Partners Group Private Equity Limited

Ladies and gentlemen, welcome to the Q3 2023 Investor Conference Call and Live webcast. I am Alice, the cover call operator. I would like to remind you that all participants will be listed in only mode and the conference is being recorded. The presentation will be followed by a Q&A session. Webcast viewers may submit their questions in writing at any time by the relative field on the webcast page. If you are connected on the phone, please press star and 1. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Sarah Page, Head of Investor Relations for Princess Private Equity. Please go ahead.

Good morning and welcome, everyone. Thank you for joining Princess' 2023 third quarter results call. My name is Sarah Page, Investor Relations for Princess, and I'm joined today by Cyril Whipsley, Senior Partner at Partners Group, and Craig Lyne in our London office from the Capital Markets team at Partners Group. Page 3 summarizes the Q3 developments. Princesses NAV grew to 15.12 euro per share, which is 2.4% in Q3 and a 6% increase year-to-date. Operational value creation was the main driver of the NAV performance. In the current market environment, our investment teams have adjusted value creation plans to prioritize organic growth and margin improvements. Gains in market share and productivity levels are likely to drive more sustainable value creation in the medium to long term, as compared to add-on acquisitions due to higher cost of capital and price increases. The largest three contributors in value creation in Q3 were PCI Pharma, Vishal Megamart, and Godelma. PCI and Vishal we will discuss later under the top 10 holdings. Galderma is a specialty pharmaceutical company which develops, manufactures and distributes a broad range of dermatological treatments. The Swiss headquartered company operates in 40 countries and it includes brands such as Epiduro, Differin, Dysport, Cetaphil and Benzac. So you may be familiar with them if you have sensitive skin. They make, for example, body washers that don't dry out your skin, baby creams and acne products for teenagers. Beldona's unique integrated strategy continues to drive product and channel synergies, alongside platform efficiencies resulting in strong growth, especially in its dermatological skincare and therapeutic dermatology business segments, and stronger margins. Princess's liquidity is healthy, with an undrawn credit facility balance of €134 million and and €3 million in cash, thanks to €13.9 million of realisations received during the quarter. Princess invested €1.9 million, with €1.4 million of this invested in an add-on investment in International School Partnership, which I'll also cover later. Princess will pay the H2 2023 dividend of €0.365 per share on 15 December. And with the share price increasing by 2.9%, share price total return was 31.5%, and the discount remained stable at 30%, keeping Princess in line with its peers. For the portfolio, I'll now hand over to Cyril.

Good morning from my side. We have mentioned in the past presentation how the strategy has changed in 2011 from a fund-by-fund to a direct investment strategy, and I'm happy to say that this transition is now complete with 99% of the net asset value being direct. The advantage of this, of course, is that there is no double-fee layer, and Partners Group has control over the transformation of the assets, meaning the value creation plan. Furthermore, pure direct vehicles trade at a significant higher discount than fund-to-funds at the London Stock Exchange. So private equity makes up, to date, 95% of net asset value, a percentage that will continue to increase to 100% once the 3% private infrastructure assets and 2% private debt assets will have been exited. Prince's status portfolio is broadly diversified across over 70 positions in well-established, high-quality companies, typically market leaders in their field. And when you flip the page, then you see that Prince's is also nicely diversified across regions, industries, and vintage years, meaning the year when the investment was made. Prince's provides investors with access to Partners Group's $74 billion private equity platform, And its portfolio composition fully reflects the firm's investment strategy, focusing on stable, developed, low-risk regions such as North America and Western Europe, and on resilient industries representing the foundational backbone of our economy, supported by long-term megatrends. In terms of vintages, having invested in a disciplined manner across the years, we have a healthy mix of companies at different stages in their value creation journeys. While we continue to hold some assets for longer in this current environment, about 27% of the portfolio NED was invested the last five to six years ago, which is a sweet spot that has historically been our average holding period, which means we sell these assets if the environment is right. In addition, another 22% of NOEs expected to reach a mature stage for exit at the next two to three years. So providing a robust exit pipeline that is waiting for the right conditions to realize value. If you look at revenue growth and EBITDA margins and EBITDA growth of our portfolio companies and compare that to MSI World, Then we can see that in the last 12 months to September 2023, we grew revenues in our direct private equity portfolio companies by 16% and EBITDA by 15%, which is in line with the historic average of 15% EBITDA growth and clearly above what broader public markets have delivered. Also, the average EBITDA margin of 24% in the Princess portfolio is very stable and offers a higher safety buffer than the average MSCI World company does. If you look at the top 10 positions, then I have to say I elaborated a lot on them on the last call, so I'll make it short for you today. As Sarah mentioned, the largest contributor of the value creation in Q3 was PCI Pharma Services, which is the largest investment in Prince's portfolio. PCI Pharma is a global provider of outsourced supply chain services for pharma and biotech companies. PG invested in the company in 2016 due to its leading position in commercial packaging, deep and long-term relationships with its top pharma customers, and the opportunity to further consolidate the market. Since 2016, the company's footprint has expanded geographically in North America and into Asia Pacific. The service offering has expanded from packaging to drug development and clinical trials, making it a one-stop shop for clients. while just-in-time manufacturing has made operations more efficient. The valuation of BCI increased over the quarter on the back of continued strong financial performance. The companies reported robust double-digit growth in both revenues and EBITDA, driven by organic growth from cross-selling, diversifying customer base and optimizing manufacturing margins. On the next slide, I would like to highlight Vishal, which in this quarter was the second largest contributor in value creation. Vishal Megapart is the sixth largest investment in the Princess portfolio. Vishal is the franchisor and wholesale supplier for a network of stores across India targeting lower middle-income customers. Vishal recorded strong top-line results driven mainly by strong like-for-like growth in the apparel segment. This was underpinned by the improvement in fabric mix, introduction of new fashion fits, and investments in apparel vendor management and quality insurance teams. Partners Group invested in Vishal in 2018 because it was a market leader with a healthy financial position and the opportunity to grow the footprint all across India, targeting second- and third-tier cities. For those who have seen the press release yesterday, we also announced yesterday that Partners Group has agreed to sell Civica, which is the 10th largest company in Princess, to Blackstone, and the transaction is expected to close next year, subject to regulatory approvals. With this, I'll hand over to Sarah.