Financials

Figures converted from CHF at historical FX rates — see data/company.json.fx_rates. Ratios, margins, and multiples are unitless and unchanged.

Financials — What the Numbers Say

Partners Group is a USD 185bn AUM Swiss alternative-asset manager whose financial statements look almost nothing like a "normal" company's. Two ideas dominate the page that follows. First, this is a fee-and-carry compounder with extreme operating margins — a 63% EBITDA margin on $3.23bn of FY2025 revenue is closer to a software franchise than to a bank or broker. Second, the cash-flow profile is jagged because performance fees and carried-interest receivables move in cycles tied to private-market exit activity, which means earnings power has to be read as a five-year average, not a single print. FY2025 looks like the start of a new realization cycle: revenue +20% YoY, operating profit +18%, free cash flow more than doubling to $1.90bn (mostly via reduced capex), leverage still trivial at 0.3× net debt / EBITDA, and the stock now trading at 20× earnings — well below its decade median (24×) and at a meaningful discount to listed US alternatives peers (BX 40×, KKR 50×, EQT 54×). The single financial number that matters next is whether performance income lands inside the new "25–40% of revenues" guidance corridor in 2026 and 2027 — because a slip back to the 2018-2020 trough range is what would invalidate the current re-rating thesis.

How to read this page. Free cash flow is the cash left after the firm pays its operating costs and capital expenditures — the discretionary cash available to pay dividends, buy back stock, or repay debt. EBITDA margin is operating profit before depreciation and amortization, divided by revenue — the cleanest profitability gauge for an asset-light fee business. ROE is net profit divided by average shareholders' equity. Net debt / EBITDA is total debt minus cash, divided by EBITDA — leverage measured against earnings power. Performance fees are the firm's share of fund profits above a hurdle return ("carried interest" in private equity language); they are episodic, not recurring.

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1. Revenue, Margins, and Earnings Power

Investor question: how big is this business, and is its earnings power expanding, plateauing, or decaying?

Partners Group earns its money in two layers. Management fees ($2,200m in 2025, ~68% of revenue) are charged on AUM and recur every year — they are the spine of the business. Performance fees ($1,033m in 2025, ~32%) are paid when funds realize gains above their hurdles — they are lumpy, tied to the global exit environment, and have ranged from 18% to 36% of revenue across the last decade. Management's new disclosure (effective 2026 under IFRS 18) reframes these as "performance income" — the same economic concept — and guides the band to 25–40% of total revenue.

The shape is unmistakable: revenue compounded ~13% annually from 2010 to 2025, with a pronounced cycle peak in FY2021 ($2.88bn — performance-fee bonanza after a 12-year private-equity cycle climaxed) and a trough in FY2022 (–29% YoY) when realizations collapsed. The recovery from 2023 onward is the new cycle: revenue is now back above the 2021 peak on a TTM basis, but the quality of that revenue is different — more management fees, less crystallized carry.

The margin line is the punchline of the business model. Operating margins have never been below 56% in 16 years and have stabilized in a 60–65% band. EBITDA margins have held near 63% for five years running — exactly what management points to as steady-state. The slight drift down in net margin (from 65% in 2014 to 49% in 2025) reflects two real effects: (a) higher effective tax rate (3.7% in 2005 → 17.7% in 2025, as Switzerland tax reform plus expansion into higher-tax jurisdictions bit in), and (b) interest expense rising as the firm took on senior notes between 2017 and 2024.

Recent semi-annual trajectory

Partners Group reports half-yearly. The picture across the last six halves shows the FY2025 reacceleration clearly.

H2 2025 revenue of $1.76bn is a record half — up 38% on H2 2024 in dollar terms (boosted by Swiss-franc strength versus the dollar) — and operating income up double-digits half-on-half. That tells you the cycle is in expansion, not exhaustion. The headline that matters: 2025 EBITDA grew +12% at constant currency but only +7% reported, after Swiss-franc strength versus the dollar, which is a recurring tax on a Swiss-listed company that books most of its fees in dollars and euros. It is not a margin problem; it is an FX translation problem.

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2. Cash Flow and Earnings Quality

Investor question: are reported earnings turning into real cash, or is accrual accounting flattering the picture?

For a private-markets manager, the gap between net income and cash flow is where most accounting risk lives. Performance fees are recognized over time as funds mature (a contract-asset sits on the balance sheet) and are realized in cash only when underlying portfolio companies are sold. Receivables can build for years before crystallizing.

The chart shows the quality issue head-on. Across 16 years, cumulative net income (~$14.8bn) versus cumulative operating cash flow (~$13.0bn) is roughly 88¢ of cash per dollar of earnings — solid but below 1.0×, which is the classic signature of a business where receivables grow faster than collections. Three years stand out as outliers: FY2013 (operating cash flow turned negative on a $356m net income — performance receivables built up before realization), FY2018 (OCF only 37% of net income — same dynamic), and FY2021 (OCF 48% of net income — peak-cycle carry recognized but not yet collected).

The mirror of those gaps is the abundance years: FY2020, FY2022, and FY2025 all delivered OCF above net income because prior-vintage carry finally hit the bank account.

A 50% FCF margin is a stupendous number in absolute terms; a volatile 50% FCF margin is the working reality. The right way to think about it: average FCF margin across 2014–2025 is ~48%, and that is the number I would underwrite. Capex stays trivial — never more than 3% of revenue, just $11m in 2025 versus $3.23bn of revenue. There is essentially no factory to feed.

Receivables — where the next forensic question lives

Item	FY2020	FY2022	FY2024	FY2025
Revenue ($ m)	1,604	2,028	2,358	3,233
Receivables ($ m)	529	695	1,275	1,432
Receivables / revenue	33%	34%	54%	44%
Days sales outstanding (approx)	120	125	197	162

Receivables ballooned in 2024 to 54% of revenue (197 days) before partially normalizing in 2025 as cash collected against accrued performance fees. This is one of the items the short-seller report (Grizzly Research, April 2026) flagged. The forensic tab covers the merits in detail; for our purposes, the direction in 2025 is reassuring — receivables stopped growing in absolute terms and revenue accelerated, so the ratio is improving — but receivables remain the single most important earnings-quality line to watch each half.

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3. Balance Sheet and Financial Resilience

Investor question: does the balance sheet give management room to act, or is it a constraint?

For a fee-and-carry manager the balance sheet is not the source of returns — it is a logistical asset that supports seed capital, GP commitments, and bridge financing for funds. So leverage should be modest and liquidity ample.

Net cash for nearly the entire decade. The shift from net cash to slight net debt of $505m in 2025 reflects two senior-note issuances (2017 ~$300m + 2019 ~$500m equivalent) and an expanded short-term funding program. Even at peak debt the picture is benign:

Three things are worth flagging. First, interest coverage has fallen from 71× to 17× — still very strong, but the trend is clear: the firm is using debt as a permanent layer of the capital stack, not just a bridge. Second, the current ratio dropped sharply to 1.67× in 2025 as short-term debt expanded to ~$1.33bn. Third, assets-to-equity has nearly tripled from 1.2× to 2.9× since 2015 — capital structure deliberately optimized to lift ROE.

The ratings agencies see it as fine: Moody's affirmed A3 investment grade in early 2026 and Fitch maintains an investment-grade rating. There is no realistic insolvency risk; the question is one of capital-allocation philosophy, not financial distress. With a 90% payout ratio (see next section), management has no plan to pay debt down — they intend to maintain modest investment-grade leverage in perpetuity.

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4. Returns, Reinvestment, and Capital Allocation

Investor question: is management compounding shareholder value, or just running on the spot?

Returns on capital are extraordinary for any sector, let alone financials. ROE oscillates between 35% and 56% — averaged 43% over 12 years — and ROIC in the 35–77% band. The spread between ROE and ROIC has compressed as leverage has crept up; the operating return on capital has been remarkably stable at 35–45%. This is the financial signature of a moat: a recurring fee stream on USD 185bn of AUM that does not require commensurate balance-sheet investment.

Capital allocation — almost everything goes back to shareholders

The pattern across eight years is unambiguous: dividends are the dominant return, buybacks supplement, capex is rounding error, M&A is occasional and small. Cumulative across 2018–2025: ~$7.3bn dividends + ~$3.4bn buybacks + ~$135m M&A + ~$0.5bn capex.

The proposed FY2025 dividend is CHF 46.00 per share (approximately $58 at year-end FX) — paid out of FY2025 EPS of $61.12, a ~95% payout. The firm has paid an unbroken, growing dividend since 2008. The trade-off worth naming: the high payout means the firm is not compounding capital internally — book value per share has only edged up because most earnings leave the building. For an asset-light fee compounder this is the textbook-correct policy, but it means investor returns come almost entirely from price appreciation + yield, not from book-value growth.

EPS compounded ~15% per year over 2015–2025 in dollar terms despite share count moving ~1% lower. Book value per share is roughly flat in dollar terms (~$47 → $106) because nearly all earnings are dividended out and the path includes meaningful FX translation. The buyback yield averaged ~1% — not aggressive, more about offsetting share-based comp than return-of-capital ambition.

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5. Segment and Unit Economics

Partners Group does not break revenue into reportable accounting segments, but management discloses AUM splits at the asset-class and structure level. Together with the performance-fee disclosure they revealed in the FY2025 results, this is enough to see where the economics live.

Private equity is 46% of the asset mix and produced 59% of the $1,033m of FY2025 performance fees. Infrastructure is the secondary growth engine — 19% of AUM, 27% of performance fees, and the fastest-growing strategy at 18% AUM CAGR. Private credit is the new engine: 22% of AUM, 22% AUM growth, but only 13% of carry yet because credit funds carry lower hurdles and longer crystallization timelines.

By client structure: 67% of AUM is in bespoke separate accounts (mandates) — the highest-quality, longest-duration revenue line because mandates rarely churn. 30% is in evergreens/semiliquid funds, the new growth wedge. Only 3% is left in legacy traditional closed-end programs.

By geography (fundraising in 2025): North America 23%, Germany & Austria 18%, Switzerland 12%, UK 10%, Japan 7%, rest of world ~30%. The mix is unusually diversified for a Swiss-domiciled GP — North American LP demand has actually grown over the decade.

The unit economics are best summarized by management's own slide language: a 1.24% management-fee margin on average AUM during 2025 — and management explicitly guides that margin will be lower in 2026 because the mix is shifting toward larger, fee-discounted bespoke mandates and toward credit (which charges a thinner fee than PE). This is the most concrete piece of forward guidance in the FY2025 results, and it is the negative element that the market has priced in.

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6. Valuation and Market Expectations

Investor question: what does the current price assume — and is that assumption defensible?

The right valuation lens for a fee-and-carry manager is P/E for steady-state, EV/EBITDA for cycle-adjusted, and dividend yield for income — not P/B or P/Sales, which are inappropriate for asset-light businesses. The whole stack is below decade norms.

The de-rating is real and severe. From the 2020-2021 peak (34× P/E, 29× EV/EBITDA) the multiple has compressed by 40–45%, and the dividend yield is at a 10-year high of 4.3%. Three things drove the de-rating: rising rates pulling all duration assets down (2022), the FY2024 receivables build prompting earnings-quality questions, and the April-2026 short-seller report on evergreen-fund valuation marks plus management's "lower management-fee margin in 2026" guidance, which together produced the 37% single-day decline on the FY2025 results print (CHF 1,289 → 806; roughly $1,625 → $1,015 at year-end FX).

Bear / base / bull frame

Scenario	Assumption	FY27 EPS	Multiple	Price ($)
Bear	Performance fees fall to 18% of revenue (lower end of guidance), management-fee margin compresses 15bp, P/E re-rates to 14× on quality concerns	63	14×	~885
Base	Performance income lands inside 25–40% guidance, AUM compounds 8%, P/E recovers to 22× (10-year median)	82	22×	~1,800
Bull	Cycle reaccelerates, performance income tops 35%, AUM grows 12%, P/E re-rates to 26× on alignment with peers	101	26×	~2,625

Management's own forward guidance from the FY2025 deck is USD 65 EPS in FY2026 and USD 78.77 EPS in FY2027 (the firm reports forward EPS in dollars). Guidance is therefore close to my "base" path but gives no benefit-of-the-doubt on multiple expansion.

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7. Peer Financial Comparison

All market caps converted to USD at 2026-05-07 spot rates so comparisons are apples-to-apples. Multiples are unitless.

The peer table tells a clean story. PGHN posts higher EBITDA margins (63%) and the highest ROE (55%) in the group, with leverage (0.3× ND/EBITDA) far below APO (1.1×), BX (1.5×), KKR (62×, distorted by reinsurance accounting), and ARES (11×). EQT is the cleanest direct comparable — same European pure-play structure, smaller AUM. PGHN trades at a P/E half of EQT's, less than half of KKR's and BX's, and 25% below APO's, despite superior margins and returns. The peer-relative discount is the mechanical opportunity in the stock.

The legitimate counter-argument: US-listed alternatives are being valued for their insurance/permanent-capital franchises (APO/Athene, KKR/Global Atlantic, BX/wealth platform) — high-multiple growth engines PGHN does not yet have. PGHN's evergreen and semiliquid product line is the analog ($56bn of AUM in 2025, ~30% of total) but it is not yet a balance-sheet permanent-capital play. The discount is therefore partly explained by strategy mix; it is not entirely an irrational gap. But "partly explained" leaves significant room for the gap to compress if private-markets fundraising holds up.

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8. What to Watch in the Financials

Metric	Why it matters	Latest (FY2025)	Better	Worse	Where to check
Performance income / total revenue	Tests whether new IFRS 18 disclosure stays inside 25–40% guided band	32%	35–40%	under 25%	Half-year results
Management-fee margin (% AUM)	Direct read on competitive pricing pressure on the recurring revenue base	1.24%	≥1.24%	under 1.10%	H1/H2 release
AUM net inflows (USD)	Volume engine for management fees	+$27bn raised	over $30bn	under $20bn	Fundraising update
Receivables / revenue	Gauge of accrual vs cash quality on performance fees	44%	under 40%	over 55%	Balance sheet
OCF / Net Income (TTM)	Cash conversion sanity check	1.20×	over 1.0×	under 0.7×	Cash-flow statement
Net debt / EBITDA	Resilience and capital flexibility	0.30×	under 0.50×	over 1.0×	Balance sheet
Dividend cover (EPS / DPS)	Tests sustainability of the high payout	1.05×	over 1.10×	under 1.00×	AGM proposal
ROIC	Compounding test on the asset-light model	35%	over 40%	under 30%	Return ratios
EBITDA margin	Operating-leverage signal	62.8%	≥63%	under 58%	Income statement
Forward P/E (consensus)	Re-rating tracker	~17×	over 22×	under 14×	Consensus screens

What the financials confirm. A high-margin, asset-light, high-ROE compounder with a clean balance sheet, a 17-year dividend track record, and a recurring-fee spine that has compounded through every cycle — exactly the financial signature you would expect from a moated franchise.

What the financials contradict. The neat "compounding machine" narrative is dented by performance-fee volatility, by the receivables build that climaxed in FY2024, and by the new admission that 2026 management-fee margin will fall — small cracks, but visible ones.

What is implied but not yet proven. Management's FY2026 EPS guide of $65 and FY2027 of $78.77 (~25% EPS CAGR over two years) requires both a continued exit cycle and AUM growth — neither alone is sufficient. The market is currently pricing as if at least one of those will fail.

The first financial metric to watch is the H1 2026 performance-income disclosure. If it lands inside the 25–40% guidance band, the cash-flow story re-asserts itself; if it slips below 25% on a cyclical exit slowdown, the bear case (~$885-area) becomes the relevant scenario.