Petershill Partners (PHLL) H1 2024 earnings summary

Executive summary

• Achieved strong H1 2024 results with double-digit growth in Fee Related Earnings (FRE) and robust asset raising by partner firms, especially in private equity, despite a challenging fundraising environment.

• Executed four acquisitions and two disposals, including Kennedy Lewis and LMR Partners, refining focus on private market strategies and increasing exposure to FRE.

• Returned $222 million to shareholders via dividends, buybacks, and a tender offer; announced a special dividend of $0.09 per share ($97 million) from the LMR Partners disposal.

• Partner-firm investment performance remained strong, with flagship funds delivering net IRRs outperforming benchmarks and 80% of AUM performing in the upper half or above.

• Balance sheet remains stable, with high cash flow conversion and substantial cash available to support further M&A and capital returns.

Financial highlights

• Aggregate AUM grew to $332 billion, up 11% year-over-year; fee-paying AUM rose 21% to $238 billion.

• Partner FRE increased 13% year-over-year to $112 million with a 58% margin; partner distributable earnings up 12% to $140 million.

• Adjusted profit after tax was $94 million, up from $68 million in H1 2023; adjusted EPS rose to 8.5 cents (from 6.0 cents in H1 2023); adjusted tax rate 15.9%.

• Gross management fees from partner firms reached $202 million, up 16% year-over-year; net management fees up 14%.

• Free cash flow conversion was strong at 123% (1H 2023: 105%), with $157 million free cash flow generated.

Outlook and guidance

• Reiterated 2024 guidance for organic gross fee-eligible AUM raise of $20–25 billion; FRE guidance for full year at $200–230 million.

• Total realizations expected at $5–10 billion for 2024, with potential upside depending on H2 activity.

• Adjusted EBIT margin expected to remain in the 85%–90% range; medium-term M&A guidance at $100–300 million per annum.