Partners Group's Accelerating Performance Fee Contribution and Its Implications for Private Markets Investors

In 2024, Partners Group’s performance fee contributions surged by 38% to CHF 511 million, accounting for 24% of total revenues—a stark contrast to the 39% decline in the first half of the year, when performance fees fell to CHF 161 million due to a sluggish transaction environment and delayed asset divestitures [1]. This volatility underscores the firm’s reliance on exit activity and the maturation of its private markets portfolios. As the firm navigates a shifting landscape, its strategic positioning—marked by innovative partnerships, a focus on secondaries, and a shift toward evergreen structures—offers critical insights for investors seeking to capitalize on private market dynamics.

Maturing Portfolios and Rising Exit Activity
The second half of 2024 saw a marked acceleration in exit activity, driven by improved market conditions and the liquidation of long-held assets. This trend aligns with Partners Group’s broader strategy to transition from capital deployment to harvesting value from its maturing portfolios. Evergreen funds, which now represent 30% of the firm’s global AUM, have become a cornerstone of this approach, enabling sustained access to private markets while reducing the need for frequent fundraising [2]. For investors, this signals a shift in revenue streams: as management fees stabilize in line with AUM, performance fees are increasingly becoming the primary driver of profitability.

Strategic Partnerships and Market Expansion
Partners Group’s collaboration with BlackRock in 2024 exemplifies its ambition to democratize access to private markets. The launch of a multi-asset private markets solution—a first-of-its-kind offering—targets retail wealth management clients, blending private equity, credit, and real assets into a single portfolio [3]. This move not only broadens the firm’s client base but also reinforces its role as a bridge between institutional-grade private market strategies and mass-affluent investors. By leveraging its expertise in evergreen structures, Partners Group is positioning itself to capture growth in a sector traditionally dominated by high-net-worth individuals and institutions.

Private Equity Secondaries: A Disciplined Bet on Liquidity
The firm’s aggressive foray into private equity secondaries further highlights its strategic agility. In 2024, Partners Group committed $3.2 billion to secondaries—more than double its 2023 allocation—capitalizing on market dislocation to acquire high-quality LP portfolios. Over 80% of this capital flowed into LP stakes, reflecting a demand for liquidity amid years of weak exit activity [4]. The firm’s rigorous selection process—reviewing $125 billion in transactions but selecting just 3%—underscores its disciplined approach. For investors, this strategy offers dual benefits: enhanced liquidity for LPs and the potential for top-quartile returns, as evidenced by Partners Group’s consistent performance in its closed-ended secondaries funds since 2008.

Implications for Investors
Partners Group’s trajectory suggests a broader industry shift toward performance-driven models. As private markets mature, the ability to execute timely exits and optimize portfolio structures will become increasingly critical. For investors, this means prioritizing managers with strong track records in secondaries, evergreen strategies, and cross-asset partnerships. Partners Group’s success in these areas not only validates its operational model but also sets a benchmark for peers navigating similar challenges.

Source:
[1] management fees in line with AuM and performance..., [https://www.partnersgroup.com/news-and-views/press-releases/corporate-news/detail?news_id=0be924b5-78be-4ee2-99fa-d90650e26f4a]
[2] proposed dividend up 8% to CHF 42.00 per share, [https://www.partnersgroup.com/news-and-views/press-releases/corporate-news/detail?news_id=3ca731c0-5c25-4879-8921-f52d05ec920b]
[3] BlackRock and Partners Group Establish Strategic Partnership, [https://www.blackrock.com/corporate/newsroom/press-releases/article/corporate-one/press-releases/blackrock-and-partners-group-expand-access-to-private-markets]
[4] Partners Group invests $3.2bn in private equity secondaries amid market dislocation, [https://pe-insights.com/partners-group-invests-3-2bn-in-private-equity-secondaries-amid-market-dislocation/]