Luxembourg’s private equity services business of Partners Group, which accounts for more than a third of its revenue, held up well last year in what otherwise was a challenging year for the Swiss-based firm.
Partners Group on Tuesday reported that its revenue from management services in Luxembourg rose 2.3 percent last year to 684.5 million Swiss francs (710 million euro).
Luxembourg accounted for 37% of the firm’s revenue last year. Total net revenues from management services increased 2.4 percent to 1,856.4 million Swiss francs, as a 35 percent jump in the United States, to 388.8 million, countered a 3.8 percent decline to 584.5 million from offshore services offered in Guernsey.
The Zug-based firm, which had invested some 147 billion dollars in client assets at the end of 2023, posted a net profit of 1,003 million Swiss francs for 2023, slightly below the 1,005 million reported for 2022. Total revenues amounted to 1,945 million francs, up from 1,872 million a year earlier.
Partners’ shares, traded in Zurich, fell 3% on Tuesday’s trading, following the release of the results.
‘Disconnect between buyers and sellers’
Last year was a difficult year, the firm’s CEO David Layton wrote in its annual report, “with a muted transaction market driven by a disconnect between buyers and sellers, as well as slowed client conversions impacting fundraising across the industry.”
Income from management fees declined last year because of the strength of the Swiss franc, the firm said. Some 81 percent of total revenue “were adversely impacted by the strengthening of the CHF against the USD and EUR, which reduced growth by 5 percent,” it said. The management fee margin, however, remained stable at 1.26%, “highlighting the value clients place in the quality of our solutions and offering us the benefit of pricing stability,” Partners said.
Addressing the year ahead, Layton said 2024 will be “a transition year with buyers and sellers slowly finding a new equilibrium” while the company is adding new products and asset classes to position itself “to take advantage of the next phase of growth for our industry.”
‘Role of private markets is shifting’
In the preface to the firm’s annual report, Layton and the firm’s executive chair Steffen Meister said 2023 data “confirms our hypothesis that the role of public and private markets in financing the economy is shifting, with private markets increasingly surpassing public markets.
“As the pace of change in the economy accelerates further, our industry will continue to grow in importance,” they said. “However, to capitalise on this growth requires a focus on transformational investing, and successful private market investors, who, like Partners Group, take an active approach to investing, stand to access a massive investment opportunity of around 30 trillion dollars in the next 10 years.”
Out of its total assets under management, Partners’ private equity investments accounted for 51 percent of the total last year. The firm said it raised some 7.7 billion dollars worth of new commitments last year. Private credit took 20 percent of total AuM; infrastructure 17 percent; and real estate 12 percent.
The firm is an avid user of Luxembourg-domiciled private equity vehicles. Its Luxembourg subsidiary serves as Alternative Investment Funds Manager, or AIFM, for about 90 Reserved Alternative Investment Funds, or Raifs, and many other types of alternative funds domiciled in the grand duchy.