Partners Group reports fundraising joy amid a ‘dog fight’ for deals

The private markets firm received $12bn in new commitments over the first half of 2021, supported by strong activity in larger flagship funds and increased investment activity.

Partners Group has adjusted its fundraising expectations for 2021 on the back of strong investor demand and deal activity in the first half of the year.

The Swiss private markets firm expects full-year 2021 gross client demand in the range of $19 billion-$22 billion, up from the $16 billion-$20 billion announced in January, according to its H1 2021 update.

“The lower end of the range assumes more potential market uncertainty and that conditions in transactional markets worsen for the remainder of the year,” Sarah Brewer, partner and co-head of client solutions at Partners Group said during a call accompanying the results. “The upper hand of the guidance is based on the assumption that the situation around covid-19 continues to further improve and that the benign fundraising and investment market continue.”

The firm gathered $12.1 billion of inflows in the first half, with the bulk of capital raising in private equity (58 percent), followed by private debt (23 percent), private infrastructure (10 percent) and private real estate (8 percent). On the PE side, fundraising was supported by demand for the firm’s fourth buyout programme, which is approaching its final close.

Of total inflows, 36 percent went into traditional closed-ended private markets programmes, 38 percent into customised mandates and the remaining 26 percent was driven by the firm’s evergreen programmes, according to a statement.

The firm invested $13 billion across private markets in the first six months of the year – more than three times last year’s $4.3 billion – with the US accounting for more than half of private markets investments.

David Layton, chief executive of Partners Group, noted during the call that the firm sees competition on many fronts, although with the investment side “feeling a little bit more intense than the fundraising side”.

“On the investment side, it is a dog fight. We are differentiating ourselves quite well with regards to the amount of pre-work we are doing, and we are winning our fair share of transactions,” said Layton. “You have to pay a market price in any market environment, and it is clearly a competitive market today, but we are holding our own in this market despite the level of competition.”

Layton also noted that managers are being “less prescriptive” with the exit processes they ran.

“In the past people ran exit process with a very strong hypothesis on whether the best route for the asset was to go public or sell to a strategic… or to another potential buyer. Today you see people oftentimes starting and initiating an IPO process, also having conversations with large PE buyers at the same time.”

That was the case with US engineering services company GlobalLogic, which the firm sold to Hitachi in March, he said. The exit is set to generate a sizeable return for Partners Group – 5x its money or net proceeds of $3.8 billion – affiliate title PE Hub reported.

Layton added: “That’s one trend of note in the exit market we are observing. It can be challenging for buyers that don’t have a clear focus and a clear orientation, because you will see win rates come down unless you were laser focused on the right areas.”

Partners Group’s total assets under management reached $119 billion as of end-June, up 24 percent from a year ago.