Partners Group: Few Negatives For High Beta Credit Issuers

Partners Group 4Q23 results tell a relatively good story but detail on current credit stress is almost totally absent. Demand remains good but realisations weak (no surprise) so questions on the call may be instructive, we feel. There looks to be little here to spook high beta credit peers, even the real estate comments (where Partners outperformed indices) look less bearish than some.

• Partners does not issue into our index so we’re restricting ourselves to comments on outlook as it pertains to private markets, private credit, and peer managers.
• Partners noted client demand up 27% in 2H23 vs. first half and sees fundraising in 2024 at USD20-25bn (from USD 18bn in FY23). Group also sees lower PE buyout activity of FY23 starting to reverse as “accessibility to financing” is improving (read: lower rates).
• FY23 buyout multiples were meaningfully lower (10.4x EV/EBITDA vs. 12.8x in FY23) though we note this is still a high level (equivalent for 2015-2016) for the prevailing level of interest rates.
• The exit market remained weak in 2H23, especially in equity but was better in private debt world which would certainly be indicative of the lower expected rate levels. Private debt was also the fastest growing asset class in terms of new money.

Conf call is at 0800 (London time) on: https://event.eu.on24.com/wcc/r/8000061925/8978D784AE08B28F3957BF2BCD83AA5C