Partners Group Global Value (AUD) W (ETL0276AU) Report & Performance

In June, the unit price of Partners Group Global Value Fund continued its upward trend, increasing by 0.3% and bringing the year-to-date performance to +4.5%. The favorable performance in June primarily resulted from the development of the Fund’s underlying private equity direct investments, as well as the positive contribution from the private equity secondary investments. In terms of sectors, the largest contributor was ‘Industrials’.

During the reporting month, the Fund made an add-on commitment to Galderma, a leading global dermatology company that develops, manufactures, and distributes a range of medical and consumer skin health solutions through three business units: injectable aesthetics, dermatological skincare, and therapeutic dermatology. The Switzerland-headquartered company operates in over 50 locations across 40 countries. Brands under Galderma include Epiduo, Differin, Dysport, Cetaphil and Benzac. Overall, the add-on commitment represents an attractive investment opportunity in a leading company with strong fundamentals, a proven track record of growth, and significant potential for future success. Going forward, Partners Group will continue to support Galderma’s growth through its continuous product innovation, geographic expansion, and channel optimization leveraging portfolio synergies

In May, the unit price of Partners Group Global Value Fund increased by 0.9%, resulting in a year-to-date net performance of +4.3%. This positive development was primarily due to the performance of the Fund’s private equity direct investments.

One of the top-performing assets during the month was Civica, a UK-based company that provides critical software solutions to the public sector. The company’s valuation increased as a result of strong financial performance. Civica continued its track record of uninterrupted growth since inception with positive revenue and EBITDA recorded over the last 12-month period.

This was primarily driven by strong organic developments in Civica’s core software business supported by growing demand and a healthy customer base. Looking forward, the company remains focused on the planning and execution of its strategic initiatives to further drive its go-to-market strategy.

During the reporting month, Partners Group closed the transaction to increase its equity stake in Breitling, a leading independent Swiss watchmaker. Following the transaction, Partners Group will be the largest shareholder of the company. CVC, Breitling’s previous majority shareholder, together with its management team and other co-investors, will remain invested alongside Partners Group. Looking ahead, Partners Group will partner with CVC and Breitling’s management to develop the brand into an enduring legacy in the industry while maintaining its neo-luxury edge through its focus on direct-to-consumer sales channels.

● Positive revaluations of Forterro, Wedgewood, and Idera

In April, Partners Group Global Value Fund unit price increased by 1.2% which brings the YTD net performance to +3.4%. Amongst the positive value drivers was Forterro, a leading pan-European enterprise resource planning software provider to the industrial mid-market. The valuation increased, reflecting its strong operating performance. The company has also reinforced its UK presence through the acquisition of Wise Software in July 2022, adding around GBP 18 million of revenue, 1’000 customers and additional Cloud software capabilities.

Furthermore, Wedgewood Pharmacy, the largest specialty pharmacy provider of compounded animal medications in the US, was the largest positive contributor reflecting an expansion of the valuation multiple due to the signing of an agreement to acquire a companion animal and equine compounding pharmacy. The acquisition seeks to accelerate strategic plans by expanding coverage in key geographies, improve service levels, and provide capacity for growth. In addition, the target company’s to-be-launched online veterinary pharmacy platform would provide access to an attractive online market.

Finally, the valuation of Idera, a provider of software solutions for testing, application development and database architecture and management, increased driven by robust financial performance and an uplift in valuation multiple applied in line with comparable companies. The company continued to perform ahead of plan and recorded healthy topline and EBITDA results mainly attributed to its strong inorganic growth, demonstrating Idera’s ability to successfully acquire and integrate new businesses that complement its product portfolio.

In March, Partners Group Global Value Fund unit price increased by 1.2%. This resulted in a net performance of 2.1% in the first quarter 2023. One of the largest positive contributors was KinderCare. The valuation of the for-profit provider of early childhood education and care services in the US increased over Q1 2023. During the last twelve-month period, KinderCare reported double-digit growth in revenue and EBITDA, mainly attributable to strong enrolment rates as well as increased net tuition rates. Operationally, the number of centers increased as of January 2023 while same center occupancy trended above expectations and previous year occupancy levels.

A recent investment within the Fund is Project Harvest, representing Partners Group’s acquisition of a selected sub-set of 7 high quality buyout funds managed by 6 leading General Partners. Partners Group acquired the highquality inflection portfolio from a larger portfolio of over 26 funds at a 10% discount, with an average vintage year of 2018, providing strong NAV uplift potential. The portfolio is well diversified across 134 companies, while the largest 20 companies represent only 46% of total NAV with significant exposure to resilient industries such as software, healthcare and goods and services sectors.

Finally, Partners Group received dividends from Milestone, a leading provider of transportation equipment and supply chain solutions in the US, on the back of its strong financial and operational performance. Founded in 1995, Milestone manages a fleet of over 98’000 trailers, containers, and chassis across an integrated service network of more than 70 branches and depots located near major logistics hubs. For 2022, the company recorded increases in revenue and EBITDA, driven by continued strong demand from shipping and logistics customers and shortage of equipment availability. Meanwhile, margins benefitted from flat operating expenditure despite the revenue growth.

In February, Partners Group Global Value Fund unit price increased in value with a positive net performance of 1.2%. The favorable movement was mainly attributable to the Fund’s private equity direct investments. Amongst other, Techem contributed positively to this month’s performance. The German-based global sub-metering services provider, increased over the period on the back of continued positive financial performance. For the last twelve months ending 31 January 2023, the company recorded increases in both revenue and adjusted EBITDA. This was mainly driven by strong momentum in its Energy Services Germany and Energy Services International segments.

During February, Partners Group made an add-on investment in Rovensa, a provider of specialty crop nutrition, biocontrol and crop protection products. The company completed the addition of Cosmocel, a developer, manufacturer and distributor of specialty biostimulant solutions. Cosmocel has a strong presence in the US, and is the market-leading bionutrition player in Mexico. In addition, Cosmocel’s geographic presence and product portfolio are highly complementary to Rovensa’s. This acquisition is anticipated to generate cross-selling synergies and establish Rovensa as the leading independent biosolutions company globally.

Finally, after the end of the reporting period, financial markets experienced heightened volatility due to adverse events surrounding Silicon Valley Bank (SVB) and Credit Suisse. We are pleased to confirm that Partners Group holds no assets or loans with SVB at Group level, and the Fund has no exposure to SVB and a negligible cash exposure to Credit Suisse.

In January, Partners Group Global Value Fund unit price eased by 0.2%. The decrease was attributable to unfavorable FX movements within the reporting month. On a portfolio level the Fund’s private equity direct investment developed well and contributed positively to the performance.

One of the largest contributors was Ammega, a global supplier of mission critical belting solutions. For the last 12-month period ending on 31 December 2022, the company registered double-digit growth in revenue, driven by an increase in sales and price across key regions such as Americas and EMEA. The company continues to benefit from its ongoing cost saving initiatives with contribution from its key value creation work streams.

During the reporting period, Partners Group made an add-on investment in Neuraxpharm, a European specialty pharmaceutical company focused on the development and commercialization of active ingredients and finished dosage forms. The additional capital was used to finance the acquisition of two well-established product portfolios from pharmaceutical company Sanofi addressing central nervous system disorders and vascular diseases. The add-on comprises 38 brands and is marketed in more than 50 countries.

The Fund’s relative value approach enables it to tactically invest across the full spectrum of private markets. This is especially advantageous looking forward to 2023, as we see attractive opportunities across asset classes in the current environment. For example, as more institutions face liquidity constraints, we see opportunities in the secondary market to acquire high quality assets at discounted prices. We also believe direct lending and syndicated debt is attractive given capital structure seniority and floating rate nature. Rising central bank rates translate into higher yields, interest margins have increased and new investments show enhanced downside protection with stronger legal documentation and lower leverage levels. We maintain high conviction in our transformational investing approach which is underpinned by thematic sourcing, and believe that our underwriting discipline is key to mitigate the adverse impact of macro headwinds on underlying assets.