Partners Group, a Swiss private equity firm, is confronting a significant debt refinancing hurdle, with approximately €6 billion ($6.5 billion) in debt due by 2027 across the companies within its portfolio. This challenge is exacerbated by a landscape of rising interest rates, which makes refinancing more expensive, and a slowdown in deal exits.
Adding to the firm's pressures, Partners Group has experienced substantial client redemptions from its popular evergreen funds. In the first half of the year, $3.8 billion in redemptions largely offset $4.2 billion in inflows into these funds. The firm had to cap withdrawals from one multi-billion-dollar evergreen fund in early June to prevent forced sales of underlying holdings. This has led to a warning that the evergreen platform could slow growth in assets under management by 1% to 2% this year and next, and shares have slumped, with a 27% drop year-to-date and 38% below their 52-week high as of mid-August.
Despite these headwinds, Partners Group continues to engage in significant investment activity. Recently, it closed a $1 billion private-credit mandate in Asia and took a majority stake in French natural-cosmetics brand Aroma-Zone, valued at roughly €2 billion. It also committed over $1 billion of equity to data-center operator AVK Power Solutions, planning to supplement this with debt financing. However, the firm's private equity investment company (PEY) reported an 8.6% loss in net asset value in the first half of the year, with five-year annualized returns falling into negative territory, largely due to investments made at high prices between 2021-2023.
Partners Group aims to boost assets under management above $450 billion by 2033, but analysts like Morningstar's Johann Scholtz note that evergreen funds, which constitute about 30% of total assets ($56 billion out of $185 billion at year-end), being flat or declining makes this target aggressive. The firm collected $16 billion in new client money in the first half and still projects full-year gross demand of $26 billion to $32 billion, but the key challenge remains whether these inflows can outpace redemption requests from both institutional and retail clients, particularly from its evergreen franchise.
