management fees in line with AuM and performance fees impacted by low asset divestitures

• Fundraising of USD 11 billion brings total AuM^[1] to USD 149 billion as of 30 June 2024
• Management fees amounted to CHF 815 million, up 4% year-on-year
• Performance fees accounted for 17% of revenues or CHF 161 million, down 39% year-on-year
• EBIT margin increased to 62.0%; profit at CHF 508 million, down 8% year-on-year due to lower performance fees
• Reconfirmed outlook on performance fees and guidance for expected gross client demand of USD 20-25 billion

 Summary of key financials H1 2024 (in CHF million)

David Layton, Partner and Chief Executive Officer, says: "We are pleased to report a solid set of results for H1. During the period, our clients entrusted us with USD 11 billion in new capital, with bespoke client solutions again driving demand. While fundamentals gradually improved, transaction markets continued to recover more slowly than expected, affecting our performance fees. Our exit pipeline remains robust and highly diversified with an increasing number of mature assets, and we are confident that our performance fees will materially increase as the exit environment begins to improve."

H1 2024 financials

Partners Group grew total AuM to USD 149 billion, representing a growth rate of 5% year-on-year. In the firm's reporting currency, this growth translated into average AuM growth in CHF of 2% compared to H1 2023. Total revenues decreased by 7% to CHF 977 million (H1 2023: CHF 1’051 million) at a revenue margin^[5] of 1.52% (H1 2023: 1.67%).

• Management fees increased by 4% to CHF 815 million (H1 2023: CHF 786 million) broadly in line with average AuM in CHF. Sustained demand for the firm's bespoke solutions, which are underpinned by Partners Group investment content that is sourced and built with the firm’s transformational investing philosophy, continued to support growth during the period. 
• Performance fees decreased by 39% to CHF 161 million (H1 2023: CHF 265 million), representing 17% of total revenues (H1 2023: 25%). Performance fees were impacted by the continued slower-than-expected recovery of the transaction environment, leading the firm to further postpone several asset divestitures across its private equity and infrastructure platform. Although the firm's realization activity increased 69% year-on-year, it was largely concentrated across private credit and portfolio assets which typically have a lower contribution to performance fees.

Total operating costs decreased by 9% to CHF 371 million (H1 2023: CHF 407 million), mainly driven by lower variable performance fee-related personnel expenses.

• Total personnel expenses (81% of total operating costs) decreased by 12% year-on-year to CHF 300 million (H1 2023: CHF 339 million). Management fee-funded personnel expenses, which are typically regular and recurring in nature, decreased by 1% year-on-year to CHF 241 million (H1 2023: CHF 244 million) in line with the development of average FTEs. Performance fee-funded personnel expenses decreased by 38% to CHF 59 million (H1 2023: CHF 95 million) and moved in line with performance fees. Partners Group allocates up to 40% of all performance fees to its employees and therefore these two components typically move in tandem.

• Other operating expenses increased by 4% to CHF 50 million (H1 2023: CHF 48 million), in line with management fees. Depreciation & amortization remained stable at CHF 22 million (H1 2023: CHF 21 million).

EBIT decreased by 6% to CHF 605 million (H1 2023: CHF 644 million) at an EBIT margin of 62.0% (H1 2023: 61.2%), in line with total revenues.

Net finance income and expenses amounted to CHF 13 million (H1 2023: CHF 17 million). The firm’s transformational investing approach translated into positive underlying asset and portfolio performance, resulting in a contribution of CHF 40 million (H1 2023: CHF 43 million) from Partners Group’s investments alongside its clients. At the same time, negative foreign exchange effects, hedging, and other costs resulted in a negative contribution of CHF -27 million (H1 2023: CHF -26 million). Income taxes totaled CHF 110 million (H1 2023: CHF 110 million) at a tax rate of 17.9% (H1 2023: 16.6%).

In summary, the firm’s profit decreased 8% to CHF 508 million (H1 2023: CHF 551 million), in line with revenues.

Outlook

Juri Jenkner, Partner and President, concludes: “As innovators in the industry, our teams have been laying the groundwork for our firm's future growth. Within private wealth, we launched several new evergreen programs, expanding our existing product shelf to add additional asset classes and multi-asset solutions while working on sophisticated structures to make these solutions more accessible. Within the individual savings space, including wealth management and defined contribution, we are looking at opportunities to work with other financial services firms to provide innovative solutions for clients."

For the full-year 2024, Partners Group confirms its guidance on expected gross client demand of USD 20 to 25 billion, based on an expected normalization of the investment environment and continued strong interest in its bespoke solutions and flagship offerings, as well as a significant pick-up in investment activity. The firm further guides for USD -8 to -9 billion in tail-down effects stemming from the more mature closed-ended investment programs. With regard to financials, Partners Group confirms performance fees to account for 20-30% of total revenues in 2024 and 2025, with 2024 expected to be at around 20% amid more muted market activity. The firm remains confident in its increased guidance of 25-40% for the years thereafter. Partners Group bases this additional upside on the increasing proportion of the firm’s maturing portfolio that consists of direct investments, which entail a higher performance fee. Partners Group will continue to target a ~60% EBIT margin on newly generated management fees as well as on all performance fees as it builds out its resources in preparation for future growth.

Conference call today & publication of Interim Report 2024

Partners Group’s senior management will hold a conference call today at 10:00am CET. To register for the call, please click here or use the contact details at the end of this press release.

The Interim Report as of 30 June 2024 is available for download at https://www.partnersgroup.com/en/shareholders/reports-and-presentations.

Upcoming key dates

[1] Stands for: Assets under Management (AuM). AuM is an Alternative Performance Metric (APM). A description of the APMs can be found in Partners Group's Interim Report 2024 (p.22 & 23), available for download at http://www.partnersgroup.com/en/shareholders/reports-presentations/. AuM figures are for Partners Group Holding AG, inclusive of all Partners Group affiliates.  

[2] Revenues include management fees and performance fees.

[3] Management fees and other revenues, net, and other operating income.

[4] Stands for: depreciation and amortization.

[5] Revenue margin is an Alternative Performance Metrics (APM). A description of the APMs can be found in Partners Group's Interim Report 2024 (p.22 & 23), available for download at http://www.partnersgroup.com/en/shareholders/reports-presentations/.