PEY Partners Group Private Equity Limited

(LSE: PEYS/PEY)

Partners Group Private Equity Limited

Amendment to investment management agreement and update to investment objective and policy

The board of PGPE Ltd (the "Board") announced in its semi-annual report 2024 that it would review in detail the investment management terms to ensure that the Investment Manager is aligned with the outcomes of the Company and its shareholders, and that the effective cost to serve (which represents the largest deduction between gross investment return and NAV total return to shareholders) is competitive.

The Board focused the review of the investment management terms on three key principles, namely ensuring the commercial terms are:

1.   fair on a relative and absolute basis;

2.   simple to understand; and

3.   aligned with shareholder outcomes.

As part of its detailed review, and in conjunction with its advisers, the Board conducted a review of the commercial terms of the investment management agreement relative to peers, including listed and unlisted private equity investment companies, and other Partners Group managed vehicles.

The Board is pleased to announce that, following this review, the Board and Partners Group have agreed that PGPE Ltd's fee arrangements with the Investment Manager will change, effective 1 January, 2025.

Investment management fee

The basis of calculating the investment management fee will change as follows:

The quarterly management fee rate of 0.375% remains unchanged and will continue to be accrued monthly and paid quarterly in arrears.

An investment in PGPE Ltd enables shareholders to invest alongside the Investment Manager's other clients and access a global portfolio of private companies that is not accessible to investors in public equity markets.  Given that the transition to a focus on direct investments is now nearly complete, with more than 99% of NAV in direct investments, this revised management fee calculation will exclude primary and secondary fund investments (less than 0.7% of NAV as of 31 December 2024).

New incentive fee

The existing incentive fee arrangement is based on the realised gain (after deducting specific purchase and sale costs, but before accounting for any management fee) for each of PGPE Ltd's investments, on a "deal-by-deal" basis in respect of which PGPE Ltd achieves an IRR of at least 8%, without reference to the overall NAV performance of PGPE Ltd. Certain shareholders requested to change the "deal-by-deal" mechanism to a more "fund as a whole" concept.

The Board and Partners Group have agreed to amend the incentive fee, so that it is payable on the NAV performance of the Company and is thus aligned with the NAV performance for shareholders. The incentive fee will remain at a rate of 15%, tested and paid on a semi-annual basis with monthly accruals. The new incentive fee will incorporate a high-water mark ("HWM"), whereby a performance fee will only be paid when the Company's NAV exceeds the level where a performance fee was previously paid (with the initial HWM being the Company's NAV as at 31 December, 2024), and also an annual cap⁽ⁱ⁾. This new arrangement has the significant advantages of being calculated on the whole portfolio performance after accounting for all costs and of applying to all existing and new investments, which a new "fund as a whole" approach operating from 1 January 2025 would not have done.

Additionally, the semi-annual payment of the incentive fee will be subject to the Company having sufficient liquidity when the incentive fee is due, which will be paid 30 days after the release of the Company's interim and annual report and accounts. Sufficient liquidity is defined as net indebtedness being less than 5% of the Company's net assets at the relevant balance sheet date, with any unpaid incentive fee being deferred.

The Board believes that the above incentive fee structure is an appropriate way to incentivise and reward the Investment Manager to deliver performance across the Company's whole portfolio for the benefit of shareholders.

Taken together, the Board believes, based on prior years' performance, that the changes to the investment management and incentive fees are estimated to reduce meaningfully the fees paid to the Investment Manager in an average year.

Existing incentive fee

The existing incentive fee has ceased as of 31 December 2024 and the sum accrued in respect of the performance of the existing portfolio of investments as at 31 December 2024 has crystallised and will be paid out as each of the relevant investments is realised.

Update to investment objective and policy

The Company's investment objective and policy will continue to be to provide shareholders with long-term capital growth and an attractive dividend yield through a diversified portfolio of private equity direct investments.

To reflect the completion in the transition of the PGPE Ltd portfolio to a focus on direct private equity investments, the Company's investment objective and policy will be updated to focus on (i) private equity, removing the ability to make investments in private infrastructure, private real estate, and private debt (other than for liquidity management) and (ii) direct investments, removing the ability to make primary and secondary investments⁽ⁱⁱ⁾.

Peter McKellar, Chair of PGPE Ltd, commented:

"We are pleased with the outcome of our constructive discussions with Partners Group. We believe these adjustments to the fee basis will be accretive to shareholder returns and also more closely align the interests of Partners Group with those of our shareholders."

The Investment Manager is a related party of PGPE Ltd and the changes to the investment management agreement constitutes a relevant related party transaction under Listing Rule 11.5.4(1). The Board considers the proposed changes to the investment management agreement to be fair and reasonable as far as the Shareholders of PGPE Ltd are concerned and the PGPE Ltd Directors have been so advised by its Deutsche Numis in its capacity as PGPE Ltd's Sponsor.

Ends.

About Partners Group Private Equity Limited

PGPE Ltd (formerly Princess Private Equity Holding Limited) is an investment holding company founded in 1999 and domiciled in Guernsey. It invests in private equity direct investments. PGPE Ltd is managed in its investment activities by Partners Group, a global private markets investment management firm with USD 152 billion in investment programs under management in private markets, of which USD 78 billion is in private equity. Partners Group itself is listed at the Swiss Stock Exchange (ticker: PGHN). PGPE Ltd aims to provide shareholders with long-term capital growth and an attractive dividend yield. PGPE Ltd is traded on the Main Market of the London Stock Exchange (ticker: PEY for the Euro Quote; PEYS for the Sterling Quote).

Contacts

Partners Group Private Equity Limited:

pgpe-ltd@partnersgroup.com

www.partnersgroupprivateequitylimited.com

Registered Number: 35241   LEI: 54930038LU8RDPFFVJ57

Important Information:

1.     Note that references in this announcement to Partners Group Private Equity Limited have been abbreviated to "PGPE Ltd" or "Company". References to Partners Group AG have been abbreviated to "Partners Group" or "Investment Manager".

2.   This document does not constitute an offer to sell or a solicitation of an offer to buy or subscribe for any securities and neither is it intended to be an investment advertisement or sales instrument of Partners Group Private Equity Limited. The distribution of this document may be restricted by law in certain jurisdictions. Persons into whose possession this document comes must inform themselves about and observe any such restrictions on the distribution of this document. In particular, this document and the information contained therein is not for distribution or publication, neither directly nor indirectly, in or into the United States of America, Canada, Australia or Japan.

3.   This document may have been prepared using financial information contained in the books and records of the product described herein as of the reporting date. This information is believed to be accurate but has not been audited by any third party. This document may describe past performance, which may not be indicative of future results. No liability is accepted for any actions taken on the basis of the information provided in this document. Neither the contents of PGPE Ltd's website nor the contents of any website accessible from hyperlinks on PGPE Ltd's website (or any other website) is incorporated into, or forms part of, this announcement.

4.   Numis Securities Limited ("Deutsche Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for PGPE Ltd and no one else in connection with the matters referred to in this announcement. In connection with such matters, Deutsche Numis will not regard any other person as their client, nor will it be responsible to any person other than PGPE Ltd for providing the protections afforded to clients of Deutsche Numis or for providing advice in relation to the contents of this announcement or any other matter referred to herein. Neither Numis nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct, indirect, consequential, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Deutsche Numis in connection with the matters referred to in this announcement, any statement contained herein or otherwise.

Notes:

(i) Total incentive fees paid to Partners Group in any calendar year will be capped to 4.99% of the lower of market capitalization or NAV.

(ii) For the purposes of liquidity management, the Company may temporarily invest part of the cash in the open-ended Partners Group Global Senior Loan Master Fund SICAV managed by the Investment Manager. Under the IMA, investments in Partners Group Global Senior Loan Master Fund SICAV are made at a management fee of 0.6% per annum.