Financial services provider Partners Group earns less in the first half of the year

Partners Group generated lower revenues in the first half of the year and also earned less. However, the asset manager expects a recovery in the sale of investments as early as the second half of the year.

In the first six months of 2024, income fell by 7 percent year-on-year to CHF 977 million, as the company, which specializes in private market investments, announced on Tuesday. This was due to significantly lower income from performance fees, which fell by 39 percent to CHF 161 million. However, income from performance fees had almost quadrupled in the previous year.

The transaction markets continue to recover more slowly than expected, writes Partners Group. And there has been an increase in the sale of investments in areas that typically generate lower performance fees. In the private equity and infrastructure sectors, some planned sales were also delayed again.

Pipeline continues to fill up

However, the exit pipeline remains robust with an increasing number of assets that are ripe for sale, CEO David Layton was quoted as saying in the press release. Performance fees should therefore increase significantly as soon as the environment improves.

In the first half of the year, performance fees accounted for 17 percent of total income. For the years 2024 and 2025, the management continues to expect 20 to 30 percent, with the figure for 2024 as a whole likely to be around 20 percent. From 2026 onwards, the share is expected to be 25 to 40 percent.

Partners Group earns significantly more from performance fees than from fixed management fees. These are the Group's second source of income and are dependent on the development of assets under management. Overall, there was an increase of 4 percent to 815 million in the first half of the year. As previously announced, the Zug-based asset manager had 149 billion dollars under management at the end of June, compared with 147 billion at the end of last year.

Even worse than expected by the market

Operating costs fell in line with income, namely by 9 percent to CHF 371 million. This was mainly due to lower variable personnel costs. At Partners Group, up to 40 percent of performance fees go to employees.

Nevertheless, EBIT fell by 6 percent to CHF 605 million, which corresponds to a margin of 62.0 percent. Partners Group's target is an EBIT margin of around 60 percent for all newly generated management fees. At the bottom line, profit was 8 percent lower at CHF 508 million.

With these results, the asset manager fell short of analysts' average expectations at all levels. Performance fees in particular were even weaker than the experts had already expected. Even the most pessimistic estimate was clearly missed.

Looking ahead, Partners Group confirmed its guidance for the full year: Management continues to expect capital commitments of USD 20 to 25 billion for 2024. In the first half of the year, Partners Group acquired 11 billion dollars in client assets.

SDA