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Case | HBS Case Collection | September 2016

Partners Group: Ain't No Mountain High Enough

by Nori Gerardo Lietz and Ricardo Andrade

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Abstract

Partners Group (PG), a Swiss-based PE manager, initiated a series of strategic shifts and evolved from a predominately fund-of-funds manager into a large, multi-asset class PE firm focused on direct investments. PG was the first PE firm to go public in 2006. A number of large U.S.-based private equity firms followed to create a new category of firms: public private equity firms (PPEs). PG’s results were superlative (565% since inception total return and 22% annual compounded growth) versus the U.S.-based PPEs performance over the same time of 76% to 18%. PG’s multiple was 22x versus its PPE peer group of 8x. PG had the lowest value of AUM yet had the second largest market capitalization behind Blackstone. Why? PG had differing management practices: (i) compensation practices, (ii) corporate governance structure, (iii) accounting policies, and (iv) source of revenues. PG historically had a low percentage of its revenues derived from carried interest payments (less than 10%) while the U.S. PPEs had a significantly higher percentage (on average 50%). Should PG do more direct investments and have more of its revenues come from carried interests? This could conceivably jeopardize its trading multiple and its stock price. Should PG risk changing its business model or proceed with confidence?

Keywords: Business Model; Management Practices and Processes; Entrepreneurship;

Language: English Format: Print 25 pages EducatorsPurchase

Citation:

Lietz, Nori Gerardo, and Ricardo Andrade. "Partners Group: Ain't No Mountain High Enough." Harvard Business School Case 217-035, September 2016.

Related Work

  1. Teaching Note | HBS Case Collection | May 2017

    Partners Group: Ain't No Mountain High Enough

    Nori Gerardo Lietz

    Partners Group (PG), a Swiss-based PE manager, initiated a series of strategic shifts and evolved from a predominately fund-of-funds manager into a large, multi-asset class PE firm focused on direct investments. PG was the first PE firm to go public in 2006. A number of large U.S.-based private equity firms followed to create a new category of firms: public private equity firms (PPEs). PG’s results were superlative (565% since inception total return and 22% annual compounded growth) versus the U.S.-based PPEs performance over the same time of 76% to 18%. PG’s multiple was 22x versus its PPE peer group of 8x. PG had the lowest value of AUM yet had the second largest market capitalization behind Blackstone. Why? PG had differing management practices: (i) compensation practices, (ii) corporate governance structure, (iii) accounting policies, and (iv) source of revenues. PG historically had a low percentage of its revenues derived from carried interest payments (less than 10%) while the U.S. PPEs had a significantly higher percentage (on average 50%). Should PG do more direct investments and have more of its revenues come from carried interests? This could conceivably jeopardize its trading multiple and its stock price. Should PG risk changing its business model or proceed with confidence? Teaching Note for HBS No. 217-035.

    Keywords: Business Model; Entrepreneurship; Management Practices and Processes; Private Equity;

    Citation:

    Lietz, Nori Gerardo. "Partners Group: Ain't No Mountain High Enough." Harvard Business School Teaching Note 217-064, May 2017.  View Details
    CiteView DetailsPurchase Related

About the Author

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Nori Gerardo Lietz
Senior Lecturer of Business Administration
Finance
Entrepreneurial Management

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More from the Author

  • Case | HBS Case Collection | January 2019 (Revised January 2019)

    Colony Capital: Unbelievable

    Nori Gerardo Lietz and Arthur Sobral

    Citation:

    Lietz, Nori Gerardo, and Arthur Sobral. "Colony Capital: Unbelievable." Harvard Business School Case 219-087, January 2019. (Revised January 2019.)  View Details
    CiteView DetailsEducators Related
  • Teaching Note | HBS Case Collection | January 2019

    Yale University Investments Office: February 2015

    Josh Lerner, Nori Gerardo Lietz and Terrence Shu

    This is a teaching note meant to aid in the use of "Yale University Investments Office: February 2015," HBS case 815-124.

    Keywords: asset management; venture capital; private equity; investment fund; investment strategy;

    Citation:

    Lerner, Josh, Nori Gerardo Lietz, and Terrence Shu. "Yale University Investments Office: February 2015." Harvard Business School Teaching Note 819-094, January 2019.  View Details
    CiteView DetailsPurchase Related
  • Teaching Note | HBS Case Collection | January 2019

    Innova Capital: The Transition

    Josh Lerner, Nori Gerardo Lietz and Terrence Shu

    Teaching Note for HBS No. 813-064.

    Keywords: private equity; succession planning; finance; Eastern Europe; Poland;

    Citation:

    Lerner, Josh, Nori Gerardo Lietz, and Terrence Shu. "Innova Capital: The Transition." Harvard Business School Teaching Note 819-085, January 2019.  View Details
    CiteView DetailsPurchase Related
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