Partners Group's H1 2025 Strategic Momentum and Private Markets Dominance

In a volatile global economy, Partners Group Holding AG (CH:PGHN) has demonstrated resilience, leveraging its private markets expertise to deliver robust asset under management (AuM) growth and position itself as a leader in value creation. The firm's first-half 2025 performance, marked by strategic exits, reinvestments, and sector-specific focus, underscores its ability to navigate challenges and capitalize on secular trends. For investors seeking exposure to private markets, Partners Group's current undervalued stock and dividend upside present a compelling opportunity.

Resilient AuM Expansion Amid Volatility

Partners Group reported $12 billion in new client commitments and $4 billion from the Empira Group acquisition, driving total AuM contributions to $16 billion in H1 2025. This growth occurred while maintaining $9 billion in both investments and realizations, showcasing operational discipline. With full-year guidance of $22–27 billion in gross new client demand, Partners Group is well-positioned to capitalize on its “robust pipeline” of private equity, infrastructure, and real estate opportunities.

The firm's ability to balance risk and growth in turbulent markets reflects its diversified platform, which includes evergreen funds—a strategic differentiator in an industry increasingly focused on liquidity.

Performance Fees Catalyst: PCI Pharma Services Exit & Reinvestment

A pivotal driver of near-term upside is the strategic exit and reinvestment in PCI Pharma Services, a global contract development and manufacturing organization (CDMO). Partners Group realized approximately €83 million on its 2016 investment, aligning with its carrying value, while reinvesting €18 million to retain a minority stake. This move not only crystallizes prior gains but also positions the firm to benefit from PCI's future growth.

PCI's valuation reflects the CDMO sector's explosive growth, driven by rising biopharmaceutical R&D spending and demand for specialized manufacturing (e.g., biologics, sterile fill-finish services). With 38 global sites and over 7,500 employees, PCI is a critical partner for drug developers, supporting over 90 product launches annually. Partners Group's continued stake ensures it captures carried interest as PCI expands into high-margin services and geographic markets like the U.S.

Healthcare as a Growth Engine: Secular Trends in Private Markets

Partners Group's focus on healthcare—exemplified by PCI—aligns with megatrends such as aging populations, rising disease prevalence (e.g., cancer, rare diseases), and increased R&D spending. CDMOs like PCI are beneficiaries of the “follow-the-molecule” model, where biopharma companies outsource complex manufacturing to streamline drug development.

The firm's healthcare portfolio is further bolstered by evergreen funds, which provide perpetual capital to support long-term growth without exit pressures. This structure is critical in sectors like biologics manufacturing, where scaling infrastructure requires sustained investment.

Valuation and Dividend Upside: An Underappreciated Opportunity

Despite its strong fundamentals, Partners Group trades at a Hold rating with a CHF1,325 price target, implying limited upward momentum. However, its CHF27.33 billion market cap and trailing 12-month P/E of 12.8x suggest undervaluation relative to its growth profile and dividend yield of ~2.5%.

Investors should note:
1. Performance Fees Tailwind: PCI's exit is a harbinger of future carried interest realizations as other portfolio companies mature.
2. Evergreen Fund Resilience: These funds, now comprising ~40% of AuM, offer steady fee income and reduced reliance on volatile capital markets.
3. Sector Diversification: Beyond healthcare, Partners Group's exposure to infrastructure (e.g., energy transition projects) and real estate (logistics hubs) mitigates sector-specific risks.

Conclusion: A Top-Tier Allocator at a Discount

Partners Group's H1 2025 results and strategic moves validate its dominance in private markets. Its resilient AuM growth, CDMO-driven performance fee catalyst, and sector-specific expertise position it to outperform peers. With an undervalued stock and dividend upside, investors should consider adding exposure to capitalize on its underappreciated potential.

In a world where private markets outpace public equities, Partners Group's ability to generate alpha through disciplined allocation and sector leadership makes it a top pick for 2025 and beyond.