Price sensitive ("ad hoc") releases
Baar-Zug, Switzerland, 19 March 2019
- USD 19.3 billion invested across all private markets asset classes (2017: USD 13.3 billion) on behalf of the firm's clients
- Gross client inflows of EUR 13.3 billion (2017: EUR 13.3 billion) across regions and size and type of client; expected range of EUR 13-16 billion in gross client demand for 2019
- Assets under management (AuM) grew to EUR 72.8 billion as of 31 December 2018 (31 December 2017: EUR 61.9 billion), representing net growth of 18%
- Management fees increased by 15% to CHF 1,002 million (2017: CHF 873 million)
- Revenues increased by 7% to CHF 1,326 million (2017: CHF 1,245 million) attributable to an increase in revenues from management fees and continued solid performance fee development
- EBITDA increased by 7% to CHF 882 million (2017: CHF 825 million); EBITDA margin remained stable at 66% (2017: 66%)
- The financial result continued to support the firm's profit development and amounted to CHF 23 million (2017: CHF 36 million)
- Profit increased by 2% to CHF 769 million (2017: CHF 752 million)
- Dividend of CHF 22.00 per share proposed (prior year: CHF 19.00 per share); an increase of 16%
With over EUR 13 billion raised, 2018 was a solid year for Partners Group as clients committed to the firm's offerings across all asset classes. In particular, Partners Group's broadening of its private debt offerings was successful in generating client demand, as clients sought to benefit from continued superior yields compared to traditional fixed income investments and a floating base rate. With over USD 19 billion invested in 2018, it was also a highly successful year as regards the firm's ability to deploy a significant amount of its clients' capital in attractive private markets assets. These achievements translated into solid financial performance across the board and an increased dividend proposal.
David Layton, Partner and Co-Chief Executive Officer, Partners Group, states: "The private markets industry is confronted with increased complexity, mainly driven by economic challenges, disruption across many industries, intense competition and structurally high valuations. In this market environment, we continue to focus on developing clear, value creation-focused investment theses for target assets long before they are available for investment. This is a prerequisite to accessing leading businesses globally in an increasingly crowded market."
Summary of key financial figures (in CHF million)
1 Revenues include management fees and performance fees.
2 Management fees include recurring management fees and other revenues, net, and other operating income.
Revenues increased by 7% to CHF 1,326 million (2017: CHF 1,245 million) for the full year 2018. The management fee margin remained largely stable despite lower late management fees and other income, amounting to 1.29% (2017: 1.33%). Performance fees brought the total revenue margin to 1.71% (2017: 1.89%) during the same period.
Management fees increased by 15%, amounting to CHF 1,002 million (2017: CHF 873 million), in line with average AuM growth in CHF of 18%. Due to the absence of significant closings of flagship programs in 2018, late management fees and other income decreased by 15% compared to the previous year, amounting to CHF 84 million (2017: CHF 99 million). Management fees will continue to be the main source of revenue for Partners Group, constituting an expected share of 70-80% of revenues in the longer term (2018: 76%).
Performance fees continued to remain at a solid level and amounted to CHF 324 million (2017: CHF 372 million), representing a decrease of 13%. Throughout 2018, the firm continued to make active use of the generally supportive exit environment to realize a number of mature private markets assets on behalf of its clients. More than 50 investment programs and mandates from a wide range of vintages contributed to performance fees. The firm expects to continue to generate significant performance fees from its underlying client portfolios, assuming that the market remains favorable to exits.
EBITDA increased by 7% year-on-year and amounted to CHF 882 million (2017: CHF 825 million). The EBITDA margin remained stable at 66% (2017: 66%). The firm targets an EBITDA margin of ~60% for newly generated management fees (assuming foreign exchange rates remain stable), as well as for performance fees on existing and new AuM.
The financial result amounted to CHF 23 million (2017: CHF 36 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 35 million (2017: CHF 50 million). However, this 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 2% year-on-year to CHF 769 million (2017: CHF 752 million).
Based on the solid development of the business in all asset classes and regions, the operating result and confidence in the sustainability of the firm's growth, Partners Group's Board of Directors will propose a dividend of CHF 22.00 per share (prior year: CHF 19.00 per share) to its shareholders at the Annual General Meeting on 15 May 2019. This represents a dividend increase of 16%.
André Frei, Partner and Co-Chief Executive Officer, Partners Group, comments: "In this transitional year between flagship offerings, our clients continued to see the benefit of our investment strategies, as evidenced by the level of new commitments. In the course of 2019, we will approach our investors with several new launches of flagship programs and related mandate solutions across all private markets asset classes."
For the full year 2019, 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 investor. The firm expects gross client demand of EUR 13-16 billion in 2019 as well as EUR -6.5 to -7.5 billion in tail-down effects from the more mature Partners Group programs, including potential redemptions from liquid and semi-liquid programs.
Press conference and Annual Report 2018
Partners Group's senior management will hold a press conference to discuss the annual results today at 9.00am CET at the Renaissance Zurich Tower Hotel, Turbinenstrasse 20, in Zurich. Dial-in details for the conference can be obtained using the contact details below.
The Annual Report as of 31 December 2018 was published today at 7.00am CET and is available for download at www.partnersgroup.com/financialreports.
Key dates 2019
15 May 2019
Annual General Meeting of shareholders
17 May 2019
20 May 2019
Dividend record date
21 May 2019
Dividend payment date
16 July 2019
Announcement of AuM as of 30 June 2019
10 September 2019
Interim results and Interim Report as of 30 June 2019