Profits at Partners Group, Private Equity International’s 2007 European fund of funds of the year, rose 61 percent to CHF228 million ($222.8 million; €145.1 million) for the full year 2007.
The firm said it believed the current problems in the worldwide markets and the economy provided numerous different opportunities. Partners Group’s executive chairman Alfred Gantner said: “There are always times when you’ve got to invest and times you’ve got to sell… the time is back when you’ve got to invest.”
Gantner said he expected opportunities for the fund of funds in the distressed debt market due to the problems in the credit markets. ““The senior debt market will go through a very dark and long valley,,” he said. The firm said its mezzanine business would also benefit from these problems for other debt providers.
He expected the larger private equity funds, due to the mass of capital they have under management, to be able to support investments with further equity commitments, while internal rates of return would still be decent. Gantner was reluctant to predict when mega buyouts would return, but he said they would eventually.
The senior debt market will go through a very dark and long valley.
He said a small number of highly leveraged investments would go bust. “Everyone will write about it, but overall across our portfolio of hundreds and hundreds of investments, most will fare well.”
The fund of funds’ revenues also grew by 54 percent to CHF311 million.
The group’s assets under management rose 41 percent to CHF24.4 billion. This growth was despite the firm’s hedge fund business remaining flat on CHF2.7 billion. It was driven largely by 46 percent growth in its private equity business to CHF16.7 billion as well as 118 percent growth in its private debt business to CHF2.4 billion.
The firm expects to launch its first resources product, encompassing alternative energy, environmental investment, traditional energy and commodities, in the second half of 2008. It will invest in primaries and secondaries transactions, as well as direct investment and listed entities.
It expects this branch of the business to have CHF2 billion under management in three years.
The firm invested $2.8 billion (€1.8 billion) in the second half of 2007. Of this $1 billion was invested in secondaries deals in the second half, up from $100 million in the first half. The firm’s number of employees grew to 273, with a 50 percent growth of its capital markets team which it expects to continue to grow at the same rate in 2008.
In 2008 the firm will open offices in Luxembourg, Beijing and Sydney after setting up offices in Tokyo and San Francisco last year.