Partners Group, the Switzerland-based global alternative asset manager, remains confident of achieving another record year, with expected growth of assets under management of at least CHF7bn, and has confirmed its positive outlook for 2008.
The group, which will announce its financial results for the first half-year on August 27, says the current volatility in financial markets triggered by the sub-prime mortgage sector in the US and general concerns regarding buyout activities due to widening credit spreads have not affected its positive business outlook.
The turbulence in some areas of the financial markets should offer attractive investment opportunities, from which Partners Group's clients have been able to benefit in the past. The firm also expects its secondary investment business in private equity, mezzanine investment in private debt and several hedge fund strategies to profit in this environment.
'The structural trend to higher allocations to alternative assets will be reinforced in periods of market turbulence,' says Partners Group executive chairman Alfred Gantner. 'Our comprehensive global product offering across different alternative asset classes should allow us to achieve solid asset growth in different market environments. For instance, I expect our Partners Group Asia-Pacific 2007 and Partners Group Secondary 2008 funds to be oversubscribed.'
Against a background of solid macro-economic growth, Partners Group remains confident that its clients' broadly diversified and mature portfolios will see continued positive development. Experienced investors are expected to take advantage of any market correction, which is likely to offer lower entry valuations for new investments and attractive buying opportunities in the secondary market over time.
The current discussions in the US and UK regarding taxation in the private equity industry are aimed at general partners and specifically their private tax situation, and have no implication for limited partners or for Partners Group.
The recent climate in private debt markets has generally been favourable for Partners Group's private debt investment activities, the firm says. While its existing investment programmes do not show any significant change in credit quality, lower prices in the market will increase the annual returns on new mezzanine investments from 10-12 per cent, seen some weeks ago, closer to the levels of the firm's historic track record of 15 per cent. The only negative impact could be the postponement of the planned roll-out of the next Partners Group CLO.
Any further market correction would be ideal for Partners Group's clients to build up their global diversified private real estate portfolios, as they could profit from lower entry valuations in several segments. The firm's first three private real estate products are scheduled to hold their initial closings in the second half of this year.
According to Partners Group, the recent losses of two Bear Stearns hedge funds engaged in the US sub-prime sector highlight the benefits of its managed account platform in allowing for thorough daily risk management, seen as a prerequisite for identifying and addressing undesired exposure in a timely fashion. Through allocations to underlying managers with corresponding short exposure, the group says it has taken advantage of the recent turbulence in the US sub-prime mortgage and high-yield markets.
Partners Group manages a broad range of funds, structured products and customised portfolios for an international clientele of institutional investors, private banks and distribution partners. Headquartered in Zug, Switzerland, with offices in New York, London, San Francisco, Singapore and Guernsey, the firm employs more than 220 people, is listed on the SWX Swiss Exchange with a market capitalisation of more than CHF4.5bn, and is majority owned by its 34 partners and principals and its employees.