Partners Group generated underlying portfolio realisations of $11.8 billion in 2020, slightly ahead of 2019 levels in a challenging exit environment due to the pandemic.
This was driven by cash distributions from closings, some of which came from transactions that were signed in 2019 and where cash was collected in 2020, co-chief executive David Layton said on the firm’s 2020 annual results call last week.
He added that the firm also had a “pretty solid Q4” from a realisations perspective and is “hopeful market stability continues in the first half of this year”.
Partners Group ended 2020 with exits of outsourced pharmaceutical services provider PCI, Europe’s non-food discount retailer Action, fibre infrastructure platform Covage and outsourced catering and hospitality services Vermaat Groep, among others. Realisations last year were $800 million more than the $11 billion reported in the year before, according to the firm’s 2019 annual report.
In its half-year 2020 report, the firm said it was expecting “somewhat lower portfolio realisations in H2 2020 as it has deprioritised exits for the near-term due to impact of covid-19 on the economy and its resulting uncertainty across global financial markets”.
Probitas Partners’ Private Equity Investor Trends 2021 found the trend of decreasing exits and distributions caused by the pandemic, along with too much money pursuing too few opportunities and high entry multiples threatening future returns were some of investors’ biggest fears.
Partners Group received $16 billion in new capital commitments in 2020, exceeding the firm’s guidance of between $12 billion and $15 billion for the year. The figure is $500 million more than it received in 2019, according to presentation materials.
Private equity represented 40 percent of total inflows at $6.4 billion. Private debt, private infrastructure and private real estate made up 23 percent, 22 percent and 15 percent of new commitments, respectively. Bespoke client solutions including mandates and evergreen structures represented 58 percent of inflows and traditional closed-ended private market programmes made up 42 percent.
The firm expects between $16 billion and $20 billion of client commitments in 2021 as investors increase exposure to private markets globally, according to presentation materials. Its 2021 fundraising outlook is based on the expectation that uncertainties around covid-19 will improve as the year progresses, co-chief executive André Frei said.
The Zug-headquartered firm invested $8.6 billion across strategies in 2020 – with the majority of these in the first and fourth quarter – down around 42 percent from the $14.8 billion deployed in the previous year. Direct investments or $5.7 billion made up about two-thirds of total investment volume, while portfolio assets accounted for the remaining 33 percent or about $2.8 billion.
For private equity secondaries the distressed window was short-lived during Q2 2020, Layton noted, adding that many transactions were put on hold due to wide bid-ask spreads. In addition, many high-quality assets rebounded to their pre-covid levels, he said.
“We also haven’t been as hot on some of these GP extensions, which made up a material part of the secondaries market last year,” Layton said.
Layton said he expects 2021 to be a “solid” year for the firm in terms of investments. Whether this year reaches 2018 levels, in which the firm deployed $19.3 billion, remains uncertain, he said. Layton noted, however, that a number of seeds planted through the firm’s thematic sourcing efforts are expected to “bear fruit this year”. The firm declined to provide additional details on such investments.
Partners Group invested about 53 percent in North America and 40 percent in Europe last year, according to presentation materials.
The firm had more than $109.1 billion as of the end of 2020, a 16 percent AUM growth year-on-year, that has been helped by a more favourable dollar to euro exchange rate, said chief financial officer Hans Ploos van Amstel, during the call.