Petershill Partners confident despite slide in income and profits

The FTSE 250 company said total income for 2023 amounted to $319m, down from $379m in 2022, with adjusted EBIT at $284m, compared to $336m a year earlier, maintaining an 89% margin.

Adjusted earnings per share were 17.6 cents, down from 23.7 cents a year earlier.

The board proposed a final dividend of 10.1 cents per share, resulting in a full-year dividend of 15 cents per share.

It was also considering a tender offer to repurchase up to $100m of the company's shares, with a decision set to be made by the end of April and subject to approval at the upcoming annual general meeting.

Partner distributable earnings (DE) amounted to $292m, down from $370m in the prior year, mainly attributed to lower partner realised performance revenues (PRE) at $55m, compared to $132m in 2022.

Despite that, partner fee related earnings (FRE) remained relatively stable at $203m.

The board said the year saw robust partner-firm asset raising and growth in assets under management (AuM), with $23bn in gross fee-eligible assets raised and an aggregate partner-firm AuM of $304bn.

Looking ahead to 2024, the company was aiming for an organic fee-eligible AuM raise of $20bn to $25bn, and realisations of $5bn to $10bn in fee-paying AuM.

The balance sheet and capital return remained strong, with a free cash flow (FCF) conversion rate of 99% supporting growth and the progressive dividend policy.

Investments at fair value increased to $5.3bn, and the book value per share reached 431 cents.

The company also executed share buybacks, purchasing 13.2 million ordinary shares for $26m through December.

Guidance for 2024 included expectations of full-year partner FRE ranging between $200m and $230m, and PRE accounting for 15% to 30% of total partner revenues.

Additionally, acquisitions in 2024 were expected to align with a medium-term range of $100m to $300m per annum, while aiming for an 85% to 90% company adjusted EBIT margin.

Subsequent to the year end, the company completed two transactions aligned with its FRE-centric nature, further enhancing its net asset value and strategic positioning.

“Despite a challenging external backdrop in 2023, we were pleased with our partner-firms raising $23bn of fee eligible assets, on track relative to both size and timing,” said managing directors Ali Raissi-Dehkordy and Robert Hamilton Kelly in a joint statement.

“Unsurprisingly, distributable earnings were lower in the year predominately reflecting lower transaction activity, and the slower realisation environment impacting partner-firm realised performance revenues.

“FRE were also down 5% compared to 2022 but we remain confident on the medium-term outlook for FRE growth supported by attractive organic fee-paying assets under management growth with potential for future mergers and acquisitions, and note an increase in accrued performance fees which underpins the medium-term outlook for PRE.”

Raissi-Dehkordy and Kelly said Petershill’s portfolio of partner-firms remained strong, with the carrying value of partner-firms up around 6% while its high profitability margin and cash conversion supported its strategy for growth and continued capital return to shareholders.

“The company maintains its progressive dividend policy and the board is considering launching a tender offer to purchase up to $100m of the company's shares, reflecting the strong operating cash flow and balance sheet.

“Our robust capital raising and dynamic approach to capital allocation underpins our ongoing confidence about our medium-term prospects for shareholders.”

At 0910 GMT, shares in Petershill Partners were up 1.85% at 175.8p.

Reporting by Josh White for Sharecast.com.