A well-reputed private equity specialist: Partners Group is a private markets specialist engaged in private equity, private debt, private real estate, and private infrastructure, using a range of investment instruments (primary, secondary, and direct investments). It manages a range of closed-ended investment programs (funds), customized mandates, and evergreen programs for ~1,000 international pension funds, insurers, asset managers, sovereign wealth funds, family offices, and distribution partners. PG employs a staff of >1,500 around the globe (Zug, Denver, Houston, New York, Toronto, São Paulo, London, Guernsey, Paris, Luxembourg, Milan, Munich, Dubai, Manila, Mumbai, Singapore, Shanghai, Seoul, Tokyo, Sydney).
Strong private markets growth: The opening of the private client segment and defined contribution (DC) pension plans to private markets, ESG/infrastructure, and an underrepresentation in the large North American market offer very sizeable long-term growth options. Global institutional AuM growth will continue and allocations to private markets will increase. PG is expected to increase AuM to a low double-digit growth rates (net).
Large performance fee potential: Performance fees are highly diversified (~300 programs and mandates across vintage years, regions, industries) and are built over 6-9 years, after reaching a 4-8% IRR hurdle rate. The long-term guidance is 20-30% of total revenues (VTe FY23-24E: 25-27%). After a pandemic-related impact in 2020 (19%), 2021 (46%) saw a catch-up effect. An acceleration has been visible as of 2022.
Unique global platform and bespoke solutions: PG has successfully built a unique global platform and bespoke solutions (mandates, evergreens) in private markets with a diversified institutional client base (>900).
Valuation: The extremely high visibility on cash flows (80% of the business is locked-in for +10 years) justifies a much higher valuation compared to more traditional asset managers. In addition to strong long-term growth, PG is expected to distribute increasing dividends.