Baar-Zug, 6 September 2011
Partners Group with solid growth of AuM, results impacted by foreign exchange movements
- Partners Group saw inflows of EUR 2.1 billion in H1 2011 and reconfirms expected client demand of EUR 4-5 billion for the full year 2011.
- The average EUR/CHF and USD/CHF rates were 12% respectively 16% lower compared to H1 2010, which had a direct impact on the firm’s financials.
- As a result, net revenues decreased by 9% to CHF 174 million (H1 2010: CHF 192 million) although recurring revenues rose by 14% in EUR.
- EBITDA was CHF 106 million (H1 2010: CHF 136 million) resulting in a lower EBITDA margin of 61% which is largely attributable to currency development.
- H1 2011 adjusted net profit amounts to CHF 113 million (H1 2010: CHF 157 million). A direct comparison is distorted by last year’s result being significantly above expectations because of two extraordinary items consisting of non-recurring (one-time) late management fees and currency hedging gains which were a total of CHF 30 million higher than this year. Therefore, the H1 2011 adjusted net profit of CHF 113 million is only 11% lower than the comparable figure of CHF 127 million and in line with the revenue reduction due to negative currency developments.
- Due to the solid recurring earnings and a strong cash generation of the firm, the board remains committed to proposing a dividend for 2011 which is at least as high as the CHF 5 per share paid out for 2010, which translates into a dividend yield of 3.7% (as of closing share price on 5 September 2011).
Partners Group is pleased that clients have continued to entrust the firm with their private markets investment programs despite the current challenging environment, with inflows totaling EUR 2.1 billion in the first half of the year. In line with Partners Group’s continued global growth, client interest has again increased in geographic diversity in both existing and new markets for the firm, with in particular heightened interest stemming from North America. The firm expects to see sustained inflows in the second half of the year and confirms that client demand is expected to reach EUR 4-5 billion for the year.
At the level of the firm's CHF financials, the current FX environment has not been without impact. With a foreign exchange exposure of two-thirds in Euro and one quarter in US dollars, Partners Group has seen the large decline in these currencies compared to the same period in 2010 mirrored in its revenues. The average EUR/CHF rate was 12% lower in H1 2011 as compared to H1 2010, while the USD/CHF rate was 16% lower in the same time frame. In addition, the majority of assets raised in H1 2010 were in products reaching the end of their fundraising periods, leading to a large amount of non-recurring (one-time) late management fees paid to the firm. In contrast, the high interest seen from clients in H1 2011 was largely committed to new programs, leading to late management fees being CHF 18 million lower in H1 2011 as compared to H1 2010. Therefore, net revenues decreased by 9% to CHF 174 million from CHF 192 million when comparing H1 2011 with H1 2010. However, when removing these distorting effects and looking at the recurring revenues, these have continued to rise in EUR terms by 14% as compared to H1 2010.
As a consequence, the developments also had an impact on the EBITDA, which amounted to CHF 106 million in H1 2011 compared to CHF 136 million in H1 2010, as well as on the EBITDA margin, which was 61% for H1 2011. The lower level of the EBITDA margin can be largely attributed to the EUR/CHF and USD/CHF currency development. While Partners Group continues to be fully committed to its strict cost management principles, the firm’s growth perspectives remain fully intact as evidenced in H1 2011. Partners Group is therefore committed to further building its global team, which grew from 447 to 511 in the first half of 2011.
The largest contributor to the financial result of CHF 22 million (H1 2010: CHF 37 million) were gains on investments in own products following the strong performance achieved by these products for our clients, as well as interest income from cash management. However, foreign exchange hedging gains in H1 2011 contributed only CHF 2 million (H1 2010: CHF 14 million) due to the relative stability of the two currency pairs EUR/CHF and USD/CHF within the first half of 2011 compared to the movement in H1 2010.
In H1 2010 Partners Group reported an adjusted net profit of CHF 157 million significantly above expectations because of two extraordinary items consisting of non-recurring (one-time) late management fees and currency hedging gains which were in total CHF 30 million higher during the prior period. Therefore, the H1 2011 adjusted net profit of CHF 113 million is 11% lower than the comparable figure of CHF 127 million and in line with the revenue reduction due to the negative currency developments.
Dr. Marcel Erni, Co-founder and Chief Investment Officer, comments "We have been extremely active investors through the market downturn since the beginning of 2009 and have invested a total of USD 9 billion in numerous highly attractive investments at the bottom of the cycle. In particular, we have seized a substantial amount of secondary opportunities across private markets, investing a total of USD 5 billion. An additional USD 2 billion was deployed in direct investments, with stable, cash-generating companies with strong revenue visibility in the advanced world, attractively valued companies in Asia and emerging markets and real assets including private real estate and private infrastructure offering promising potential. The high investment pace during this attractive period has resulted in a substantial performance for our clients, with an annualized overall return of 18.9% compared to the MSCI World TR at just 1.5% since the end of 2009."
Alfred Gantner, Co-founder and Executive Chairman, adds "In this challenging environment, we continue to gain significant market share across the entire private markets spectrum based on the excellent performance we have achieved for our clients. We find that an established global business and brand name as well as size and stability remain key factors in winning investors' trust. We are dedicated to retaining a leading position in private markets investment management by focusing equally on investment selection and performance through the cycle, client servicing and operational excellence."
Partners Group’s senior management will hold a press conference to discuss the interim results today at 9.00 am CET at the SIX ConventionPoint in Zurich. Dial-in details for the conference can be obtained using the contact details below.
The interim report as of 30 June 2011 was published today at 7.00 am CET and is available for download at www.partnersgroup.com/financialreports.
(in CHF m)
Recurring net revenues
Adjusted net profit1
1 Adjusted for certain non-cash items relating to our capital-protected product Pearl