Partners Group has encountered a notable downturn, with shares decreasing by 7% on Tuesday due to a lackluster recovery in transaction markets. This situation has prompted the Swiss private equity firm to pause several divestitures, negatively impacting their first-half profit and revenue figures. The company's performance in the first half suffered significantly, as a decrease in asset divestitures across both its private equity and infrastructure platforms led to a staggering 39% drop in performance fees, which amounted to only 161 million francs.
This figure represents a mere 17% of the firm's total revenues, according to the latest press release. As a consequence of these challenges, net revenue from management services plummeted to 908.1 million francs, down from 1.02 billion francs in the previous year. The profit attributable to the owners of Partners Group fell from 551.2 million francs to 508 million francs, despite the company managing to cut total operating costs by 9%. On a positive note, the group's management fees did see an increase of 4%, reaching 815 million francs.
This uptick was driven by sustained demand for its bespoke services, facilitating the raising of $11 billion in new capital. As a result, the total assets under management climbed by 5%, hitting an impressive $149.2 billion as of June 30. Looking ahead, Partners Group has indicated that performance fees are projected to account for 20% of revenues in 2024, influenced by the ongoing subdued transaction environment.
This figure is expected to range between 20% to 30% in 2025. However, forecasts point to a recovery in the proportion of performance fees, which could rise to between 25% to 40% in the subsequent years, fueled by an increasing share of mature assets within the firm’s portfolio, which includes direct investments. "Our exit pipeline remains robust and highly diversified, with an increasing number of mature assets.
We are highly optimistic that our performance fees will experience significant growth as the exit environment starts to shift positively," stated Partner and CEO David Layton. For 2024, the company also reaffirmed its projection of total client demand to fall between $20 billion and $25 billion, contingent upon a normalization of the investment landscape and sustained interest in its tailored solutions and flagship offerings..