Petershill Partners Share Discussion Threads

[casholaa] 06/7/2023 08:57

Knock off circa 10% for inflation and currency exchange devaluations.... still looks good to me.

[casholaa] 06/7/2023 08:52

p.s. If they were to leave 100m shares the share price should in my mind on a very simple calc be circa north of 500p, possibly 665p on an share price of 165p? I never was good at maths. Have I got it wrong?

[casholaa] 06/7/2023 08:41

I think what we're waiting for is $3.5bn/£2.75bn vs 1.34bn shares. At 165p (circa current sp) 1.34bn is £2.21bn and then £500m still left over in the pot. That's a simple calc. It would be great if the share price were about 369p. Where have I got it wrong? Did you see their 'borrowings'?

[spectoacc] 06/7/2023 07:29

"The 25 alternative asset managers in which Petershill invests generate management fees of roughly 1.5 per cent to 2 per cent of the capital under management, plus performance fees of 20 per cent, typically on any gains generated on the underlying investments above 8 per cent. As a minority shareholder, Petershill gets a slice of that fee income. So what’s the problem? A rapid rise in interest rates over the past 18 months has squashed the returns generated by buyout firms and stifled fundraising activity. For Petershill, it casts doubt over the strength of its income stream and whether it will be forced to mark down the value of its assets further."

"..Then there is the extra layer of fees carved out by Goldman Sachs Asset Management, which takes a cut for managing the company of 7.5 per cent of revenues generated."

[spectoacc] 06/7/2023 07:28

An "avoid" from Tempus, not that these tipsters know much, but might be worth a read:

[jonwig] 29/6/2023 07:19

Reduction of capital:



$3.35bn moved from share premium account to distributable reserves.

This leaves open the possibility of "special dividends", and the share buybacks improve dividend cover or allow for higher dividends.

So just possibly we'll get returns of capital and a slimmed-down operation.

[casholaa] 23/6/2023 11:55

Decent divi.

[jonwig] 23/6/2023 11:50

Chairman buys another 45,000.

[mrscruff] 11/6/2023 17:00

topvest wrote: "You get the feeling that with Petershill it will be Goldman Sachs and their clients that will be the only winners." - You are forgetting two things. Naguib Kheraj has been adding crazy and he now has 900,000 shares! How rich is he? He certainly doe snot needed to work. He has been buying from 350p to 150p. The last buy was the biggest at 300,000 shares and so to be indicates a potential bottom. The other factor is reputation. It would be really bad if this was then taken private so soon and I see this as unlikely. There are plenty of companies on very large discounts.

[mrscruff] 10/6/2023 08:54

investor73, PHLL is not a Trust; it is an asset manager similar to Schroders, Goldman Sachs Group, M&G, Baillie Gifford, and even L&G. While they all generate revenue through fees, PHLL primarily focuses on the private market sector as you know. Currently, the markets are incorporating the significant decline in the private IPO market, and so potentially the share price has overshot to the downside. I believe this to be true and there is now genuine value emerging in the form of recurring AUM and at a dividend we can take while we wait.

It will take time. The very rich directors have been very confident buying on the way down and we are buying back stock. The asset management sector has also taken a massive hit but green shoots here are being seen slowly with M&G reporting good Q1 numbers etc...

[casholaa] 23/5/2023 22:32

Buyback has started.

[investor73] 13/5/2023 17:05

Goldman Sachs Japan Equity Partners portfolio is another of their trusts.

[investor73] 11/5/2023 14:41

Goldman Sachs has many trusts floated on the market. This is one more addition to their stable of trusts.

[investor73] 11/5/2023 14:34

There's excessive suspicion about this company. They've stated paying much higher dividend than anticipated. The dividend is likely to be even higher next year and there's a very good chance for the share price to appreciate from this level imo. GLA

[casholaa] 11/4/2023 17:29

I smell an experiment and if it works out well, I think they'd want to delist unless there is some risk deeming it too high-risk to be private.

[topvest] 11/4/2023 16:45

You wouldn't think Goldman Sachs would leave their clients in a vehicle at a 50%+ discount for too long. I'm sure they will give it some time to recover, but didn't they list so that their clients could reduce their holding? I wouldn't have thought that is feasible with such a discount. I am probably more wary because of Tetragon.

[casholaa] 11/4/2023 16:09

Do you think they could delist within the next 3-5 years?

[topvest] 11/4/2023 14:33

Thanks Jonwig and CC - good posts. I will keep watching. I prefer the UK Listed asset managers like Gresham House and Foresight in this space at the moment. I agree that the Petershill business model is undoubtedly a win win. However, I am not sure I trust them.

Another observation - does this have some similarities with Tetragon Financial Group Limited? I was hoping that they would list their asset management business which was in a similar space to Petershill. Unfortunately, management have no intention of benefiting any shareholders other than themselves and so it stayed on a massive discount and I sold out in one of their tender offers. You get the feeling that with Petershill it will be Goldman Sachs and their clients that will be the only winners. Anyway, that probably undermines to me that I think the best decision will be to keep watching rather than buying some at this stage.

[casholaa] 11/4/2023 10:05

@CC I'd very much be interested in your view on POLN if you are willing

[cc2014] 11/4/2023 08:55

Thanks for the recent posts. I took a look myself this morning.

I came to the conclusion that in old money we would call this a "fund of funds" and the income and dividend stream is dependent on the success of the underlying asset managers.

Page 7 of the annual report shows me that from the underlying:
69% of income comes from management fees
26% comes from performance fees
5% from investment incomes.

So, broadly in my view of a cash constrained future universe where AUM at all funds are shrinking I see the income from management fees reducing and the performance fees falling by around 90%. One counter to this is that the AUM of the underlying is forecast to rise by around 10% for the several years. I do not agree with this but personal judgement is required.

Is it a hit or a miss. For me it's a miss. The disount makes a big difference but I see difficult times ahead

[jonwig] 11/4/2023 07:13

topvest - thank you for #89, very thought-provoking!

But I think the current annual report (published only recently) makes a big, and largely successful effort to explain the strategy.

Take an equity stake in a PE investor which owns companies directly and also within funds which it hawks to investors. Then you get income and growth from the investees plus fees (and performance) from the funds. So you have, in a best case, three sources of income. And, fro PHLL's point of view, get well-diversified (25 "partners), add some GS expertise and cut risk. (VC is only 9% of their portfolio.)

What this seems to have produced a dividend yield of over 7%, 1.7x covered by adjusted net earnings (ie. essentially cash flow). And a progressive dividend policy - so they can probably maintain it in 2023. (I'd actually expect considerably lower earnings this year.)

They play down NAV (for obvious reasons), but it's about 330p and is, of course, the ultimate generator of the income - I'd expect it to be more prominent as markets recover.

The low rating is, I suppose, the present curse of private equity, which says "we don't believe your stuff is worth what you say it is", but it's hard to argue with cash flows.

I agree we ought to be given more numbers on the individual asset managers. They do have websites, of course, but I have the impression that private equity discloses as little as possible anyway, so thay won't want PHLL lifting the lid.!

The notion that GS will pull a fast one at some point (they do have form!) has one objection: they clearly haven't told the Chairman, Naguib Kheraj, who has been buying all the way down (he recently bought 300,000) and holds I think 850,000 shares.

I see they've taken on $500m of unsecured debt which has an A credit rating. I assume it's cov-lite, but haven't checked anywhere to find out.

Anyway, I'm not of course trying to persuade you to anything - you've simply encouraged me to investigate further. The headline financial statements look very straightforward, though Ihaven't reached the notes yet. (I'm not an accountant by any stretch!)

[adae] 09/4/2023 08:12

GS unethical? Perish the thought. What was the IMB1 fine, $3bn? And that wasn't even their most heinous heist IMVO.

As for PHLL, I doubt a single private shareholder understands it fully or in part. Not the only London-listed fund like that, and you wonder who ploughed in on IPO.

[casholaa] 07/4/2023 16:12

Even if you were correct, even a lump of gold only has a value as a result of the cost another party is willing to incur.

[topvest] 07/4/2023 15:20

I'm quite interested in this vehicle and the underlying assets. Despite being an FCA with a big-4 background, I am still struggling to understand their accounts without pulling out a calculator and really concentrating. They are a bit misleading in my view, which is always the danger when you have the clever boys and girls from GS running the show.

They have US$283bn of AUM of which US$194bn is fee paying. It looks like Petershill then only owns 13.5% of these or US$38bn or US$26bn of fee paying AUM. Lets say US$30bn of AUM then to simplify and a cUS$5bn valuation. That's a whopping 17% of AUM on valuation or comparing like for like about 50% of book value using market cap - say 8% rounded down. That is versus GHE and FSG currently valued at below 4% of AUM. So twice the AUM valuation which immediately makes me wary!

Well, its not quite that straightfoward as the net management fee rate is higher at c1.4% versus c1% for GHE, so that presumably accounts for the much higher valuation.

They really should disclose more clearly that this is a cUS30bn AUM group and not the nearly US$300bn. If you look at the individual managers they all seem to have US$10-20bn of AUM.....Petershill only own 13.5% of this...it's not very clearly disclosed which makes valuation very difficult as they continually peddle the gross numbers which they only own a minority interest.

Anyway, its on a P/E of 8 and a Dividend Yield of 7% so worth watching. Lesson for Goldman Sachs here is that they are turning-off investors with too much technical mumbo jumbo. They need to explain better what this highly technical vehicle does otherwise they will continue to put people off investing in it.

The discount rates applied are quite high but even these are unclearly disclosed, and I think they are taking into account performance fees at a c25% discount rate. Is this opaque disclosure intentional? Was it GSs original intention to float 25% or so at a toppy valuation and then wait for the inevitable fall off in price given the odd structure of this vehicle. Then two year's down the track they can buy it back at less than half the price and take it private again benefiting their own clients. I'm not entirely convinced on the ethics...what do others think?

Overall, the asset managers look like they are extremely profitable....... but are valued accordingly and we are now in an asset bubble burst phase. A discount is warranted given its only a small minority interest that is being held. Petershill does not control any of the asset managers. Probably the safest way to value this is just to look at the P/E multiple and Dividend Yield. Given performance fees are a good 30-40% of income, a much lower P/E is warranted versus other listed asset managers as performance fees by their very nature are one-off and not always recurring. There is also the obvious risk of Goldman Sachs clients holding 76% of a minority interest listed vehicle and so this could quite quickly get snapped-up in a go-private transaction. Why was it listed in London, when all the holdings are US asset managers? Aren't the GS clients going to be rather upset at the performance of their assets that are now marked to market and on a c50% discount?

The accounts also give very little detail on the 25 asset managers. You would expect % holding, opening and closing AUM and net flows for each asset manager as a minimum, but nothing!

Anyway, still waiting and watching...not sure its anywhere near as cheap as it looks as a 50% discount on a very high valuation is still on the high side! I've concluded that I much prefer Gresham House, Foresight and MAN Group.
Any thoughts on my analysis as I'd like to be proved wrong?
I'd like to invest in this, but my rational analysis says stay well clear unless its really really cheap and the chart bottoms out.