Price sensitive ("ad hoc") releases
Baar-Zug, Switzerland; 14 July 2020
• Solid gross client demand of USD 8.3 billion in H1 2020
• Important breakthrough for longer-term US defined contribution efforts
• USD 4.3 billion invested in transformative businesses and assets in H1 2020
• Expected gross client demand of USD 12-15 billion for full-year 2020
Partners Group, the global private markets investment manager, received USD 8.3 billion in new commitments from its global client base in H1 2020. This demand for closed-ended investment programs, customized mandates and evergreen programs brings total assets under management (AuM) to USD 96.3 billion as of 30 June 2020 (31 December 2019: USD 94.1 billion).
The breakdown of total AuM as of 30 June 2020 is as follows: USD 45 billion private equity (47%), USD 22 billion private debt (23%), USD 15 billion private real estate (16%), and USD 14 billion private infrastructure (14%).
AuM development in H1 2020
Partners Group received USD 8.3 billion in new commitments from its global client base across all private markets asset classes in the six-month period ending 30 June 2020. 55% of total inflows stemmed from traditional closed-ended private markets programs, 20% of client demand derived from customized single- and multi-asset class private markets mandates and the remaining 25% of fundraising was driven by the firm's evergreen programs.
The firm's total tail-down effects from mature private markets investment programs amounted to USD -2.9 billion and redemptions from evergreen programs amounted to USD -1.1 billion in H1 2020. Over the same period, a negative contribution of USD -1.5 billion stemmed mainly from performance-related effects of a select number of investment programs. A further USD -0.6 billion was driven by foreign exchange effects. Overall, this resulted in net AuM growth of USD 2.2 billion during the period.
Breakthrough for longer-term US defined contribution (DC) efforts
In June 2020, the US Department of Labor (DoL) released an Information Letter in response to Partners Group's initiative to seek guidance for the US DC industry, which clarified that under federal law, DC pension plan fiduciaries can prudently incorporate certain private markets strategies into diversified investment options, such as target-date funds. The Information Letter also clarified that Partners Group's dedicated offering for the US DC market is suitable for these investment options. Without this clarification regarding their fiduciary duties under US federal law, DC plan managers had been reluctant to meaningfully incorporate private markets exposure into DC plans, including 401(k)s. Structurally, the DC pension system in the US prefers underlying fund allocations to provide daily liquidity and pricing as well as highly standardized purchase and redemption procedures.
Next to Partners Group's customized mandate solutions and traditional private markets offerings, the firm has been a global leader in managing private markets programs with liquidity features since 2001. In 2015, Partners Group became the first private markets investment manager to develop offerings for the world's three largest DC markets, the US, UK and Australia. As of 30 June 2020, Partners Group manages around USD 24 billion of AuM in liquid and semi-liquid programs, of which around USD 1 billion stems predominantly from open-ended DC investment programs for the UK and Australia.
André Frei, Partner and Co-Chief Executive Officer, adds: "The Information Letter issued by the US Department of Labor is a major milestone. It not only enables Partners Group to help modernize the US DC market and provide participants with potentially improved retirement outcomes, but it also offers the DC pension system vital access to the broader economy and the opportunity to be a substantial future investor in the growing proportion of American businesses that prefer not to list publicly. As with our UK and Australian DC offerings, we expect the guidance to translate into modest demand from US DC clients initially. However, we anticipate realizing the full potential of our pioneering global DC efforts over the long term."
USD 4.3 billion invested in transformative businesses and assets in H1 2020
Partners Group invested a total of USD 4.3 billion (H1 2019: USD 6.9 billion) on behalf of its clients across all private markets asset classes in H1 2020, with a significant proportion of these investments undertaken in Q1. In Q2, the firm's private markets professionals worked intensively to guide portfolio companies and assets through the COVID-19 crisis, by allocating leadership, operational and financial resources to ensure business continuity and preserve liquidity, while safeguarding the health and safety of portfolio company employees.
The firm deployed USD 3.1 billion (73% of total investment volume) in direct assets, of which a total of USD 2.4 billion was invested as equity in individual businesses and USD 0.7 billion was invested in corporate debt. To complement its direct asset investments, the firm invested USD 1.2 billion (27% of total investment volume) in portfolio assets. These portfolio assets include secondary investments in globally diversified private markets portfolios and select primary commitments to other private markets managers.
David Layton, Partner and Co-Chief Executive Officer, comments: "Due to the measures imposed to contain the COVID-19 outbreak, we are observing an amplification of long-term trends and themes in the operating model of many businesses and assets across our investment portfolios. While a small number of portfolio companies are going through challenges, the overall outperformance of our private markets portfolios during this period compared to their relevant public markets benchmarks was driven by our focus on sectors, such as outsourced contract manufacturing, software product engineering, digital outsourcing solutions, renewable energy and last-mile logistics."
Guidance on gross client demand for full-year 2020
Due to the market uncertainty and general disruption caused by COVID-19, the firm did not confirm its guidance on full-year expected gross client demand as of 17 March 2020. Considering the potential for temporarily limited investment volumes and longer conversion periods for new commitments, Partners Group today anticipates gross client demand of USD 12-15 billion for the full-year 2020, together with USD -7.5 to -9.0 billion in tail-down effects from the more mature, closed-ended investment programs and potential redemptions from evergreen programs.
Conference call today
Partners Group's senior management will hold a conference call today at 9am CEST. To register for the call, please click here or use the contact details at the end of this press release.
Key dates 2020 / 2021
8 September 2020
Interim results and Interim Report as of 30 June 2020
14 January 2021
Announcement of AuM as of 31 December 2020
16 March 2021
Annual results and Annual Report as of 31 December 2020
12 May 2021
Annual General Meeting of shareholders
15 July 2021
Announcement of AuM as of 30 June 2021
7 September 2021
Interim results and Interim Report as of 30 June 2021