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Annual Report 2020 ANNUAL REPORT 2020 REPORT – ANNUAL GROUP PARTNERS Contents Christina Han Head Investment Research | Patrick Xin Du Private Equity As of 31 December 2020 ANNUAL REPORT 2020 REPORT ANNUAL Annual Report 2020 PARTNERS GROUP – GROUP PARTNERS Contents Key figures 4 Message from the Chairman and the Co-CEOs 6 2020 at a glance – Partners Group’s business model and review of financial performance Investments 9 Clients 15 Financials 19 Appendix 26 Key definitions and alternative performance metrics (APM) 28 Consolidated financial statements 30 Financial statements of Partners Group Holding AG 102 Compensation Report 118 Corporate Governance Report 143 Contacts 174 ANNUAL REPORT 2020 As in the past, the breadth and clear strategic direction of our platform has enabled us to successfully navigate through these challenging times, reflected in a robust set of 2020 financials. Our transformational approach to investment and our entrepreneurial approach to governance remain at the core of our activities, enabling us to generate superior returns and look ahead with confidence. This, combined with the dedication of our employees and the trust of our clients, business partners and shareholders, positions us well to continue to create lasting, positive impact for all our stakeholders, irrespective of the economic environment. Partners Group | 3 ANNUAL REPORT 2020 Key figures USD 1'533 20 109 1.51% billion professionals offices around assets under revenue margin1), 2) the world management CHF CHF CHF CHF 1'412 875 805 27.50 million million million per share revenues1) EBIT profit proposed dividend Total AuM3) Number of professionals (in USD bn) 1'533 1'464 109.1 94.1 1'203 83.3 1'036 74.4 930 840 57.2 746 50.0 45.5 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 Profit4) Share price development since IPO5) (in CHF m) 1'600% 900 Partners Group 805 1'400% +1'551% 752 769 1'200% 1'000% 558 800% 396 600% 336 400% 200% Bloomberg European Financial Index -57% 0% -200% 2014 2015 2016 2017 2018 2019 2020 2006 2008 2010 2012 2014 2016 2018 2020 1) Revenues from management services, net, and other operating income. 2) Based on average AuM of CHF 93.8 billion in 2020 (2019: CHF 88.4 billion), calculated on a daily basis. 3) Assets under management exclude discontinued public alternative investment activities and divested affiliated companies. 4) Partners Group adjusted its profit for specific non-cash items related to the capital-protected product Pearl Holding Limited until 2014; the successful conversion of Pearl in September 2014 has consequently made Partners Group’s adjusted net profit equal to its IFRS profit from 2015 onwards. 5 ) As of 31 December 2020. 4 | Partners Group ANNUAL REPORT 2020 Key figures Key performance indicators 2019 2020 Assets under management as of the end of the year (in USD bn) 94.1 109.1 Revenue margin1),2) 1.82% 1.51% Revenues (in CHF m)2) 1'610 1'412 EBIT margin 63% 62% EBIT (in CHF m) 1'008 875 Financial result (in CHF m) 30 53 Profit (in CHF m) 900 805 Net cash position at end of year (in CHF m)3) 1'035 1'102 Shareholders’ equity (in CHF m) 2'288 2'275 Return on shareholders’ equity (ROE) 42% 35% Equity ratio 58% 56% 1) Based on average AuM of CHF 93.8 billion in 2020 (2019: CHF 88.4 billion), calculated on a daily basis. 2) Revenues from management services, net, including other operating income. 3) Comprises cash & cash equivalents and short-term loans for investment programs provided by the firm, net of long-term debt. Share information as of 31 December 2020 Share price (in CHF) 1'040.0 Total shares 26'700'000 Market capitalization (in CHF bn) 27.8 Free float1) 84.96% Diluted shares (weighted average) 26'505'234 Diluted earnings per share (in CHF) 30.36 Dividend per share (in CHF)2) 27.50 Dividend yield per share3) 2.6% Bloomberg ticker symbol PGHN SW Reuters ticker symbol PGHN.S 1) According to the SIX Swiss Exchange definition. 2) As per proposal to be submitted to the next ordinary Annual General Meeting of shareholders on 12 May 2021. 3) Yield as of 31 December 2020. Corporate calendar 12 May 2021 Annual General Meeting of shareholders 17 May 2021 Ex-dividend date 18 May 2021 Dividend record date 19 May 2021 Dividend payment date 15 July 2021 Assets under management announcement as of 30 June 2021 7 September 2021 Publication of Interim Report as of 30 June 2021 Partners Group | 5 ANNUAL REPORT 2020 Message from the Chairman and the Co-CEOs André Frei Co-Chief Executive Officer, Steffen Meister Executive Chairman, David Layton Co-Chief Executive Officer Dear clients, business partners programs. Our total AuM increased to USD 109 billion as of 31 December 2020. This translated into a strong 11% and fellow shareholders, underlying AuM growth (16% including foreign exchange We start this letter by acknowledging the unprecedented effects). events of the past year, precipitated by the outbreak of the In the past, our industry has primarily grown via traditional COVID-19 pandemic. Safeguarding the health and safety of funds, but we are now increasingly seeing investors in private our employees, and those of our portfolio companies, was markets turn to customized mandate solutions as a means our first priority in 2020. of optimizing the return potential of their commitments to the asset class. Many of our clients are looking for specific In parallel, we drove forward performance in our investments risk/return exposures and to combine various asset classes, for the benefit of our clients. With double-digit EBITDA match asset/liability needs through cash-flow profiling, and growth across our direct private equity portfolio, we are ramp up quickly through investment level steering. We are proud to report strong portfolio performance last year. The truly differentiated in creating these types of bespoke private foundations for portfolio stability were laid by our emphasis markets solutions, with a 20-year track record of forming on thematic sourcing coupled with our disciplined asset customized mandates. Today, 64% of our AuM is managed selection and value creation approach. through bespoke private markets solutions. We believe Towards the end of the year 2020 markets turned more that this differentiates us and will remain important as our active and our investment activity has increased again industry continues to mature and grow. considerably. As we transition into 2021, our transformational The transformative trends we identified have been approach to investment and our entrepreneurial approach amplified and accelerated to governance remain at the core of our activities. This gives We are highly satisfied with the resilience our portfolios us confidence that with our investment strategy we are well showed during the volatility of 2020. Our investments were positioned to continue to grow and provide our clients with reasonably stable in the first half of the year and rapidly sustainable returns. transitioned back to growth in the second half of the year. Continued strong demand for our private markets We believe that our hands-on approach and our thoughtful solutions theme selection helped to facilitate this stability. COVID-19 Despite the challenging environment in 2020, our business has, in fact, amplified and accelerated most of the trends and model has proven to be resilient amid the economic themes on which Partners Group has focused. headwinds caused by the pandemic. Clients around the globe Our team of over 500 private markets investment entrusted us with USD 16 billion in new commitments. We professionals works year-round to identify transformative saw strong demand across all asset classes and program trends across sectors. We find and target companies and types, from customized mandates and our extensive range assets with strong potential to benefit from these trends. of evergreen fund solutions, to traditional closed-ended Then, together with our over 200 Operating Directors 6 | Partners Group ANNUAL REPORT 2020 Message from the Chairman and the Co-CEOs and Industry Advisors, our professionals leverage our clients into our own investment programs. The strong entrepreneurial governance approach to transform the performance of these programs reflects the success of our companies and assets in which we have invested into market transformational investing strategy. Profit decreased by 11% leaders. This approach has delivered strong revenue growth year-on-year to CHF 805 million, in line with revenues. and sustained double-digit EBITDA growth across our direct Based on the solid development of the business across asset private equity portfolio – in turn giving us a strong track classes and regions, the operating result and Partners Group’s record of investment outperformance in many areas. Board of Directors' confidence in the sustainability of this In 2020, we continued our steady work on our investment growth, the Board will propose a dividend of CHF 27.50 per themes, which are underpinned by long-term secular trends. share to its shareholders at the Annual General Meeting in This has been our approach across the entire platform, not May 2021. This represents a dividend increase of 8% and a only in private equity, but also in private infrastructure and payout ratio of 91%. private real estate, for several years. However, today, this Formalizing our Stakeholder Benefits program and approach shapes our investment activities more than ever. advancing our corporate sustainability efforts In private equity alone, there are hundreds of such themes; At the portfolio level, besides remaining steadfast in our we currently zoom in and develop concrete investment commitment to responsible investment and ESG integration, opportunities in more than 50 of them, grouped into our we further advanced the Stakeholder Benefits Program four main sectors.
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