an ample set of investment opportunities in private markets for those managers who have the ability to generate proprietary deal flow and to create value. Based on our current relative value views on private markets, we continue to overweight defensive assets and look for growth assets that offer value-creation potential as a way to generate returns for our investors."
Conference call and interim report H1 2015
Partners Group’s senior management will hold a conference call to discuss the semi-annual results today at 9.00 am CET. Dial-in details for the conference can be obtained using the contact details below.
The interim report as of 30 June 2015 was published today at 7.00 am CET and is available for download at www.partnersgroup.com/financialreports.
Key dates 2016
14 January 2016
Announcement of AuM as of 31 December 2015
22 March 2016
Annual results & annual report 2015
11 May 2016
Annual general meeting
14 July 2016
Announcement of AuM as of 30 June 2016
13 September 2016
Interim results & interim report as of 30 June 2016