Partners Group received USD 11.1 billion in new commitments from its global client base in H1 2024, bringing the firm’s total assets under management (AuM) to USD 149.2 billion as of 30 June 2024 (30 June 2023: USD 141.7 billion). The firm committed USD 9.2 billion (H1 2023: USD 5.9 billion) globally to investments across private markets asset classes and generated USD 9.2 billion (H1 2023: USD 5.4 billion) in realizations. Partners Group reconfirms its full-year 2024 guidance for total fundraising of USD 20 to 25 billion.
H1 was characterized by gradually improving market fundamentals while realizations in the industry remained muted and distributions to investors are at historically low levels. Consequently, although the pace of client conversion rates for traditional closed-ended funds did increase relative to the previous period, it remained slower than anticipated. Demand for bespoke private markets solutions was again the largest contributor to inflows, with interest from private wealth clients accelerating.
David Layton, Partner and Chief Executive Officer, comments: “We are pleased to report solid business development in what we believe is a transition period for the industry. Our near-term transaction pipeline of thematically sourced investments is full across all asset classes, including for our newly launched private markets royalties business. To generate sustainable returns for our clients in this market, our transformational investing approach is key. It allows us to consistently identify businesses and assets that benefit from future growth themes and transform them into industry leaders.”
USD 11 billion in new client demand in H1, led by bespoke client solutions
Overall client demand resulted in total new commitments of USD 11.1 billion (H1 2023: USD 8.0 billion). Bespoke client solutions continued to grow in importance for the firm, contributing the largest share to fundraising at USD 8.6 billion and accounting for 77% of assets raised (H1 2023: 68%). Such tailored solutions are increasingly becoming a focus for the industry as clients seek to customize their private markets exposure beyond the constraints of the traditional closed-ended vehicles that have been the hallmark of the industry in the past.
- Mandates (USD 4.0 billion raised): these bespoke portfolios allow large institutional clients to customize their long-term target allocations to private markets using separately managed accounts and are increasingly preferred by private markets investors. As of 30 June 2024, Partners Group manages 39% of its AuM in mandates (USD 58.2 billion).
- Evergreens (USD 4.6 billion raised): these programs offer immediate exposure to a diversified private markets portfolio without subsequent capital calls as well as limited liquidity to address the specific needs of individual investors. As of 30 June 2024, Partners Group manages 30% of its AuM in evergreens (USD 45.5 billion).
- Traditional closed-ended private market programs (USD 2.6 billion raised): In H1, Partners Group closed fundraising for its fifth direct private equity program and has several additional programs in fundraising. As of 30 June 2024, Partners Group manages 31% of its AuM in traditional private markets programs (USD 45.5 billion).
Gross client demand stood at USD 11.1 billion before tail-down effects from mature private markets investment programs amounting to USD -4.5 billion and redemptions from evergreen programs totaling USD -2.5 billion. Foreign exchange effects affected AuM growth by USD -2.2 billion during the period. A final USD 0.2 billion came from other factors such as a select number of investment programs that link AuM to NAV development.
USD 9 billion invested in H1, transaction environment gradually improving
Partners Group invested USD 9.2 billion (H1 2023: USD 5.9 billion) on behalf of its clients into companies and assets during the first half of the year, up 55% from the same period last year and diversified across its platform. Partners Group continued to invest with a focus on direct control and thematically sourced investments, as the transaction environment showed signs of improvement in H1. The firm applies deep thematic research to identify high conviction sub-sectors supported by resilient long-term global trends and builds conviction for investments based on value creation plans developed in conjunction with the expertise of Partners Group’s large network of seasoned external industry experts.
In one example of note within private equity, Partners Group, acting on behalf of its clients, agreed to purchase a majority stake in FairJourney Biologics, a leading antibody discovery Contract Research Organization, based in Portugal and the UK. FairJourney is set to benefit from several structural tailwinds driving growth in the market for antibody discovery. Partners Group will partner with founder António Parada to build on FairJourney’s unique positioning, expanding its technology and capabilities through organic and inorganic investment to unlock faster, more effective drug development for its partners.
Partners Group invested 57% of its total global volume into direct assets on behalf of its clients. The remaining 43% of the total investment volume was invested into portfolio assets. These included secondary investments into globally diversified private markets portfolios, which are often tactically overweighted during periods of economic recalibration as part of Partners Group’s relative value asset allocation management, as well as select primary commitments to other complementary private markets strategies and investments into the broadly syndicated loan market.
USD 9 billion realized in H1, concentration across credit and portfolio assets
Portfolio realizations amounted to USD 9.2 billion (H1 2023: USD 5.4 billion). In an exit environment that remained subdued for headline equity transactions, Partners Group’s diversified platform continued to provide realizations for the benefit of clients. During the period, distributions stemmed primarily from credit and portfolio asset sales, which amounted to 68% of total realizations (H1 2023: 61%). Portfolio assets are an important tool for providing diversification and liquidity in an overall private markets portfolio as they provide a diverse stream of distributions across cycles.
Outlook H2 2024
Partners Group sees the outlook for long-term, sustainable growth in the private markets industry, supported by strong structural tailwinds and increasing growth in client demand. In particular, the shift to tailored mandates and growing demand from individual investors for private markets solutions are expected to drive future growth for the industry. The firm has been a pioneer in both categories and has built a leadership position over the last 20 years of building bespoke solutions.
For the full year 2024, Partners Group continues to expect to raise between USD 20 to 25 billion in total client demand. Full-year estimates for tail-down effects from more mature closed-ended investment programs remain unchanged at USD -8 to -9 billion. The firm reaffirms its full year guidance based on the previously communicated assumption of a continued normalization of the investment environment. While traditional fundraising remains slow as client conversion periods have not yet normalized, bespoke client solutions are expected to continue to drive fundraising in 2024.
Sarah Brewer, Partner and Global Co-Head Client Solutions, adds: “We are pleased that clients continue to place their trust in us and believe there are several factors supporting the sustainable growth of our platform in an evolving market environment. Firstly, the increasing desire for customized alternatives to traditional closed-ended funds. Secondly, the continued consolidation of the industry as investors look for more comprehensive private markets solutions from a smaller number of large managers that are seeking to diversify their platforms. As a pioneer in providing bespoke client solutions and one of the largest firms in the global private markets industry, we are well positioned to take advantage of these trends.”
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