REG - Petershill Prtnrs - Q1 Trading Update

Petershill PartnersAnnouncement

23/05/2024 07:00

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RNS Number : 5483P  Petershill Partners PLC  23 May 2024

Petershill Partners plc (the "Company" or "Petershill Partners"), the
diversified, global alternatives investment group focused on private capital
strategies, today publishes its Q1 trading update for the quarter ended 31
March 2024

Gross Fee-eligible AuM raise of $8 billion

Highlights

·     Aggregate Partner-firm AuM of $312bn, increasing 3% during the
quarter and 8% year-over-year.

·     Aggregate Fee-paying Partner-firm AuM of $225bn, increasing 2%
during the quarter and 15% year-over-year.

-    Organic gross Fee-eligible AuM raised was $8bn for the quarter.

·     In the first quarter, Partner Fee Related Earnings were $51m, 4%
higher than in Q1 2023 reflecting Net Management and Advisory Fees of $93m,
13% higher than Q1 2023 offset by Partner Fee Related Expenses of $42m, 27%
higher than in Q1 2023. Expense growth included the impact of the change to
the fee model of one of our Absolute Return Partner-firms, as previously
highlighted.

-    Management fees during Q1 2024 were $96m, 10% higher than in Q1 2023.
There were no Transaction and Advisory Fees in Q1 2024 and Q1 2023, and
Offsets in Q1 2024 were ($3m) compared to ($5m) in Q1 2023.

·     Partner Distributable Earnings in the first quarter were $57m, 7%
lower than in Q1 2023 reflecting lower Partner Realised Performance Revenues
(PRE) of $3m, ($5m, Q1 2023) and Partner Realised Investment Income of $3m,
($7m, Q1 2023).

·     Transaction activity during 2024:

-    We acquired additional interests in three existing Partner-firms in a
secondary transaction from a financial investor for $55m at a discount of
approximately 16% to the carrying value at 31 December 2023;

-    We sold a partial interest of PRE and Investment Income in AKKR back
to management for $35m at a slight premium to the carrying value at 31
December 2023; and

-    Subsequent to the quarter end, the Company acquired a stake in Kennedy
Lewis Investment Management ("Kennedy Lewis") for $150m of which $66m was
funded at close with $84m deferred and yet to be funded. Kennedy Lewis is an
alternative credit manager with over $14bn AuM(1).

·     Subsequent to the quarter end:

-    Goldman Sachs Asset Management "GSAM" in consultation with the
Company, has determined the Private Shares in funds managed by GSAM could
maintain an ownership greater than 25% of the Company beyond Sep-2026, while
allowing the Company to continue to operate as it has been in the ordinary
course; and

-    We announced a Tender Offer of up to $100m subject to shareholder
approval at the AGM today.

·     We re-iterate our 2024 guidance as provided at our full year
results on 26 March 2024.

 

Statement from Ali Raissi-Dehkordy and Robert Hamilton Kelly

"Our Partner-firms continued to experience steady fund-raising activity with
$8bn of gross fee eligible assets raised during the quarter. Following a
slower deployment year in 2023 for new Partner-Firm M&A, activity has
picked up - we have closed three transactions in recent weeks and are
continuing to evaluate opportunities. Crucially, we have maintained our high
bar for new acquisitions as we seek out high performing sector specialist
Partner-firms. Our recent acquisition of Kennedy Lewis is testament to this,
as we believe they are strategically positioned to capitalise on the
opportunities in private credit adding to Petershill Partners credit
portfolio, and further increasing exposure to private capital firms.
Industry-wide realisations continue to be muted, which may reflect macro
uncertainty with less visibility on the path to a reduction in rates. However,
as we look forward, our Partner-firms' robust capital raising and the
Company's dynamic approach to capital allocation underpins our ongoing
confidence about our prospects for shareholders."

1.   AuM as of 31 December 2023

 

AuM Development: Q1 2024

The following table summarises the changes in Aggregate Partner-firm AuM,
Aggregate Fee-paying Partner-firm AuM and Ownership Weighted values for the
first quarter of 2024, based on a one-period (3-month) lag:

 

                                                            Quarter ended 31 March
  ($bn unless otherwise indicated)                     AuM  Fee-paying  Ownership Weighted  Ownership Weighted Fee-paying

                                                            AuM         AuM                 AuM
 Aggregate AuM Prior Period    ($bn)                   304  221         37                  28
 Inflows                       ($bn)                   9    7           1                   1
 Realisations                  ($bn)                   (5)  (4)         -                   -
 Investment performance        ($bn)                   4    1           -                   -
 M&A                           ($bn)                   -    -           -                   -
 Aggregate AuM Current Period  ($bn)                   312  225         38                  29

 

 

AuM Reconciliation: Aggregate Fee-paying AuM Vs Aggregate Partner-firm AuM

The below table reconciles Aggregate Fee-paying Partner-firm AuM to Aggregate
Partner-firm AuM as at 31 March 2024, based on a one-period (3-month) lag:

                                                               Q1
 ($bn unless otherwise indicated)                              2024
 Aggregate Fee-paying Partner-firm AuM  ($bn)                  225
 AuM not yet paying fees                ($bn)                  10
 Fee Exempt AuM                         ($bn)                  20
 Investment performance                 ($bn)                  57
 Aggregate Partner-firm AuM             ($bn)                  312

 

The following table reflects the Aggregate Partner-firm AuM, Aggregate
Fee-paying Partner-firm AuM and Ownership Weighted Fee-paying AuM by Asset
Class as of 31 March 2024, based on a one-period (3-month) lag:

 

 Asset Class ($bn unless otherwise indicated)          AuM  Percentage  Fee-paying  Percentage  Ownership Weighted Fee-paying AuM  Percentage

                                                                        AuM
 Private equity           ($bn)                        202  65%         129         57%         12                                 41%
 Private credit           ($bn)                        40   13%         35          16%         4                                  14%
 Private real assets      ($bn)                        42   13%         33          15%         8                                  28%
 Absolute return          ($bn)                        28   9%          28          12%         5                                  17%
 Total Current Period     ($bn)                        312  100%        225         100%        29                                 100%

 

 

 

 

 

Unchanged 2024 Guidance

·      $20 - 25 billion organic fee-eligible AUM raise and realisations
of $5-10 billion in fee-paying AUM.

·      $200 - $230 million full year Partner FRE.

·      PRE of 15% - 30% of total Partner Revenues.

·      Acquisitions in 2024 expected to be in-line with medium-term
range of $100 - $300 million per annum.

·      85-90% Company Adjusted EBIT margin.

 

 

 

Contact Information

 

Please direct any questions to Petershill Partners Investor Relations, via
e-mail, at PHP-Investor-Enquiries@gs.com
(mailto:PHP-Investor-Enquiries@gs.com)

Analyst / Investor
enquiries:

 Gurjit Kambo    +44 (0) 207 051 2564

Media enquiries:

 Brunswick Group    phll@brunswickgroup.com (mailto:phll@brunswickgroup.com)
 Simone Selzer                          +44 (0)207 404 5959

 

 

 

Petershill Partners will provide a Q2 2024 AuM update on 26 July 2024

 

 

 

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 a portfolio of 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 $312 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.

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-firm's, 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 Fee-paying 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 Fee Related Earnings, 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 reinvestment decisions.

Ownership weighted AuM

Ownership weighted AuM represents the sum of the Company's ownership stakes in
each Partner-firm's AuM.

Aggregate Fee-paying 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 Fee-paying AuM and Aggregate Partner-firm AuM is that
Aggregate Fee-paying 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.

Ownership weighted Fee-paying AuM

Ownership weighted Fee-paying AuM represents the sum of the Company's
ownership stakes in each Partner-firm's Fee-paying AuM.

Aggregate Performance Fee Eligible Partner-firm AuM

The amount of Aggregate Partner-firm AuM that is eligible for performance
fees.

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 feerelated 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 reinvestment
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 reinvestment
decisions.

Partner Distributable Earnings

Partner Distributable Earnings is defined as the sum of Partner FRE, Partner
Realised Performance Revenues and Partner Realised Investment Income.

The Operator and the Directors consider Partner Distributable Earnings 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.

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 Fee-paying Partner-firm AuM

•        Average Aggregate Fee-paying Partner-firm AuM

•        Aggregate Performance Fee Eligible Partner-firm AuM

•        Average Aggregate Performance Fee Eligible Partner-firm AuM

 

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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