Partners Group laments ‘very ambitious’ market valuations

The firm has adopted a more selective approach to the market as a result of a larger-than-normal increase in prices for investments.

Swiss investment firm Partners Group has warned investors of an increase in prices which have now “reached unusually high levels”.

Speaking following the company’s annual general meeting last week, Peter Wuffli, chairman of Partners Group, said the trend was occurring across the infrastructure, private equity, real estate and private debt sectors it is active in.

“We are operating in a market environment characterised by low global growth and meaningful tail risks, in which prices across asset classes have reached unusually high levels,” he explained. “Despite the difficult investment environment, we remain fundamentally convinced that Partners Group has positioned itself to succeed as a leading global private markets investment manager.

“However, while we look confidently ahead and re-confirm our current year's guidance to the market, the very high multiples in public markets, including that of our own firm, may have reached very ambitious levels.”

Wuffli’s comments follow a report in March by consultant Hymans Robertson on behalf of the Suffolk County Council Pension Fund, which invested in the €1 billion Partners Group Global Infrastructure 2012 fund. The report stated that Partners Group had “found it difficult” to deploy the fund into brownfield infrastructure investments.

However, Paul Finbow, corporate finance specialist at the pension fund, refuted the company had found it “difficult” and said Partners Group had just been slower to deploy the vehicle amid a more selective approach.

“We made two commitments, one to Partners Group and one to KKR. KKR got the money invested relatively quickly and Partners Group have taken longer to find the things they want to invest in,” he told Infrastructure Investor. “They still say they will invest all the money over the investment period but they've taken longer to spend the money.

“For them, they're saying they're trying to find the right opportunities and not just getting the money in the ground. And to be honest, we will only know which [fund] is best 10 years down the line when these two particular products we went into have ended.”

The Suffolk pension fund boosted its infrastructure allocation in March when it invested £60 million ($73.4 million; €69.6 million) into Infracapital’s greenfield fund.

Partners Group said in its 2016 annual report, which was approved at last week’s meeting, that the current market environment has warranted “a highly selective investment approach” and it is pursuing investments that have more value-creation potential.