Partners Group Holding AG

to our annual results presentation. I'm Dave, CEO of Partners Group. I'm joined on the call today by Joris, our CFO, and Philip, our head of corporate development, and Roberto, our head of portfolio solutions, will join us for the Q&A. On slide two, a few key data points from our annual results to kick things off. In 2024, we achieved 1.6 billion Swiss francs of management fees. Management fees grew in line with AUM with some FX considerations. Our management fees are sticky, they're recurring in nature, and they've demonstrated a lot of stability over time. Our management fee margin was 1.25%, which is in line with expectations. Performance fees ultimately came in at 24% of revenues for the year. Performance fees reached 511 million Swiss francs during the period. That's up 38% from the prior year, and we confirmed the prior guidance we provided regarding how these are expected to further increase in future years. We have a continued disciplined approach to cost management, and our EBITDA margin was stable with the prior few years at around 63%. Our profit came in at 1.1 billion Swiss francs of 12%, and we have proposed an increase of the dividend to 42 francs per share based on the firm's strong development and our confident growth outlook. Overall, quite solid operational and financial results for 2024. On slide three, the private market industry experienced mixed results in 2024. I would describe it as a gradually improving environment. Some spots of the industry contracted. But during this period, we were pleased to have been able to grow our investment activity by 66% from the prior year to $22 billion. We build our returns through hands-on active value creation. Realization activity was up 53% to $18 billion. And our fundraising was up 18% to $22 billion. Our bespoke client solutions continue to differentiate us. Custom portfolio solutions for institutional clients, evergreen solutions for wealthy individuals, these bespoke solutions were 78% of our fundraising for the period. On slide four, while the industry is still in a period of relatively low liquidity with industry-wide investors seeing less distribution activity as compared to what they're accustomed to, we did see a pickup in activity later in the year in particular. Some of these exits required multiple iterations over the past number of periods, and it's good to see them finally achieve good outcomes for clients. We've been working hard on developing our assets, on positioning them to be competitive in their respective industries, helping them to grow and develop, and we're pleased to have been able to lock in some good returns for investors and some well-earned performance fees for employees and shareholders, as shown on slide five. Performance fees reached 511 million Swiss francs during the period. That's up 38% from the prior year. And this was partially driven by some of those performance fee generating events highlighted on the prior slide. Private equity and infrastructure combined to contribute approximately 89% of performance fees reported. We had more than 90 different investment programs and mandates that contributed to performance fees during the year. It's a highly diversified investor base We also had contributions balanced across both institutional structures and private wealth structures. On slide six, here we helicopter out and provide some context for why there is upside in performance fee potential in the future. Over time, not only has the investment portfolio grown, but a decade plus ago, we drove a mixed shift towards more direct investments. Direct investments have more performance fee potential than portfolio investments. And now that we have had that higher mix of direct investments for a reasonable amount of time, those investments have matured nicely. And performance fees have tailwind coming from the combination of both the impact of platform growth and the impact of that mix shift. As such, we see upside in the levels of performance fees we've historically generated. And as we've previously communicated, we expect that performance fees as a percentage of revenues will increase from 20 to 30 percent this year and historically to 25 to 40 percent in 2026 and beyond. On page seven, we provide some insight into the current exit pipeline, into how those assets have developed. We have about $19 billion of net asset value that's flagged internally for realization in the medium term. We usually underwrite plans of five plus years and 83% of this pipeline is older than five years with 17% that's ready to exit ahead of schedule. 24% of this NAV are in public securities that have a current weighted average multiple on invested capital on these public positions that stands at around 3.4 times cost. Value creation and engagement in developing portfolio assets is never done until we're out, but we have achieved what we set out to achieve on this exit pipeline. Recent exits have outperformed our book value in several cases, but the point we're making on this slide is that we're not dependent on any further uplifts in order to achieve this higher range of performance fees. There is obviously continued uncertainty on timing. Industry-wide, we're still in a period of relatively low liquidity. but we feel good about the variables that we can control. And we have observed improvements in the markets for our recent exit processes. Again, several of those exits were a result of iterations over time. On page eight, here we highlight the U.S. market. We've historically been underrepresented in the U.S. given our heritage. We have put particular emphasis on the U.S. in recent years with more leadership and more resources invested into that market. We had a record 33% of inflows from the U.S., balanced across institutional mandates and wealth. Total U.S. fundraising was up by more than 50% this past year. Our innovation history has given us some great relationships to build on, and the U.S. is now 24% of our total mix, up eight points of our mix since we started our U.S. push about five years ago. On page nine, We expect the growth trajectory for private markets and more specifically for Partners Group to remain intact. We have a strong and diversified client base across regions, asset class and client types. For the full year 2025, Partners Group continues to expect total new client assets of 26 to 31 billion. No change to guidance. We base our forecast on the large and visible pipeline of fundraising opportunities across channels. And on slide 10, we look forward to welcoming many of you to dinner tonight, and for our capital markets day tomorrow, we've got a big group joining us, and we trust that you'll find that time well invested. And with that, Yoris, over to you.

YORIS DEMETRIOUX- Thanks, Dave. It is a pleasure to be here with all of you in our call today. That said, let me walk you through Partners Group's 2024 financial results on page 11. Let me start with our assets under management. As you have heard, these are diversified across asset classes and regions. In US dollar, they grew 4% year over year. In average AUM in Swiss franc, this translated into growth of also 4%. Management fees generally follow AUM growth in 2024 with a slightly lower rate of 3%. This was primarily due to currency impact in the first half of the year. Total revenues increased 10% to 2.1 billion Swiss francs. Performance fees contributed meaningfully and represented 20... 19% last year. EBITDA followed revenues, increasing 10% at a margin of 63.6% in line with the previous year's period. While our approach to cost management remains unchanged, we have transitioned to using EBITDA and EBITDA margin as a profitability measure in our external communication. We propose a 42 Swiss franc dividend per share or a 8% increase. The proposal reiterates the board's confidence in the strength of our business, the solidity of our balance sheet, and the structural shift we continue to see towards private markets. On slide 12, let's look at our revenues in more detail. We have two sources. of revenue, management fees, and performance fees. Management fees represent most of our revenues and are recurring in nature. Management fees grew by 3% in 2024 in line with average AEM growth of 4% year on year. FX negatively impacted management fee growth by 2%, whereas our other operating income positively contributed to management fee growth in 2024. A strong driver to this were treasury services rendered to our products. Let me talk about the management fee margin on the next slide. Again, in 2024, our management fee margin has been stable at an average of 1.26%. Slight variances between years are driven by the timing of when fees are activated in investment program or how our mix in asset classes is developing. We expect the stable development to continue. Let's look at the performance fees on the next slide. 2024 saw strong realizations and value creation in the second half of the year, bringing performance fees to 24% of revenues. Private equity was the largest contributor to performance fees with several exits, as Dave mentioned earlier, driving the increase of 87% compared to previous year's period. Infrastructure contributed 120 million Swiss francs, or 23% of overall performance fee volumes, which is a decrease of 26% after last year's catch-up effect. Already announced exits like DSB will be realized in 2025 and 2026. Performance fees from private credit increased by 86%, showing another year of strong growth. Credits in private markets are almost exclusively floating rates and hence benefited from increased base rates, allowing us to realize value for our clients. Real estate was the lowest contributor to performance fees as the industry continues to be in a state of transition. Let us move to the operating costs on the next page. Profitability, as mentioned, remains strong with an EBITDA growth rate of 10% at a margin of 63.6%. Total operating costs increased by 9%. 85% of our operating costs are personnel expenses. As you can see, the increase in performance fee revenues also triggered an equal increase of performance fee funded personal expenses. This is because we allocate a fixed proportion of up to 40% to our employees. Management fee funded personal expenses were at the level of the previous year. We reduced the average number of FTEs during the period mainly as a result of various initiatives to increase the effectiveness of our organizations. The 11% increase in other operating expenses was mainly attributable to our various growth initiatives, both organic and inorganic. Depreciation and amortization increased by 18% with our new office spaces becoming used in 2024. Let's move to the next slide. Through 2024, We have guided our operations towards a target EBIT margin of approximately 60% for newly generated management fees, assuming stable foreign exchange rates. Beginning in 2025, we will change our profitability measure from EBIT margin to EBITDA margin in our external communication. Over the last three years, Partners Group's EBITDA margin has been stable at around 63%. Our approach to cost management remains unchanged and we will continue to apply an operating margin of approximately 60% for newly generated management fees and performances. The decision to modify our profitability measure was primarily driven by our increased engagement in M&A activities in the consolidating industry. Acquisitions typically lead to significant amortization charges of newly recognized intangible assets This distorts the firm's EBIT and EBIT margin, which may no longer accurately reflect the true operational strength and profitability of the business. The same holds true for depreciation driven by our significant upfront office investments over the last five years. Both items have no impact on the cash flows of the operating business. Furthermore, EBITDA has emerged as the European standard with the majority of private market managers now referring to it as a key financial indicator. We believe that this shift enhances comparability and provides a more standardized measure of financial performance across the sector. To be clear, we continue with our current cost management approach and, ethics being equal, we currently do not see a reason why the EBITDA margin of our business of around 63% should change. Let's move to the next slide. We are a global business reporting in Swiss franc. However, most of our revenue comes from US dollar and euro denominated funds. Unsurprisingly, as the Swiss franc strengthened, this created a negative translation effect on our EBITDA margin of approximately 0.3 percentage points. Let us move to the next slide discussing our balance sheet. We invest around 1.5 billion Swiss francs alongside our clients across various programs. In 2024, these investments generated a positive performance of 9% or 112 million Swiss francs. The net in financial income translated into 61 million Swiss francs, as costs from foreign exchange hedging and higher interest expenses were at the previous year's levels. Our tax rate amounted to 18% in 2024 within our previous guidance. For 2025 onwards, we anticipate the tax rate to range within 18% to 19% following the OECD Pillar 2 implementation. This leaves us with a profit of 1.13 billion Swiss franc, an increase of 12% compared to 2023. So let us move to the last slide of the presentation. The board proposes a dividend of 42 Swiss francs per share representing an increase of 8%. As mentioned, it bases the proposal on the solid development of the business and its confidence in the sustainability of the firm's growth. Following this dividend, Partners Group will have generated a dividend growth of 17% per annum since our IPO and will have paid back more than five times the price of its IPO share price in the form of dividends. This brings me to the end of our presentation. I would like to open up for questions.

Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 on your telephone and wait for your name to be announced. If you wish to ask a question via the webcast, please type them in the question box and click submit. But before starting the Q&A session, I want to hand over to Philip Sauer, who will provide you with a process and order of how the Q&A session will be taking place. Thank you.