Partners Group Private Equity (PEY) is under pressure to return more capital to shareholders after a disappointing 2025 saw its portfolio fall 8.7% to €891.5m (£773m). Most of the net asset value (NAV) decline, 5.7%, was due to the weak dollar but “value creation” was just 0.7% with a number of companies facing “idiosyncratic challenges”.
While PEY’s pre-2021 investments drove strong realisations, such as the sale of PCI Pharma Services and Techem in the first half of the year, the company said a number of 2021-23 assets had proved “to be more sensitive to macro and company specific headwinds, amplified by the effects of higher entry valuations and capital structures set during a lower-rate environment.”
It said most of the assets in the 2021-23 cohort remained above cost and maintained positive profits growth.
The investment loss means leaves PEY’s underlying returns over five years to 31 December at 21.7%, a 4% annual average.
Shareholder total returns, which include the 7.6%-yielder’s semi-annual dividends, were positive at 5.3% last year as the share price discount to NAV narrowed to 19.6% in response to the launch of a €15m buyback programme and the company’s inclusion in the FTSE 250 index.
However, chair Peter McKellar said these could not offset a poor first half of last year. The latest data shows at the end of last week, PEY had delivered a 6% total return over five years, well below the average AIC Private Equity sector return of 121%.
McKellar said the performance of Swiss fund manager Partners Group and the persistent share price discount remained the board’s key focal points. “In light of recent investment performance and shareholder feedback, the board is discussing with the investment manager and the company’s advisers what options might establish a satisfactory path forward that marries achieving liquidity for investors at a narrower discount to NAV, whilst providing long-term investors with an attractive proposition going forward. The board will update shareholders on its assessment at the annual general meeting expected to be held on 18 June.”
Our view
Matthew Read, senior analyst at QuotedData, said: “Partners Group Private Equity’s 2025 results will make uncomfortable reading for its beleaguered shareholders. While currency headwinds weighed on returns, the more persistent issue has been lacklustre underlying performance, and it is not surprising that the discount remains stubbornly wide despite stepping up its buyback efforts. It is therefore right that the board has explicitly acknowledged both performance and the discount as key concerns and, importantly, is exploring options that might address both of these.”
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