Partners Group's Resilience in Private Markets: A Case for Positioning in a Maturing Investment Cycle

The private markets are undergoing a profound transformation as investors demand greater liquidity and transparency, and managers like Partners Group are recalibrating their strategies to align with these expectations. At the heart of this evolution lies a dual challenge: adapting fee structures to remain competitive while navigating the complexities of asset maturity in an era of macroeconomic uncertainty. Partners Group’s recent adjustments to its performance fee model and its embrace of innovative exit strategies exemplify how a leading asset manager is positioning itself to thrive in a maturing investment cycle.

Strategic Fee Adjustments: Balancing Incentives and Investor Confidence

Partners Group has redefined its fee framework to align with investor priorities. While the annual management fee remains at 1.5%, it is now calculated based on net asset value (NAV) rather than the higher of NAV or gross asset value, reducing costs during periods of asset depreciation [2]. Simultaneously, the firm has raised the performance fee watermark to €15.03, ensuring that performance-based compensation is only triggered when NAV surpasses this threshold. This approach mitigates short-term volatility and reinforces long-term value creation, a critical differentiator in an industry where fee erosion has become a persistent concern [2].

The firm projects that performance fees will account for 20-30% of total revenues in 2025, with this proportion rising to 25-40% from 2026 onward. This shift reflects a growing emphasis on direct investments, which typically offer higher returns and greater control over portfolio companies [1]. By structuring fees to reward outperformance, Partners Group is signaling confidence in its ability to generate alpha—a crucial signal in a market where limited partners (LPs) are increasingly prioritizing cash returns over paper gains [3].

Navigating Asset Maturity: Liquidity Solutions in a Thawing Market

As private market assets mature, the pressure to deliver liquidity has intensified. Traditional exit routes like IPOs and M&A remain constrained by high interest rates and geopolitical risks, prompting managers to explore alternative strategies. Continuation vehicles (CVs) have emerged as a dominant solution, accounting for 20% of private equity exits in the first half of 2025 [3]. Partners Group, like its peers, is leveraging CVs to extend the life of underperforming assets while preserving value for LPs. This approach allows managers to avoid fire-sale discounts and instead restructure portfolios for long-term growth [4].

Evergreen funds and secondaries are also playing a pivotal role in addressing liquidity demands. By offering flexible capital calls and staggered redemption terms, evergreen structures align with LPs’ need for more predictable cash flows [3]. Meanwhile, secondaries provide a direct avenue for LPs to divest non-core holdings, unlocking capital without disrupting the manager’s operational focus. These innovations underscore Partners Group’s agility in adapting to a market where distribution-to-paid-in (DPI) metrics are gaining prominence over internal rates of return (IRR) [4].

The Case for Positioning

Partners Group’s strategic recalibration is not merely a defensive maneuver but a proactive response to the maturation of private markets. By aligning fee structures with investor expectations and embracing liquidity-enhancing tools, the firm is fortifying its position in an industry where operational excellence and adaptability are paramount. As capital deployment accelerates and LPs commit to higher allocations, managers that can balance profitability with liquidity will emerge as leaders.

The firm’s focus on direct investments and performance-based incentives also positions it to capitalize on the next phase of the cycle. With private markets expected to remain resilient despite macroeconomic headwinds, Partners Group’s ability to generate consistent returns through disciplined asset management and innovative exits will be a key differentiator. For investors seeking exposure to a sector in transition, the firm’s strategic agility offers a compelling case for long-term positioning.

Source:
[1] Partners Group, [Corporate News: Proposed Dividend Increase] [https://www.partnersgroup.com/news-and-views/press-releases/corporate-news/detail?news_id=3ca731c0-5c25-4879-8921-f52d05ec920b]
[2] The AIC, [Partners Private Equity Cuts Fees to Keep Investors Onside] [https://www.theaic.co.uk/aic/news/industry-news/partners-private-equity-cuts-fees-to-keep-investors-onside]
[3] McKinsey & Company, [Global Private Markets Report 2025] [https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report]
[4] Alter Domus, [Private Markets Mid-Year Review 2025] [https://alterdomus.com/insight/private-markets-mid-year-review-2025/]