Petershill Prtnrs - Q3 Trading Update
21/11/2023 07:00
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RNS Number : 0539U Petershill Partners PLC 21 November 2023
Petershill Partners plc (the "Company" or "Petershill Partners"), the
diversified, global alternatives investment group focused on private capital
strategies, today publishes its Q3 trading update for the quarter ended 30
September 2023
Trading in-line with 2023 expectations
Performance Update
· Aggregate Partner-firm AuM of US$303bn, increasing 1% during the
quarter and 7% year-over-year.
· Aggregate Fee-paying Partner-firm AuM of US$197bn, increasing 1% during
the quarter and 4% year-over-year.
- Organic gross fee-eligible AuM raise was US$6bn for the quarter and a
total of US$20bn in the first nine months of the year.
· In the third quarter, Partner Fee Related Earnings (FRE) were US$53m,
13% higher than in Q3 2022 and 6% higher than in Q2 2023. FRE growth reflected
Net Management and Advisory Fees of US$91m for the quarter, 21% higher than in
Q3 2022 and 5% higher than in Q2 2023 partially offset by Partner Fee Related
Expenses of US$38m, 36% higher than in Q3 2022 and 3% higher than in Q2 2023.
- Management fees for the quarter were US$97m, 17% higher than in Q3
2022 and 11% higher than in Q2 2023, supported by approximately US$20bn of
Fee-paying AuM switched on during calendar Q3 2023 which is not yet included
in the Q3 2023 Fee-paying AuM on a 3-month lag basis. There were no
Transaction and Advisory Fees in Q3 2023 compared to US$6m in Q3 2022, and
US$5m in Q2 2023, and Offsets in Q3 2023 were US$(6)m compared to US$(14)m in
Q3 2022 and US$(5)m in Q2 2023.
· Partner Distributable Earnings in Q3 2023 were US$80m, 16% higher than
in Q3 2022 reflecting higher Partner Fee Related Earnings (FRE) of US$53m (Q3
2022 US$47m) and Partner Realised Investment Income of US$13m (Q3 2022 US$6m)
with lower Partner Realised Performance Revenues (PRE) of US$14m, (Q3 2022
US$16m).
· We re-iterate our 2023 guidance as provided at our interim results on 8
September 2023.
· The Company as at close 20 Nov 2023 had completed US$22m of the
previously announced US$50m share buyback programme that commenced on 17 May
2023.
Statement from Ali Raissi-Dehkordy and Robert Hamilton Kelly
"Our Partner-firms continued to experience steady fund-raising activity with
US$20bn of gross fee eligible assets raised year-to-date. The asset raising
highlights the strength of our Partner-firms given the challenging market
backdrop. There are signs that inflation is moderating and an expectation for
rates to stabilize, but at the same time broader macro uncertainty persists as
we head into the year end. We remain highly selective and focused on the
risk-adjusted outlook for new investments, and we have made no new investments
in 2023. As we look forward, our diversified business model, healthy cash
generation and strong balance sheet, positions Petershill Partners well to
take advantage of opportunities as they arise."
Review of AuM
All AuM figures are based on a three-month lag due to the timing of the
financial information received by the Operator from the Partner-firms.
Aggregate Partner-firm AuM
Aggregate Partner-firm AuM grew 1% in the quarter and 7% year-over-year to
US$303bn.
The largest contribution of AuM by a single Partner-firm fund represented 5%
of Aggregate Partner-firm AuM, highlighting the diversified nature of the
Company.
Aggregate Fee-paying Partner-firm AuM
Aggregate Fee-paying Partner-firm AuM grew 1% in the quarter and 4%
year-over-year to US$197bn.
AuM at the end of the quarter not yet paying fees was stable with the previous
quarter at US$28bn on a 3-month lag. While AuM are reported on a 3-month lag,
management fees are reported on a current basis. Management fees were switched
on during Q3 2023 for US$20bn of the US$28bn AuM reported not yet paying fees
on a 3-month lag.
The below table reconciles Aggregate Fee-paying Partner-firm AuM to Aggregate
Partner-firm AuM as of 30 September 2023, based on a one-period (3-month) lag:
Q3
(US$bn unless otherwise indicated) 2023
Aggregate Fee-paying Partner-firm AuM ($bn) 197
AuM not yet paying fees ($bn) 28
Fee Exempt AuM ($bn) 22
Investment performance ($bn) 56
Aggregate Partner-firm AuM ($bn) 303
The table below shows the changes in Aggregate Partner-firm AuM and Aggregate
Fee-paying Partner-firm AuM for both the quarter and the nine months ended 30
September 2023, based on a one-period (3-month) lag:
Quarter ended Nine months ended
30 September 30 September
(US$bn unless otherwise indicated) AuM Fee-paying AuM AuM Fee-paying
AuM
Aggregate AuM Prior Period ($bn) 300 196 283 194
Inflows ($bn) 7 5 30 8
Realisations ($bn) (3) (2) (13) (6)
Investment performance ($bn) (1) (2) 3 1
M&A ($bn) - - - -
Aggregate AuM Current Period ($bn) 303 197 303 197
Private markets represent the majority of AuM. The following table reflects
the Aggregate Partner-firm AuM and Aggregate Fee-paying Partner-firm AuM by
Asset Class as of 30 September 2023, based on a one-period (3-month) lag:
Asset Class (US$bn unless otherwise indicated) AuM Percentage Fee-paying Percentage
AuM
Private equity ($bn) 194 64% 104 53%
Private credit ($bn) 12% 32 16%
36
Private real assets ($bn) 15% 34 17%
46
Absolute return ($bn) 9% 27 14%
27
Total Current Period ($bn) 303 100% 197 100%
2023 Guidance
§ US$20-US$25bn organic fee-eligible AuM raise and realisations of
US$5-US$10bn in fee-paying AuM.
§ US$190-US$210m full year Partner FRE.
§ Partner Realised PRE expected to be below medium-term guidance of 20% - 30%
of total Partner Revenues for full year.
§ Acquisitions in 2023 expected to be at or below the bottom end of the
medium-term range of US$100 - US$300m per annum as we continue to remain
selective on M&A.
§ 85-90% Company Adjusted EBIT margin.
Details of investor and analyst conference call
There will be a conference call for investors and analysts at 9.00am GMT today
hosted by Ali Raissi-Dehkordy and Adam Van De Berghe to discuss the Q3 2023
Trading Update, followed by a Q&A session.
All interested parties are invited to participate via telephone or the audio
webcast. Please click here to access the webcast.
(https://event.webcasts.com/viewer/portal.jsp?ei=1509448&tp_key=4ccdad6376)
Conference Call Information:
Domestic: +44(0)330-165-3657
Domestic Freephone 0800 279 6843
International: +1-929-477-0492
International Tollfree 888-596-2629
Conference ID: 1772166
All participants are asked to dial in approximately 10-15 minutes prior to the
call, referencing "Petershill Partners" when prompted.
Replay Information:
An archived replay of the call will be available on the webcast link.
(https://event.webcasts.com/viewer/portal.jsp?ei=1509448&tp_key=4ccdad6376)
Please direct any questions regarding obtaining access to the conference call
to Petershill Partners Investor Relations, via e-mail, at
PHP-Investor-Enquiries@gs.com (mailto:PHP-Investor-Enquiries@gs.com)
Petershill Partners will provide a Q4 2023 AuM update on 19 January 2024
Analyst / Investor
enquiries:
Gurjit Kambo (Head of Investor Relations) +44 (0)207 051 2564
Media enquiries:
Brunswick Group phll@brunswickgroup.com
Simone Selzer +44 (0)207 404 5959
The conference call will not be open to investors located in the United States
or to "U.S. persons" as defined in Regulation S under the US Securities Act of
1933, as amended, (Regulation S) except to "qualified purchasers" as defined
in the US Investment Company Act of 1940, as amended (the Investment Company
Act). In addition, the conference call will not be open to persons located in
or resident of any jurisdiction where to do so would constitute a violation of
the relevant laws of such jurisdiction. By attending the conference call, you
represent to being (i) (a) outside the United States and not a "U.S. person"
as defined in Regulation S or (b) a "qualified purchaser" as defined in the
Investment Company Act, and (ii) not located in or resident of any
jurisdiction where to do so would constitute a violation of the relevant laws
of such jurisdiction.
ABOUT PETERSHILL PARTNERS
Petershill Partners plc (the "Company" or "Petershill Partners") and its
Subsidiaries (the "Group") is a diversified, global alternatives investment
group focused on private equity and other private capital strategies. Through
our economic interests in 25 alternative asset management firms
("Partner-firms"), we provide investors with exposure to the growth and
profitability of the alternative asset management industry. The Company
completed its initial acquisition of the portfolio of Partner-firms on 28
September 2021 and was admitted to listing and trading on the London Stock
Exchange on 1 October 2021 (ticker: PHLL). The Company is operated by Goldman
Sachs Asset Management ("Goldman Sachs" or the "Operator") and is governed by
a diverse and fully independent Board of Directors (the "Board").
Through our Partner-firms, we have exposure to $303 billion of total assets
under management ("AuM"), comprising a diverse set of more than 200 long-term
private equity and other private capital funds where capital is typically
locked in over a multi-year horizon. These underlying funds generate recurring
management fees and the opportunity for meaningful profit participation over
the typical 8+ year lifecycles of such funds. We believe our approach is
aligned with the founders and managers of our Partner-firms and, as a result,
allows the Company to participate in these income streams in a way that
provides high-margin, diversified and stable cash flows for our shareholders.
For more information, visit https://www.petershillpartners.com
(https://www.petershillpartners.com) . Information on the website is not
incorporated by reference into this press release and is provided merely for
convenience.
Appendix
AuM and FP AuM*
Q3 YTD*** LTM
Q-on-Q
(US$bn, unless otherwise indicated) Sep-30-2023 Jun-30-2023 Mar-31-2023 Dec-31-2022 Sep-30-2022 (Δ%) (Δ%) (Δ%)
Aggregate Partner-firm AuM ($bn) 303 300 290 283 282 1% 7% 7%
Aggregate Fee-paying Partner-firm AuM ($bn) 197 196 195 194 189 1% 2% 4%
Average Aggregate Fee-paying Partner-firm AuM ** ($bn) 193 190 188 178 169 2% 8% 14%
Aggregate Performance Fee Eligible Partner-firm AuM ($bn) 276 274 266 259 256 1% 7% 8%
Average Aggregate Performance Fee Eligible Partner-firm AuM ** ($bn) 265 258 251 236 220 3% 12% 20%
Additional Metrics
Partner Private Markets Accrued Carried Interest ($m) 613 608 600 611 644 1% 0% (5%)
Investment capital ($m) 398 398 383 383 398 0% 4% 0%
*All AuM figures are based on a one-period (3-month) lag due to the timing of
the financial information received by the Operator from the Partner-firms.
** Average Aggregate AuM figures represent the twelve month mean and use the
start and each quarter end of the reporting period adjusted for acquisitions
and dispositions where applicable.
*** Percentage change relative to Dec-31-2022.
Key Operating Metrics - Definitions
This document contains certain key operating metrics that are not defined or
recognised under IFRS.
The Operator and the Directors use these key operating metrics to help
evaluate trends, assess the performance of the Partner-firms and the Company,
analyse and test dividends received from the Partner- firms and inform
operating, budgeting and re-investment decisions. The Directors believe that
these metrics, which present certain operating and other information in
respect of the Partner-firms, provide an enhanced understanding of the
underlying portfolios and performance of the Partner-firms and are therefore
essential to assessing the investments and performance of the Company.
The key operating metrics described in this section are derived from financial
and other information reported to the Operator by the Partner-firms. The
Operator, with the assistance of an independent accounting firm, performs due
diligence procedures on the information provided by the Partner-firms. It
should be noted, however, that these due diligence procedures do not
constitute an audit.
In addition, each Partner-firm may account for and define certain financial
and other information differently from one another. For example, each
Partner-firm may calculate its fee-paying AuM differently, the result of which
being that the inputs of the Company's Aggregate FP AuM are not consistently
calculated.
Whilst the operating metrics described in this section are similar to those
used by other alternative asset managers, there are no generally accepted
principles governing their calculation, and the criteria upon which these
metrics are based can vary from firm to firm. These metrics, by themselves, do
not provide a sufficient basis to compare the Partner-firms' or the Company's
performance with that of other companies.
None of Partner Distributable Earnings, Partner FRE, Partner Realised
Performance Revenues or Partner Realised Investment Income are measures of or
provide any indication of profits available for the purpose of a distribution
by the Company within the meaning of section 830 of the Companies Act 2006, or
of any Partner-firm in accordance with the equivalent applicable rules.
Aggregate Partner-firm AuM
Aggregate Partner-firm AuM is defined as the sum of (a) the net asset value of
the Partner-firms' underlying funds and investment vehicles, and in most cases
includes co-investment vehicles, GP commitments and other non-fee paying
investment vehicles and (b) uncalled commitments from these entities, as
reported by the Partner-firms to the Operator from time to time and aggregated
by the Operator without material adjustment. This is an aggregated figure
across all Partner-firms and includes Partner-firm AuM outside of the
Company's ownership interest in the Partner-firms.
The Operator and the Directors consider Aggregate Partner-firm AuM to be a
meaningful measure of the size, scope and composition of the Partner-firms, as
well as of their capital raising activities. The Operator uses Aggregate
Partner-firm AuM to inform operating, budgeting and re-investment decisions.
Aggregate Fee-paying Partner-firm AuM
Aggregate Fee-paying AuM is defined as the portion of Aggregate Partner-firm
AuM for which Partner-firms are entitled to receive management fees, as
reported by the Partner-firms to the Operator. The principal difference
between Aggregate FP AuM and Aggregate Partner-firm AuM is that Aggregate FP
AuM typically excludes co- investment on which Partner-firms generally do not
charge fees and, to a lesser extent, fund commitments in Partner-firm funds
(i) on which fees are only earned on investment, rather than from the point of
commitment and (ii) where capital has been raised but fees have not yet been
activated. This may also include legacy assets where fees are no longer being
charged.
The Operator and the Directors consider Aggregate Fee-paying AuM to be a
meaningful measure of the Partner-firms' capital base upon which they earn
management fees and use the measure in assessing the management fee related
performance of the Partner-firms and to inform operating, budgeting and
re-investment decisions.
Aggregate Performance Fee Eligible Partner-firm AuM
The amount of Aggregate Partner-firm AuM that is eligible for carried
interest.
Partner Net Management and Advisory Fees
Partner Net Management and Advisory Fees is defined as the Company's aggregate
proportionate share of the Partner-firms' net management fees (as reported by
the Partner-firms to the Operator), including monitoring and advisory fees,
payable by the Partner-firms' funds to their respective Partner-firms for the
provision of investment management and advisory services.
The Operator and the Directors consider Partner Net Management and Advisory
Fees to be a meaningful measure of the management fee-related performance of
the Partner-firms, and the Operator uses this metric to analyse and test
income received from the Partner-firms and to inform operating, budgeting and
re-investment decisions.
Partner Fee Related Earnings (FRE)
Partner FRE is defined as Partner Net Management and Advisory Fees, less the
Partner-firms' operating expenses and fixed and bonus compensation (but not
performance fee-related expenses) allocable to the Company's share of Partner
Net Management and Advisory Fees, as reported by the Partner-firms to the
Operator, and subject to applicable contractual margin protections in respect
of certain Partner-firms.
The Operator and the Directors consider Partner FRE to be a meaningful measure
of the management fee-related earnings of the Partner-firms and key
performance indicator of the Company's income from investments in management
companies derived from management fee income. The Operator uses this metric to
analyse and test dividends received from the Partner-firms, as well as to
inform operating, budgeting and re-investment decisions.
Partner Realised Performance Revenues
Partner Realised Performance Revenues is defined as the Company's aggregate
proportionate share of the Partner-firms' realised carried interest
allocations and incentive fees payable by the Partner-firms' funds to their
respective Partner-firms, less any realised performance fee-related expenses
of the Partner-firms allocable to the Company's share of performance
fee-related revenues, as reported by the Partner-firms to the Operator.
The Company's share of the Partner-firms' performance fee-related earnings
will be lower than its share of the Partner-firms' management fee-related
earnings because the Company's ownership stake in the Partner-firms'
performance fee-related earnings is lower than its ownership stake in the
Partner-firms' management fee-related earnings.
The Operator and the Directors consider Partner Realised Performance Revenues
to be a meaningful measure of the performance fee-related earnings of the
Partner-firms and key performance indicator of the Company's income from
investments in management companies derived from performance fee income. The
Operator uses this metric to analyse and test dividends received from the
Partner-firms, as well as to inform operating, budgeting and re-investment
decisions.
Partner Realised Investment Income
Partner Realised Investment Income is defined as the Company's aggregate
proportionate share of Partner-firm earnings resulting from the realised gains
and losses or any distributed income from the investments held on
Partner-firms' balance sheets, as reported by the Partner-firms to the
Operator. Partner Realised Investment Income is also realised by the Company
through a limited number of direct stakes in certain Partner-firms' funds.
Realised Investment Income includes income that has been realised but not yet
paid, as well as amounts that are realised and either fully or partially
reinvested.
The Company's share of the Partner-firms' investment and balance sheet income
will be lower than its share of the Partner-firms' management fee-related
earnings because the Company's ownership stake in the Partner-firms'
investment and balance sheet income is lower than its ownership stake in the
Partner-firms' management fee-related earnings.
The Operator and the Directors consider Partner Realised Investment Income to
be a meaningful measure of the investment performance of certain assets held
by the Partner-firms and key performance indicator of the Company's income
from investments in management companies derived from investment income. The
Operator uses this metric to analyse and test dividends received from the
Partner-firms, as well as to inform operating, budgeting and re-investment
decisions.
Partner Distributable Earnings and Partner Distributable Earnings Margin
Partner Distributable Earnings is defined as the sum of Partner FRE, Partner
Realised Performance Revenues and Partner Realised Investment Income. Partner
Distributable Earnings Margin is defined as Partner Distributable Earnings
divided by the sum of Partner Net Management and Advisory Fees, Partner
Realised Performance Revenues and Partner Realised Investment Income.
The Operator and the Directors consider Partner Distributable Earnings and
Partner Distributable Earnings Margin to be meaningful measures of the overall
performance of the Partner-firms and key performance indicators of the
Company's total income from investments in management companies. The Operator
uses this metric to analyse and test dividends received from the
Partner-firms, as well as to inform operating, budgeting and re-investment
decisions. These measures reflect any contractual margin protections or
revenue share interests that the Company may have with the Partner-firms,
which means that the Partner Distributable Earnings Margin may differ from the
margins achieved by other shareholders or partners of the Partner-firms.
Partner Revenues
Partner Revenues is defined as the sum of Partner Net Management and Advisory
Fees, Partner Realised Performance Revenues and Partner Realised Investment
Income.
The Operator and the Directors consider Partner Revenues to be a meaningful
measure of the overall performance of the Partner-firms. The Operator uses
this metric to inform operating, budgeting and re- investment decisions.
Partner Private Markets Accrued Carried Interest
Partner Private Markets Accrued Carried Interest is defined as the Company's
proportionate share of the Partner-firms' balance sheet accrued carry (as
reported by the Partner-firms to the Operator) and represents the Company's
proportionate share of the accumulated balance of unrealised profits from the
Partner-firms' funds.
The Operator and the Directors consider Partner Accrued Carried Interest to be
a meaningful measure of the performance of the private markets Partner-firms
and potential future private markets Partner Realised Performance Revenues.
Absolute return performance fees are not accrued and are instead realised
annually. The Operator uses Partner Accrued Carried Interest to assess future
expected carried interest payments and inform operating, budgeting and
re-investment decisions. This key operating metric reflects data reported to
the Operator on a three-month lag.
Investment Capital
Investment Capital is defined as the sum of the reported value of the balance
sheet investments from the Partner-firms. The Operator and the Directors
consider Investment Capital to be a meaningful measure of the performance of
the Partner-firms' balance sheet investments and potential future Partner
Realised Investment Income. The Operator therefore uses Investment Capital to
assess future expected Partner Realised Investment Income and inform
operating, budgeting and re-investment decisions.
AuM and associated data
The data presented in this document for the following key operating metrics
reflects AuM data reported to the Operator on a three-month lag. This
three-month data lag is due to the timing of the financial information
received by the Operator from the Partner-firms, which generally require at
least 90 days following each period end to present final financial information
to the Operator. The key operating metrics reflected on a three-month lag
are:
• Aggregate Partner-firm AuM
• Aggregate FP Partner-firm AuM
• Average Aggregate FP Partner-firm AuM
• Aggregate Performance Fee Eligible Partner-firm AuM
• Average Aggregate Performance Fee Eligible Partner-firm AuM
• Partner Private Markets Accrued Carried Interest
• Investment Capital
In respect of Investment Capital, the data may be adjusted for any known
valuation impacts following the reporting date of the information received
from the Partner-firms.
This announcement has been prepared solely to provide additional information
to shareholders and meets the relevant requirements of the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority. The announcement
should not be relied on by any other party or for any other purpose.
These written materials are not an offer of securities for sale in the United
States. Securities may not be offered or sold in the United States absent
registration under the US Securities Act of 1933, as amended, or an exemption
therefrom. The issuer has not and does not intend to register any securities
under the US Securities Act of 1933, as amended, and does not intend to offer
any securities to the public in the United States. Any securities of
Petershill Partners plc referred to herein have not been and will not be
registered under the US Investment Company Act of 1940, as amended, and may
not be offered or sold in the United States or to "U.S. persons" (as defined
in Regulation S under the US Securities Act of 1933, as amended) other than to
"qualified purchasers" as defined in the US Investment Company Act of 1940, as
amended. No money, securities or other consideration from any person inside
the United States is being solicited and, if sent in response to the
information contained in these written materials, will not be accepted.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by the
use of forward-looking terminology such as "may," "will," "should," "expect,"
"anticipate," "project," "target," "estimate," "intend," "continue," or
"believe" or the negatives thereof or other variations thereon or comparable
terminology. You should read statements that contain these words carefully
because they discuss our plans, strategies, prospects and expectations
concerning the business, operating results, financial condition and other
similar matters. These statements represent the Company's belief regarding
future events that, by their nature, are uncertain and outside of the
Company's control. There are likely to be events in the future, however, that
we are not able to predict accurately or control. Any forward-looking
statement made by us in this press release is based upon information known to
the Company on the date of this press release and speaks only as of such date.
Accordingly, no assurance can be given that any particular expectation will be
met and readers are cautioned not to place undue reliance on forward looking
statements. Additionally, forward looking statements regarding past trends or
activities should not be taken as a representation that such trends or
activities will continue in the future. Other than in accordance with its
legal or regulatory obligations (including under the UK Listing Rules and the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority), the Company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information, future
events or otherwise.
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