Annual Report 2022
Petershill Partners plc
RESILIENCE
THROUGH
DIVERSIFICATION
Resilience
Through
Diversification
Our Shareholders benefit from the long-term
stable cash flows generated by the fee income
fromover 200 funds, managed by our
Partner-firms across multiple asset classes
andinvestment strategies.
Contents
Strategic Report
2 Petershill Partners at a Glance
4 Performance Highlights
6 Business Model
8 Chairman’s Statement
10
13 Role of the Operator
14 Q&A
17 Our Markets
21 Strategy and Investment Objective
26 Operator’s Report
32 Key Performance Indicators
34 Our Stakeholders
36 Section 172 Statement
38 ESG Commentary
41 Principal Risks and Uncertainties
Governance Report
48 Our Board
50 Report of the Directors
53 Corporate Governance Report
62 Audit and Risk Committee Report
65 Directors’ Remuneration Report
69 Directors’ Responsibilities
Statement
Financial Statements
72 Independent Auditors’ Report
82 Consolidated Financial Statements
86 Notes to the Consolidated
Financial Statements
115 Company Financial Statements
118 Notes to the Company
Financial Statements
Additional Information
126
128
131 Glossary of Key Operating Metrics
134 Alternative Performance Measures
141 Company Information
142 Cautionary Statement
1 Petershill Partners plc | Annual Report 2022
Petershill Partners at a Glance
25
Partner-firms in our portfolio
Partnering alongside over 1,800 talented employees
220
diverse funds under the management of our Partner-firms
Across 112 different strategies
Buyout 21%
Real estate 19%
Venture capital 9%
Direct lending 6%
Energy 6%
Growth 6%
Multi-strategy 6%
Distressed/special
situations 4%
Equity long/short 4%
Global macro 4%
Infrastructure 4%
Secondaries 4%
Systematic 4%
Other 3%
Partner-firms
Investment strategies
2 Petershill Partners plc | Annual Report 2022
$283bn
1
Aggregate Partner-firm Assets under Management (“AuM”)
Partner-firms raised $60 billion in 2022
$245m
$245m total capital return declared to Shareholders
since the Company’s IPO
Largest Partner-firm
fund of $13.9bn represents
less than 5% of total
Partner-firm AuM
Capital Returned to
Shareholders ($m)
All data is at 31 December 2022. All AuM figures are based on a one-period (three-month) lag due to the timing of the financial information received by the Operator from the Partner-firms.
H2 2022
Proposed
dividend:
$125m
FY 2021
Final
dividend:
$30m
H1 2022
dividend:
$40m
2022
Share
buyback:
$50m
1. Implied ownership-weighted AuM is 13.5% of total Partner-firm AuM.
3 Petershill Partners plc | Annual Report 2022
Performance Highlights
Petershill Partners in Numbers
Petershill Partners invests in a diverse mix of Partner-firms, which themselves manage
investments predominately in the private markets industry. The Partner-firms earn fees and
other income from this activity, which forms the basis of earnings for the Company.
The metrics below provide insight into the strength and earnings power of the Company’s investments.
Investments in Partner-firms
at Fair Value
IFRS
$5.0bn
(2021: $6.0bn)
1
Adjusted EBIT Margin
APM
89%
(2021: 87%)
Adjusted Earnings Before
Interest and Tax (“EBIT”)
APM
KPI
$336m
(2021: $106m)
Profit (Loss) Before Tax
IFRS
$(505)m
(2021: $261m)
Per Share Metrics
Book Value Per Share
APM
At 31 Dec 2022
415.7¢
(2021: 457.8¢)
Earnings Per Share
IFRS
(39.4)¢
(2021: 64.1¢)
Proposed Ordinary Dividend Per Share H2 2022
IFRS
11.0¢
(2021: 2.6¢)
Petershill Partners plc | Annual Report 20224
Note: These metrics do not relate to Company financials. See pages 131 to 133 for more details.
Profitability
KPI
Growth
KPI
Quality of earnings
KPI
Partner Fee-Related
Earnings (“FRE”)
$213m
(2021: $211m)
Aggregate Partner-
firm total AuM
3
$283bn
(2021: $234bn)
Aggregate Fee-
paying AuM
3
$194bn
(2021: $158bn)
Weighted average
capital duration
8.9 years
(2021: 8.1 years)
Fee-eligible
assets raised
3
$60bn
(2021: $21bn)
Partner FRE
Margin
62%
(2021: 69%)
Partner Distributable
Earnings (“DE”)
2
$370m
(2021: $382m)
Partner-firm highlights
Alternative Performance Measure
Key
International Financial Reporting Standard
Key Performance Indicator
IFRS
APM
KPI
FY 2021 (24 March 2021 to 31 December 2021).
¢ Refers to US Dollar cents.
1. This balance includes interests owned by other Petershill funds which were required to be consolidated under IFRS at 31 December 2021. See page 26 for further details.
2. Partner Distributable Earnings as referred to throughout this Annual Report do not represent an indication of profits available for the purpose of distribution within the meaning of
Section 830 of the Companies Act 2006. Refer to the Glossary of Key Operating Metrics on page 131 for more information on this Operating Metric.
3. All data is as at 31 December 2022, unless otherwise stated. AuM figures are based on a one-period (three-month) lag due to the timing of the financial information received by the
Operator from the Partner-firms.
READ MORE ON PAGES 134 TO 140
Pages 134 to 140 include definitions of the APMs and
reconciliation to relevant IFRS measures.
5 Petershill Partners plc | Annual Report 2022
Business Model
A Resilient Business Model
Proven Resilience
Our business model was designed to be durable and effective
across economic and market cycles, and to offer four key benefits:
1
To be a growing company in a growing industry
2
To offer attractive risk-adjusted returns
3
To generate fees and free cash flow with long-term visibility
4
To be capital efficient
This resilience has been proven in 2022, which has seen
challenging market conditions, not least as a result of the
conflict in Ukraine and its effects on energy prices and inflation.
Growth
Our Partner-firms raised $60 billion of fee eligible AuM this year
compared to $21 billion raised in 2021, an increase of 186%. This
was in a market where fundraising declined by around 11%
according to Preqin. Group Aggregate Partner-firm AuM stood at
$283 billion at the end of 2022.
In the long term, the value of global AuM managed by the
alternative asset management industry is forecast to grow from
$13.7 trillion in 2021 to $23.3 trillion in 2027, a compound
annual growth rate of 9.3%. We maintain our target of
$100 million to $300 million of annual acquisitions across
three-to-six transactions a year in the medium term.
FRE grew 1% in 2022, from $211 million to $213 million, while
Partner Realised Performance Revenues (PRE) rose 2%, from
$129 million to $132 million despite the challenging
environment. Partner FRE Margin fell from 69% to 62% due to
increased costs across all our Partner-firms. Partner Realised
Investment Income was down 40%, from $42 million to
$25 million, leading to an overall decline in Partner Distributable
Earnings of 3% year on year to $370 million. We are pleased with
the resilience of our Partner-firms in 2022 and, with the
additional $60 billion of fee eligible AuM raised in 2022, we are
confident that they will continue to grow revenues in 2023.
FRE grew 1% in 2022
Profitability
We achieved an Adjusted profit after tax of $273 million in 2022.
There was an IFRS loss after tax of $(453) million. Included in the IFRS
loss after tax was an unrealised loss of $(807) million as a result of the
change in fair value of investments. The fair value of investments
represents an estimate of the price that could be received on the sale
of an asset. Since Petershill Partners does not generally intend to sell
its investments, we believe the Adjusted profit after tax is a more
meaningful measure of profitability for Shareholders. The decline in
the fair value of the investments during the year primarily reflects the
impact of higher interest rates on discounted cash flow valuations and
the decline in valuation multiples of comparable businesses. See page
27 for further details. Income from investments in Partner-firms
derived from management fee income was $213 million, representing
approximately 78% of Adjusted profit after tax. Performance fee
income APM basis was $132 million, representing approximately 48%
of Adjusted profit after tax.
Whilst we are proud of this achievement, and see it as evidence of
our strength through diversification, we continue to be cautious
as we look ahead into 2023. Performance fee income is inherently
less predictable than management fee income.
Adjusted EBIT margin reached 89%
Cash Flow
Our business continues to be strongly cash-generative, with cash
flow from management fees locked in for an average of 8.9 years.
We had a cash balance, including investments in money market
funds, of $581 million at 31 December 2022 and 76% of our
Adjusted EBIT represents free cash flow on an APM basis. The
Adjusted net cash flow from operating activities generated in
2022 was $256.9 million, compared with $56.7 million in 2021.
Strongly cash-generative
Capital Management
Continuing capital efficiency is demonstrated by our raising
of $500 million senior unsecured debt via private placement
across tenures ranging from seven to 20 years and reflecting both
a higher A rating and a lower spread relative to the $350 million
of paper that it replaced. This transaction extended the weighted
average duration of our debt to 11.2 years and demonstrates
the confidence that the credit market has in our model. With
gives us more flexible, long-term, low-cost capital at a time
Our high cash generation has enabled us to return capital to
investors both through progressive dividends and share buybacks.
Since our IPO, we have declared and proposed a total capital
return to Shareholders of $245 million, comprised of $195 million
in dividends and $50 million in share buybacks.
The Board has proposed a final dividend of 11 cents per share for
2022. Shareholders’ equity ended at $4.7 billion, compared with
$5.3 billion in 2021.
Looking Forward
Our business is designed for diversification and we believe our
Partner-firms are well positioned for an inflationary environment.
Private market fundraising and investing activity have continued
even amidst uncertainty and we are pleased with the progress our
Partner-firms have made this year, performing in line with our
latest guidance.
Our model, based on long-term fee-related earnings, provides
resilience against challenges to realisations for performance and
gives visibility to the majority of our revenues. Diversification
across strong Partner-firms means we are not dependent on a
single fund raise. Our largest underlying fund continues to
We believe that the Company is robust and well-placed to face
a changing fundraising and operating environment.
Well positioned for an inflationary environment
1. Source: Preqin Special Report Future of Alternatives in 2027.
Petershill Partners plc | Annual Report 20226
We deliver diversified, highly visible, risk-adjusted returns for our Shareholders
by participating in the fee income from more than 200 funds managed by our
Partner-firms across multiple asset classes and investment strategies.
Operated by
Goldman Sachs Asset Management
A global, broad and deep platform with diversified
capabilities across public and private asset classes.
220 Alternative Investment Funds
with broad coverage of the alternatives universe
Performance fees
26%
Management fees
69%
Investment income
5%
Shareholder returns
Our purpose is to provide Shareholders with best-in-class diversified
access to the growth and profitability of the alternatives industry,
focusing on the quality of recurring cash-based earnings.
25 Partner-firms
Private Capital firms generating stable revenue from a blend of fee income and investment appreciation
7 Petershill Partners plc | Annual Report 2022
Chairman’s Statement
Dear Shareholders
2022 was our first full year as a public listed company. In the
context of a volatile market backdrop which saw significant
declines in equity and bond markets and a sharp reduction in the
valuations of asset management businesses, the underlying
operating performance of our Partner-firms was encouraging.
Partner FRE growth continued and our Partner-firms in aggregate
have outperformed the industry by raising $60 billion of new
gross fee-eligible AuM. This growth in AuM provides a platform
for further growth in FRE in 2023.
Our overall Partner Distributable Earnings were held back
Investment Income. We marked down the carrying value of our
investments in Partner-firms, reflecting the impact of higher
interest rates on discounted cash flow valuations and the decline
in valuation multiples of comparable businesses. The change in
the accounting fair value of assets resulted in an IFRS loss and
longer term, our focus is on the cash flow generated by these
investments and so we focus more attention on Adjusted Profit
After Tax which excludes the change in fair value of assets and
more closely approximates free cash flow available over time
The business generated substantial cash flows, which provide
through dividends and buybacks as well as new acquisitions
Taking into consideration the strong cash flows of the business
and the valuation of the Company’s own shares, we completed a
buyback of $50 million of our own shares. We are recommending
a final dividend of 11 cents per share, which would make the full
year dividend 14.5 cents per share. Dividends and buybacks
therefore would amount to $215 million for the year whilst we
invested $180 million in acquisitions in the form of both paid and
deferred consideration.
The management of capital is a critical function of the Board and
was a significant focus in 2022. The Company inherited a complex
debt structure at the time of IPO. This created a security interest
for lenders in the cash flows generated by our Partner-firm
interests, and resulted in an accounting gross up of assets and
liabilities. In 2022 we were able to repay the existing debt by
issuing $500 million of simple, more flexible, unsecured loan
notes. These are at fixed interest rates and range in maturity from
seven to 20 years. Subsequent to the year end, we also closed on
a $100 million three-year revolving credit facility. As a result, we
believe the Company has a strong and sound debt capital
structure appropriate for a substantial public company, which will
facilitate the funding of future growth. Our accounting
disclosures will also become less complex going forward.
In a very challenging year
for markets, our portfolio
was resilient. The very
strong increase in net new
AuM provides the
underpinning for future
growth in fee related
earnings.
Naguib Kheraj
Chairman
Petershill Partners plc | Annual Report 20228
Whilst we are disappointed that the share price of the Company
remains well below the IPO price, we believe this is largely
management industry. We would hope that, over time,
management of capital will be reflected in the way in which
The Board remains positive about the medium-term prospects of
the Company, due to the quality of our Partner-firms, the
diversification they represent, and the significant value added by
our Operator. The economic and market environment continues to
be volatile and may affect related performance fee earnings in
the near term, but the combination of strong growth in AuM and
diversification in our portfolio of Partner-firms gives us
confidence that we should see good growth in Partner FRE in the
coming year. We will continue to be selective about new
acquisitions and expect to use our strong cash flow to drive
dividends to Shareholders and support another $50 million
buyback programme in 2023.
Naguib Kheraj
Chairman
5 April 2023
The Board evaluates the deployment of capital over the long term
and considers prospective Shareholder value creation from
applying additional capital to new and existing Partner-firm
investments, buybacks and dividends. The Board also considers
the level of leverage in the capital structure in this context to
optimise returns to Shareholders. We expect that debt capacity
will grow over time as our Partner-firms grow and new
acquisitions are accretive to earnings.
Our strategy, of accessing growth and profitability through
diverse ownership in quality businesses, has proven to be resilient
throughout 2022. There has been limited direct impact from the
challenges brought about by the conflict in Ukraine, with
increases in the price of energy and the disruption to supply
chains. Our Partner-firms are largely located in North America.
We benefit from diversification across our Partner-firms and their
funds through multiple asset classes, sectors, strategies and
vintages. We believe this delivers the Company and our investors
the potential for strong risk adjusted earnings across economic
cycles and macro environments.
We continue to pursue a strategy of growing the business through
further acquisitions but moderated the pace of this investment
significantly in 2022 as we took stock of the change in market
conditions and outlook, as well as the impact of higher interest
rates on the cost of equity. We acquired interests in two new
Partner-firms during the year – SLR Capital Partners, a boutique
asset manager focused on direct lending, and LLR Partners, a
private equity firm investing in technology and healthcare
companies. We also acquired an additional interest in Kayne
Anderson Real Estate, strengthening the existing partnership
between us.
We expect to see ongoing opportunities to deploy capital into
first class Partner-firms at attractive valuations through the
network of Goldman Sachs’ relationships and are confident in the
sourcing, due diligence and execution capability of the Operator
team that manage this process for the Company. As always when
there is a market correction, it can take some time for the
expectations of sellers to adjust and we will be patient to ensure
that acquisitions are made at valuations which are appropriate.
Our first full year as a public company has involved considerable
efforts on the part of the Board, the Operator, and our other
external service providers, including our Administrator and
Company Secretary Ocorian, to firmly establish and operationalise
our ongoing requirements for good governance and appropriate
reporting and controls. In response to feedback from the Board,
significant resources were added to the team at the Operator and
Administrator in order to ensure that the Company has the
appropriate level of support. We held 11 Board meetings during
the year, supplemented by 12 meetings of Board Committees
covering Audit and Risk, Remuneration, Nomination and
Management Engagement.
The expertise of the Operator in selecting and managing
investments on behalf of the Company was evidenced by the
relative and absolute performance of our Partner-firms in 2022,
especially in relation to their success in fund raising. The Operator
was also effective in securing a strong credit rating in the A
category and implementing a new debt capital structure which
puts the Company in a strong financial position with flexible and
long-term debt to support its future growth. The Operator
continues to develop its approach to Environmental, Social and
Governance (“ESG”) matters and keeps the Board informed on its
process as an integral part of its asset management mandate.
Total amount invested across eight
acquisitions since IPO
$165m
Amount purchased through the share
buyback programme in 2022
The combined interim and final ordinary
dividends for 2022
Issued new A rated fixed rate private
placement debt
$500m
$638m
$50m
9 Petershill Partners plc | Annual Report 2022
A Diversified Business
It is an important tenet of our strategy to be well diversified in order to deliver across
market cycles and to be able to seize opportunities when they arise. We achieve this
in several ways.
Partner-firms
A wide range of Partner-firms
We make non-controlling investments across a wide range of
Partner-firms – 25 at the end of 2022 and set to increase year by
year. Each of these represents an individual engine of growth;
each is financially independent; and each has its own investment
team. The combination of these individual Partner-firms
inherently reduces overall volatility.
Asset Classes
Four asset classes
Our Partner-firms are grouped into four main classes according to
the principal assets they manage:
• Private equity
Private equity asset managers typically acquire either
controlling, co-controlling or influential minority stakes
in developing or developed unlisted companies.
• Private credit
Private credit asset managers typically invest in unlisted credit
assets with strategies addressing different parts of the credit
spectrum, ranging from less risky senior debt to opportunistic
distressed investments.
A Diversified Business
AuM by Fund
Total
Partner-firm AuM
$283bn
Largest Partner-firm fund of $13.9bn
represents less than 5% of total
Partner-firm AuM
–––––––––––––––––
–––––––––––––
–––––––––––––––––––
––––––––––––––––––––
–––––––––––––––––––––
–––––
–––––––––
–––––––––
–––––––––
–––––––––––––––––––––––––
Global macro 5%
Venture capital 5%
CLO 4%
Infrastructure 4%
Multi-strategy 3%
Buyout 49%
Other 10%
Real estate 8%
Growth 7%
Energy 5%
AuM by Strategy
Permanent
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
4%
8+ years
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
74%
3 – 8 years
––––––––––––––––––––––––––––––––––––––––––––––
10%
0 – 3 years
––––––––––––––––––––––––––––
12%
AuM by Duration
1
AuM by Sector
–––––––––––––––––
–––––––––––––
–––––––––––––––––––
––––––––––––––––––––
–––––––––––––––––––––
–––––––––––––––––––––
–––––
–––––––––
–––––––––––––––––––––––––
Healthcare 4%
Industrials 3%
Infrastructure 3%
Aerospace
& defence 2%
Technology 39%
26%
Real estate 10%
Credit 8%
Energy 5%
Petershill Partners plc | Annual Report 202210
1. Weighted average duration of Aggregate Partner-firm total AuM.
2.
Private equity
62%
Private real assets
17%
Absolute return
10%
AuM Asset Class Exposure
($bn)
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
––––––––––––––––––––––––––––
Private credit
11%
––––––––––––––––––––––––––––––––––––––––––––––
Private markets AuM
90%
Private equity
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Private real assets
Absolute return
–––––––––––––––———–––––––––––––––––––––––––––––––
––––––––––––––––––—–––––––––––
Ownership-weighted AuM
by Asset Class
43%
31%
14%
$35.7bn
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
Private credit
12%
Partner Management Fee
Revenue by Asset Class
($m)
2021 2022
Private equity
139
162
Private credit
20
20
Private real assets
87
78
Absolute return
61
2020
84
16
72
54
82
342
307
226
• Private real assets
Private real assets include private real estate, private
infrastructure and private natural resources. Real estate assets
include residential or commercial developments with varying
risk profiles. Infrastructure includes assets such as power
plants, roads or airports and companies which own and operate
infrastructure, such as utility or fibre companies. Natural
resources include energy (production, storage, distribution
and/or retail), agriculture, metals and mining, timberland
and water related assets.
• Absolute return
Absolute return asset managers typically invest in liquid
securities, such as debt and equity, in addition to derivative
instruments such as futures, options, short selling, arbitrage,
leverage and other unconventional assets aimed at achieving
positive returns in both rising and falling market conditions.
This spread seeks to mitigate factors that may negatively affect
any individual asset class and we benefit from being able to take
advantage of positive developments wherever they may occur
across the whole unquoted sector.
Multiple Strategies & Sectors
Across asset classes, fund managers have a wide range of
investment strategies to choose from. These include: buyout;
long or short equity; real estate; energy; infrastructure; and credit.
We diversify further by spreading our investments across multiple
strategies – 112 at the end of 2022. These strategies are
themselves diversified across funds.
Our representation across a broad spread of sectors leads to a low
correlation of outcomes and a reduced “netting” risk across firms.
Multiple Funds
Each of our Partner-firms has multiple funds, giving us access to
the returns from a large selection of the top performing funds
across the alternatives industry.
Multiple Vintages
Partner-firms typically raise funds every two-to-three years and
the year in which the fund closes is known as its vintage. Each
vintage will be subject to different economic conditions during the
lifetime of the fund, so a mix of vintages creates additional
diversification.
As the Operator has been active in the minority investing
investments in Partner-firms spanning many vintages, enabling
us to better withstand some of the pressures faced by those
with a shorter track record.
Geography
Our portfolio is consciously concentrated in the US as this is the
largest market for alternative investments, with the greatest
depth and number of investment opportunities. We regard the US
as a more robust economy with a robust currency, protecting our
investments to some extent from global geopolitical forces.
However, whilst our Partner-firms themselves may be
headquartered in the US, the larger firms are diversifying
internationally and we will continue to evaluate investments in
the rest of the world where appropriate.
11 Petershill Partners plc | Annual Report 2022
Our Partner-firms
The following table details the Company’s Partner-firms.
Partner-firm Strategy Asset Classes Founded Geography (Headquarters)
Accel-KKR Mid-market software /
Private equity 2000 Americas (Menlo Park, CA)
ArcLight Capital Partners Energy / infrastructure Private real assets 2001 Americas (Boston, MA)
Arlington Capital Partners Mid-market buyout Private equity 1999 Americas (Chevy Chase, MD)
Arsenal Capital Partners Healthcare / industrial Private equity 2000 Americas (New York, NY)
Caxton Associates Global macro Absolute return 1983 Global (New York, NY)
Clearlake Distressed credit, buyout Private equity / private credit 2006 Americas (Santa Monica, CA)
Fort Investment
Management
Systematic Absolute return 1993 Global (Chevy Chase, MD)
Francisco Partners Mid-market tech buyout Private equity / private credit 1999 Americas (San Francisco, CA)
General Catalyst Venture Private equity 2000 Americas (Boston, MA)
Harvest Partners Mid-market buyout Private equity 1981 Americas (New York, NY)
Industry Ventures Venture Private equity 2000 Americas (San Francisco, CA)
Kayne Anderson Real
Estate
Real estate Private credit / private real
assets
2007 Americas (Boca Raton, FL)
Knighthead Capital
Management
Event-driven, credit Private real assets / credit /
2008 Americas (New York, NY)
Lakewood Equity long / short Absolute return 2007 Americas (New York, NY)
Littlejohn & Co Mid-market buyout, credit 1996 Americas (Greenwich, CT)
LLR Partners Mid-market buyout Private equity 1999 Americas (Philadelphia, PA)
LMR Partners Multi-strategy relative value Absolute return 2009 Global (London, Hong Kong,
New York)
Pelham Capital Equity long / short Absolute return 2007 Europe (London, UK)
Piney Lake Partners Private credit Private credit 2018 Americas (Greenwich, CT)
Riverstone Holdings Energy / natural resources
credit
2000 Global (New York, NY)
Slate Asset Management Real estate Private real assets 2005 Global (Toronto, Canada)
SLR Capital Partners Private credit Private credit 2006 Americas (New York, NY)
Symphony Technology
Group
Mid-market software / tech
buyout
Private equity 2002 Global (Palo Alto, CA)
Westbrook Partners Real estate Private real assets 1994 Global (Palm Beach, FL)
Wind Point Partners Mid-market buyout Private equity 1984 Americas (Chicago, IL)
A Diversified Business continued
Petershill Partners plc | Annual Report 202212
A Proven Approach
The Operator leverages the extensive experience, insight and
relationships of the wider Goldman Sachs Group to identify
prospective Partner-firms, with such a vast network giving us
greater reach than our competitors.
Rigorous Underwriting and Thorough Due Diligence
The Operator then carries out rigorous underwriting and
thorough due diligence prior to investing. The experience and
expertise of the Operator give us greater insight into the
specialist segments that are likely to succeed, as well as access to
the top investment managers within those segments. We invest
only in sectors that we believe will outperform and contribute to
a diverse business mix, and only in firms that we consider capable
of outperforming within those sectors.
Over the past 16 years, the Operator has made 48 investments
across the private funds it manages, having undertaken detailed
due diligence on more than 380 investment opportunities and
deployed over $7 billion of capital.
Partnering on Beneficial Terms
The Operator’s investment approach is to take a non-controlling
stake in each Partner-firm, which aligns the interests of the firms’
principals with ours. These investments then lock in positive cash
flows for many years, with all partners equally incentivised to
maximise performance.
Once firms have become Partner-firms, the Operator collaborates
with them to help them scale and institutionalise their
businesses. They provide balance-sheet capital and offer them a
wide range of guidance and value-added services to improve their
infrastructure, performance and earnings profile.
The economic and geopolitical headwinds impacting markets
during the year have made the value of our support even greater.
In 2022 our Partner-firms raised about 4% of the new funds
across the whole private equity market, although they
represent only about 2% of that market.
This is one of the best indicators of our ability to pick great
partners. We carried out over 300 GP service engagements during
the year, illustrating the value that Partner-firms place on our
strategic partnership.
Alignment with Partner-firms and Investors
The Operator fee structure aligns its long-term interests with
those of the Company and its Shareholders, so that all parties are
similarly incentivised for success. See page 60 in the Corporate
Governance Report for additional information on the Operator's
fee structure and alignment.
The operating team is aligned to the Company’s share price
through direct and indirect share ownership, and their carried
interest participation in Petershill II and III. Together these funds
own 76% of the shares in Petershill Partners plc and therefore
their performance and carry realisation is driven predominantly
by the Petershill Partners plc share price.
Low-cost Capital Provides a Significant Advantage
Through the Operator, the Company has access to the extensive
network and track record of Goldman Sachs, which assisted us in
raising $500 million of debt comprised of tenors ranging from
seven to 20 years maturity via private placement in 2022. Our
notes are rated A, with a weighted average fixed funding cost of
5.65% and an effective interest rate of 6.2%. In an environment of
rising interest rates, this fixed low-cost capital provides a
significant advantage for the Company.
We believe the expertise in fundraising and sector understanding
we are able to offer has given our Partner-firms a significant
advantage, allowing them to raise a significantly higher share of
Our Values
The Directors are committed to providing the highest standards
of diligence in governance and reporting, and to maintaining a
constructive and collaborative relationship with the Operator
while ensuring that the Operator manages conflicts of interest
appropriately. The Company has no employees and has instead
delegated its operating and investment responsibilities to the
Operator. The Directors are both reassured by and supportive of
the values of the Operator and its parent company, The Goldman
Sachs Group, Inc., which are set out below and published in
detail at www.goldmansachs.com/about-us/purpose-and-
values/index.html.
• Client Services • Integrity
• Excellence • Partnership
Petershill Partners is operated by Goldman Sachs Asset Management (the “Operator”).
The Petershill business within the Operator was founded in 2007, giving them one of the
longest General Partner (“GP”) investing track records in private markets and an
experienced team across multiple market cycles.
The value-added services we offer to Partner-
firms, provided by the sizeable GP Services team
and platform within the Operator, include:
Firm infrastructure and operations
• Legal, tax and regulatory overviews
• ESG consultancy
• Human capital optimisation
• Operational consulting and digital transformation
Capital and product development
• Capital formation
• Strategy, corporate finance and M&A advice
• Product development and peer benchmarking
Investment portfolio and reporting
• Investment portfolio services
• Portfolio monitoring, reporting and communication
Role of the Operator
13 Petershill Partners plc | Annual Report 2022
Q&A with our Operator
Ali Raissi-Dehkordy
Partner
Goldman Sachs Asset
Management
Co-Head of
Goldman Sachs
Petershill Group
Christian von
Schimmelmann
Managing Director
Goldman Sachs Asset
Management
Co-Head of
Goldman Sachs
Petershill Group
Robert Hamilton Kelly
Managing Director
Goldman Sachs Asset
Management
Co-Head of
Goldman Sachs
Petershill Group
What would you say differentiates
you from your competitors?
Ali
Our business model from the outset has been to invest
Given many of our listed peers focus on the larger end of the
market, we believe Petershill Partners is differentiated as it
provides investors with access to an attractive part of the industry
that isn’t generally accessible to public investors.
Christian
We’ve always felt that we can buy faster-growing, higher quality
firms at more compelling value in the mid-market than at the
larger end of the market - this is attractive from a risk reward
basis. Importantly our partners are not seeking an “exit” as would
be the case in the larger part of the market, but rather a partner
to accelerate the value creation on the controlling ownership that
management continues to retain.
We provide access to an attractive part of the private
alternatives market that is largely privately held
Rob
On top of the mid-market focus, there’s also our diversification,
which has been another deliberate part of our strategy from the
start. By investing assets across multiple Partner-firms, we have
many opportunities to generate income from management and
performance fees. Our success does not depend on any single
firm, but rather the results across the whole portfolio. Even if a
few are disappointing because of market conditions, netting out
can still lead to a positive result overall.
Christian
Our business selection has been active, and driven by quality with
a focus on detailed, bottom up underwriting. We avoid
concentrating in any single sector. There are some sectors we find
more attractive than others, but we aim for good diversification
across sectors - this is a capital allocation consideration that we
are constantly reviewing.
Diversification has been a deliberate part of our strategy
from the start
Q&A
Petershill Partners plc | Annual Report 202214
Was this year’s strong fundraising
result a surprise given the macro
uncertainty during the year?
Christian
I wouldn’t say it was directionally a surprise, because we guided
the market to expect $40 billion to $45 billion – already a
meaningful increase over 2021 at $21 billion. But, as evidence of
their quality, our Partner-firms ended up raising even more than
our initial and revised guidance with $60 billion.
We believe this is a nuanced fundraising environment, and while
private market investors and Limited Partners (“LPs”) have a
strong understanding of their priority GPs, that nuance is creating
surprises in the public market as some struggle to raise their
targets on time.
Rob
The very successful fundraising year in 2022 really sets the stage
for earnings, not just next year, but for many years ahead given
the long-term lockup nature of the capital raised. But we should
also recognise that this raise was widely dispersed across nine
firms, and that this capital will need to be deployed before firms
raise again – so fundraising may well be lower in 2023, although
we still expect it to strengthen over time.
Ali
Fund managers schedule fundraising years ahead. It happens that
many schedules among our Partner-firms coincided in 2022, and
that is unlikely to be repeated next year. Having said that, the
medium-term outlook remains strong, reflecting the growth
of high quality mid-market firms and continued expected
industry growth.
The medium-term outlook for fundraising remains strong
How is Petershill Partners
positioned to perform in the
face of a more negative economic
outlook? Has the strategic focus of
the Company changed as a result
of the market environment?
Rob
If we look at the last year, which was a challenging period,
firms and in part from our business model. This approach has
been something refined over the 16 year history of the Operator,
with a focus on creating resiliency across market cycles.
Ali
Our strategy has not changed in this market, but that’s because
we can be more nimble than a traditional listed asset manager
given we can pivot and drive capital to new and existing areas
We have a very dynamic approach to adding more Partner-firms
to the process and can pivot more easily because of all the M&A
opportunities. For example, SLR – a private credit firm we
acquired an interest in this year – we believe is well positioned
Higher interest rates, higher yield portfolios and more dislocation
of the syndicated credit markets mean more opportunity and
better terms for them. That’s a good example of a deal with
a firm that might not have appetite to relinquish control
to an incumbent.
Christian
Although our Partner-firm PRE increased in 2022 compared to
2021, this was driven by strength in the absolute return asset
class. Private markets realisations slowed down in 2022 leaving
us cautious on performance fee revenues going into next year.
This slowdown is because some exits have been delayed until
markets stabilise. Nevertheless, other areas have seen a pickup
expect to perform relatively well.
Rob
We believe that challenging environments also highlight our
position as a value-added partner. Our GP services offering plays
an even more important role when the markets are challenging
and our Partner-firms can call on us to roll our sleeves up and
collaborate with them to take advantage of opportunities and
enhance their operations.
The capital we raise is locked in for the long term, creating
stability in uncertain times
15 Petershill Partners plc | Annual Report 2022
Francisco Partners is a leading global
investment firm specialising in technology
and technology-enabled businesses. The
firm has invested in or acquired more than
400 technology companies and has been
repeatedly recognised for market-leading
performance.
In 2022, Francisco Partners closed on nearly
$17 billion in capital commitments across
two funds, both of which exceeded targets
and were oversubscribed.
Francisco Partners
technology companies
400+
Invested in or acquired
in capital commitments
across two funds
$17bn
Closed on nearly
16 Petershill Partners plc | Annual Report 2022
Increasing Institutional Capital
The growth in long-term investing has been driven mainly by the
rise of global institutional wealth from pension funds, insurance
companies and sovereign wealth funds. Global institutional
wealth has increased rapidly over the past 15 years, with
sovereign wealth funds growing at a Compound Annual Growth
Rate (“CAGR”) of around 10%. Investor demand for alternative
assets has driven AuM in our industry over the last decade, with
further growth expected to result in industry AuM CAGR of 9.3%
between 2021 and 2027. Asset raising declined year on year by
around 11% in 2022, partially reflecting the “denominator effect”
with a disproportionate decline in public market securities
resulting in a technical portfolio-overweighting towards
alternatives. This came following a record year in 2021. 2022
total asset raising at around $1.4 trillion was more nuanced, with
established and strong performing firms having performed
particularly well in terms of asset raising, with turbulent public
markets sparking a flight to quality.
Our Partner-firms manage $283 billion, across a host of
strategies, sectors and geographies, predominantly in
longer-duration strategies, with private capital comprising
90% of AuM. We believe that given the strength of their
performance, with over 76% of Partner-firm funds
exceeding their benchmarks, our Partner-firms are well
positioned to benefit from ongoing investor demand for
alternatives.
1
Impact of Rising Rates
Historically, rising interest rates have been seen as a challenge
for consistent investment returns – in both public and private
market strategies – increasing risk in leveraged firms and also
increasing benchmarks for risk-adjusted returns as risk-free
rates rise.
While global growth was spurred by the low interest rate
environment between 2019 and 2021, we also observed resilient
demand for alternative asset management products during
the rising rate environment in 2022. This is partly explained
interest rate.
Given the Company’s diversification and exposure to high-quality
Partner-firms, we expect industry growth to provide a baseline to
our aggregated Partner-firm AuM growth, which has historically
averaged over 20% CAGR (including acquisitions).
Rising rates have also created issues for the leveraged capital
structures of private-equity-owned assets. However, we have
seen little in terms of bankruptcies or restructuring during 2021
and 2022. To put this into context, bankruptcy rates in 2009 and
2010 were 9.9% and 3.0% for speculative debt. In comparison,
bankruptcy rates were 1.7% in 2021 and 2022.
2
This can partly
private debt lenders replacing the more regulated and
constrained bank lenders. For this same reason, although not
immune to the impact of rising rates, leveraged firms are not
expected to show the same level of sensitivity to rising interest
rates as they have in prior periods.
Although interest rates have risen across the globe during 2022,
our Partner-firms’ capital raising has remained strong, and the
firms owned by the funds they manage have remained largely
stable. If rates continue to rise, it could impact returns along with
realisation multiples, and private market firms that rely on some
element of multiple expansion, driven by falling interest rates,
may find that this is not available to them in the near term.
Rising rates may even create attractive “entry points” for firms
acquiring new assets. However, we expect to see a slowdown or
end to the rate raising cycle, potentially reducing uncertainty
across markets.
Trends and Evolving
Opportunity Drivers
The strong and sustained growth of the alternative investments industry has been
underpinned by a number of secular trends that we expect will continue to benefit
the Company. We believe the Company’s diversification, and the long-duration capital
of our Partner-firms, position the Company to be resilient across cycles.
Our Markets
1. Private markets performance based on realised net IRR quartiling based on percentage of Aggregate Partner-firm AuM and absolute return by Aggregate Partner-firm AuM over 10
years relative to HFRX Absolute Return Index. Private markets weighted at 90% and absolute return at 10% in line with Dec-22 Aggregate Partner-firm AuM split.
2. S&P Global Ratings Credit Research & Insights, 2023.
17 Petershill Partners plc | Annual Report 2022
Impact of Inflation
In addition to credit firms, we also expect real asset and absolute
return firms to potentially benefit from increases in rates and
inflation, as these asset classes have historically provided a
Given the challenge of rising costs, inflation may complicate
the ability of firms to enhance operating margins, potentially
impacting profitability. We believe the diversification of Petershill
Partners and the expense protections we have implemented
Partner-firms’ activity is based in North America and we believe
that global challenges might present themselves more outside
the mid-market private equity landscape, with larger assets that
operate across multiple markets.
We believe that the diversification of Petershill Partners,
through vintages, sectors, funds and teams, positions the
Company for long-term resilience, by reducing reliance on the
returns of any one fund, strategy or sector.
Increasing Demand for Alternative
Investments from Institutional Investors
Institutional investors have been increasing allocations to
alternative investments in lieu of investments such as equity
and fixed-income securities. The asset allocation to alternative
investments by pension funds has increased significantly,
from approximately 7% to 22% between 2000 and 2022,
according to Preqin.
Around 94% of institutional investors tracked by Preqin now
invest in at least one alternative asset class, and around 49%
invest in at least three. While competition for assets, valuations,
and rising interest rates top the list of investor concerns, on
average more than 70% plan to invest more or the same amount
in private capital over the next 12 months.
Our Markets continued
Petershill Partners plc | Annual Report 202218
Increasing Demand for Alternative
Investments from Retail Investors
The same resilience and consistent returns that have driven
institutional investors to increase allocations to the private
capital asset class have driven appetite in the historically
underserved retail investor base. Lack of product availability
and regulatory challenges have historically been barriers to asset
managers raising capital from retail investors in the same manner
that they have from institutional investors. However, with certain
changes in regulation and consultations, we are beginning to see
increasing potential for retail market access to alternatives
products: in the US, the Securities and Exchange Commission is
consulting on opening private equity products to retail investors;
in Europe, the European Long Term Investment Fund introduced
in 2015, which was designed to gather institutional and retail
capital for longer-term products, is being amended to expand the
scope and range of products that can be eligible.
Consistent Outperformance of Private
Markets Investments over Public Markets
Private markets investments have a track record of higher
absolute and risk-adjusted returns in comparison to both public
equity and fixed-income markets. In addition to seeking superior
risk-adjusted returns, institutional investors have been increasing
their allocations to private market investments to achieve
diversification, macro hedges, stable income and low volatility
relative to “traditional” public markets investments. Additionally,
in times of volatility, declining valuations may present attractive
opportunities for those investors with capital to invest.
Companies Staying Privately-Held
for Longer, Deepening the Opportunity Set
and Capacity for Private Capital Managers
The composition of public markets is fundamentally shifting,
or return to being privately held. Between 2000 and 2018, the
number of US and European sponsor-backed companies
increased more than fivefold. Over the same period, the number
of US publicly traded firms decreased by 36%, while the number
of publicly traded firms in Europe and Central Asia decreased
Increasing International Growth
The Company expects international markets, led by the stronger,
more stable economies, to become a source of scalable and
long-term capital for private markets fundraising. In addition,
we expect our investment opportunity set to expand as more
firms outside of North America begin to recognise the potential
benefits of entering into a strategic partnership with a company
like Petershill Partners.
Increasing Demand for Sophisticated
Analytics and Transparency
Alternative asset managers are finding that big data and
analytics can provide a competitive advantage in terms of due
diligence and deal sourcing. There is now a substantial amount
of data available on prospective targets that can be used to
managers that have integrated digital processes into their
sourcing and due diligence frameworks are well positioned
As a result, investors are increasingly seeking to partner with
firms that not only have a proven track record of investing across
asset classes and strategies but are also highly sophisticated
reporting, accounting, legal, compliance, operations and
Greater Focus on Sustainability and ESG
Sustainability is becoming increasingly important for asset
management firms in response to the challenges faced by
businesses and the world at large. These challenges include
environmental factors such as climate change and pollution,
social concerns such as diversity and inclusiveness, and
governance issues such as the need for equitable employee
compensation and transparent decision-making.
In response to these trends, asset management firms are
increasingly emphasising sustainability and are increasingly
focused on communicating transparently on ESG topics with
stakeholders, including investors. Firms are seeking to move
beyond simply incorporating sustainability into their investment
approach and are looking to embed sustainability into their
cultural framework, taking a more holistic view. According to
Preqin, 48% of private equity investors have an active ESG policy
in place, with another 26% expected to put one in place in the
next 12 months. In addition, 82% of private equity investors
believe that fund managers are adopting ESG policies because
Investment funds with an approach that considers ESG factors
increase in the interest in/demand for their organisations’ ESG
capabilities or strategies over the past 12 months.
You can find more information on the Operator’s approach
to ESG on pages 38 and 39.
19 Petershill Partners plc | Annual Report 2022
Clearlake is an investment firm operating
integrated businesses across private equity,
credit and related strategies. Clearlake
businesses that can benefit from its operational
improvement approach.
In 2022, a consortium led by Clearlake
completed the acquisition of Chelsea Football
Club. Together, the consortium will invest
in key sporting infrastructure, including the
redevelopment of Stamford Bridge.
Clearlake
The consortium will invest in
key sporting infrastructure,
including the redevelopment
of Stamford Bridge.
20 Petershill Partners plc | Annual Report 2022
Strategy and Investment Objective
How the Operator Sources and
Evaluates New Partner-firms
Disciplined Focus
Petershill Partners targets well-established multi-billion -
dollar alternative asset managers with a track record of
for more than 10 years, have more than $50 million of run-rate
management fee income, and attractive fee margins. Among the
favourable dynamics that the Company and Operator seek are:
• Performance – category leaders with proven track records
of generating attractive risk-adjusted returns for clients
that have performed in the top or second quartile across
multiple vintages
• Sector – firms operating in sectors benefiting from positive
sustainable tailwinds with capacity to develop over time
• Opportunity – firms with potential, an opportunity set
and the ability to develop in a sustainable way with
attractive prospects
• Culture – strong culture and cohesiveness of team and
partnership, often with a focus on generational development
and an apprenticeship culture
• Alignment – firms defined by their entrepreneurial spirit
and majority-employee ownership, and with a high degree
of alignment with LPs and other stakeholders
• Stability – high-quality, stable and diversified capital bases
with an emphasis on building enduring client relationships
across the platform
• Financials – attractive recurring earnings-based businesses
with strong profitability and cash conversion
• Goals and responsibilities – firms with a focus on building
an enduring, diverse platform and instilling best practices of
corporate responsibility, ethics and transparency throughout
their portfolio companies
• ESG engagement – firms who are committed to socially
responsible investing and actively work to elevate ESG issues
as focal points
• Leadership – highly capable management teams with a proven
ability to manage and develop their platforms
Increasingly, the Company’s focus is on real assets,
private credit and private equity firms focussed on specific
sectors, such as healthcare, which we feel demonstrate
Our key strategic drivers for growth are clear:
1
Support and assist our Partner-firm development
2
Continue to identify and enter attractive growth markets
through acquisitions
3
Drive capital efficiency and total shareholder returns
Healthy Acquisition Pipeline
The total addressable market for private alternative asset
management firms is significant and growing. Within this market,
Petershill Partners has already identified significant opportunity
to add new Partner-firms.
Private markets expansion creates organic growth and M&A
opportunity. The alternatives industry is forecast to continue
to expand, with alternative asset managers expected to manage
over $23.3 trillion of aggregate AuM by 2027, representing 9.3%
CAGR between 2021 and 2027*. Our Operator has a robust,
repeatable evaluation process that leverages significant
proprietary data and processes – and benefits from the depth and
rigour available in a private diligence process.
Petershill Partners offers distinct advantages to Partner-firms. The highest-quality
alternative asset managers typically seek partnership and continuity in the ownership
of their business. Our strategy focuses on empowering partnerships over the long
term, and the Company’s target profile for Partner-firms is consistent and precise.
* Source: Preqin Special Report: Future of Alternatives in 2027.
21 Petershill Partners plc | Annual Report 2022
Ali Raissi-Dehkordy
Partner
Robert Hamilton Kelly
Managing Director
Christian von Schimmelmann
Managing Director
Ali is global co-head of the Goldman
Sachs Asset Management Petershill
Group, leading initiatives for Petershill
Partners as well as the Petershill private
funds. He is co-chair of the Goldman
Sachs Asset Management Petershill
Investment Committee, directing
investing in leading established
private-market and public-market
alternative asset management
companies and in newly established
private-market managers. Ali first joined
Goldman Sachs in 1999 in the Financial
Institutions Group in the Investment
Banking Division and rejoined the firm
helping found the Existing Petershill
Group in 2007 as a portfolio manager
Robert is global co-head of the Goldman
Sachs Asset Management Petershill
Group, leading initiatives for Petershill
Partners as well as the Petershill private
funds. He is a member of the Goldman
Sachs Asset Management Petershill
Investment Committee, directing
investing in leading established
private-market and public-market
alternative asset management
companies and in newly established
private-market managers. Prior to
joining Goldman Sachs, Robert worked
at Gleacher & Co./Gleacher Shacklock
in investment banking and in special
situations. Robert earned a BA (Hons)
and an MA from the University of Oxford.
Christian is global co-head of the
Goldman Sachs Asset Management
Petershill Group, leading initiatives
for Petershill Partners as well as the
Petershill private funds. He is co-chair
of the Goldman Sachs Asset
Management Petershill Investment
Committee, directing investing in
leading established private-market
and public-market alternative asset
management companies and in newly
established private-market managers.
Prior to joining the Existing Petershill
Group, Christian was a senior member
of the research and principal investment
team on the Goldman Sachs Bank Loan
Desk for four years. Prior to that, he was
a member of the Financial Institutions
Group in the Goldman Sachs Investment
Banking Division from 1999 to 2004.
Earlier in his career, Christian worked
at McKinsey & Company in the Financial
Services Practice and at Salomon
Brothers Inc. in the Investment Banking
Division. Christian earned a BS in
Economics from the Wharton School
of the University of Pennsylvania and
an MBA from the University of Chicago
Booth School of Business.
Our Acquisition Strategy
and InvestmentPolicy
The Company seeks to make growth capital investments in the
general partnerships of alternative asset management
businesses (“Partner-firms”, with such stakes in Partner-firms
being referred to as “Alternative Asset Manager Stakes”). The
Company’s structured investments represent non-controlling
ownership positions in such Partner-firms in which the Company
has an Alternative Asset Manager Stake.
Strategy and Investment Objective continued
The Company seeks to invest in Alternative Asset Manager Stakes
primarily across the following four asset classes: private equity,
private real assets (including real estate, infrastructure and
natural resources), absolute return strategies invested principally
in publicly-traded securities, and private credit (the “Segments”).
The Company may also invest in adjacent businesses that involve
investment management, including traditional asset
management firms, wealth managers and insurance businesses.
As part of partnering with the Partner-firms, the Company may be
required, or choose, to invest in funds and products that are
Highly Experienced Operator Team
Petershill Partners plc | Annual Report 202222
managed by Partner-firms in which it holds an Alternative Asset
Manager Stake. The amount the Company invests in the
Partner-firms’ funds and products will typically be significantly
less than the amounts the Company invests in Alternative Asset
Manager Stakes. The investment restrictions set out in this policy
support the Company’s objective of spreading investment risk by
limiting the Company’s ability to invest in individual Partner-firms
and in the funds and products that are managed by those
Partner-firms in which the Company has an Alternative Asset
Manager Stake.
The Company targets well-established alternative asset
managers with a track record of strong performance and
meaningful cash flow generation which are well-positioned to
develop their business across future fund and product offerings.
The Company’s portfolio will comprise investments in Partner-
firms globally, with a primary focus on North America and Europe,
and a lesser focus on Asia. The geographic scope and asset class
focus will evolve according to the investment opportunities
identified. The Company expects to ensure that at least 30% of
annual Partner FRE is derived from investments in Partner-firms
which primarily manage or advise on investments in assets in
North America. The Company’s initial investment into any one
Partner-firm will typically range from $10 million to $400 million,
although secondary transactions involving a portfolio or number
of different stakes may cause the resulting aggregate investment
to be larger than this.
The Company will seek to spread Alternative Asset Manager
The Company’s investments in Partner-firms will typically take
the form of unlisted ordinary equity and partnership interests
(but may also take other forms, including unlisted preferred
equity and unlisted debt investments). What form an investment
takes will be determined by the Operator and will be the form
that, in its reasonable opinion, is the most appropriate for the
investment in question. As a result of realisations from the funds
managed by Partner-firms, as well as the Partner-firms
themselves, the Company may hold shares in listed businesses,
which would typically be on a temporary basis.
From time to time a portion of the Company’s assets may be held
in the form of cash. Pending the identification of new investment
opportunities by the Operator, and the application of some or all
of that cash as part of any such investment or for working capital
purposes, it may be invested in cash deposits, cash equivalents or
investments including, but not limited to, gilts, money market
funds, government securities and/or other investment grade
securities. Investment ratings shall be “AA” rated or higher and
the duration of any investment shall not exceed two years at the
time of purchase. There is no limit on the amount of cash that the
Company may, from time to time, hold in cash, cash deposits and/
or cash equivalents and investments. No more than 20% of the
Company’s gross assets will be invested in any single money
market fund or deposited in any single bank. Excluding US
Government investments, investments in money markets and
investments in Partner-firms, no more than 5% of the Company’s
gross assets will be invested in the funds, products or securities
of any single issuer at the time of purchase.
The Company may from time to time (but shall not be required to)
enter into hedging or other derivative arrangements which are, in
the reasonable opinion of the Operator, considered appropriate
for the purposes of efficient portfolio management (including
without limitation for interest rate hedging purposes) and
managing investment exposures.
The Company will not conduct a trading activity which is
significant in the context of the Company and its investments
as a whole.
Investment Restrictions
Investments will be selected with a view to diversifying risk.
compliance with the restrictions set out below, also with the
object of spreading investment risk:
• The Company will only make an investment in a Partner-firm if
such Partner-firm will contribute no more than 20% of annual
Partner FRE measured in reference to the 12-month period
ended on the latest practicable date prior to the date of the
investment. Shareholders should note that such Partner FRE
data will be unaudited. For the avoidance of doubt, the limits
that is managed or advised on by such Partner-firm and any
returns from any such fund or product.
• The Company will only make an additional investment in a
Partner-firm that is already within the Company’s portfolio if
such Partner-firm will contribute no more than 20% of annual
Partner FRE measured in reference to the 12-month period
ended on the latest practicable date prior to the date of the
additional investment. Shareholders should note that such
Partner FRE data will be unaudited. For the avoidance of doubt,
the limits in this paragraph exclude any investment in a fund or
product that is managed or advised on by such Partner-firm
and any returns from any such fund or product.
• The Company will ensure that no investment will be made in a
fund or product managed or advised on by a Partner-firm
unless the aggregate value of all such investments, including
the amount proposed to be invested, is no more than 20% of
the Company’s gross assets, as shown in its most recently
published balance sheet.
• The Company will invest in funds or products only if they
Company’s portfolio.
• For so long as required by the Listing Rules, the Company
with its Acquisition Strategy and Investment Policy.
The above investment restrictions are measured at the time
be no requirement to sell any investment (in whole or in part)
valuation result in any investment exceeding the limits set by
indirectly, including through one or more holding entities, the
investment restrictions will be applied on a look-through basis.
Unfunded further payment commitments in respect of
investments in Partner-firms or funds or products managed
additional investment in the relevant Partner-firm or in the
relevant funds or products for the purposes of any of the above
investment restrictions.
23 Petershill Partners plc | Annual Report 2022
Strategy and Investment Objective continued
Co-Investment and Co-Financing
The Company may invest alongside Petershill IV, or other funds
with a substantially similar investment policy which are managed
or advised on by the Operator or any member of the Operator’s
group at the relevant time, but for the avoidance of doubt the
Company will not be limited solely to such investments.
Borrowing Policy and Gearing
The Company may incur indebtedness (less available cash) of up
to a maximum of three times the Company’s Adjusted EBITDA as
published in the Company’s last financial statements, calculated
at the time of drawdown, for the purposes of financing
investments, share buybacks, general working capital purposes or
any other purpose approved by the Board. Adjusted Earnings
Before Interest Tax Depreciation and Amortisation (“EBITDA”) will
be defined as earnings before interest, tax, depreciation and
amortisation, less net gain on investment transactions and
non-recurring items.
Intra-group indebtedness will not be included for the purposes of
calculating the Company’s indebtedness. Any indebtedness of any
holding entity through which the Company makes investments
will not be included for the purposes of calculating the Company’s
indebtedness for so long as either: (a) the creditor of such
indebtedness only has recourse to the assets of the holding entity
and does not have recourse to the other assets of the Company or
any of the Company’s investments; or (b) that debt is owed to the
Company or its subsidiaries.
The Company may borrow funds for general purposes, including
to make investments, to leverage existing investments and to pay
expenses and other obligations. Any such borrowings may be
secured by the Company’s investments (as described below under
“EU AIFMD Leverage Limit”). The Company may, directly or
indirectly, through wholly or partially owned subsidiaries of the
Company (including an investment vehicle), or otherwise, incur
indebtedness or enter into guarantees, provided that the
Company complies with its Acquisition Strategy and Investment
Policy. Credit facilities may be secured by the Company’s assets.
The Company may also, subject to the overall limitations set out
in this Acquisition Strategy and Investment Policy, guarantee or
pledge its assets in support of or otherwise provide credit support
(including by giving equity commitments) for the obligations of
Partner-firms in which it is invested, which may be structured as a
guarantee in full or by providing collateral or other credit support
for the full value (and not just a pro rata portion) of the
obligations of a Partner-firm.
EU Alternative Investment Fund Managers
Directive (“AIFMD”) Leverage Limit
In accordance with its risk management function and the
investment objectives of the Company, the Operator has set a
maximum level of leverage which the Operator may employ on
behalf of the Company. For the avoidance of doubt, this maximum
level of leverage only applies at the level of the Company
(including, where applicable, financial or legal structures
involving third parties controlled by the Company and specifically
set up to directly or indirectly increase leverage at the level of the
Company). The methods used for the determination of the
maximum level of leverage of the Company and the
circumstances in which borrowings are treated as leverage for
these purposes, are prescribed under EU AIFMD and are the gross
method (as such term is defined in article 7 of the AIFMD
Delegated Regulation) and the commitment method (as such
term is defined in article 8 of the AIFMD Delegated Regulation).
The Operator has determined that leverage, for this purpose and
calculated in this manner, will not exceed 1,500% (expressed as
percentage and calculated using the gross method of calculation)
and 1,500% (expressed as percentage and calculated using the
commitment method of calculation), other than if and to the
extent that leverage for these purposes results from borrowings
under revolving credit facilities on a short term basis to make
investments pending the drawdown of (and covered by) capital
commitments of Shareholders (“Subscription Facility
Borrowings”) which, due to the way in which such borrowings
Shareholders should note that in exceptional circumstances,
restrictions on the management of the Operator with respect
Shareholders should note that the level of leverage as calculated
under the gross method of calculation does not necessarily
provide any reasonable illustration of the overall risk profile of
the Company as financial derivative instruments and borrowing
return. This is largely due to the fact that the gross method
simply aggregates the absolute sum of all long and short
financial derivative instrument positions, even if they are for
hedging or offsetting purposes, and further uses just notional
values rather than measures that calculate the overall
contributions to risk which will often explain why the leverage
levels under this method appear high. Shareholders should also
note that the incurrence of Subscription Facility Borrowings can
lead to very high reported leverage levels for the purposes of the
EU AIFMD, for reasons including the inability to include undrawn
capital commitments in determining the net asset value of the
Company for these purposes and the inability to exclude
drawdowns under revolving facility agreements as “temporary”
disclosed in the Company’s annual financial statements for the
relevant accounting period.
Shareholders should not expect that the Operator can or will
For the risks related to the Petershill Partners Group’s incurrence
of leverage, please see the risk factor entitled “The Operator
pursuant to the Acquisition Strategy and Investment Policy”
Changes to Investment Policy
The Company must at all times comply with its published
investment policy. Whilst the Ordinary Shares are listed on the
premium listing segment of the Official List of the Financial
Conduct Authority (the “FCA”), no material change may be made
to the Company’s investment policy other than with the prior
approval of both the Company’s Shareholders and the FCA in
accordance with the Listing Rules.
Petershill Partners plc | Annual Report 202224
Kayne Anderson’s strategic approach helps
it to deliver market-leading returns and
actively manage risk.
In May 2022, the real estate investment arm
of Kayne Anderson announced its debt
platform had closed its fourth flagship debt
fund with $1.875 billion of committed
capital, significantly surpassing its original
target. The fund will continue to invest in
opportunities in Freddie Mac-structured
products, direct loan originations and
purchases across targeted sectors.
Kayne Anderson
Real Estate
Closed its fourth flagship
debt fund with
of committed capital
$1.875bn
25 Petershill Partners plc | Annual Report 2022
Operator’s Report
Financial and Operating Review
The Company’s purpose is to give investors the opportunity to
participate in the growth of the alternative asset management
industry. Despite the industry’s reputation for complexity,
the Company’s model is simple. Investors share in the fees
generated by first-class Partner-firms that manage alternative
investments predominantly in private markets and other
unquoted assets. In a higher inflation environment, which
tends to lower real returns, alternative investments can
be particularly attractive.
To assist readers, we refer throughout this section to adjusted
measures which the Company considers to be Alternative
Performance Measures or APMs and Operating Metrics. APMs are
non-IFRS measures that analyse our performance, using a variety
of measures that are not specifically defined under IFRS; while
Operating Metrics are non-IFRS measures that are based on the
performance of the Partner-firms.
APMs and Operating Metrics are used by the Directors and the
Operator to analyse the business and financial performance, track
the Company’s progress and help develop long-term strategic
plans and they also reflect more closely the cash flow of the
Company. The Directors believe that these APMs and Operating
Metrics are useful to investors, analysts and other interested
parties as supplemental measures of performance and liquidity.
Definitions of APMs and Operating Metrics, along with
reconciliations to the IFRS measure, where appropriate, can
A simple business model
Technical Note
As part of the initial acquisition of the portfolio of Partner-firms
on 28 September 2021, the Company acquired interest in several
trusts, which previously issued $350 million of long term debt
with a 5% coupon and a maturity date of 2039. The debt was
secured by the rights to the cash flows of certain Partner-firm
interests held by the Company and other interests held by the
Petershill Funds. The debt was retired and the interests owned by
the Petershill Funds securing that debt was released when the
Company raised $500 million of new, unsecured long term debt.
However, under IFRS the Company was required to consolidate
these interests at 31 December 2021 and to 19 December 2022.
This consolidation resulted in all of the assets and liabilities of
these trusts appearing in the Consolidated Statement of Financial
Position and all of the income, investment gain and finance costs
appearing in the Consolidated Statement of Comprehensive
Income during the period. However, shareholder returns were
only affected by the interests that the Company owned.
Since these interests were de-consolidated at 19 December 2022,
they are not included in the consolidated statement of financial
position at 31 December 2022. The consolidated statement of
comprehensive income does reflect the effects of consolidation
for the period from 1 January 2022 to 19 December 2022.
The APM basis presents the financial information on a non-IFRS
basis, excluding the impact of the assets, liabilities, income,
investment gain and finance cost which do not affect shareholder
returns. It can therefore aid Shareholders in assessing their
investment in the Company.
The IFRS and APM basis numbers discussed and presented below
include significant ‘unrealised’ and non-cash items that include
unrealised change in fair value of investments, and it should be
noted that, while permitted, it is not the Company’s core strategy
to exit or realise these investments. Therefore, management
results are also presented, excluding the unrealised change in fair
value of investments at fair value through profit and loss and
related unrealised divestment fee.
Management Results
Year Ended
31 December
2022
$m
Period Ended
31 December
2021
$m
Income
Partner Fee Related Earnings
1
213.2 52.3
Partner Realised Performance Revenues
1
131.6 62.3
Partner Realised Investment Income
1
25.4 7.7
Total Partner Distributable Earnings
1
370.2 122.3
Interest income from investments
in money market funds 8.6 –
Total income (APM basis)
2
378.8 122.3
Operating costs
Board of Directors’ fees and expenses (1.5) (1.0)
Operator charge (27.8) (9.2)
Other operating expenses
3
(13.2) (5.7)
Total operating costs (42.5) (15.9)
Adjusted Earnings Before Interest
and Tax (EBIT)
2
336.3 106.4
Finance cost
4
(28.3) (4.6)
Adjusted Earnings Before Tax (EBT)
2
308.0 101.8
Tax & tax related expenses
2
(35.4) (3.4)
Adjusted Profit After Tax
2
272.6
Reconciliation of Adjusted Profit After
Tax to IFRS Loss After Tax
Adjusted Profit After Tax
2
272.6 98.4
• APM basis movement in Financial
Assets and Liabilities Held
at Fair Value
2
(776.5) 217.6
• Unrealised divestment fee 0.9 (45.2)
• Non-recurring expenses
5
(18.5) (6.9)
• Change in liability for Tax
Receivables Agreement (19.0) (6.8)
• Adjustment for tax and tax
related expenses 87.6 (9.2)
IFRS Loss After Tax (452.9) 247.9
1. Partner-firm key operating metrics. Refer to the glossary on page 131 for additional information.
2. Financial measure defined as Alternative Performance Measure, or (“APM”). Further information on page 134.
3. Excludes non-recurring expenses of $1.2m in connection with the IPO (2021: $6.9m).
4. Excludes non-recurring finance cost of $17.3m related to the retirement of Notes payable and issuance of Unsecured Notes.
5. Includes the non recurring expense of $1.2m and finance cost of $17.3m noted above (2021: $6.9m).
Petershill Partners plc | Annual Report 202226
Company Performance
The Company performed well in 2022, despite the challenging
environment. Aggregate Partner-firm AuM grew 21% and
Aggregate Fee-paying AuM grew 23% for the year. FRE increased
1% and PRE increased 2% over the prior year. Lower Partner
Realised Investment Income in 2022 contributed to an overall
decline in Partner Distributable Earnings of 3% over the prior year.
The $60 billion fee eligible AuM raise in 2022 – a significant
outperformance of the market – is attributable to the high quality
of our Partner-firms and the diversification of our portfolio.
The Company’s results for 2021 represent the period it was in
operation from 24 March 2021 (date of incorporation) through
31 December 2022. As a result, the 2021 comparable amounts
reflected are not for the same period as 2022 (1 January 2022
through 31 December 2022), which was the Company’s first full
year of operations.
Double-digit growth for AuM, stable management fee
income and strong performance revenues
The Company’s revenue model combines three types of income
from Partner-firms: management fee income, performance fee
income and investment income. Of these three, management fee
income in particular provides stable, recurring profits. Although
FRE Margin fell from 69% to 62%, the management fee income
APM basis for the year was $213 million (2021: $52 million),
performance fee income APM basis $132 million (2021:
$62 million), and investment income APM basis $25 million
(2021: $8 million).
The IFRS Loss and total comprehensive loss for the period after
tax was $(453) million (2021: profit of $248 million) equating to
an Earnings Per Share (EPS) of (39.4) cents (2021: 64.1 cents).
This includes an APM basis decrease in financial assets and
liabilities held at fair value of $(777) million (2021: $218 million
increase), an Unrealised Divestment Fee of $(1) million (2021:
$45 million), non-recurring expenses of $18.5 million (2021:
$7 million), change in liability towards Tax Receivables
Agreement of $19 million (2021: $7 million), a reduction in
deferred tax of $56.4 million (2021: $13 million increase) and
excludes an expected payment towards the Tax Receivables
Agreement of $31.2 million (2021: $3 million).
The Company’s Adjusted Profit after tax was $273 million (2021:
$98 million), aided by the new and follow on investments in
Partner-firms. The Company’s Adjusted EBIT for the year was
$336 million (2021: $106 million), resulting in an Adjusted EBIT
margin of 89% (2021: 87%). This highlights the key
characteristics of Petershill Partners as a business with
significant growth of durable capital, delivering stable and
recurring revenues with a highly efficient Adjusted EBIT margin
and significant cash flow.
Dividends
Petershill Partners has set a progressive dividend policy which
will reflect earnings growth over time. The Board reviews the
distributable reserves periodically, including consideration
of any material changes since the most recent audited financial
statements, ahead of proposing any dividend. The interim
dividend is set to one-third of the prior year’s annual dividend
amount, and the final dividend proposed is set to reach the target
for the year. Shareholders will be given the opportunity to
approve the final dividend for the year at the Company’s Annual
General Meeting (“AGM”).
Based on the financial results for the year, the Board has
proposed a dividend of $125 million or 11 cents per Ordinary
Share to be approved by Shareholders at the AGM on 24 May
2023. This dividend, when combined with the interim dividend
declared of 3.5 cents per Ordinary Share, totals 14.5 cents per
Ordinary Share for 2022.
Given our financials are primarily driven by USD denominated
economics (management fees and USD denominated funds,
denominated funds), our dividends are proposed and paid in USD.
However, Shareholders have the option to elect for payment
Progressive dividend policy
APM Basis Investments at Fair Value
through Profit and Loss
2022
$m
2021
$m
At beginning of year/period 5,524 –
Initial acquisition at 28 September 2021 – 4,843
Investments (includes new, follow on,
212 463
Change in fair value of investments
through profit and loss APM basis (777) 218
At end of year/period 4,959 5,524
The fair value of the Company’s investments in Partner-firms APM
basis at 31 December 2022 was $4,959 million (2021:
$5,524 million). The fair value of the Company’s investments in
Partner-firms is determined using both earnings multiples and
discounted cash flow techniques, which are common industry
approaches. In valuing the investments, key assumptions include
estimates of future AuM growth, expected management and
performance fee margins, expected current and future underlying
fund returns and timing of realisations. Whilst an exit of an
investment is possible, we do not typically seek to exit an
investment as part of our strategy. The change in fair value of
investments through profit and loss APM basis was $(777) million
for the year ended 31 December 2022 (2021: $218 million). The
reduction in fair value was primarily due to the impact of higher
interest rates on discounted cash flow valuations and the decline
in valuation multiples of comparable businesses. See Note 4 in
the Notes to the Consolidated Financial Statements on page 98
for additional information.
27 Petershill Partners plc | Annual Report 2022
Operator’s Report continued
Investments in Money Market Funds
The Company had $483 million invested in money market
credit rating.
Deferred Payment Obligations
and Notes
Certain investments in Partner-firms are purchased with deferred
payment terms. These deferred payment obligations represent
amounts payable by the Company at various dates in the future.
The Company has $500 million of long-term, unsecured debt with
an effective interest rate of 6.2% and a range of maturities
between seven and 20 years. This debt was issued in 2022 and
the proceeds were used to retire $350 million of notes
outstanding at the time. The finance cost for the year ended
31 December 2022 was $46 million (2021: $5 million), which
included $17 million in non-recurring costs resulting from the
retirement of $350 million of debt. Refer to note 2.xvi on page 92
and notes 11 and 12 on page 105 in the Notes to the
Consolidated Financial Statements.
Tax Receivables Agreement
The Company entered into a Tax Receivables Agreement as part
of the Initial Acquisition on 28 September 2021. The agreement
provides for the payment of 75% of cash tax savings, if any, in U.S.
federal, state and local income tax that the Company actually
realises. The cash tax savings is defined as the difference between
the taxes actually due, and the taxes due had there been no
step-up in tax basis from the Initial Acquisition. The Company
expects these payments to arise over a period of 15 years.
timing of the payments. The change in liability for the Tax
Receivables Agreement was $19 million (2021: $7 million).
Agreement is approximately $31 million. Refer to note 3 in
for additional information.
Operating Expenses
Operating expenses were $42.8 million (2021: $68 million).
Included in the operating expenses for 2022 was a non-recurring
amount of $1.2 million related to the IPO and a $1 million credit
related to the Fee payable on the divestment of investments.
The Operator is entitled to a divestment fee calculated at 20%
of the realised profit on the exit of an investment. Although
is reflected representing an amount that would be payable
if the Company were to exit all of its investments. At 31 December
2022, the Fee payable on divestment of investments was
$44 million (31 December 2021: $45 million). No payment was
made in 2022.
The Operator is entitled to a fee (“Operator charge”) of 7.5%
of Income from investments in Partner-firms APM basis.
The Operator charge for the year was $28 million
The Directors’ fees for the year were $1.5 million
The Adjusted EBIT margin for 2022 was 89% (2021: 87%)
reflecting the relatively low cost to operate the Company.
Finance Cost
Finance cost was $46 million (2021: $5 million). Included in the
finance cost for 2022 is an amount of $5.5 million (31 December
2021: $0.2 million) of imputed interest relating to deferred
payment obligations and a non-recurring charge of approximately
$17 million resulting from the retirement of $350 million of debt.
On 28 September 2021 the Company acquired $350 million of
private placement debt with a fixed rate of 5% and a maturity
$500 million of private placement unsecured loan notes during
2022, at an effective interest rate of 6.2% and maturities
between seven and 20 years. Refer to notes 11 and 12 in the
Notes to the Consolidated Financial Statements on page 105
Tax Expense
Current tax expenses comprise obligations to tax authorities
related to current period reporting. Deferred tax expenses arise
with respect to temporary differences between carrying amounts
of assets and liabilities and their tax bases.
Analysis of Tax
2022
$m
2021
$m
Analysis of tax on profit
Current tax 4.2 –
Corporate tax – –
Deferred taxation (56.4) 12.6
Current year – –
Tax (credit)/expense (52.2) 12.6
The tax expense does not include the related expected payments
under the Tax Receivables Agreement for the current year.
The expected payment under the Tax Receivable Agreement
for the year ended 31 December 2022 was $31 million
The tax and related expenses for the year were $35 million
rate was 11.5% (2021: 3.3%). These amounts represent current
taxes payable in addition to any expected payments under the
Tax Receivables Agreement for the year and exclude deferred
taxes related to the change in fair value of the investments
through profit or loss.
Cash and Money Market Investments
The Company’s balance sheet is strong and well-capitalised
its Acquisition Strategy and Investment Policy. There was
$483 million invested in money market funds (31 December
2021: $453 million) and $98 million of cash and cash equivalents
at 31 December 2022 (31 December 2021: $69 million
Petershill Partners plc | Annual Report 202228
Capital
As at 31 December 2022, the Company’s issued share capital
comprised of 1,135,399,597 Ordinary Shares (31 December
2021: 1,156,696,028).
Total Shareholders’ funds was $4,719 million at 31 December
2022 (31 December 2021: $5,296 million). At 31 December 2022,
there was a retained loss of $(329) million (31 December 2021:
$248 million profit). This retained loss primarily resulted from the
change in fair value of investments for the year of $(807) million
and does not have an impact on the realised profits.
In 2022, the Company paid dividends totalling $70 million and
bought back Ordinary Shares totalling $50 million resulting in a
reduction to capital of $120 million in the form of a capital return
to Shareholders.
Approximately 76% of Petershill Partners shares are held by
Management. Goldman Sachs Asset Management is the manager
of these shares and exercises discretion over how and when
Petershill Partners 2022 New Acquisitions
Partner-firm Committed
Aggregate
Partner-firm AuM
Aggregate
Fee-paying AuM
LLR Partners $40m $5bn $3bn
SLR Capital
Partners $40m $3bn $3bn
Total $80m $8bn $6bn
M&A and Overview of Acquisitions made in
2022
In 2022, the Company completed three acquisitions of interests in
additional equity in Kayne Anderson Real Estate, plus two new
fund. These acquisitions, combined, contributed $8 billion to
Aggregate Partner-firm AuM and $6 billion to Aggregate
Fee-paying AuM. The three acquisitions by the Company relate to
the following Partner-firms:
Kayne Anderson Real Estate was founded in 2007 and is based in
Boca Raton, USA.
LLR Partners is a lower middle market private equity firm
investing in technology and healthcare businesses. LLR was
founded in 1999 and is based in Philadelphia, USA.
SLR Capital Partners LLC is an independent boutique asset
manager focused on direct lending with expertise across a range
of primarily senior secured financing solutions for U.S. middle
market companies. SLR was founded in 2006 and is based in
Partner-firm Full Year Performance
Key Operating Metrics
We provide significant detail on our Partner-firms in our key
Operating Metrics as this gives investors insight into the revenues
and revenue model of the Company.
In 2022, fundraising momentum accelerated across the
Company’s Partner-firms with aggregate Partner-firm AuM
growing 21% year-on-year to $283 billion. Aggregate Fee-paying
AuM rose by 23% year-on-year to $194 billion. Ownership
weighted AuM at 31 December 2022 amounted to $36 billion
(31 December 2021: $30 billion). Strong aggregate Partner-firm
AuM and Aggregate Fee-paying AuM growth are the basis for
future earnings development and highlight the positive operating
dynamics and pricing power of our high-quality Partner-firms.
This growth has translated into robust, recurring and high-quality
earnings from our Partner-firms – with full year Partner
Distributable Earnings of $370 million, despite the
Petershill Partners is not reliant on any one firm, one fund-
raising, one track record, or one brand. Our approach is to invest
in a range of high quality, high performing alternative asset
management firms, who manage a diverse range of funds, giving
the Company stable, high quality, recurring earnings.
Our total AuM at year-end comprised over 200 funds, spanning
private equity, absolute return and other private capital funds,
each with an average life cycle of 8+ years. That means their
capital is locked in for an average duration of 8.9 years,
generating recurring management fees and the opportunity for
meaningful profit participation throughout this time. We believe
our long-term approach differentiates us and provides for
enhanced alignment with the key principals at each Partner-firm
and, as a result, allows the Company to participate in their income
streams in a way that provides high-margin, diversified and
stable cash flows for our Shareholders.
Partner Fee Related Earnings (FRE)
Partner FRE, drawn from management fees, grew 1% year-over-
year to $213 million (2021: $211 million), reflecting a 62%
partner FRE margin (2021: 69%) on $342 million of partner net
management and advisory fees (2021: $307 million). Higher costs
due to Partner-firm fundraising and team expansions contributed
to the reduction in the Partner FRE margin year over year. Despite
the challenging environment, we are pleased with the
performance of the Partner-firms. In 2022, the Partner Blended
Net Management Fee Rate was 1.41% (2021: 1.54%).
29 Petershill Partners plc | Annual Report 2022
Operator’s Report continued
Petershill Partners Operating Metrics
31 December
2022 2021
Aggregate Partner-firm AuM ($bn) 283 234 21%
Aggregate Fee-paying Partner-firm AuM ($bn) 194 158 23%
Partner Blended Net Management Fee Rate (%) 1.41% 1.54% -13 bps
Implied Blended Partner-firm FRE Ownership (%) 13.5% 14.2% -70 bps
Partner Net Management and Advisory Fees ($m) 342 307 11%
Management Fees ($m) 337 292 15%
Fee Offsets ($m) (16) (25) (36)%
Transaction and Advisory Fees ($m) 21 40 (48)%
Partner Fee Related Expenses ($m) (129) (95) 36%
Partner FRE ($m) 213 211 1%
Partner Realised Performance Revenues (PRE) ($m) 132 129 2%
Partner Realised Investment Income ($m) 25 42 (40)%
Partner Distributable Earnings ($m) 370 382 (3)%
Partner FRE Margin (%) 62% 69% -7 pts
Partner Distributable Earnings Margin (%) 74% 80% -6 pts
(%) 26% 27% -1 pt
Partner Realised PRE over Average Aggregate Performance Fee Eligible Partner-firm AuM* (bps) 5.6 bps 7.7 bps -2.1 bps
* Realised Performance Fee Revenues for the period divided by the Average Aggregate Performance Fee Eligible Partner-firm AuM. The Average Aggregate Performance Fee Eligible
Partner-firm AuM represents the average of the beginning and ending period stated.
Partner Realised Investment Income
As an owner in the Partner-firms, the Company shares in a
percentage of the investment and balance sheet income of the
Partner-firms and realises this through a number of direct
positions in the funds of underlying Partner-firms, known as
Realised Investment Income. This totalled $25 million in 2022,
declining 40% from $42 million, reflecting the more difficult
realisation environment.
General Partner (GP) Services available
to Partner-firms
The Operator’s value-added services capabilities, offering guidance
and strategic advice, have helped support our Partner-firms and
their businesses. The Operator collaborates with our Partner-firms
as they seek to scale and institutionalise their businesses, providing
guidance, best practice and analytics through the Operator’s ‘GP
Services Team’ and Platform. In 2022, there were record levels of
activity, bringing year-to-date interactions to 314 projects and
interactions with Partner-firms.
Partner Realised Performance Revenues
(PRE)
PRE, which represents direct participation in the upside
performance of Partner-firms’ funds and products rose year-over-
year to $132 million for 2022 (2021: $129 million) in difficult
market conditions and despite a relatively unattractive realisation
environment. This was largely due to the strong investment
performance of our absolute return strategies. Overall,
approximately 26% of the partner revenue in 2022 came from
PRE (2021: 27%), highlighting the diverse nature of the
Company’s financial profile.
Partner-firms manage a variety of performance fee-eligible funds
at different stages of their life cycle. Due to this diversification,
the Company anticipates that Realised Performance Revenues
will be earned regularly from a wide range of funds going
forward, making them a “quasi-recurring” source of income within
an expected range of 20–30% of total Partner-firm revenues over
the medium term, assuming market conditions and environment
are broadly supportive. The fact that these earnings are drawn
volatility of this fee stream.
We feel that Partner Private Markets Accrued Carried Interest is
an important indicator of future PRE. Partner Private Markets
Accrued Carried Interest was $611 million at 31 December 2022.
Petershill Partners plc | Annual Report 202230
Petershill Partners Operating Metrics
***
31 Dec 2022 30 Sep 2022 30 Jun 2022 31 Mar 2022 31 Dec 2021
FY 2022**
Aggregate Partner-firm AuM ($bn) 283 282 266 266 234 21%
Aggregate Fee-paying Partner-firm AuM ($bn) 194 189 184 184 158 23%
Average Aggregate Fee-paying Partner-firm AuM* ($bn) 178 169 159 153 142 25%
Aggregate Performance Fee Eligible Partner-firm AuM ($bn) 259 256 241 241 208 25%
Average Aggregate Performance Fee Eligible
Partner-firm AuM* ($bn) 236 220 204 187 167 41%
Additional metrics:
Partner Private Markets Accrued Carried Interest ($m) 611 644 700 710 649 (6)%
Investment Capital ($m) 383 398 395 369 369 4%
* Average Aggregate AuM figures represent the twelve month mean and use the start and each quarter end of the reporting period adjusted for acquisitions and dispositions
** Percentage change relative to 31 December 2021.
*** Represents key Operating Metrics that reflect data reported to the Operator on a three-month lag.
31 Petershill Partners plc | Annual Report 2022
Key Performance Indicators
Tracking Our Progress
Aggregate
Partner-firm AuM
OM
At 31 Dec 2022
Aggregate Fee-paying
Partner-firm AuM
OM
At 31 Dec 2022
2022
Acquisitions
IFRS
OM
Investments in
Partner-firms at
FairValue
IFRS
At 31 Dec 2022
Growth
Profitability
Aggregate Partner-firm AuM is a
scope and composition of the
Company’s Partner-firms, as well
as of their capital-raising
activities. This is an aggregated
figure across all Partner-firms and
includes Partner-firm AuM outside
of Petershill Partners’ ownership
interest in the Partner-firms.
Adjusted EBIT is an APM and
a key measure of profitability.
It is defined as the sum of
revenues including other income
and expenses before net finance
result and before income taxes,
and excluding non-recurring
charges related to the IPO.
The profit before tax is
a measure of profitability
of the Company and a KPI.
Aggregate Fee-paying
Partner-firm AuM is a
meaningful measure of the
Partner-firms’ capital base upon
which they earn management
fees, and the measure is used
in assessing the management
fee-related performance of
the Partner-firms.
The Company’s organic
Partner-firm growth prospects
are complemented by inorganic
growth opportunities through
the acquisitions of additional
Partner-firm interests.
was $100-300 million across
The fair value of the investments
in Partner-firms represents the
basis, see page 134 for
explanation.
Partner FRE
OM
Full year 2022
Partner Distributable
Earnings
OM
Full year 2022
Partner FRE is a meaningful
measure of the management
fee-related earnings of the
Partner-firms.
Comparative period figure
is full year 2021.
Partner Distributable Earnings
is a meaningful measure of the
overall profitability of the
Partner-firms and a KPI.
It is defined as the sum of
Partner FRE, Partner Realised
Performance Revenues (PRE)
and Partner Realised
Investment Income.
Adjusted EBIT
APM
At 31 Dec 2022
Profit (Loss)
Before Tax
IFRS
At 31 Dec 2022
$283bn2022
2021
2020
$234bn
$150bn
$194bn2022
2021
2020
$158bn
$133bn
$213m2022
2021
2020
$211m
$156m
KPI:
Partner Fee Related Earnings (FRE)
$370m2022
2021
2020
$382m
$243m
Petershill Partners uses several key performance indicators or Operating Metrics to
measure the progress and performance of the Company over time. The Operator and
Company use these key Operating Metrics and APMs to help evaluate trends and assess
the performance of our Partner-firms and the Company.
At the start of our second financial year, we began the process of benchmarking
our KPIs to targets.
$180m
(2021: $458m)
$5.0bn
(2021: $6.0bn)
APM
$336m
(2021: $106m)
$(505)m
(2021: $261m)
Petershill Partners plc | Annual Report 202232
2021
2020
212
174
2202022
25
(2021: 23)
(at IPO: 19)
220 8.6%
(2021: 7.0%)
Diversification
Quality of Partner-firm Earnings
Partner-firm funds are defined as the
underlying Partner-firm funds to which
the Company is exposed.
Partner-firms are defined as the
alternative asset managers in
which Petershill Partners owns
non-control positions.
Partner FRE Concentration by
Largest Fund is calculated as FRE from
the largest fund divided by total FRE,
and highlights the diversified nature
of the Company.
26%
(2021: 27%)
Weighted Average Capital Duration
is a key measure of the long-term,
locked-up capital of Aggregate
Fee-paying Partner-firm AuM.
This KPI highlights the management-
fee-centric nature of the Company’s
financial profile.
8.9 years
(2021: 8.1 years)
The Glossary of Capitalised
Defined Terms on pages 126
to 127 and Glossary of Key
Operating Metrics on pages 131
to 133 includes definitions of
the APMs and reconciliation to
The 2021 comparative period is
24 March 2021-31 December 2021.
Number of
Partner-firms
OM
At 31 Dec 2022
Partner-firm
Funds
OM
At 31 Dec 2022
Partner FRE Concentration
by Largest Fund
OM
At 31 Dec 2022
Partner Realised
PRE asaPercentage
of Partner Revenue
OM
Full year 2022
Weighted Average
Capital Duration
OM
At 31 Dec 2022
Alternative Performance
Measure
Key
Operating Metric
OM
APM
IFRS
International Financial
Reporting Standard
33 Petershill Partners plc | Annual Report 2022
Our Stakeholders
Stakeholder Engagement
The Company’s stakeholders are key to our long-term success. The importance of each key stakeholder and the Board’s engagement with
them are described below. Highlights of some of the principal decisions that have been made as a result of this engagement can be found
within the section 172 statement as outlined on pages 36 and 37. Given the Company has no employees and the Directors have all been
appointed on a Non-Executive basis, it must rely upon the Operator to perform certain executive functions and other third-party service
providers, including the Administrator, to perform other administrative and operational functions.
Stakeholder How the Board engages
Shareholders,
prospective
Shareholders
and lenders
support critical
to our success
• receives updates from the Operator at every Board meeting on investor relations, with a comprehensive report
delivered twice a year
• engages regularly with the Company’s corporate brokers, and receives frequent market and trading updates
• communicates with Shareholders and lenders through the Operator; with financial reporting and updates
published on the Company’s website
• meets Shareholders through general meetings
• the Chairman has met with and continues to be available to meet with Shareholders
• holds strategy meetings to ensure the Board is acting in Shareholders’ and lenders’ best interests
Goldman Sachs
Asset Management
(the Operator)
fundamental to the
business model and
overall strategy
• oversees the performance of investment management services that are integral to the Company’s operations
and financial performance
• active dialogue and regular meetings with the Operator
• open, respectful, and clear communication, with constructive challenge and a strong partnership ethos
• detailed monitoring of the Partner-firms and investment process
• strategic planning with the common goal of helping the Company fulfil its purpose
• visits the Operator’s offices
• requests ad-hoc meetings and updates as necessary
• works with the Operator to evolve Board reports and share insights
Community
full support of ESG
as integral to the
Company’s success
• addresses service providers’ ESG policies and initiatives
For additional information on the impact of the Company’s operations on the community and the environment,
please refer to pages 38 and 39.
Partner-firms
effective relations
to facilitate growth
• maintains regular dialogue with the Operator on partnerships
• receives formal Partner-firm performance review from the Operator
Service providers
effective relations
to foster compliant
and efficient
operations
• maintains regular interaction as part of the provision of services
• receives reports from core service providers at Board meetings
• formal performance review conducted annually
• receives updates from the Operator on dialogue with lenders and service providers
Regulators
effective relations
to comply with all
regulations
• engages with regulators in a transparent manner, completing required filings and other submissions and acts
responsively and thoughtfully in relation to any inbound queries
Petershill Partners plc | Annual Report 202234
Engagement with Shareholders
The Company reports to Shareholders in a number of formal ways,
including its Annual Report, interim report and regulatory news
releases, all of which are approved by the Board. The AGM,
detailed below, is used as a forum for the Board and Operator to
communicate Company performance and future plans and
prospects. It is expected that all members of the Board will be in
attendance and will be available to answer any Shareholder
questions. The Company’s website contains comprehensive
information for Shareholders and provides regular market
commentary at www.petershillpartners.com.
In addition, the Chairman, the Administrator and Operator’s
contact email addresses are also available for Shareholders to
contact the Company outside of the AGM. The Operator and
Chairman have had a number of meetings at investor requests.
The Board invites representatives from its brokers to provide
regular analysis of Shareholder movements, industry changes and
contact with investors. The Board seeks to engage with the
Operator and other service providers in an open manner,
encouraging constructive discussion. This approach enhances
service levels and strengthens relationships to deliver the highest
standard of service at a competitive cost, ensuring Shareholders’
interests are best served.
Employees, Social, Human Rights,
Environment and Community Issues
The Board has a responsibility to help protect, preserve and
promote human rights around the world. The Board supports
statements made by the Operator’s parent company, The
Goldman Sachs Group, Inc., on human rights, modern slavery, and
human trafficking. As the Company has outsourced operations to
third parties, there are no significant greenhouse gas emissions
or other environmental matters to report in relation to the
operation of the Company. The Board encourages all service
providers associated with the Company to consider matters
to the Board annually.
Acquisition Strategy and Investment Policy
The Company seeks to achieve its investment objective through
acquiring stakes in alternative asset managers, via direct
investments representing a non-controlling ownership position.
The Operator adopts a responsible investing approach which
takes into account the Company’s ESG principles and strategy,
approved the Acquisition Strategy and Investment Policy
pages 22 to 24. The Company reports to Shareholders through
regulatory news releases, using the London Stock Exchange
Regulatory News Service and interim and annual reports.
Significant new investments are announced promptly,
distribution announcements are all communicated in a timely
manner through these means.
Dividend Policy
The Board has reviewed the Company’s dividend policy, as set out
on page 27, during the year and agreed that it remained
appropriate. The Board proposes a final dividend of 11 cents per
2023, delivering a full year dividend of 14.5 cents per share to the
Company’s Shareholders.
2023 Dividend Timetable
Dividend Announcement Tuesday, 28 March 2023
Ex-Dividend Date Thursday, 11 May 2023
Record Date Friday, 12 May 2023
Currency election Friday, 26 May 2023
Payment Date Friday, 16 June 2023
Board Committees
The Audit and Risk Committee, Nomination Committee,
Remuneration Committee and Management Engagement
Committee were formed in order to establish a good corporate
governance framework for the Company. The Chairperson of each
Committee attends the AGM to answer any questions on their
Committee’s activities. More information on the Committees’
activities can be found on pages 54 to 56.
AGM
The AGM of the Company will be held at 1.00 pm (BST) on
Wednesday, 24 May 2023 at the Goldman Sachs London office.
Details of the resolutions to be proposed at the AGM, together
with explanations, appear in the notice of meeting available on
the Company’s website www.petershillpartners.com. As a matter
of good practice, all resolutions will be conducted on a poll and
the results will be announced to the market as soon as possible
after the AGM.
Employees and Officers of the Company
The Company does not have any employees and therefore
employee policies are not required and it is not possible to
provide a breakdown of the split between employees and senior
managers. The Directors of the Company are detailed on pages 48
and 49. As at the date of this report, the Board comprises three
men and two women, all of whom are Non-Executive Directors
who are considered to be independent of the Operator and free
from any business or other relationship that could materially
interfere with the exercise of their independent judgement.
35 Petershill Partners plc | Annual Report 2022
Section 172 Statement
Directors’ Responsibilities
Pursuant to Section 172 of the
Companies Act 2006
The Directors are responsible for acting in a way that they consider, in good faith, is most
likely to promote the success of the Company for the benefit of its members as a whole.
In doing so, they have had regard to the factors set out in section 172(1)(a) to (f) of the UK
Companies Act 2006, which includes the needs of stakeholders and the wider society.
Details of the Company’s key stakeholders are set out on page 34. In particular, the Directors recognise the importance of acting in a way
that promotes the long-term success of the Company for the benefit of its members as a whole.
Key decisions are those that are material or of strategic importance to the Company or are significant to any of the Company’s key
stakeholders, as described on page 34. The below key decisions were made or approved by the Directors during the year, with the overall
aim of promoting the long-term success of the Company for the benefit of its members as a whole, while considering the impact on its
members, stakeholders and the wider society. For more information on the approach to ESG please see pages 38 to 39.
Key decisions
made by the
Board in 2022
Considerations of factors set out in section 172(1)
in the decision-making process
Outcomes as a result
of these considerations
Capital structure:
Share capital
In considering proposals put forward by the Operator, the Board considered the
complexity of the existing capital structure and how simplifying it would
contribute to the Company’s long-term strategy, while having regard to its
Shareholders, the Operator, Partner-firms, regulators, and other service providers.
The Board was mindful of the regulatory requirements involved and engaged
advisors such as corporate brokers, external legal counsel, and other service
providers to provide advice and support throughout the process.
The first step in simplifying the Company’s structure was to redeem the
Company’s 50,000 deferred shares, leaving Ordinary Shares only, which was
completed on 24 May 2022.
The Board received assurances from the Operator by way of generally positive
market feedback and reflected on 2023 voting guidance from proxy advisory firms,
which satisfied the Board that such events were common across the market and
were a positive demonstration of capital efficiency.
The primary outcome was the
creation of an optimal capital
structure that gives the
Company more flexibility to
deliver value to Shareholders.
The Company’s capital
structure is now simpler and
more closely mirrors its peers,
contributing to the long-term
success of the Company.
MORE INFORMATION ON THE
DELIVERY OF OUR STRATEGY
AND OUR BUSINESS MODEL
CAN BE FOUND ON PAGE 6.
Capital structure:
Debt refinancing
The Board received reports from the Operator’s lending team to ensure the
Directors were adequately apprised of the technical complexities of refinancing
debt. They were mindful of the regulatory requirements involved and engaged
advisors such as corporate bankers, external legal counsel and other service
providers to provide advice and support throughout the process.
In making their decisions, the Directors considered the Company’s investors and
the wider stakeholder base, and the benefits of restructuring the existing debt to
increase the Company’s borrowing power and financial flexibility.
With the support of the Board, the Company (through its wholly owned subsidiary
Petershill Partners, Inc.) successfully placed $500 million private placement
senior unsecured loan notes with a group of institutional investors. The majority
of the net proceeds were used to repay $350 million in existing secured
indebtedness, increasing flexibility and extending the maturity profile of the
Group’s debt.
Enhancing the capital
structure was beneficial as the
credit rating and debt capital
structure increased flexibility
and enabled enhanced access
to bank financing and
improved financial leverage
as well as providing additional
finance options for new
acquisitions.
MORE INFORMATION
CONCERNING THE PLACEMENT
CAN BE FOUND ON PAGE 28.
Petershill Partners plc | Annual Report 202236
Key decisions
made by the
Board in 2022
Considerations of factors set out in section 172(1)
in the decision-making process
Outcomes as a result
of these considerations
ESG: Framework ESG is an important area of focus for the Company and the Board considers it
important to ensure that steps taken are sensible and proportionate in order to
ensure compliance and competitiveness of the Company and to avoid green
washing. With this in mind the Operator engaged an external provider to advise
on, and help formulate, an appropriate ESG framework for the Company.
An independent gap analysis was conducted which looked at applicable
regulations across the UK, US and EU, as well as relevant guidelines, standards
and frameworks that the Company could consider developing alignment to on a
voluntary basis.
As a Shareholder value focused Company, the Board is interested in understanding
how a broader ESG strategy could fit into its unique operating model. Transparency
and integrity in reporting is a top priority for the Board, for the benefit of
investors and the wider stakeholder base. The Board is interested in the indirect
impact of the Company’s operations and has discussed minimum standards
expected of our partners and suppliers, and as such applicable changes will be
made to the Company’s onboarding processes.
The Company intends to stay ahead of the ever-changing regulatory environment,
with the view that this readiness will ensure a smooth transition into compliance
or early adoption in future. As such, ESG continues to be an important standing
agenda item for the Board.
The current primary outcome,
taking the long-term
aspirations of the Board into
consideration, was embedding
ESG as a strategic objective.
As part of the ongoing project,
the Board, with the support of
the Company Secretary, is
introducing an ESG specific
training programme for Board
members, to encourage a
progressive and continuing
appreciation of the ESG
agenda.
The desired outcome is to
manage a considerate and low
impact Company, attracting
the discerning investor
through a best practice
approach to ESG.
MORE INFORMATION
CONCERNING ESG CAN BE
FOUND ON PAGES 38 AND 39.
ESG: Diversity and
inclusion
During the year, the FCA's new disclosure rules in relation to positive diversity
targets (contained in Listing Rule 9.8.6R(9)) took effect. The Board, in assessing
the Company’s responsibilities, considered the challenges posed by the Company’s
unique structure. The Board has acknowledged that, as set out on page 56, whilst
the Company does not yet meet the target in relation to senior board positions,
such targets were not specifically designed for companies without executive
directors. Nonetheless, planning is underway to ensure that clear parameters are
set for future recruitment as part of succession planning.
The Board has also sought assurance from the Operator, Administrator and
Company Secretary concerning their approach to diversity and inclusion. It is
important to the Board that they engage with providers that share its outlook and
make commitments to improve where necessary and deliver on those promises.
The Board approved a
Company specific diversity
policy drawing on the FCA's
new diversity reporting
targets and the future
aspirations of the Board,
which will be reviewed at least
once a year.
MORE INFORMATION
CONCERNING DIVERSITY
AND INCLUSION CAN
BE FOUND ON PAGE 56.
Dividend policy
and payments
The Board reviewed the Company’s dividend policy during the year and agreed
that it remained appropriate.
In determining the appropriateness of the dividend policy, the Board considered
the interests of all its stakeholders, ensuring a balance between the short-term
expectation of returns to Shareholders and the longer-term growth opportunities
and capital needs of the Company.
The Board continues to
maintain a progressive
dividend policy which will
reflect earnings growth over
time. The Board proposes a
final dividend of 11 cents per
share to be approved by
Shareholders at the AGM on
24 May 2023.
MORE INFORMATION ON THE
DIVIDEND POLICY CAN BE
FOUND ON PAGE 27.
37 Petershill Partners plc | Annual Report 2022
ESG Commentary
Environmental, Social and Governance
(“ESG”) at Petershill Partners
As an investment company without employees or physical
operations, Petershill Partners does not itself engage in
operations that directly impact the environment or the
community. It is not subject to requirements to make climate-
related financial disclosures under the Listing Rules, Companies
Act 2006 or the EU Sustainable Finance Disclosure Regulation
((EU) 2019/2088) (“SFDR”). However, the Board has recognised
that it can reflect an acknowledgement or a commitment to
sustainability in its choice of certain vendors or service providers
who act on its behalf.
ESG Integration into the investment process
The Board of Petershill Partners believes that businesses which
promote and embrace ESG will be more successful over time, and
therefore support the Operator in its effort to incorporate an ESG
strategy into the investment process.
The investment team considers ESG risks and opportunities as
part of the acquisition due diligence process. All investment
proposals submitted to the Petershill Investment Committee for
consideration include an assessment of ESG among many factors
and, where appropriate, are also assessed against an internal five
factor ESG framework to derive a blended ESG score. This
includes the following factors:
• Firm ethos — The extent to which the Partner-firm is
committed to ESG and incorporates sustainable practices into
the management of its business
• Investment philosophy — The degree to which ESG is viewed
• Team and resources — The depth, breadth and organisation
external resources
• Investment process — The degree to which ESG-related factors
are formally incorporated into the investment process with
• Portfolio engagement — The level and type of engagement
with portfolio companies on ESG and the ability to add
Goldman Sachs’ and Goldman Sachs Asset
Management’s Partnerships and Affiliations
Goldman Sachs Asset Management became a signatory to
the United Nations Principles for Responsible Investing
(UNPRI) in December 2011. As a signatory, the Operator
has committed to considering the investment implications
of ESG issues within its portfolio management and
investment decision-making processes where appropriate.
The Operator reports annually to the UNPRI on its ESG and
impact-investing commitment and activities, and publicly
discloses the report on its website.
At Petershill Partners, we recognise that there is a global focus on ESG and sustainability.
Consumers are increasingly incorporating sustainability into their purchasing decisions;
corporations are publicly committing to become carbon neutral; employees are insisting on
corporate leadership on ESG topics; and investors are driving growth in ESG-oriented
investment products. We understand that considering the ESG characteristics and long-
term sustainability of assets can reduce investment risk and enhance long-term returns.
The global shift towards ESG and sustainability means that the asset management industry
must also change the way it operates and makes investment decisions.
Acquisition
due diligence
• ESG diligence on all new
Partner-firm acquisitions
• Quantitative assessment as part
of acquisition-factor framework
• Focus on firm ethos, investment
philosophy/process, resources and
portfolio engagement
Ongoing
Partner-firm
engagement
• ESG-focused modules are produced
by our General Partner Services team,
which is focused on value creation
• Sharing of industry best practices
through diagnostic exercises which
help identify potential development
opportunities
• Development of a framework
for collecting information on ESG
practices at our Partner-firms, to
incorporate this into our ongoing
monitoring of investment
performance
The Operator’s Approach
toESG at Petershill Partners
The Operator focuses on sustainability
throughout its business
Petershill Partners plc | Annual Report 202238
Further to the above five factors, the investment committee may
reflect diversity, equity, and inclusion (“DEI”) considerations in its
investment process where appropriate, applicable and such
information is reliably available.
In addition, pursuant to the Operator Agreement, the Operator
from time to time consults with the Petershill Investment
Committee, who abide by regulations set forth in the Operator’s
broader Goldman Sachs policies. For example, Goldman Sachs’
Firmwide Reputational Risk Committee (“FRRC”) maintains a List
of Prohibited Transactions, which sets forth transactions that are
prohibited by Goldman Sachs. The FRRC is also responsible for
maintaining an Escalation Criteria Grid (the “Grid”), which sets
forth the types of transactions that would need to be escalated to
the FRRC. The List of Prohibited Transactions and the Grid are
constantly monitored and may be amended from time to time.
Ongoing Partner-firm Engagement on ESG
After an investment has been made, management teams at our
Partner-firms can request the support of the Petershill GP
Services team on a range of issues. These could include support
with ESG matters such as the integration of best-practice ESG
policies, processes and systems within their business. The integral
relationship the Operator has with Goldman Sachs provides
access to extensive resources in addressing this important topic.
The Operator is actively developing a framework for collecting
information on ESG practices at our Partner-firms, with the
ArcLight Capital Partners is a leading private
equity firm focused on providing decarbonising
energy solutions with a strong ESG focus.
In August 2022, ArcLight announced that it
had entered into an agreement to acquire five
windfarms in Pennsylvania and West Virginia,
with an operating capacity of 185MW: enough
enough energy to power
over 30,000 homes in the US
185MW
An operating capacity of
5 windfarms
Acquired
in Pennsylvania and West Virginia
Please note that the Petershill Partners portfolio does not
promote environmental or social characteristics and does
not have sustainable investment as its investment
objective. It does not commit to environmental or social
targets and does not score or assess its portfolio assets
with reference to any sustainability themes including
environmental or social factors. For the purposes of the
sustainability risk in the investment decision making
process. The above information should be read in
ArcLight
39 Petershill Partners plc | Annual Report 2022
40 Petershill Partners plc | Annual Report 2022
Principal Risks and Uncertainties
Risk Management
Our Risk Management Approach
The Board believes a good risk culture enables effective
management of risk. An open and transparent environment
which encourages the Operator and the Company’s other service
providers to embrace risk management is critical to the
achievement of the Company’s strategic objectives. Our cultural
framework is set out on page 61.
On behalf of the Board, the Audit and Risk Committee reviews
the effectiveness of the Group’s risk management processes,
focusing on the assessment of current identified principal risks
and the process to identify emerging risks. The Audit and Risk
Committee, with support from the Operator, carries out a robust
assessment of the principal and emerging risks facing the Group
by providing a risk matrix to the Board for review and discussion,
on an annual basis, and also as and when it is thought necessary
by the Audit and Risk Committee and the Board. The Operator
prepares the risk matrix, which sets out the key risks faced by the
Group, their likelihood and impact, and the associated control
procedures and mitigating measures. This is primarily achieved
through the Risk and Control Self-Assessment (“RCSA”) process.
The Audit and Risk Committee reviews the risk matrix, providing
an independent assessment, oversight and challenge of the risks
identified. The Audit and Risk Committee also monitors and
reviews the adequacy and effectiveness of internal control and
risk management systems and advises the Board on the Group’s
overall risk appetite.
The Operator, as delegated by the Board, provides portfolio
management and risk management services to the Group.
The Operator is accountable for the application and execution
of the Company’s investment strategy, and therefore has a key
role in managing the Group’s risk. The Operator, in its normal
course of business, faces various risks and leverages the “three
lines of defence” model employed by Goldman Sachs to delineate
the roles and responsibilities for risk-taking, risk management
and risk assurance activities for the Group.
• The first line of defence is the Goldman Sachs Asset
Management Petershill Group, which is responsible for
implementing effective internal controls and maintaining
processes for managing risks of the Operator.
• The second line of defence is the independent risk oversight
and control functions of Goldman Sachs, which provide
independent assessment, oversight and challenge of the risks
taken by the first line of defence. Independent risk oversight
and control functions include Goldman Sachs’ Conflicts
Resolution Group, Controllers, Global Compliance, Legal, Risk,
and Tax functions.
• The third line of defence is Goldman Sachs’ Internal Audit
division, which provides independent risk assurance to senior
management, the Board of Goldman Sachs and regulators that
the governance, risk management, and control activities of the
first and second lines of defence are effective.
Principal Risks and Uncertainties
The Company’s underlying investments are high-risk and illiquid
assets within the alternative investment industry. Its principal
risks are therefore related to revenue generated by the
alternative asset managers in which the Company invests and the
performance of the Partner-firms, their funds, and the products
they manage. The Operator seeks to mitigate these risks through
active engagement and action as outlined in the Acquisition
Strategy and Investment Policy (pages 22 to 24) and by carrying
out due diligence work on potential targets before entering into
any investments. The Company’s business model involves the
acquisition of non-controlling investments in independent
Partner-firms, and, although the Company has certain controls as
part of contractual rights, the Company does not control the risk
tolerance of the underlying Partner-firms.
The Board thoroughly considers the process for identifying,
evaluating and managing any significant risks faced by the Group
on an ongoing basis, and these risks are reported and discussed
at Board meetings. The Board ensures that effective controls are
in place to mitigate these risks and that a satisfactory compliance
regime exists to ensure all applicable local and international laws
and regulations are upheld.
For each risk, the likelihood and impact are identified,
management controls and frequency of monitoring are
confirmed, and results are reported to and discussed by the
Audit and Risk Committee on at least an annual basis. The Audit
and Risk Committee has reviewed the Group’s risk management
process and has evaluated the principal and emerging risks,
which are discussed on pages 42 to 45.
Principal Risks and Uncertainties
41 Petershill Partners plc | Annual Report 2022
Principal Risks and Uncertainties continued
The key areas of risk faced by the Group and mitigating measures are summarised below:
Strategy /
Investment Risk Description/Impact Mitigating Measures
Residual
Risk Trend
1.
Alternative Assets
Industry Risk
The alternative investments industry may
not grow at the same rate as it has in the
past, in line with forecasts or at all. If the
alternative investments industry does not
grow sufficiently, whether as a result of
evolving laws and regulation or any other
risk, the Company’s investments may not
produce attractive returns and the
Operator may not be able to identify
additional investment targets on suitable
terms or at all. In addition, industry
dynamics could negatively impact the fee
rates that managers in the alternative
investments industry are able to charge,
which could negatively impact the
Company’s income from Partner-firms
derived from management fees.
The Company’s revenue streams are
diverse and are composed substantially of
income from Partner-firms derived from
management fee income on contractually
committed, long-dated assets, therefore
minimising the concentration of risk.
Investments in Partner-firms span
multiple asset classes providing
diversification within the alternative asset
industry. The Company has limits on how
much any new investment may represent
as a percentage of Partner FRE or the
Company's gross assets. Board approval is
required when proposed acquisitions
exceed 12% of the Company's market
capitalisation. The Company monitors its
exposure to the different asset classes
which it is exposed to.
2.
Partner-firm
Revenue Risk
The Company’s revenue is largely
dependent on the management fees
generated by the Partner-firms in which
the Company invests. The Company’s
revenue is also largely dependent on the
performance of their funds and the
products they manage, as well
as the growth and profitability of their
businesses. The Company is therefore
exposed to the risk that the Partner-firms
may not be able to generate adequate
management fees and performance fee
related earnings. Additionally, the
investments made by the Partner-firms
include high-risk, illiquid assets. The
Partner-firms may not be able to sell or
otherwise dispose of investments in their
funds when they desire and therefore may
not be able to realise the full value of such
investments, resulting in impact to
performance related fees.
While Partner-firm specific revenue risk
cannot be eliminated, it can be reduced by
diversifying the Company’s investments
across different Partner-firms. The
Operator monitors the concentration of
revenue quarterly. A significant amount of
the Company’s revenues are derived from
a capital base that is long-term. The
Company has limits on how much any new
investment may represent as a percentage
of Partner FRE or the Company's gross
assets. Board approval is required when
proposed acquisitions exceed 12% of the
Company's market capitalisation. The
Company monitors its exposure to the
different asset classes which it is
3.
Investment
Diligence Risk
The due diligence process that the
Operator undertakes in connection with
investments may not reveal all facts that
may be relevant in connection with an
acquisition. Any shortcomings in the due
diligence process in respect of the
Company’s investments, including as a
result of fraud by the seller or target,
could result in diminished returns or
losses on the acquisitions by the Company
compared to the financial projections used
when evaluating such partnership.
Investment decisions are underpinned by
an established and rigorous investment
due diligence process to determine the
feasibility and attractiveness of an
investment. The Operator has a track
record of evaluating and undertaking due
diligence exercises on non-controlling
stakes in alternative asset managers, and
also extensive expertise in negotiating and
structuring bilateral contracts which
govern the minority investor rights. For
each potential acquisition, the Operator
conducts due diligence of the following
types: Partner-firm, product, asset-level,
operational, legal and audit and tax.
Key
Residual risk Trend
Low Medium High Increased No change Decreased
Petershill Partners plc | Annual Report 202242
Strategy /
Investment Risk Description/Impact Mitigating Measures
Residual
Risk Trend
4.
Macroeconomic
Risk
Macroeconomic uncertainty on a global
basis due to rising inflation and interest
rates that may result in increased costs to
the Partner-firms. The possibility of softer
fundraising assumptions and portfolio
realisations for individual Partner-firms can
lead to lower expectations of future income
from Partner-firms. In addition, volatility
and disruption in the equity and credit
markets can adversely affect the underlying
earnings of the Partner-firms and the value
of their earnings, and therefore the
Company’s balance sheet and income.
Rising interest rates may result in reduced
Partner-firm Performance related
Earnings both in frequency as assets are
held for longer, and in quantum as
multiples of realisation are lower. The
impact of inflation on returns may
challenge the ability of Partner-firms to
enhance operating margins given the
challenges of rising costs and may
potentially impact profitability. The
Company uses leverage as part of its
overall operating strategy, which may be
impacted by changes in interest rates.
The Company’s revenue streams are
diverse and are composed substantially of
contractually committed, high and stable
income derived from Partner-firms’
management fee income on long-dated
assets. Additionally, there is a rigorous
investment due diligence process which
analysis and stress testing to ensure
factors and outcomes.
The Company monitors its ongoing risks to
interest rates and foreign exchange. The
Company’s long-term debt is at fixed
rates.
Partner-firms operating within the private
credit, private real assets, credit and some
absolute return asset classes may
potentially benefit from increases in rates
and inflation, as these asset classes have
historically presented a hedge to rising
rates and inflation.
5.
Regulatory Risk
The Company and the Operator are subject
to extensive laws and regulations in
various jurisdictions. These laws and
regulations (and the interpretations
thereof) may change, and the imposition
of stricter laws and regulations could
result in increased compliance costs for
the Partner-firms and the Operator or
could limit their operational flexibility and
efficiency. The Company is also subject to
Listing Rules and UK-Adopted
International Accounting Standards.
Moreover, governmental policy changes
and regulatory or tax reform (for example,
in relation to prevailing tax rates, the
treatment of a foreign corporation as such,
or the treatment of carried interest) could
also have a material effect on the Operator
and/or the Partner-firms and their funds
and the products they manage.
The Operator, Board, Administrator and
Company Secretary have established
policies, procedures and oversight
functions to ensure compliance with
applicable laws and regulations. Changes
to the regulatory framework, as well as
compliance with all reporting, notifications
and filing requirements are closely
monitored. The Operator also leverages the
expertise of its external tax and legal
counsel and other advisors as needed to
analyse the impact of potential
governmental policy changes and
regulatory or tax reform.
6.
Key Persons Risk
The Operator relies on highly skilled
qualified investment professionals.
Because the Operator will perform
investment management services that are
integral to the Company’s operations and
financial performance, a failure by the
Operator to retain its senior leadership or
to recruit and retain additional qualified
investment, sales and other professionals
could have a material adverse effect on
the Company’s investment performance
and, as a result, its business, financial
condition, results and the value of its
assets.
The Operator benefits from the global
footprint of Goldman Sachs, whose
professional employees possess a
combination of deep industry knowledge,
financial expertise and operating
capabilities. The Board believes that the
Operator has appropriate experience and
expertise to implement the Company’s
investment policy and strategies
successfully. A strong culture of excellence
is essential to attract and retain the best
talent. The Operator’s strategy for its
human resources is focused on attracting
individuals with drive and values aligned
with its wider team and retaining and
rewarding those individuals who make an
exceptional contribution to the team.
43 Petershill Partners plc | Annual Report 2022
Principal Risks and Uncertainties continued
Strategy /
Investment Risk Description/Impact Mitigating Measures
Residual
Risk Trend
7.
Operator,
Administrator and
Service Provider
Resiliency and
Performance Risk
The Company has no employees and relies
on the Operator, Administrator, and other
service providers. Failure by the Operator
or other third-party service providers to
the Operator, the Administrator and other
service providers to carry out their
obligations could have a material adverse
effect on the Company’s performance.
The Company has entered into detailed
agreements with the Operator,
Administrator and other service providers
and the performance of all service
providers is formally reviewed annually.
The Board believes this risk is mitigated by
the fact that the Operator and the
Administrator are well-established and
resourced companies with robust track
records. Both have robust business
continuity plans in place, which are
updated and tested on an ongoing basis,
to ensure the continued ability to service
the Company in the event there are
disruptions of normal operations.
8.
Partner-firm
Reporting Risk
The Operator depends on the continuation
of its relationships with Partner-firms in
order to maintain current data on its
investments and private market activity.
Restrictions on the Operator’s ability to
use the data it obtains for its reporting
and monitoring processes could adversely
affect its ability to provide the same level
of disclosure for the Company, which could
have a material adverse effect on the
Company.
The Operator has contractual information
rights in place for all Partner-firms,
communicating information, to provide
the Company with sufficient information
for its regulatory reporting requirements.
The Operator has implemented processes
to review certain financial and other
information reported by the Partner-firms
and assess for reasonableness.
9.
Cyber /
Information
Security Risk
Cyber and security risks could adversely
affect the Operator and the Company. The
Operator and the Company rely on its
information technology infrastructure to
conduct daily business operations, and any
cybersecurity attacks or threats to this
infrastructure could result in business
disruption and the breach of confidential
and proprietary information.
The Operator is committed to
implementing the highest standards of
information security to protect the privacy
and confidentiality of information related
to its activities.
The Operator has implemented processes,
procedures and internal controls designed
to mitigate cybersecurity risks and cyber
intrusions, including maintaining physical,
electronic and procedural safeguards to
protect the information against loss,
misuse, damage or modification and
unauthorised access or disclosure.
Additionally, the Operator has
a dedicated Security Incident Response
Team which handles information security
threats and incidents that may have an
impact on the confidentiality, integrity or
availability of the Operator’s information
and technology environment.
10.
Liquidity Risk
The risk that the Company is not able to
meet its financial obligations as they fall
due or can do so only at an excessive cost.
To protect the Company, the Operator
monitors its liquidity needs including
those under stressed conditions. The
liquidity is monitored to ensure there are
sufficient liquid assets at all times to cover
cash flow movements and fluctuations in
funding and enable the Company to meet
all financial obligations and to support
anticipated growth. Liquidity conditions
under stressed conditions are considered
as part of the Guidelines on liquidity stress
testing in UCITS and AIFS by the European
Securities and Markets Authority (“ESMA”).
Petershill Partners plc | Annual Report 202244
Emerging Risks
Emerging risks are risks to which the Group is exposed and are
uncertain in terms of their impact and timelines. These risks have
the potential to become principal risks but are not yet considered
to be so. The Audit and Risk Committee is responsible for carrying
out an assessment of the emerging risks, and overseeing
procedures for identifying emerging risks as well as procedures
for managing these risks. The Audit and Risk Committee, as part
of its responsibilities, identifies and assesses emerging risks to be
referred to the Board for review. This process includes monitoring
the external environment for global trends or potential changes
that may impact the drivers of growth and performance of the
Company. Emerging risks may also arise from internal factors.
Monitoring pressure points on operational processes, personnel
and third-party vendors is another avenue for identifying
emerging risks. The monitoring and management of emerging
emerging risk may potentially become a principal risk and the
level of impact to the Group if it were to become a principal risk.
Since the IPO, the Company has witnessed significant geopolitical
turbulence and the continuing effects of the COVID-19 pandemic,
as well as a broader market sell-off in the alternative asset
management sector and a rotation out of higher-growth stocks as
markets anticipated further rises in interest rates.
The Board, via the Audit and Risk Committee, has discussed
several emerging risks through the year, which include
geopolitical risks, elevated levels of inflation, higher interest
rates and implications of the UK Government’s audit reform.
Viability Statement
In accordance with the UK Corporate Governance Code (the “UK
Code”) and the Association of Investment Companies Code of
Corporate Governance (the “AIC Code”), the Board has assessed
the viability of the Company. The Board has considered the
Group’s strategic plan as well as the Group’s principal risks in its
assessment. The Board has chosen a period of three years to
31 December 2025 for its formal assessment of viability on the
basis that assumptions made during this period are the most
reliable due to the visibility of earnings from investments in
Partner-firms. The Board is satisfied that this forward-looking
assessment of the Group is sufficient to enable a reasonable
statement of viability.
The assessment reflects on the Group’s Acquisition Strategy
and Investment Policy as outlined on pages 22 to 24. Key
considerations in the assessment are:
• The investments in Partner-firms are long-term investments
with no plan to exit;
• The amount and timing of returns from investments in
Partner-firms comprised management fee income,
performance fee income and investment income;
• The fixed operational costs of the Group are low relative to its
recurring revenues; and
• The Operator charge is variable based on the income from
investments in Partner-firms.
The assessment of viability requires the Board to consider the
principal risks to the Group, which appear on pages 42 to 44.
While all of the risks outlined may have an impact on the Group’s
performance, there are certain risks that are more likely to have a
greater impact on the future solvency and liquidity of the Group
in the three-year period considered:
• Partner-firm revenue risk – the risk that Partner-firms are
unable to generate adequate fees, which would result in
lower-than-expected revenue for the Group; and
• Macroeconomic risks – volatility in the markets may affect the
Partner-firms’ ability to realise investments, which could delay
or reduce the income the Group is expected to earn.
The Group’s investments in Partner-firms are long-term and the
Group has no exit strategy for its investments. As a result, the
Group expects long-term recurring revenues from its investments
in Partner-firms. Income from investments in Partner-firms is
derived from management fee income, performance fee income
and investment income. Management fee income is typically
based on private capital commitment funds managed by
the Partner-firms that are locked up for a period of eight
or more years.
The income from management fees is therefore stable and
recurring. Income derived from performance fee income
underlying fund and underlying investment performance of the
Partner-firms.
The Group has a low, and relatively stable, cost structure. The
Operator charge is variable and based on the income earned by
the Group from its investments in Partner-firms. The other
operating expenses and finance costs are considerably lower than
the income derived from management fee income. The Group has
a strong balance sheet with substantial funding headroom in
place. The Group’s unsecured loan notes are long-term in
duration and the interest rates are fixed. The Board reviewed the
key risks and considered options available to the Group to
mitigate these risks and to ensure the viability of the Group.
Stress testing has been performed, which considers the impact of
the Group’s key risks over the three-year period to 31 December
2025. A severe but plausible downside scenario was assessed,
which includes:
• A 90% reduction in income from Partner-firms derived from
performance fee income and investment income because of
underlying fund and underlying investment performance risk
of the Partner-firms. This translates to a substantial reduction
in overall income from Partner-firms over the three years. Such
a reduction might be a result of Partner-firm revenue and
macroeconomic risks;
• A 20% decline in the fee-paying AuM held by absolute return
funds, while private market funds AuM remains relatively stable.
This would have a slight impact on the management fee income;
• The Operator charge is based on the amount of income from
Partner-firms and therefore changes commensurate with the
change in income from Partner-firms;
• While there is the possibility of higher interest rates in the
future, this would not have a material negative effect since the
Group's long-term debt has fixed interest rates; and
• Any reduction in the valuation of investments at fair value
through profit and loss would not impact free cash flow, debt
covenants or leverage limitations.
The severe but plausible downside scenario also applied the
following actions which could be reassessed, if the circumstances
determined this to be necessary:
• maintaining the Group’s dividend policy
• putting a hold on additional investments in Partner-firms
45 Petershill Partners plc | Annual Report 2022
Principal Risks and Uncertainties continued
The Group’s ability to pay its expenses, including the Operator
charge, can continue under the severe but plausible downside
scenario. The Group would remain in compliance with its financial
covenants, satisfy the requirements under ESMA’s liquidity stress
tests guidelines for alternative investment funds and continue to
conform to the leverage limits prescribed in the Acquisition
Strategy and Investment Policy.
The Board has concluded that it has a reasonable expectation
that the Group will be able to continue in operation and meet its
liabilities as they fall due, for the three years to 31 December
2025. The Board’s assessment has been made with reference to
the Group’s current position, the Group’s outlook, its strategy and
the Group’s principal risks.
Given the above, the Board also considered it appropriate to
prepare the financial statements on the going concern basis as
set out on pages 95 and 96.
Going Concern Statement
In accordance with the Companies Act 2006, the Board has
a responsibility to evaluate whether the Group has adequate
resources to continue its operational existence for the
foreseeable future and at least for the 12 months following
the issuance of the financial statements.
The Group’s business activities are set out in the Strategic Report
on pages 2 to 25. The financial position of the Group is described
in the Operator’s Report on pages 26 to 31. The Board has taken
into account the Group’s risk management process set out on
page 41. The Board has made an assessment of going concern,
which takes into account the current performance and the
Group’s outlook, using information that is available as of the date
of these financial statements.
The Group’s business model involves earning income from
investments in Partner-firms. The Group’s investments
in Partner-firms are long-term and the Group has no exit strategy
for its investments. As a result, the Group expects long-term
recurring revenues from its investments in Partner-firms. Income
from investments in Partner-firms is derived from management
fee income, performance fee income and investment income.
Management fee income is typically based on private capital
commitment funds managed by the Partner-firms that are locked
up for a period of eight or more years. The income from
management fees is therefore stable and recurring. Income
derived from performance fee income and investment income
from Partner-firms is dependent on underlying fund and
underlying investment performance of the Partner-firms. The
Group has good visibility into the income from investments in
Partner-firms.
The Group has a low, and relatively predicable, cost structure.
When taken together with the visibility into the income from
investments in Partner-firms the Group has reasonably
stable earnings.
As at 31 December 2022 there was $483 million invested in
money market investments and $98 million of cash and cash
equivalents on an APM basis. There were liabilities related to
Notes payable of $500 million at 31 December 2022.
In making the assessment of going concern, the Board has
considered the scenario prepared in conjunction with the
viability statement.
The Board acknowledges its responsibilities related to the
financial statements. After making an assessment of going
concern, the Board has concluded that the preparation of the
financial statements on a going concern basis for at least
12 months from the date of the approval of the financial
statements is appropriate.
The 2022 Annual Report and Financial Statements for Petershill
Partners incorporates:
• The Strategic Report;
• The Report of the Directors;
• The Corporate Governance Report;
• The Directors’ Remuneration Report; and
• The Consolidated Financial Statements.
Each of which have been approved by the Board of Directors
of Petershill Partners.
Naguib Kheraj
Chairman
5 April 2023
Petershill Partners plc | Annual Report 202246
Governance
Report
48 Our Board
50 Report of the Directors
53 Corporate Governance Report
62 Audit and Risk Committee Report
65 Directors’ Remuneration Report
69 Directors’ Responsibilities Statement
47 Petershill Partners plc | Annual Report 2022
Our Board
An Experienced and
Independent Board
As at the date of this report, the Board comprises five individuals from relevant and
complementary backgrounds. The Directors are of the opinion that the Board as a whole
comprises an appropriate balance of skills, experience and diversity. The Directors of the
Company who were in office during the year and up to the date of signing the financial
statements are listed below.
Mr Kheraj began his career at Salomon Brothers in 1986
and went on to hold senior positions at a number of leading
financial institutions. Over the course of 12 years at
Barclays, Mr Kheraj served as Group Finance Director and
Vice-Chair and in various business leadership positions in
wealth management, institutional asset management and
investment banking. He also served as Chief Executive
Chairman of Standard Chartered plc, a major international
bank. During his tenure of over 8 years at Standard Chartered
he served as Chairman of the Board Risk Committee and the
Mr Kheraj is Chairman of Rothesay Life, a specialist
pensions insurer. Mr Kheraj is a Senior Adviser to the Aga
Khan Development Network; he serves on the boards of a
number of entities within its network and chairs its
Endowment Committee. He has also been an advisor to
member of the Finance Committee of the University of
Cambridge and a Member of the Board of Gavi, The Vaccine
Alliance where he chairs the Audit and Finance Committee.
Mr Kheraj is a former Non-Executive Director of NHS
England and served as a Senior Adviser to Her Majesty’s
Revenue and Customs and to the Financial Services
Authority in the United Kingdom. He also served as a
member of the Investment Committee of the Wellcome
Trust and the Finance Committee of Oxford University Press.
Mr Kheraj was educated at Dulwich College London and
Cambridge University where he graduated with a degree
in Economics.
Mr Simmons began his career as a commercial litigation
attorney in Bermuda in 1997 before moving to the United
States for business school and joining Goldman Sachs as
an investment banker in 2004. Returning to Bermuda, he
became Managing Partner/Chief Executive Officer of a
reinsurance law firm for 14 years. Mr Simmons is currently
Chair and Chief Executive Officer of Rose Investment
Limited, a Bermuda-based advisory business focused on
financial services and corporate restructuring.
Mr Simmons has a vast array of board experience. He was
Lead Director and then Chair of the Board of the Bank of
N.T. Butterfield & Son Limited, where he served from 2011
to 2017 during its ownership by private equity to after its
listing on the NYSE, having led a co-investment in the bank
alongside Carlyle and CIBC. Mr Simmons served on the board
of Bermuda’s financial services regulator, the Bermuda
Monetary Authority, for 10 years. He also previously served
as a Director at FIL Limited and currently serves as a
Director at Eight Roads, the international public and
private investing platforms of Fidelity.
Mr Simmons also serves as a Senior Advisor at Further
Global Capital Management, a private equity firm focused
on financial services companies.
Mr Simmons is Chair of the Public Funds Investment
Committee, responsible for the investment of Bermuda’s
pension funds, where he has spent 16 years as a member
of the Board. He currently leads the Pension Fund Reform
Committee established to address the underfunded status
of Bermuda’s pension funds, serves as an advisor to
Bermuda’s Minister of Finance and sits on the Board of
Argus Group, a Bermuda multiline insurer. Mr Simmons
was appointed as a Director to the Ivy UK Co-Invest Vehicle
II Limited and Ivy Re II Limited in April 2022.
Mr Simmons attended the University of Kent at Canterbury
where he graduated with a law degree, the Inns of Court
School of Law where he qualified as a barrister, and
Harvard Business School where he graduated with a
Masters in Business Administration.
Naguib Kheraj
Chairman of the Board
Appointed 4 September 2021
Everard Barclay Simmons
Senior Independent Director
Appointed 4 September 2021
A
R
R
N
N
ME
ME
Committee Membership
A
Audit and Risk
Committee
R
Remuneration
Committee
N
Nomination
Committee
ME
Management Engagement
Committee
Chair
Petershill Partners plc | Annual Report 202248
Ms Durbin began her career in the mid-1980s as a qualified
and practising barrister and solicitor in New Zealand. In
1987, she moved into banking with ANZ Banking Group and
relocated to the United Kingdom in 1990. Ms Durbin has
more than 30 years’ international business and banking
experience across Asia, Africa and the Middle East. Ms
Durbin joined Standard Chartered, an international banking
group, in 1995 and went on to hold a number of senior
positions including being CEO and executive director of a
large, publicly listed banking subsidiary in Thailand and,
separately, as CEO in the Philippines. She also served as
Group Company Secretary of Standard Chartered and as a
member of the banking Group Executive Committee with a
broad portfolio of responsibilities.
Ms Durbin has served on public company boards since 2012
and is a non-executive director and Chair of the
Remuneration Committee at Persimmon Plc. She is
currently the Senior Ringfence Bank director and
Remuneration Committee Chair on the board of Santander
UK PLC and Chair of Cater Allen Private Bank.
Formerly Ms Durbin held roles as Non-Executive Director
Non-Executive Director of Ladbrokes Coral PLC and
Fleming Family & Partners Ltd. She was also Chair of
Kingdom, advising the Financial Conduct Authority on
provider of executive coaching, mentoring and leadership
development services primarily through Merryck & Co. Ltd
and, until July 2021, was its Board Chair.
Ms Durbin was educated at the University of Auckland,
Coaching from Ashridge Business School. She is also
Annemarie Durbin
Non-Executive Director
Appointed 4 September 2021
Ms Handling began her career in 1988 at Allen & Overy LLP
before moving to Weil, Gotshal & Manges LLP to help open
their office in London. She became a partner there in 1998
and moved a team to Ashurst LLP in 2001 where she
founded a securities and structured finance practice.
General Counsel in Europe for Barclays Investment Bank
from 2011 to 2015, where she served on the EMEA
Executive Committee and Global Operating Committee.
European General Counsel, where she served on various
boards and committees and led major regulatory
implementation projects including a two-year Brexit
preparation project.
Ms Handling left BlackRock in 2019 to take up a
non-executive role with the Government Legal Department
where she remains on the Board today. Since that time, she
has developed a career as an executive coach, now working
with leadership advisory firm Pelham Street.
Ms Handling also spends time working with various
charities in the criminal justice sector and is currently
Deputy Chair of St Giles Trust, as well as Chair of Spark
Inside. Ms Handling was formerly a trustee of the charity
Working Chance, which she resigned from in June 2022.
Ms Handling was educated at Wycombe High School and
Exeter University where she graduated with a degree in
Law (LLB) before attending Guildford Law School.
Erica Handling
Non-Executive Director
Appointed 4 September 2021
Mr Merson began his career in the financial services
division of Arthur Andersen in London in 1989, becoming
to banking and investment businesses throughout Europe
before moving to Tokyo as steward of Andersen’s
investment into its financial services business in Japan.
in Deloitte Business Consulting.
In 2003, Mr Merson joined Barclays PLC as Group Financial
Controller, as the bank adopted International Accounting
Standards. In a 14-year career at Barclays he went on
Director, in which role he was leader of the global
Mr Merson is a founding partner of Veritum Partners
Limited, advisors to European financial services companies
on their interaction with the equity market.
In a non-executive capacity, Mr Merson is Chair of Absa
Securities UK Limited and a governor of Sevenoaks School.
He was formerly an independent non-executive director of
Absa Group Limited, chairing the Board Finance Committee,
the Group Risk and Capital Management Committee and
the Group Credit Risk Committee.
Mr Merson is a chartered accountant and a graduate of
Oxford University.
Mark Merson
Non-Executive Director
Appointed 4 September 2021
A
A
A
R
R
R
N
N
N
ME
ME
ME
49 Petershill Partners plc | Annual Report 2022
Report of the Directors
Report of the Directors
The Directors present their Annual Report and Audited Financial Statements of the Group for
the year ended 31 December 2022. The Corporate Governance Report on pages 53 to 61
forms part of this report.
Throughout the financial year, the Board was comprised of five
Non-Executive Directors, whose details can be found on pages 48
and 49.
Capital Structure
The Company is incorporated and registered in England and
Wales under the Companies Act 2006 with registered number
13289144 as a public limited company under the name Petershill
Partners plc.
As at 31 December 2022 the Company’s issued share capital
comprised 1,135,399,597 Ordinary Shares (2021: 1,156,696,029).
No shares were allotted during the year.
Authority to Purchase Own Shares
At the AGM held on 31 May 2022, the Company was generally and
unconditionally authorised to make market purchases (within the
meaning of section 693(4) of the Companies Act 2006) of its
Ordinary Shares of $0.01 each in the capital of the Company,
subject to the following conditions:
i. the maximum number of Ordinary Shares authorised to be
purchased is 115,669,602, representing 10% of the Company’s
issued Ordinary Share capital as at 26 April 2022;
ii. the minimum price (excluding expenses) which may be paid for
an Ordinary Share is $0.01;
iii. the maximum price (excluding expenses) which may be paid for
each Ordinary Share is the higher of: (i) an amount equal to
105% of the average of the middle-market quotations of an
Ordinary Share as derived from the London Stock Exchange
Daily Official List for the five business days immediately
preceding the day on which the Ordinary Share is contracted to
be purchased; and (ii) an amount equal to the higher of the
price of the last independent trade of an Ordinary Share and
the highest current independent bid for an Ordinary Share on
the trading venue where the purchase is carried out;
iv. the authority shall expire at the close of the AGM of the
Company held in 2023 or 30 June 2023, whichever is earlier;
and
v. a contract to purchase Ordinary Shares under the authority
may be made before the expiry of the authority (as per
paragraph iv above), and concluded in whole or in part after
the expiry of the authority (as per paragraph iv above).
During the year, 21,296,432 shares were purchased for a total
cash consideration of $50 million with 19,221,152 purchased
under the above authority and 2,075,280 purchased under
authority existing from the time of the Company’s IPO. The
buyback programme concluded on 9 November 2022. More
information may be found in note 14 on pages 106 and 107.
Major Interests in Shares
Significant shareholdings as at 31 December 2022 are
detailed below.
Ordinary Shares held %
31 December 2022
Petershill Funds 76.0%
Blacksheep Fund Management 2.2%
The Company has not been notified of any changes to the
significant shareholdings detailed above between 31 December
2022 and the date of this report.
Shares held by Goldman Sachs Asset
Management’s Private Funds
Approximately 76% of Petershill Partners shares are held by the
Petershill Funds’ private funds and funds managed for certain
co-investors. Teams within Goldman Sachs Asset Management
manage these shares and exercise discretion over how and when
they could be sold in future, on behalf of the investors in the
Petershill Funds.
The following table provides further details on the holdings of the
Petershill Funds as at 31 December 2022.
As at 31 December 2022
Amount %
PH II GP Aggregator LP 108,330,412 9.5%
PH II IM Aggregator LP 128,249,969 11.3%
PH PE GP Aggregator LP 143,267,721 12.6%
PH PE IM Aggregator LP 273,135,529 24.1%
VF VII GP Aggregator LP 43,906,398 3.9%
VF VII IM Aggregator LP 84,910,220 7.5%
Co-Invest GP Aggregator LP 27,347,968 2.4%
Co-Invest IM Aggregator LP 54,938,496 4.8%
Petershill Partners plc | Annual Report 202250
The Petershill II fund complex holds shares in Petershill Partners
through PH II GP Aggregator LP and PH II IM Aggregator LP, the
Petershill PE or Petershill III fund complex holds shares in
IM Aggregator LP, the Vintage VII fund complex holds shares in
Aggregator LP and certain co-investor structures hold shares
Co-Invest IM Aggregator LP. In addition, co-investors are able
structures at any time, subject to notice, lock-up and other
customary requirements.
The interests of the Petershill II fund complex, the Petershill PE
fund complexes and the co-investor structures, on the one hand,
and the interests of the Vintage VII fund complex, on the other
hand, are managed on a day-to-day basis by distinct teams within
the larger Goldman Sachs Asset Management platform. In
within the pertinent management structures at any time, subject
Vintage VII Funds (VF VII)
While the management structure of each of the Vintage VII Funds
is slightly distinct due to the difference in jurisdiction of
incorporation and applicable legal requirements, Goldman Sachs
Asset Management, L.P., which forms part of Goldman Sachs
Asset Management, has the role of an investment manager/
investment advisor, as applicable.
Within Goldman Sachs Asset Management, L.P., there is (a)
a specific team (“Vintage Team”) responsible for day-to-day
management of investments to pursue the investment objective
of Vintage VII Funds and (b) a specific investment committee
responsible for oversight and final say on investments.
With respect to co-investments with the Petershill Funds,
including holdings in the Company, the Vintage Team seeks input
from (and may give weight to the views of) the Petershill team
within the Operator but does not delegate decision making
For FTSE purposes, we believe that this setup is analogous
management institution but with distinct and different
Companies Act 2006 Disclosures
Companies and Groups (Accounts and Reports) Regulations 2008,
the Directors disclose the following information:
• the Company’s capital structure is detailed in note 14 to the
Consolidated Financial Statements. Ordinary Shareholders are
entitled to attend and vote at all general meetings of the
Company. On a show of hands, every holder of Ordinary Shares
in the capital of the Company who is present in person shall
have one vote and, on a poll, every holder of Ordinary Shares
present in person or by proxy shall have one vote per Ordinary
Share. All Ordinary Shares are non-redeemable;
• there are no restrictions on voting rights and the Company is
not aware of any agreement between holders of securities that
would result in restrictions on the transfer of securities or on
voting rights;
• other than as described below, there are no restrictions on the
transfer of securities of the Company, subject to applicable law
and regulation and contractual lock-ups for certain
Shareholders;
• the Board may, in its absolute discretion, decline to transfer,
convert or register any transfer of Ordinary Shares to any
person: (i) whose ownership of Ordinary Shares may cause the
Company’s assets to be deemed “plan assets” for the purposes
of the US Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) or the US Internal Revenue Code of 1986,
as amended (“the US Tax Code”); (ii) whose ownership of
Ordinary Shares may cause the Company to be required to
register as an “investment company” under the US Investment
Company Act of 1940, as amended (“the US Investment
Company Act”) or to lose an exemption or a status thereunder
to which it might otherwise be entitled (including because the
holder of Ordinary Shares is not a “qualified purchaser” as
defined in the US Investment Company Act); (iii) whose
ownership of Ordinary Shares may cause the Company to be
required to register under the US Exchange Act of 1934, as
amended (“the US Exchange Act”) or any similar legislation; (iv)
whose ownership of Ordinary Shares may cause the Company
to be a “controlled foreign corporation” for the purposes of the
US Tax Code or may cause the Company to suffer any pecuniary
disadvantage (including any excise tax, penalties or liabilities
under ERISA or the US Tax Code); (v) whose ownership of
Ordinary Shares may cause the Company to cease to be
considered a “foreign private issuer” for the purposes of the US
Securities Act of 1933, as amended or the US Exchange Act; or
(vi) whose ownership of Ordinary Shares would or might result
in the Company not being able to satisfy its obligations on the
Common Reporting Standard developed by the Organisation
for Economic Co-Operation and Development, the Foreign
Account Tax Compliance Act or such similar reporting
obligations on account of, inter alia, non-compliance by such
person with any information request made by the Company
(each person described in (i) to (vi) above, being a “Non-
Qualified Holder”). Under the Company’s Articles of Association,
the Directors have the power to require the sale or transfer of
Ordinary Shares, or refuse to register a transfer of Ordinary
Shares, in respect of any Non-Qualified Holder;
• subject to consultation with the Operator and within certain
restrictions, the Directors may determine changes to the
Company’s capital structure, including any reduction of capital,
share buybacks (including the use of treasury shares) or issue
of shares or other securities (subject to the existing
shareholder authority granted on 31 May 2022 and which the
Company will seek to renew at its forthcoming AGM);
• there exist no securities carrying special rights with regard to
the control of the Company;
• the Company does not have an employees’ share scheme;
• the rules concerning the appointment and replacement of
Directors are contained in the Company’s Articles of
Association and the Companies Act 2006;
• there are no provisions in the Company’s Articles of Association
relating to amendments to the Articles of Association; there
exist no agreements to which the Company is party that may
affect its control following a takeover bid;
• there exist no agreements between the Company and its
Directors providing for compensation for loss of office that
• the Directors’ responsibilities pursuant to section 172 of the
Companies Act 2006 are as detailed in the Strategic Report
• no political or charitable donations have been made
51 Petershill Partners plc | Annual Report 2022
Business Review and Diversity
A business review is detailed in the Operator’s Report on pages 26
to 31, and the Company’s policy on diversity is detailed in the
Corporate Governance Report on page 56.
Directors’ Indemnity
Directors’ and Officers’ liability insurance cover is in place in
respect of the Directors. The Company’s Articles of Association
state that each Director is entitled to be indemnified out of the
assets of the Company against any liability incurred by them for
negligence, default, breach of duty or breach of trust in relation
to the affairs of the Company to the extent permitted by law
against any loss or liability incurred by them in the execution of
their duties in relation to the affairs of the Company.
Qualifying third-party indemnity provisions were in force for the
financial year and up to the date of this report.
Global Greenhouse Gas Emissions
All of the Company’s activities are outsourced to third parties. The
Company therefore has no greenhouse gas emissions to report
from its operations, nor does it have responsibility for any other
emissions-producing sources under the Companies Act 2006
(Strategic Report and Directors’ Reports) Regulations 2013. For
the same reasons as set out above, the Company considers itself
to be a low energy user under the SECR regulations and therefore
is not required to disclose energy and carbon information.
Stakeholder Engagement
The stakeholders of the Company comprise its Shareholders and
prospective Shareholders, lenders, the Operator, the
Administrator, the Company Secretary, other Service Providers,
Partner-firms, regulators and the community, and the Board
recognises and values these stakeholders and gives regular
consideration to the need to foster the Company’s business
relationships with them. As a public limited company with no
employees, trade suppliers or customers, the Company’s
relationship with its service providers is of particular importance.
The effect of this consideration upon the key decisions taken by
the Company during the year is set out in further detail in the
Strategic Report on pages 36 and 37.
Risks and Risk Management
The Group is exposed to financial risks such as price risk, interest
rate risk, credit risk and liquidity risk, and the management and
monitoring of these risks are detailed in note 18 to the
Consolidated Financial Statements.
Strategic Report
A review of the business and future outlook, the going concern
statement and the principal risks and uncertainties of the Group
have not been included in this report as they are disclosed in the
Strategic Report on pages 2 to 46. In accordance with section
414C (11) of the Companies Act 2006, the Company has chosen
to include in its Strategic Report the following information, which
would otherwise be disclosed in this Report of the Directors:
• Our engagement with suppliers, customers and others in a
business relationship with the Company; and
• Future developments in the business of the Group.
Independent Auditor
The Directors recommend the reappointment of
PricewaterhouseCoopers LLP as the Company’s independent
auditor, and resolutions concerning this and the remuneration of
the Company’s independent auditor will be proposed at the AGM.
At the time that this report was approved:
• so far as each of the Directors is aware, there is no relevant
audit information of which the independent auditor is unaware;
and
• each Director has taken all the steps they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the independent
auditor is aware of that information.
Annual Report
After due consideration, the Directors believe that the Annual
Report and Financial Statements , taken as a whole, are fair,
balanced and understandable and therefore are of the opinion
that the Annual Report provides the information necessary for
Shareholders to assess the position, performance, strategy and
business model of the Group and Company.
The Board recommends that the Annual Report, the Report
of the Directors and the Independent Auditors’ Report for
proposed at the AGM.
Dividend
The Board has recommended a final dividend of $125 million,
equivalent to 11 cents per share, with respect to the year ended
31 December 2022. For more information on the Company’s
dividend policy see page 27.
Subsequent Events
Significant subsequent events have been disclosed in note 21
to the Consolidated Financial Statements.
On behalf of the Board
Naguib Kheraj
Chairman
5 April 2023
Report of the Directors continued
Petershill Partners plc | Annual Report 202252
Corporate Governance Report
The Board is committed to the highest standards of
recommendations of the AIC Code, as explained by the AIC
investment companies, such as the Company. As such, the Board
intends to comply with the AIC Code unless otherwise disclosed
from time to time, as it considers that reporting against the
principles and recommendations of the AIC Code will provide
better information to Shareholders. The AIC Code addresses
additional principles and recommendations on issues that are
against the AIC Code, the Company meets its obligations in
relation to the UK Code. The Company will report to Shareholders
on its compliance with the AIC Code.
The Company became a member of the AIC with effect from
1 October 2021 and has therefore put in place arrangements
The AIC Code and the related AIC Guide are available on the AIC’s
website, www.theaic.co.uk. It includes an explanation of how the
AIC Code adapts the principles and provisions set out in the UK
Code to make them relevant for investment companies.
The Company has complied with the recommendations and
relevant principles and provisions of the AIC Code, where
applicable. However, the Company did not comply with one
provision during the year for the reasons described below.
Principle Provision
AIC Code
provision 18
The Board should monitor and evaluate other
service providers (besides the Operator). The
Board should establish procedures by which
other service providers should report back and
the methods by which these providers are
monitored and evaluated.
The Directors felt that, as it was the first full
year of operation, a formal evaluation should
The Company has complied with the recommendations of the UK
Code, except those relating to:
• the role of the chief executive;
• executive directors’ remuneration;
• the need for an internal audit function;
• engagement with the workforce; and
• whistleblowing.
The Board considers these provisions are not relevant to the
position of the Company, being an externally managed company.
In particular, all of the Company’s day-to-day management and
administrative functions are outsourced to third parties. As a
result, the Company has no executive directors, employees or
internal operations. The Company has therefore not reported
further in respect of these provisions. The Board receives updates
and assurance from its service providers that requisite standards
are met concerning these provisions and that appropriate
systems are in place to continuously monitor their application.
The Board
The Company is led and controlled by a Board of Directors, who
are collectively responsible for the long-term success of the
Company. It does this by creating and preserving value and has
acting in the interests of Shareholders, other stakeholders and
wider society as its foremost principle. The importance of the
Board’s role to the delivery of the Company’s purpose, values and
strategy is further outlined within the Strategic Report, in the
Chairman’s Statement (pages 8 and 9) and in our Business Model
(pages 6 and 7).
The Company believes that the composition of the Board will be
a fundamental driver of its success, as the Board must provide
strong and effective leadership of the Company. The Directors, as
their biographies on pages 48 and 49 illustrate, bring a breadth
of knowledge, skills and business experience to the Company. The
Non-Executive Directors provide independent challenge and
review, bringing wide experience, specific expertise and a fresh
objective perspective.
The Company has no employees, and all five Directors, who were
appointed on a Non-Executive basis on 4 September 2021, are
independent of the Company’s Operator and free from any
business or other relationship that could materially interfere with
the exercise of their independent judgement.
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the Directors as disclosed on
pages 50 to 52. The Board operates under a framework for corporate governance which is
appropriate for closed-ended investment funds. This report describes how the Company has
applied the principles identified in the AIC Code during the year ended 31 December 2022.
53 Petershill Partners plc | Annual Report 2022
Corporate Governance Report continued
The AIC Code requires that Directors be subject to an annual
re-election by Shareholders, and the Directors comply with this
requirement. All of the Directors, including the Chairman, shall
offer themselves for re-election at the forthcoming AGM. Having
considered their effectiveness, demonstration of commitment to
the role, length of service, attendance at meetings and
contribution to the Board’s deliberations, the Board approves the
nomination for re-election of all of the Directors at the
forthcoming AGM.
The Chairman of the Board is independent and is appointed in
accordance with the Company’s Articles of Association. Mr Kheraj
is considered to be independent because he, among other criteria:
• has no current or historical employment with the Operator;
• has not provided services to the Operator within the last three
years; and
• has no current Directorships or partnerships in any other
investment fund managed by the Operator.
The responsibilities of the Chairman are available on the
Company’s website.
The Board has regular planned formal meetings at least four
times during a full year and holds such additional ad-hoc
meetings as are necessary to fulfil its duties. See page 58
Directors are given access to the information necessary to assist
them in the performance of their duties. An agenda and Board
papers are circulated to the Directors in advance of Board
meetings to allow them adequate opportunity for review and
preparation for Board meetings. The primary focus at Board
meetings is a review of investment performance and associated
matters such as asset allocation, share price discount/premium
management, investor relations, acquisitions, acquisition policies,
peer group information, capital structure, industry issues and
principal risks and uncertainties – in particular those identified
The Directors have overall responsibility for overseeing the
performance of the Operator and the Group’s activities. The
Company has entered into the Operator Agreement with the
Operator, pursuant to which the Operator is responsible for the
risk and portfolio management of the Group’s assets, and has
Company’s Acquisition Strategy and Investment Policy, subject
• where the value of a proposed acquisition of an Alternative
Asset Manager Stake represents between 5% and 12% of the
Company’s market capitalisation, the Operator will submit such
proposal to the Board for review and consultation; and
• where the value of a proposed acquisition of an Alternative
Asset Manager Stake represents more than 12% of the
Company’s market capitalisation, the Operator will submit such
proposal to the Board for approval and will publicly announce
the acquisition with such announcement also subject to
The Company has adopted a code of securities dealings based on
the requirements of the UK Market Abuse Regulation. The
Directors are responsible for taking all proper and reasonable
steps to ensure compliance with this code.
The Board also considers whether the Company has inside
information and if an announcement obligation has arisen.
systems, procedures and controls in place to enable the Company
to comply with its legal and regulatory obligations in relation
The Board is also responsible for reviewing and considering any
actual or potential conflicts of interest referred to it in
accordance with the Company’s conflicts of interest policy and for
approving any such conflicts. At least annually, the Board reviews
the adequacy of disclosure to Shareholders regarding potential
conflicts of interest and the effectiveness of the Company’s
conflicts of interest policy. In addition, the Board is responsible
for reviewing and approving any related party transactions. Other
key matters requiring Board approval include capital allocation
and capital structure, the Company’s dividend policy and changes
to the Acquisition Strategy and Investment Policy.
In the performance of its duties, the Board is committed to
maintaining a good understanding of the views of Shareholders
and considerable importance is attached to communicating
Senior Independent Director
The Company has appointed Everard Barclay Simmons as Senior
Independent Director. The Senior Independent Director acts
review of the Chairman’s performance. The responsibilities
Company’s website.
Board Committees
The Company has established an Audit and Risk Committee,
formally delegated duties and responsibilities and written terms
of reference that have been approved by the Board. The terms
website and reviewed on an annual basis.
The Directors believe that the Board and its Committees have
independence and diversity of backgrounds to discharge their
duties and responsibilities effectively. The Directors are of the
view that no one individual or small group dominates decision-
making. The Board keeps its membership, and that of its
Committees, under review to ensure that an acceptable balance
members continue to be refreshed. It is satisfied that all Directors
have sufficient time to devote to their roles and that undue
reliance is not placed on any individual.
All Committee members are provided with appropriate induction
on joining their respective Committees, as well as ongoing
Committees is provided to the Board by the respective
Committee attends the AGM to answer any questions on their
Committee’s activities.
Petershill Partners plc | Annual Report 202254
The Board and its Committees are provided with information that
enables the Directors to discharge their duties effectively. All
Directors are able to make further enquiries of the Operator
whenever necessary and have access to the services of the
Company Secretary.
Audit and Risk Committee
The members of the Audit and Risk Committee are Mark Merson
(Chair), Everard Barclay Simmons, Annemarie Durbin and Erica
Handling. The Audit and Risk Committee, the Operator, the
Administrator and the independent auditor have held discussions
regarding the audit approach and identified risks.
The independent auditor attends Audit and Risk Committee
meetings, and private meetings are held routinely with the
independent auditor to afford the opportunity of discussions
without the presence of the Operator and the Administrator.
Advisors and department heads from the Operator are invited to
attend meetings from time to time, and the Chairman of the
Board attends meetings in an advisory capacity. The activities of
the Audit and Risk Committee are contained in the Audit and Risk
Committee Report on pages 62 to 64.
The Audit and Risk Committee, among other things, considers the
appointment, independence and remuneration of the
independent auditor and reviews the financial statements and
accounting policies. The principal duties of the Audit and Risk
Committee are to consider the appointment of the independent
auditor, to discuss and agree with the independent auditor the
nature and scope of the audit, to keep under review the scope,
results, quality and effectiveness of the audit and the
independence and objectivity of the independent auditor, and to
review the independent Auditors’ letter of engagement and
management letter. The Audit and Risk Committee also monitors
and reviews the adequacy and effectiveness of the Group’s
internal control and risk management systems and advises the
Board on the Group’s overall risk appetite. The Audit and Risk
Committee meets at least four times a year pursuant to its terms
of reference.
Remuneration Committee
The members of the Remuneration Committee are Annemarie
Durbin (Chair), Naguib Kheraj, Everard Barclay Simmons, Erica
Handling and Mark Merson. In accordance with the
recommendations of the AIC Code, all members of the
Remuneration Committee are Non-Executive Directors, and the
Chair of the Remuneration Committee has the relevant
experience and understanding of the Company. Given the small
Remuneration Committee. The Remuneration Committee meets
at least once a year pursuant to its terms of reference.
Whilst the Board is ultimately responsible for setting the
Directors’ remuneration, the Remuneration Committee is
responsible for determining the appropriateness of the
Chairman’s remuneration and making recommendations to the
Board accordingly. Any remuneration consists only of fees and
expenses. The Committee is also responsible for reviewing the
ongoing appropriateness and relevance of remuneration levels
for the Board as a whole, and appointing external remuneration
consultants. Directors do not set their own levels of remuneration
and are expected to recuse themselves from discussions
pertaining to their fees. The Committee is responsible for
recommending the Remuneration Policy for approval by
Shareholders, and approval of the annual disclosures in relation
to the implementation of the Remuneration Policy. FIT
Remuneration Consultants LLP remain as advisors to the
Committee on remuneration matters.
Nomination Committee
The members of the Nomination Committee are Naguib Kheraj
(Chair), Everard Barclay Simmons, Annemarie Durbin, Erica
Committee. The Nomination Committee meets at least once
The Nomination Committee leads the process for Board
appointments, reappointments and the succession planning
process. The Nomination Committee is responsible for monitoring
including the skills, knowledge, independence, experience
specifications of the roles and responsibilities, including expected
time commitments, and consideration is given to the existing
experience, knowledge and background of current Board
members, as well as the strategic and business objectives of the
Company. The Committee would then use open advertising and/
or an external search consultancy to facilitate recruitment. The
appointment of any new Director is made on merit and against
objective criteria with the aim of bringing complementary skills
and different perspectives to the Board, while promoting diversity
of gender, and of social and ethnic background. Any additional
external appointments are submitted for Board approval before
the appointment is accepted. The Nomination Committee is
responsible for ensuring a Board evaluation process is conducted,
detailing the nature and extent of any external evaluator’s
contact with the Board and individual Directors, the outcomes
and actions taken and how it influences Board composition. As a
result, the Nomination Committee also makes recommendations
to the Board in relation to the composition of the Audit and Risk
Committee and Remuneration Committee, and any other Board
committees as appropriate.
Management Engagement Committee
The members of the Management Engagement Committee
Management Engagement Committee. The Management
Engagement Committee meets at least once a year pursuant
The role of the Management Engagement Committee is to
provide a formal mechanism for the review of the performance
providers. It carries out this review through consideration
terms and conditions of the advisors’ and service providers’,
appointments with the aim of evaluating performance,
identifying any weaknesses and ensuring value for money
specifically considers matters such as:
• monitoring and evaluating the Operator’s investment
performance and, if necessary, providing appropriate guidance;
• regularly reviewing the continued retention of the
• considering the merit of obtaining, on a regular basis,
• reviewing the level and method of remuneration, the basis
55 Petershill Partners plc | Annual Report 2022
Corporate Governance Report continued
The Management Engagement Committee is responsible for
reviewing the terms of the Operator Agreement and monitoring
and evaluating the performance of the Operator and its
compliance with the Operator Agreement.
During the year, on an informal basis, the Board held private
sessions without service providers present to discuss
performance. Whilst improvement points have been noted and
an action plan is underway, the Board concluded that their
performance had been satisfactory. Furthermore, the Board
evaluation process produced specific action points for the
Operator, Administrator and Company Secretary to enhance their
support to the Board in contribution to the improvement of the
Board’s effectiveness. More information about the Board
evaluation can be found on page 58.
The Management Engagement Committee formally reviewed
the performance of the other key service providers in Q1 2023
following the completion of the Company’s first full-year of
operation. No material issues were raised and all key service
providers continue to deliver in line with the terms of their
engagements. The Performance of the Operator and
Administrator will be kept under review with a deep dive
scheduled for the second half of 2023.
Diversity Policy
The Board acknowledges the importance of all aspects of
diversity for the effective functioning of the Board and commits
to supporting diversity in the boardroom. During the year, the
Board approved a Company specific diversity policy which will be
reviewed at least once a year. It is the Board’s ongoing aspiration
to have a diverse Board, and the Board broadly complies with
gender and ethnicity guidelines currently. Appointments to the
Board are based on merit and objective criteria and within this
context promote diversity of gender, of social and ethnic
background and of cognitive and personal strengths. The Board
also values diversity of business skills and experience because
Directors with diverse skill sets, capabilities and experience
gained from different geographical backgrounds, enhance the
Board by bringing a wide range of perspectives to the Company.
The Board is cognisant that the positions of Chairman and Senior
Independent Director are both currently occupied by men, which
does not yet meet the FCA's targets on board diversity set out at
Listing Rule 9.8.6R(9)(a)(ii). However, the Board notes that such
requirements were not specifically designed with companies
listed under Chapter 15 (which may not have any executive
directors) in mind, which is specifically acknowledged by the
notwithstanding this, the Company has met, or exceeded, the
targets contained in Listing Rule 9.8.6R(9)(a)(i) and (iii). The
Board has committed to setting criteria for future appointments
and in considering succession planning to ensure that the targets
contained in Listing Rule 9.8.6R(9)(a)(ii) are met in future but,
given the short tenure of the Board and in the interest of
continuity, they cannot reasonably be met at this time.
As at the date of this report, and as explained above, the
composition of the Board is as follows (for the purposes of Listing
Rule 9.8.6R(10)):
Number
of Board
members
in scope
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)*
Men 3 60% 2
Women 2 40% 0
Not specified/prefer
0 0% 0
* The positions of CEO and CFO are not applicable to the Company as an externally
managed investment fund. Senior Board positions will continue to be reviewed.
Number
of Board
members
in scope
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)*
White British or other
White (including
minority-white groups) 3 60% 0
Mixed/Multiple
Ethnic Groups 1 20% Chairman
Asian/Asian British – – –
Black/African/
Caribbean/
Black British 1 20%
Senior
Independent
Director
Other ethnic group,
including Arab – – –
Not specified/prefer
– – –
* The positions of CEO and CFO are not applicable to the Company as an externally
managed investment fund.
The Operator has a diverse employee base and continues to
dedicate recruiting resources to increasing diversity across all
positions and levels. The Operator recognises that diversity at
senior management level is an area for improvement, particularly
female representation at executive level.
The Board recognises the importance of an inclusive and diverse
Board in facilitating a collaborative culture and enhancing the
delivery of the Company’s strategic objectives. The Board will
continue to monitor and actively work on ensuring that it
maintains and nurtures a Board that is as diverse as possible. This
baseline representation and understanding will help inform the
development of future initiatives on diversity and inclusion.
Board Tenure and Re-Election
As the Company was incorporated on 24 March 2021 and all
Directors were appointed on 4 September 2021, no issues have
arisen to be considered by the Board with respect to long tenure.
In accordance with the AIC Code, in the event that any Director
shall have been in office (or on re-election would have been in
office at the end of that term of office) for more than nine years,
the Directors will consider further whether there is a risk that
such a Director might reasonably be deemed to have lost
independence through such long service. In accordance with the
AIC Code, the Board recognises that Directors serving nine years
or more may appear to have their independence impaired.
However, the Board may nonetheless consider Directors to remain
independent beyond nine years’ tenure and in such circumstances
would provide a clear explanation within future annual report and
financial statements as to its reasoning.
Petershill Partners plc | Annual Report 202256
The Board approved the Chair Tenure Policy in November 2022.
The Company’s policy on Chair tenure is that the Chair should
normally serve no longer than nine years as a Director and Chair
but, where it is in the best interests of the Company, its
Shareholders and stakeholders, the Chair may serve for a limited
time beyond that. In such circumstances, the independence of the
other Directors will ensure that the Board as a whole remains
independent. The Board's view is that the continuity and
experience of its Directors is important and that a suitable
balance needs to be struck with the need for independence
to Chair tenure will enable it to manage succession planning
more effectively.
The Board considers its composition and succession planning
Company’s AGM on 24 May 2023. A Director who retires at an
AGM may, if willing to continue to act, be elected or re-elected
retires, the Company neither re-elects that Director nor appoints
another person to the Board in the place of that Director, the
retiring Director shall, if willing to act, be deemed to have been
re-elected unless at the general meeting it is resolved not to
Director is put to the meeting and not passed.
See page 55 for a description of the Board appointment process.
Following a full review of the effectiveness of the Board, its
Committees and each Director, the Board considers that each
Director continues to make an effective contribution to the
running of the Company and therefore recommends that
Shareholders vote in favour of the re-election of all Directors
Duties and Responsibilities
The Directors have adopted a formal schedule of matters
specifically reserved for Board approval, which are set out on the
Company’s website. The Board has overall responsibility for the
Company’s activities, including reviewing its investment activity,
performance, business conduct and policy. The Directors also
review and supervise the Company’s advisors and service
providers, including the Operator. The Board continues to
dedicate a considerable amount of time and effort to
embedding the procedures for the Company.
The Directors may delegate certain functions to other parties.
The Board is required to meet formally at least four times a year
and holds such additional ad-hoc meetings as are necessary to
fulfil its duties. Between meetings there is regular contact with
the Operator and the Administrator. The Board is supplied with
information by the Operator, the Administrator and other
advisors in a form appropriate to enable it to discharge its duties.
The Board has responsibility for ensuring that the Company keeps
proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Company and
which enable it to ensure that the financial statements comply
with applicable regulation. It is the Board’s responsibility to
present a fair, balanced and understandable Annual Report,
which provides the information necessary for Shareholders to
assess the position, performance, strategy and business model
other price-sensitive public reports.
The Directors have access to the advice and services of the
Company Secretary, who is responsible to the Board for ensuring
that Board procedures are followed and that it complies with
applicable law and regulations of the London Stock Exchange.
Where necessary, in carrying out their duties, the Directors may
seek independent professional advice and services at the expense
of the Company. The Company maintains Directors’ and Officers’
liability insurance in respect of legal action against its Directors
on an ongoing basis.
The Board’s responsibilities for the Annual Report are set out in
the Directors’ Responsibilities Statement.
What the Board focused on in 2022
The Board considered a number of topics during the year as
detailed below. This list is by no means exhaustive, but provides
an overview of the key subjects covered:
• Capital allocation, share buybacks, dividend and debt
restructuring;
• financial disclosures by way of trading statements, financial
statements, and the Company’s tax statement, based on the
recommendations of the Audit and Risk Committee;
• the governance framework and the application of the AIC Code
of Corporate Governance, policy, terms of reference, and the
structure and conduct of meetings including the quality of
reporting to the Board;
• the identification of risk, risk management, internal controls
and oversight;
• monitoring and reviewing the performance of Partner-firms;
• investor relations and how we communicate with stakeholders;
and
• procedures which the Operator undertakes in relation to ESG.
Looking forwards into 2023, the Board intends to continue to
focus on the above important matters, to ensure new initiatives
are embedded and, taking the macroeconomic backdrop into
consideration, that they remain relevant and proportionate to the
activities of the Company. The Board expects the Operator and
Administrator to continue to raise any matters pertinent to the
success of the Company as a whole.
Directors’ Attendance at Board and
Committee Meetings
One of the key criteria the Board uses when selecting Non-
Executive Directors is their confirmation prior to their
appointment that they will be able to allocate sufficient time to
the Company to discharge their responsibilities in a timely and
effective manner.
The Board formally met 11 times during the year ended
31 December 2022.
Directors are encouraged when they are unable to attend a
meeting to give the Chairman their views and comments on
matters to be discussed, in advance. In addition to their meeting
commitments, the Directors also liaise with the Operator
whenever required and there is regular contact outside the Board
meeting schedule.
57 Petershill Partners plc | Annual Report 2022
Corporate Governance Report continued
Board Performance and Evaluation
In accordance with Provision 26 of the AIC Code, the Board is
required to undertake a formal and rigorous evaluation of its
performance on an annual basis. Such an evaluation of the
performance of the Board as a whole, the Audit and Risk
Committee, the Nomination Committee, the Remuneration
Committee, the Management Engagement Committee, individual
Directors and the Chairman was carried out under the mandate of
the Nomination Committee.
The Board believes that the current mix of skills, experience,
knowledge and age of the Directors is appropriate to the
requirements of the Company.
Whilst this is the first full year of the Board’s operation it was
evaluation commenced in October 2022 and included interviews
with Directors and regular attendees of Board and Committee
meetings to inform the report. The Chairman also conducted
interviews with the Directors to understand their views on the
Board’s strengths and weaknesses, and the Senior Independent
Director collated feedback on the Chairman’s performance
for the year.
The results were considered by the Board at its meeting in
November 2022. The review concluded that, while the Board and
its Committees were operating effectively, there were a number
of areas in which performance could be improved. The Board
considered the recommendations on the work of the Board and
its Committees in relation to each of these areas (i) Governance
and Succession; (ii) Performance and Strategy; (iii) Risk and
Controls; and (iv) the structure and delivery of adequate
information to the Board at meetings.
An action plan covering the recommendations was approved by
the Board in January 2023 and its implementation will be
monitored during 2023.
Directors regularly meet with senior management employed by
the Operator and Administrator, both formally and informally, to
ensure that the Board remains regularly updated on all issues.
Members of the Board are members of professional bodies and/
or serve on other boards, which ensures they keep abreast of the
latest technical developments in their areas of expertise.
The number of meetings of the full Board and Committees during the year ended 31 December 2022 and attendance by each Director are
set out below:
Board
Meetings
(min 4)
Remuneration
Committee
Meetings
(min 1)
Audit and Risk
Committee
Meetings
(min 4)
Nomination
Committee
Meetings
(min 1)
Management
Engagement
Committee
Meetings
(min 1)
31 December 2022
Director A B A B A B A B A B
Naguib Kheraj 11 11 1 1 9 9 1 1 1 1 16 months
Everard Barclay Simmons 11 11 1 1 9 9 1 1 1 1 16 months
Annemarie Durbin 11 11 1 1 9 9 1 1 1 1 16 months
Erica Handling 11 11 1 1 9 9 1 1 1 1 16 months
Mark Merson 11 11 1 1 9 9 1 1 1 1 16 months
Column A: indicates the number of meetings held during the year.
Column B: indicates the number of meetings attended by the Director during the year.
A quorum comprises any two members of the Board or Committee from time to time, to perform administrative and other routine functions on behalf of the Board, subject to such
limitations as the Board may expressly impose on a Committee from time to time.
Naguib Kheraj is not a member of the Audit and Risk Committee but attends as an observer and offers advice.
The Board arranges for presentations from the Operator, the
Company’s brokers and other advisors and service providers on
matters relevant to the Company’s business. The Board will assess
the training needs of Directors on an annual basis as set out in
the terms of reference of the Nomination Committee.
Internal Control and Financial Reporting
The Directors acknowledge that they are responsible for
establishing and maintaining the Company’s system of internal
control and reviewing its effectiveness. Internal control systems
are designed to manage rather than eliminate the failure to
achieve business objectives and can only provide reasonable,
However, the Board’s objective is to ensure that the Group has
appropriate systems in place for the identification and management
of risks. The Directors carry out a robust assessment of the Group’s
principal and emerging risks, including events or circumstances
that might threaten its business model, future performance,
solvency or liquidity and reputation. As further explained in
uncertainties in relation to the Group are outlined in a risk
The Board continually reviews its policy setting. The risk register
is reviewed quarterly and the risk framework is reviewed at least
annually to ensure that procedures are in place with the intention
of identifying, mitigating and minimising the impact of risks
should they crystallise.
The key procedures which have been established to provide
internal control are that:
• the Board has delegated the oversight of internal controls and
financial reporting to the Operator and relies on the Operator
to perform such functions;
• the Board has delegated the day-to-day operations of the
Company to the Administrator, Company Secretary and
Operator; however, it retains accountability for all functions
consideration of the quality and cost of services provided;
• the Board clearly defines the duties and responsibilities of the
Company’s advisors and service providers and appointments
are made by the Board after due and careful consideration. The
Board monitors the ongoing performance of such advisors and
service providers and will continue to do so through the
Management Engagement Committee;
Petershill Partners plc | Annual Report 202258
• the Operator Agreement details defined duties and
responsibilities with lines of control and reporting. There is a
formal structure in place to review the Operator through the
Management Engagement Committee which then makes
recommendations to the Board. The Board is also given
updates on developments arising from the operations and
strategic direction of the underlying investee companies;
• the Administrator provides administration services to the
Company and maintains a system of internal control on which
it reports to the Board;
• the Audit and Risk Committee monitors risks, including those
of the Administrator and Operator.
The Board, via the Audit and Risk Committee, has reviewed the
need for an internal audit function and has decided that the
systems and procedures employed by the Administrator and
Operator, including their own internal controls and procedures,
provide sufficient assurance that an appropriate level of risk
management and internal control, which safeguards
Shareholders’ investments and the Company’s assets, is
maintained. The Board has also considered that the Operator
leverages the risk management framework of Goldman Sachs,
which includes an internal audit function responsible for
independently assessing and validating the effectiveness of
Operator’s internal audit function engaged directly with the
Directors providing assurance reports which were discussed
An internal audit function specific to the Company is therefore
considered unnecessary.
Internal controls over financial reporting are designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
reporting purposes. The Administrator and Operator both operate
risk-controlled frameworks on a continual ongoing basis within a
regulated environment. The Administrator formally reports to the
Board, via the Audit and Risk Committee, quarterly through a
compliance report and holds International Standard on Assurance
Engagements (ISAE) 3402 Type 2 certification. This entails an
independent rigorous examination and testing of its controls and
processes. The Operator formally reports to the Board quarterly
and also engages with the Board on an ad-hoc basis as required.
No weaknesses or failings within the Administrator or Operator
have been identified.
The systems of control referred to above, which have been in
place to date, are designed to ensure that the Company can
effectively identify and manage its risks as well as ensuring that it
is in compliance with all applicable laws and regulations. In
establishing the systems of internal control, regard is paid to the
materiality of relevant risks, the likelihood of costs being incurred
and the costs of control. It follows therefore that the systems of
internal control can only provide reasonable, not absolute,
assurance against the risk of material misstatement or loss. The
Board has reviewed the effectiveness of the risk management and
internal control processes and is satisfied that they are in
accordance with the FRC’s internal control publication titled
Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting.
Operator Agreement
The Company and Goldman Sachs Asset Management Fund
Services Limited entered into an agreement dated 28 September
2021, pursuant to which the Operator was appointed as the
Company’s exclusive alternative investment fund manager
management of the Group’s investment portfolio. The Operator
as the Company’s Acquisition Strategy and Investment Policy
(adopted by the Board in September 2021), the Listing Rules and
applicable law. The Company undertakes in the Operator
Agreement to authorise no one other than the Operator to deal in
the Company’s assets for the duration of the Operator Agreement,
except on the advice of the Operator. A summary of the fees paid
to the Operator are given in note 5 to the financial statements.
Authority of the Operator
Pursuant to the Operator Agreement, the Operator has discretion
to acquire, dispose of and manage the direct and indirect assets
of the Company subject to and in accordance with the Company’s
Acquisition Strategy and Investment Policy. All activities engaged
in under the Operator Agreement by the Operator are at all times
subject to the overall policies, supervision, review and control of
the Board.
The authority granted to the Operator pursuant to the Operator
Agreement is subject to the Company’s Acquisition Strategy and
Investment Policy, pursuant to which the Operator is required
Shareholders before undertaking acquisitions or disposals or
incurring leverage at certain thresholds established by the Board
from time to time.
The Operator may delegate certain of its functions, powers and
duties under the Operator Agreement to any affiliate of the
Operator. The Operator has exercised this power and has
delegated its portfolio management functions to Goldman Sachs
Asset Management International Ltd. which has further
delegated the provision of portfolio management services
investment committee to oversee portfolio construction and
monitoring. Currently, the members of the investment committee
are senior executives of Goldman Sachs selected by the Operator
and serve without compensation for their services.
The Operator is liable for the acts or omissions of any person
59 Petershill Partners plc | Annual Report 2022
Corporate Governance Report continued
Term and Termination
The Operator Agreement has an initial term of seven years until
2026, after which it will automatically renew on an annual basis
until terminated in accordance with its terms.
During the initial term of seven years (the “Initial Term”), the
Operator Agreement is terminable by the Company on three
months’ written notice if, in the opinion of the independent
members of the Board acting reasonably, the Operator is in
material breach of the Operator Agreement and such breach is
incapable of remedy or has not been remedied to the reasonable
satisfaction of the Company during this three-month notice
period. Additionally, during the Initial Term, the Operator
Agreement may be terminated on immediate written notice if (a)
in the opinion of the independent members of the Board acting
reasonably, the Operator has (i) committed an act of wilful
misconduct in relation to the Company which has resulted in
material harm to the Company’s business or (ii) committed an act
of fraud, or (b) the Operator has ceased to have the necessary
authorisations to provide the services it has agreed to provide
under the Operator Agreement and there is no suitable
replacement, in the sole judgement of Goldman Sachs, within the
Goldman Sachs Group.
After the Initial Term, the Operator Agreement is terminable by
the Company if, in the opinion of the independent members of
the Board acting reasonably, (i) the Operator is in material breach
of the Operator Agreement and such breach is incapable of
remedy or has not been remedied to the reasonable satisfaction
of the Company within three months of providing written notice
to the Operator, or (ii) the Operator has committed an act of (a)
wilful misconduct in relation to the Company which has resulted
in material harm to the Company’s business or (b) fraud, or (iii)
the Operator has failed to provide the Company with services to
the standard or with the due care and attention that would be
expected of an Operator of a comparable listed company where
such failure has not been remedied to the reasonable satisfaction
of the Company within six months of the Company giving notice
to the Operator specifying such failure. Additionally, after the
Initial Term, the Operator Agreement may also be terminated
without cause with the approval of at least three-quarters of the
independent members of the Board, subject to the payment
referred to below.
The Operator may terminate the Operator Agreement at any time
(i) by giving 12 months’ notice to the Company, if the Company is
in material breach of its obligations under the Operator
Agreement, (ii) if the Company undergoes a change of control,
(iii) if the Company undertakes a material action, or declines to
act, and such action or inaction is against the advice of the
Operator and where the Operator notified the Company in writing
of its disagreement with such proposed action or inaction or (iv)
the Company materially amends its Acquisition Strategy and
Investment Policy without the prior consent of the Operator.
The Operator Agreement may also be terminated by either party
at any time if the other party is subject to a bankruptcy or other
similar insolvency event (other than in the context of a scheme
for solvent amalgamation or reconstruction).
Other than the payment required to be made in the event that the
Company terminates the Operator Agreement without cause and
described below, termination of the Operator Agreement in
accordance with its terms does not require payment of a penalty
or other additional payment from either party save that the
Company shall pay any outstanding portion of the Recurring
Operating Charge to the Operator pro-rated to the date of
termination of the Operator Agreement and the Company shall
honour any authorised transactions entered into before the date
of any such termination. In the event the Company terminates the
Operator Agreement without cause after the Initial Term, the
Operator will be entitled to receive (i) payment of an amount
equal to the aggregate Recurring Operating Charge for the most
recent four fiscal quarters multiplied by three, and (ii)
crystallisation of the Profit Sharing Charge based on the
immediately prior fiscal quarter’s holding values.
During the year, the Board as a whole reviewed the Company’s
compliance with the UK Code, the Listing Rules, the Disclosure
Guidance and Transparency Rules and the AIC Code. In accordance
with Listing Rule 15.6.2(2)R and having formally appraised the
performance and resources of the Operator prior to the IPO, as
outlined under the roles and responsibilities of the Management
Engagement Committee on pages 55 to 56, in the opinion of the
Directors the continuing appointment of the Operator on the
terms agreed is in the interests of Shareholders as a whole.
Operator Charges and Alignment
The Operator fee structure is designed to align with performance
against the strategic objectives, taking into consideration the
Company’s culture and values. The fee structure is underpinned
by the level of investments in Partner-firms, encouraging the
Operator’s focus on long-term relationships, collaboration and
the success of the Partner-firms and aligning with Company and
Shareholder interests.
As consideration for its services pursuant to the Operator
Agreement, the Company pays the Operator a Recurring
Operating Charge in respect of the management of its assets. The
Recurring Operating Charge is payable quarterly in arrears in an
amount equal to 7.5% of the Group’s income from investments in
Partner-firms, as defined under IFRS, for the relevant quarter.
The Company also pays the Operator a Profit Sharing Charge on a
quarterly basis. The Profit Sharing Charge comprises a profit
sharing charge of 20% of total income from investments in
Partner-firms, as defined under IFRS, from new investments
made by them post Admission, in the relevant quarter (net of any
Recurring Operating Charge in respect of such new investments),
chargeable only after a two-year ownership period from the date
on which the investment closed, and subject to the relevant
investment achieving an investment return of at least 6.0%. The
Profit Sharing Required Investment Return is calculated at the
end of each quarter only on the total invested capital funded to
date; in other words, it excludes any potential deferred
consideration embedded in the total investment amount, if not
yet paid. The Profit Sharing Charge is only applicable if the
average annual return, comprising income from investments in
Partner-firms and change in fair value of the investment since the
date of acquisition, as defined under IFRS, exceeds the Profit
Sharing Required Investment Return of 6.0%.
Petershill Partners plc | Annual Report 202260
While the Group does not typically seek to exit its assets, in the
event that there are realisations, the Company will pay to the
Operator a divestment Profit Sharing Charge of 20% of the total
profits from the divestment (in respect of any investments which
pre-date the Initial Acquisition, to be based upon the contribution
value of such asset pursuant to the Initial Acquisition).
The total profits from the divestment, which represent the capital
return of the investment, will be calculated as the sale price
minus the contribution value of such asset as defined at the Initial
Acquisition, excluding any income from investments in Partner-
firms received over the holding period (and on which the
Company has already paid Recurring Operating Charges and, in
the case of new investments made by them following Admission,
Profit Sharing Charges).
Our Culture
The Company’s purpose is to provide Shareholders with
best-in-class access to the growth and profitability of the
alternative asset management industry, focusing on the quality
The Company has no employees. The Directors are committed
relationship with the Operator, while ensuring that the Operator
manages conflicts of interest appropriately. The Company has
delegated its operating responsibilities to the Operator and is
reassured by and supportive of the Operator’s values.
As the Company has no employees and acts through its Operator,
its culture is represented by the values, attitudes and behaviour
of the Board. The Board encourages a culture that is responsive
which Board meetings are conducted. The Chairman promotes
and facilitates a strong culture of open debate on topics,
encouraging participation and input from all Directors, the
Operator and other advisors and service providers to ensure
The Board sets the strategy for the Company to align with its
purpose. Having a strong culture of collaboration and
transparency will help the Company achieve its strategy to offer
high-quality Partner-firms a “win-win” solution as a source of
partnership and capital, helping them to build enduring
businesses that are responsive to the trends we expect to shape
the future, while maintaining alignment with our Shareholders,
Operator, Partner-firms and service providers. The Board has
focused on ensuring that this culture is embedded across the
Company’s operations and monitors progress in that regard.
The Board undertakes continued engagement with the Operator
and other advisors and service providers to ensure that practices
and behaviour throughout the business are aligned with the
Company’s purpose and strategy. As part of this ongoing
monitoring, during the year the Board requested more granular
information on matters such as the Company’s risk culture
Partner-firms, to ensure any concerns and inconsistencies
Relations with Shareholders
The Board welcomes Shareholders’ views and places great
importance on communication with its Shareholders. The
Company’s AGM provides a forum for Shareholders to meet and
discuss issues with the Directors of the Company. The Chairman
and other Directors are also available to meet with Shareholders
to hear their views and discuss any issues or concerns, including
in relation to Board composition, governance and strategy. The
Operator and the Chairman have held meetings at investor
requests during the year.
The Company reports formally to Shareholders in a number of
ways, including regulatory news releases through the London
Stock Exchange’s Regulatory News Service and announcements in
response to events or routine reporting obligations, including
interim and annual reports outlining performance to 30 June and
31 December respectively, are made available on the Company’s
website. In addition, the Company’s website contains
comprehensive information, including Company notifications,
share information, financial reports, Acquisition Strategy and
Investment Policy, investor contacts and information on the
Board and corporate governance. Shareholders and other
interested parties can subscribe to email news updates by
registering on the website.
The Directors and Operator receive informal feedback from
analysts and investors, which is presented to the Board by the
Company’s brokers. The Company Secretary also receives informal
feedback via queries submitted through the Company’s website,
and these are addressed by the Board, the Operator or the
Company Secretary, as applicable.
Engagement with Other Stakeholders
Service providers have been selected and engaged based on due
diligence and references including consideration of their internal
controls and expertise. The Company has established a
Management Engagement Committee, which reviews the
performance of each service provider annually and provides
feedback as appropriate, to maintain good working relationships.
More information on stakeholder engagement may be found on
pages 34 and 35 of this report.
The Board recognises that relationships with suppliers are
enhanced by prompt payment and the Operator, in conjunction
with the Administrator, ensures all payments are processed
within the contractual terms agreed with the individual suppliers.
Whistleblowing
The Board relies on the Operator’s whistleblowing policies and
has considered arrangements by which staff of the Operator may,
in confidence, raise concerns within its organisation about
possible improprieties in matters of financial reporting or other
matters. It has concluded that adequate arrangements are in
place for the proportionate and independent investigation of
such matters and, where necessary, for appropriate follow-up
action to be taken within their organisations.
By order of the Board
Naguib Kheraj
Chairman
5 April 2023
61 Petershill Partners plc | Annual Report 2022
Audit and Risk Committee Report
Audit and Risk Committee Report
The Audit and Risk Committee, chaired by Mark Merson, operates
within clearly defined terms of reference which are available on
the Company’s website and include all matters indicated by
Disclosure Guidance and Transparency Rule 7.1, the AIC Code and
the UK Code. Its other members are Everard Barclay Simmons,
Annemarie Durbin and Erica Handling. In line with corporate
governance best practice, the Chairman of the Board is not a
member of the Committee but attends in an advisory capacity.
Members of the Audit and Risk Committee must be, and are,
independent of the Company’s independent auditor and Operator.
The Audit and Risk Committee meet no less than four times in a
year at appropriate points in the reporting and auditing cycle and
at such other times as the Audit and Risk Committee Chair shall
require. The Audit and Risk Committee meets the independent
auditor at least once a year without the presence of the Operator
or the Administrator.
The Committee members have considerable financial and
business experience, and the Board has determined that the
membership as a whole has sufficient recent and relevant
Responsibilities
The main duties of the Audit and Risk Committee are:
• to monitor the integrity of the Group and Company’s financial
statements and regulatory announcements relating to its
financial performance, and to review significant financial
reporting judgements;
• to report to the Board on the appropriateness of the Company’s
accounting policies and practices;
• to consider the ongoing assessment of the Group as a going
concern and the assessment of longer-term viability;
• to review the valuations of the Company’s investments
prepared by the Operator, and provide a recommendation
• to oversee the relationship with the independent auditor,
including agreeing its remuneration and terms of engagement,
reviewing reporting, monitoring independence, objectivity and
effectiveness, ensuring that any non-audit services are
appropriately considered, and making recommendations
to the Board on the independent auditors’ appointment,
reappointment or removal, for it to put to the Shareholders
• to monitor and consider annually whether there is a need
• to keep under review the effectiveness of the Group’s internal
controls, including financial controls and risk management
systems;
• to review and consider applicable requirements of the UK Code,
the AIC Code, and the AIC Guidance on Audit Committees; and
• to report to the Board on how it has discharged its
responsibilities.
The Audit and Risk Committee is aware that certain sections of
the Annual Report are not subject to formal statutory audit,
including the Chairman’s Statement, the Operator’s Report and
certain sections of the Directors’ Remuneration Report. Financial
information in these sections is reviewed by the Audit and Risk
Committee as part of its review of the overall Annual Report.
The Company continues to comply with the Statutory Audit
Services for Large Companies Market Investigation (Mandatory
Use of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014 for the financial year under review.
The Audit and Risk Committee is required to report its findings to
the Board, identifying any matters on which it considers that
action or improvement is needed, and making recommendations
on the steps to be taken.
The Statutory Auditor was invited to attend all Audit and Risk
Committee meetings during the year and has the opportunity to
meet with the Committee without representatives of the
Operator or Administrator being present at least once per year.
Financial Reporting
The primary role of the Audit and Risk Committee in relation to
financial reporting is to review with the Administrator, the
Operator and the independent auditor, the appropriateness of the
Annual Report and Financial Statements and interim results and
to report to the Board, concentrating on, among other matters:
• the quality and acceptability of accounting policies and
practices;
• the clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance
reporting requirements;
• material areas in which significant judgements have
independent auditor, including the going concern
• whether the Annual Report and Financial Statements,
provide the information necessary for Shareholders to assess
the Company’s position and performance, business model
• any correspondence from regulators in relation to financial
reporting.
To aid its review, the Audit and Risk Committee considers reports
from the Administrator and the Operator and also reports from
the independent auditor on the outcomes of the half-year review
and annual audit.
Petershill Partners plc | Annual Report 202262
Meetings
During the year, the Audit and Risk Committee met nine times,
and there was ongoing liaison and discussion between the
independent auditor and the Audit and Risk Committee Chair
• review of the terms of reference of the Audit and Risk
Committee, for approval by the Board;
• review of the accounting policies, content and format
• review and approval of the budget and other financial
projections and estimates;
• review and approval of the Company’s tax strategy;
• consideration of the independent auditors’ audit report on the
2021 financial statements and review of the 2022 Interim
Report;
• review and approval of the independent auditors’ audit plan;
• review of the internal audit plan of the Operator’s internal
audit function;
• review of the results of the work of the Operator’s internal
audit function as it pertains to the Company;
• consideration of the fee for the external audit;
• governance and compliance responsibilities of the Company;
• assessment of the independence of the independent auditor;
• requirement for climate-related financial disclosures;
• assessment of the effectiveness of the external audit process
as described below;
• review of the Group’s key risks and internal controls, including
reports from the Operator’s control functions and internal
audit function; and
• implications of the UK Government’s audit reform.
After the year ended 31 December 2022, the Audit and Risk
Committee met on 19 January 2023 and 27 March 2023 to
consider the significant areas of judgement, estimates and
assumptions, and to review the results of the external audit and
to consider and approve the preliminary results announcement
and the Annual Report.
Significant Areas of Judgement Considered
by the Audit and Risk Committee
The significant areas of judgement, as well as estimates and
assumptions, considered by the Audit and Risk Committee are
outlined in note 3 to the Consolidated Financial Statements.
The revenue recognition and valuations were discussed with the
Operator and with the independent auditor at the Audit and Risk
Committee meetings held on 17 November 2022 and 27 March
2023. The value of investments and other financial assets and
liabilities of the Company is determined periodically by the
Operator, with the assistance of Goldman Sachs & Co. acting
as Valuer, and is subject to review by the Valuation Committee
of the Operator.
The independent auditor has explained the results of its audit
work on valuations in the Independent Auditors’ Report on pages
72 to 81. There were no adjustments proposed and uncorrected
that were material in the context of the Annual Report and
Financial Statements as a whole.
Risk Management
On behalf of the Board, the Audit and Risk Committee has
risks facing the Group, including those threatening its business
model, future earnings potential, and operational resilience.
in which significant business risks are managed and the overall
effectiveness of the Group’s risk management processes.
on the Group’s risk evaluation process and reviewed changes
Committee was driven primarily by the Board’s assessment of its
principal risks and uncertainties as set out on pages 41 to 45 of
the Strategic Report.
Internal Audit
The Audit and Risk Committee shall consider at least once a
Currently, the Audit and Risk Committee does not consider
and procedures. The Operator is subject to internal audit by
internal audit function on the work of the Operator, including
and Risk Committee reviewed and approved the audit plan and
received assurance reports and updates from the Goldman
Committee was apprised of the methods and systems in place
and Risk Committee was satisfied that the systems in place were
robust and that the team was qualified to perform adequate
monitoring and oversight activities. The Operator’s internal
audit function is aware of the Audit and Risk Committee’s
responsibilities and will bring all matters requiring its
consideration to its attention.
Independent Audit
PricewaterhouseCoopers LLP has been the Company’s
independent auditor since 4 August 2021. There are no
contractual obligations restricting the choice of independent
auditor, and the Company will put the audit services contract out
to tender at least every 10 years. Under the Companies Act 2006,
the reappointment of the independent auditor is subject to
Shareholder approval at the AGM. The Senior Statutory Auditor
responsible for the audit will be rotated at least every five years
in accordance with professional and regulatory standards in order
to protect independence and objectivity and to provide fresh
challenge to the Company. Richard McGuire, the current Senior
Statutory Auditor, has held this role for two years and intends to
continue as Senior Statutory Auditor until the conclusion of the
2025 audit. The Audit and Risk Committee will continue to
monitor the performance of the independent auditor on an
annual basis and will consider independence and objectivity,
taking account of appropriate guidelines. In addition, the
Committee Chair will continue to maintain regular contact with
the Senior Statutory Auditor outside of the formal Committee
meeting schedule, not only to discuss formal agenda items for
upcoming meetings, but also to review any other significant
matters. The Audit and Risk Committee reviews the scope and
results of the audit, its cost-effectiveness and the independence
and objectivity of the independent auditor, with particular regard
to the level of any non-audit fees.
63 Petershill Partners plc | Annual Report 2022
Notwithstanding such services, the Audit and Risk Committee
considers PricewaterhouseCoopers LLP to be independent
of the conduct of the audit.
To further safeguard the objectivity and independence of the
independent auditor from becoming compromised, the Audit
charged by a company’s independent auditor for non-audit
services at 70% of the average statutory audit fees for the
previous three years. This cap will become applicable to the
PricewaterhouseCoopers LLP will be precluded from providing,
and does not provide, certain services such as valuation work
PricewaterhouseCoopers LLP should only be engaged for
non-audit services where it is best placed to provide those
services; for example engagement as Reporting Accountant prior
to the Company’s listing and a review of the Interim Report.
Note 6 details services provided by PricewaterhouseCoopers LLP
excluding VAT were: £1,085k (including £161k for additional
2021 fees) (2021: £808k excluding VAT). Fees payable for
(2021: £868k excluding VAT).
To fulfil its responsibility regarding the independence of the
independent auditor, the Audit and Risk Committee considers:
• discussions with or reports from the independent auditor
describing its arrangements to identify, report and manage
• the extent of non-audit services provided by the
To assess the effectiveness of the independent auditor,
• the independent auditors’ fulfilment of the agreed audit plan,
through review of the audit plan, including the audit approach
to significant risks and monitoring any changes in response to
new issues identified and any variations from the audit plan;
• discussions or reports highlighting the major issues that arose
during the course of the audit; and
• feedback from other service providers evaluating the
performance of the audit team.
The Audit and Risk Committee is satisfied with
PricewaterhouseCoopers LLP’s effectiveness and independence
as independent auditor, having considered the degree of
diligence and professional scepticism demonstrated. Having
carried out the review described above and having satisfied itself
that the independent auditor remains independent and effective,
the Audit and Risk Committee has recommended to the Board
that PricewaterhouseCoopers LLP be reappointed as independent
auditor for the year ending 31 December 2023. Accordingly, a
resolution proposing the reappointment of
PricewaterhouseCoopers LLP as our independent auditor will be
put to Shareholders at the AGM.
On behalf of the Audit and Risk Committee
Mark Merson
Audit and Risk Committee Chair
5 April 2023
Audit and Risk Committee report continued
Petershill Partners plc | Annual Report 202264
Chair’s Statement
The Directors’ Remuneration Report that follows has been
prepared in accordance with the Listing Rules, the Large and
(Amendment) Regulations 2013 and the Companies Act 2006.
We were pleased with the support given for the remuneration
resolutions passed at the Company’s AGM on 31 May 2022, with
almost 100% of votes in favour approving both the Directors’
Remuneration Report for the period ended 31 December 2021
and the ongoing Directors’ Remuneration Policy.
This Directors’ Remuneration Report covers the year ended
31 December 2022. As a reminder, the Company does not
so this report relates solely to the Chairman and other
This Directors’ Remuneration Report consists of three parts:
• the Directors’ Remuneration Policy (the “Policy”) which sets
and the other Non-Executive Directors. This was approved
• the Annual Report on Remuneration. This explains how
AGM; and
• the Annual Statement, which summarises the Remuneration
Committee’s activities, including our approach to remuneration,
key decisions made and the context for those decisions.
The Context of Remuneration Decisions
The Board’s remuneration remains consistent with the
disclosures contained in the Company’s Prospectus dated
28 September 2021.
The Non-Executive Directors were selected through a targeted
search process with the assistance of a leading international
search firm Spencer Stuart. The objective was to assemble a
high-quality and diverse Board with significant experience in
financial services, together with the knowledge and standing to
be able to oversee and manage the relationship with the
Operator. The fees set out in the remainder of this report reflect
the scale and complexity of the Company and its intended growth
strategy, as well as the alternative opportunities that otherwise
would have been available to the Non-Executive Directors, based
on their skills and experience. Spencer Stuart has no other
connection with the Company and its only connection with its
Non-Executive Directors is as advisor to other committees on
which they may serve.
The original fees anticipated the time commitment which would
be expected of the Chairman and Non-Executive Directors. Both
in preparation for and subsequent to the Company’s IPO, the time
commitment continues to be higher than originally anticipated.
However, it is expected that the time commitment will normalise
as the Company matures. Whilst there is no proposal to revisit
fees at this stage, in accordance with best practice, in Q1 2023,
the Committee’s remuneration advisor, FIT Remuneration
Consultants LLP (“FIT”), presented on remuneration market
trends, including benchmarking data for Chairmans’ fees.
Directors’ Remuneration Policy
The Directors’ Remuneration Policy was approved by
Shareholders at the Company’s AGM on 31 May 2022. When
designing the Policy, the Remuneration Committee was mindful
of the six factors listed in the UK Code: clarity, simplicity, risk,
predictability, proportionality and alignment to culture. The
Company has no employees and, therefore, the Policy relates
solely to the fees which are payable to the Chairman and other
Non-Executive Directors. No elements of the fees are linked to
financial or other performance of the Company.
Implementing the Policy for FY 2023
There are no planned changes to the fee levels for 2023.
Conclusions
We will continue to engage with our Shareholders and other
stakeholders on an ongoing basis. I welcome any feedback or
comments on the Directors’ Remuneration Report more generally.
Annemarie Durbin
Chair of the Remuneration Committee
5 April 2023
Directors’ Remuneration Report
Directors’ Remuneration Report
65 Petershill Partners plc | Annual Report 2022
Directors’ Remuneration Report continued
Directors’ Remuneration Policy
The Directors’ Remuneration Policy was approved by Shareholders at the Company’s AGM on 31 May 2022. The Remuneration Committee
intends that the Policy will operate for three years and will next be submitted for approval by Shareholders at the Company’s 2025 AGM.
It is not part of the Company’s strategy to appoint executive directors (or indeed any employees). However, in the highly unlikely event that
the Company subsequently chooses to appoint executive directors, it would then develop a policy which would be subject to Shareholder
approval before such Board appointments could be made.
Fees Policy for Chairman and Non-Executive Directors
The following table summarises the fees policy for the Chairman and the Non-Executive Directors.
Element of pay Purpose/link to strategy Operation/performance Maximum
Fees To provide a competitive fee
who have the requisite skills
Company’s strategy.
Fees for the Chairman are set by the
Committee. Fees for the other Non-Executive
Directors are set by the Chairman.
Fees are reviewed, but not necessarily
increased, annually.
Fee levels are determined based on expected
time commitments for each role and by
reference to comparable fee levels in other
Additional fees are payable to the Senior
Independent Director and Chairs of Board
Committees to reflect their additional
responsibilities.
Additional fees may be paid for other
responsibilities which include a higher time
commitment than normal.
The overall aggregate annual limit
for fees payable to the Chairman
and Non-Executive Directors is
£2 million.
Expenses To facilitate the performance of
their duties.
Reasonable business expenses (including any
tax thereon) will be reimbursed.
Variable pay Bonuses, shares and long-term
incentives.
There is no provision for the payment of
variable pay. The Chair and Non-Executive
Directors do not receive bonuses or LTIP
awards from the Company. Therefore, there
are no recoupment (malus or clawback)
provisions relating to variable pay. There
Statement of Consideration of
Shareholder Views
Prior to Admission, the views of Petershill Partners’ private
Shareholders (representing the private funds managed by
Goldman Sachs Asset Management) were carefully considered
when determining the Policy. The Committee continues to engage
with Shareholders and to respond to Shareholder feedback.
Material changes to the Policy will be subject to prior
consultation with major Shareholders.
The Company has no employees and, therefore, there were no
such persons with whom to consult.
Recruitment Policy
The remuneration package for any new Chairman or Non-
Executive Director will be set in accordance with the terms of the
Policy in place at the time of appointment, including the overall
cap on fees.
Non-Executive Directors’ Terms
ofAppointment
The Non-Executive Directors do not have service contracts with
the Company, but instead have letters of appointment. The date
of appointment and length of service for each Non-Executive
Director up to the year end are shown in the table below:
Date of appointment Length of service
Naguib Kheraj (Chairman) 4 September 2021 16 months
Everard Barclay Simmons 4 September 2021 16 months
Annemarie Durbin 4 September 2021 16 months
Erica Handling 4 September 2021 16 months
Mark Merson 4 September 2021 16 months
Each Non-Executive Director is subject to annual re-election by
Shareholders at the AGM. None of the Non-Executive Directors
are appointed for a fixed term. The appointment of the Chairman
may be terminated by either the Chairman or the Company
Non-Executive Directors may be terminated by either that
Non-Executive Director or the Company giving three months’
notice. Payment may be made in lieu of providing the full
Petershill Partners plc | Annual Report 202266
Annual Report on Remuneration
Single Total Figure of Remuneration (Audited)
For the year ended 31 December 2022
For the period 4 September 2021
to 31 December 2021
Non-Executive Directors
2022 Fees
(£’000)
2022 Fees
1
% change
Taxable
2
Benefits
(£’000)
Taxable
1
Benefits
% change
Total 2022
(£’000) (£’000)
2
Benefits
(£’000)
3
(£’000)
Naguib Kheraj 475 – – – 475 154 – 154
Everard Barclay Simmons 175 – 9 (69.0)% 184 57 29 86
Annemarie Durbin 155 – – – 155 50 – 50
Erica Handling 150 – – – 150 49 – 49
Mark Merson 170 – – – 170 55 – 55
Total 1,125 9 1,134 365 29 394
Notes to Single Total Figure of Remuneration Table
1. FY22 is the first year that Directors have been paid in accordance with the annual fee agreement. For the purposes of calculating the percentage change in fees or taxable benefits
2. Taxable benefits relate to reimbursement of travel and accommodation expenses to attend Board meetings, together with associated taxes.
3. In the prior period, no Director received any inducement or performance-related pay on joining the Board. In addition to fees from formal appointment, fees were accrued from the
Fees
The Company is operationally complex and in the absence of any employees, the expectation on the Company’s Board members is
considerably greater when compared to traditional investment companies. This is reflected in the fees paid to the Chairman and other
Non-Executive Directors. The Board’s skills matrix reflects the balance of the knowledge, skills, qualifications, and experience required to
discharge its duty of stewardship over the Group.
The Chairman and Non-Executive Director fees remain unchanged from 2021 as set out below:
Position
Fees
(£’000)
Chairman of the Board fee 475
NED base fee 120
Senior Independent Director fee 25
Chair of the Audit and Risk Committee 35
Chair of the Remuneration Committee 10
Member of the Audit and Risk Committee 15
Member of the Nomination, Remuneration or Management Engagement Committees (per Committee) 5
There are no proposed changes for 2023.
Expenses
Expenses includes the reimbursement (including any tax payable) of business-related costs.
67 Petershill Partners plc | Annual Report 2022
Annual Statement on the
Role and Activities of the
Remuneration Committee
Role and Responsibilities of the
Remuneration Committee
The Company’s Remuneration Committee is responsible for
determining the remuneration of the Chairman, reviewing the
ongoing appropriateness and relevance of remuneration levels
and appointing external remuneration consultants.
The Remuneration Committee meet at least once a year. The
members of the Remuneration Committee are Annemarie Durbin
(Chair), Naguib Kheraj, Everard Barclay Simmons, Erica Handling
and Mark Merson. As all of the Directors are independent and
there are no executives, the Committee’s membership comprises
the whole Board.
Advisors
The Committee appointed FIT Remuneration Consultants LLP
Remuneration Consultants’ Group and complies with its Code
independent and free of undue influence. Fees charged for time
incurred in respect of the year ended 31 December 2022
amounted to £11,508 ($13,925) (2021: nil). FIT has no other
connection with the Company and its only connection with its
Non-Executive Directors is as advisor to other remuneration
committees on which they may serve.
Key Activities During the Year
The Committee held a meeting on 19 April 2022 in which the
Remuneration Policy was discussed and approved for
presentation to the Shareholders at the Company’s AGM on
31 May 2022. At that same meeting the Committee reviewed the
Committee terms of reference, which were recommended for
approval by the Board.
Other Statutory Requirements
Share Interests (Audited)
There is no requirement for Directors to hold shares in the
Company. The Directors who held office during the year and had
interests in the Ordinary Shares of the Company as at
31 December 2022 are set out below.
Shares owned
31 December 2022
Shares owned
31 December 2021
Naguib Kheraj* 550,000 375,000
Everard Barclay Simmons – –
Annemarie Durbin – –
Erica Handling 85,714 85,714
Mark Merson 114,285 114,285
* Mr Kheraj’s shares are held through a Self-Invested Personal Pension.
As Independent Non-Executive Directors, no Director participates
in any form of incentives. The Company’s mid-market share
(2021: 175p) and the range of the mid-market price during
Total Shareholder Return Performance
The following chart shows the value of £100 invested in the
Company (at the date of Admission) compared with the value of
£100 invested in the FTSE 250 Index. We have chosen the FTSE
250 Index as it provides the most appropriate and widely
recognised index for benchmarking the Company’s corporate
performance since Admission.
0
20
40
60
80
100
120
Petershill Partners FTSE 250 Index
Total Shareholder Return
Value of a 100 unit investment made at Admission
Sep 21 Dec 21 Mar 22 Jun 22 Sep 22 Dec 22
Relative Importance of Spend on Pay
The table below shows amounts paid to the Company’s
Non-Executive Directors compared to amounts distributed
Non-Executive
Director Fees
£m
Distributions by way
of dividends and
share buybacks
$m
For the year ended
31 December 2022 1.1 120.3
For the period from
appointment on 4 September
2021 to 31 December 2021
1
1.1 –
Percentage change – n/a
1. Amount paid to Non-Executive Directors in 2021 represents an annualised figure
rather than the amount actually received. There were no dividends paid to
Shareholders or share buybacks in the period from IPO to 31 December 2021.
CEO Pay Ratio
The Company has no Chief Executive or any equivalent executives
and no employees, so no such ratio is required.
Payments for Loss of Office and/or Payments to
Former Directors (Audited)
No payments for loss of office, nor payments to former Directors,
were made during the year.
On behalf of the Remuneration Committee
Annemarie Durbin
Chair of the Remuneration Committee
5 April 2023
Directors’ Remuneration Report continued
Petershill Partners plc | Annual Report 202268
Directors’ Responsibilities Statement
Directors’ Responsibilities
Statement
The Directors are responsible for preparing the Annual Report and Financial Statements in
accordance with applicable law and regulations.
The Companies Act 2006 requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors have prepared the Group’s and the Company’s financial
statements in accordance with UK-Adopted International
Accounting Standards. Under company law the Directors must
that they give a true and fair view of the state of affairs of
In preparing these financial statements, the Directors are
required to:
• select suitable accounting policies in accordance with
International Accounting Standard 8 ‘Accounting Policies,
Changes in Accounting Estimates and Errors’ and then apply
them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the
specific requirements of IFRS are insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the Group and Company financial position
and performance;
• state whether applicable UK-adopted International Accounting
Standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
and
• prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company and/or
the Group will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy at
any time the financial position of the Group and Company and
enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
In the case of each Director in office at the date the Report of the
Directors is approved:
• so far as the Director is aware, there is no relevant audit
information of which the Group’s and Company’s independent
auditor is unaware; and
• they have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant
audit information and to establish that the Group’s and
Company’s independent auditor is aware of that information.
Under applicable law and regulations, the Directors are
The Directors are also responsible under section 172 of the
Companies Act 2006 for promoting the success of the Company
for the benefit of its members as a whole and in doing so having
regard for the needs of wider society and other stakeholders.
Website Publication
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ Responsibilities Pursuant to DTR4
The Directors confirm that to the best of their knowledge:
• the Group and Company financial statements, which have been
prepared in accordance with UK-adopted International
Accounting Standards, give a true and fair view of the assets,
liabilities and financial position and profit or loss of the Group
and Company, and of the profit or loss of the Group;
• the Annual Report and Financial Statements, including the
Strategic Report, includes a fair review of the development and
performance of the business and the position of the Company
and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face; and
• they consider that this Annual Report and Financial
Statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
Shareholders to assess the Company’s and the Group’s position
and performance, business model and strategy.
On behalf of the Board
Naguib Kheraj
Chairman
5 April 2023
69 Petershill Partners plc | Annual Report 2022
70 Petershill Partners plc | Annual Report 2022
Financial
Statements
72 Independent Auditors’ Report
82 Consolidated Financial Statements
86 Notes to the Consolidated Financial Statements
115 Company Financial Statements
118 Notes to the Company Financial Statements
Additional Information
126
128
131 Glossary of Key Operating Metrics
134 Alternative Performance Measures
141 Company Information
142 Cautionary Statement
71 Petershill Partners plc | Annual Report 2022
Independent Auditors’ Report to the Members
ofPetershill Partners plc
Independent Auditors’ Report
Report on the audit of the
financial statements
Opinion
In our opinion, Petershill Partners plc’s Group financial
statements and Company financial statements (the “financial
statements”):
• give a true and fair view of the state of the Group’s and of the
loss and the Group’s and Company’s cash flows for the year
then ended;
• have been properly prepared in accordance with UK-adopted
international accounting standards as applied in accordance
with the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements, included within the
Annual Report, which comprise: the Consolidated and Company
Consolidated Statement of Comprehensive Income, the
Consolidated and Company Statements of Changes in Equity, and
the Consolidated and Company Statements of Cash Flows for the
year then ended; and the notes to the financial statements, which
include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit and
Risk Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate
Independence
We remained independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard,
as applicable to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC’s Ethical Standard
Other than those disclosed in Note 6 to the Consolidated
Financial Statements, we have provided no non-audit services
Our audit approach
Context
In planning for our audit of Petershill Partners plc and its
subsidiaries (the “Group”), we met with the Audit and Risk
Committee, the Board of Directors and the Operator to discuss
and confirm our understanding of significant business activities
during the year, and to understand their perspectives on
associated business risks. We used this insight when forming our
own views regarding the business, as part of developing our audit
plan and when scoping and performing our audit procedures. The
Group was formed with the objective of investing in Partner-firms
to achieve capital growth and to generate income. Given the
complexity and judgements required in determining the value of
investments we considered this a significant risk to both the
Group and the Company. Income from investments in Partner-
firms derived from management fee income, performance fee
income and investment income is based on contractual terms in
place with the Partner-firms, and are a significant proportion of
the Group’s income and therefore considered a key audit matter.
We have considered the carrying value of the liability for the Tax
Receivables Agreement, which arose on the initial acquisition of
the stakes in the Partner-firms on 28 September 2021 to remain
a significant risk to the Group, due to the complexity of the
underlying tax laws and the magnitude of the balance.
Petershill Partners plc | Annual Report 202272
Overview
Audit scope
• We audited the consolidated financial information of the Group
as a whole. As part of designing our audit, we determined
materiality and assessed the risks of material misstatement in
the financial statements. In particular, we looked at where the
Directors made significant judgements and estimates. As in all
of our audits we also addressed the risk of management
override of internal controls, including evaluating whether
there was evidence of bias by the Directors that represented a
risk of material misstatement due to fraud.
Key audit matters
• Valuation of investments at fair value through profit and loss
(Group)
• Valuation of liability for Tax Receivables Agreement (Group)
• Valuation of investment in subsidiary undertakings (Company)
• Income from Investments in Partner-firms (Group)
Materiality
• Overall Group materiality: US$47.2m (2021: US$53.0m) based
on 1% of Net assets.
• Overall Company materiality: US$44.8m (2021: US$50.3m)
based on 1% of Net assets, capped at 95% of Group materiality.
• Performance materiality: US$35.4m (2021: US$39.7m) (Group)
and US$33.6m (2021: US$37.7m) (Company).
The scope of our audit
As part of designing our audit, we determined materiality
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditor, including
those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in
the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Income from Investments in Partner-firms (Group) is a new key
audit matter this year. Valuation of shares issued in exchange for
transfer of assets and liabilities (Group and Company), which was
a key audit matter last year, is no longer included because the
initial acquisition was in 2021, which is a non-recurring
transaction. Otherwise, the key audit matters below are
consistent with last year.
73 Petershill Partners plc | Annual Report 2022
Independent Auditors’ Report continued
Key audit matter How our audit addressed the key audit matter
Refer to the Audit and Risk Committee Report, Notes to
The investments at fair value through profit or loss for the
Group were $4,958.9 million as at 31 December 2022. The
investments in Partner-firms held by the Group are not
quoted or traded in an active market and as such their fair
values are determined using valuation techniques such as
the market approach or income approach. A third party
valuation advisor (“Valuer”) is engaged to assist the Operator
in the preparation of the fair valuation of a selection of
investments. In valuing the investments, key assumptions
expected management and performance fee rates, margins
of the Partner-firms, expected current and future fund
returns and timing of realisations. The inputs in the market
approach include observable data, such as market multiples
of comparable companies to the relevant Partner-firms, and
unobservable data, such as forecast earnings for the
Partner-firms. In discounted cash flow models, unobservable
inputs are the projected cash flows of the relevant Partner-
firms and the discount rates applied. The valuation of the
Group investments at fair value through profit and loss was
identified as a key audit matter given the valuation is
inherently subjective due to, among other factors, the
individual nature of each investment and the expected future
cash flows. The significance of the estimates and judgements
involved, coupled with the fact that only a small percentage
difference in individual investment valuations, when
aggregated, could result in a material misstatement,
warranted specific audit focus in this area.
We understood and evaluated the valuation methodologies applied, by
reference to industry practice and applicable accounting standards, and
tested the techniques used by management in determining the fair value
of the investments. We performed the following over the fair value of
investments as at 31 December 2022:
• Discussed and challenged the Operator and Valuer’s approach to
valuations and significant estimates;
• Undertook further investigations by holding further discussions with
the Operator and Valuer and obtained evidence to support
explanations received where assumptions were outside the expected
range or showed unexpected movements based on our knowledge;
• Observed that alternative assumptions had been considered and
evaluated by the Operator and the Valuer before determining the final
valuation. Challenged management about the rationale of any
non-observable inputs or significant estimates used in valuations and
obtained corroborative evidence such as past performance of the
Partner-firms or data provided by the Partner-firm. We concluded that
the assumptions used in the valuations were supportable in light of
available and comparable market evidence;
• Obtained confirmations directly from the Partner-firms to corroborate
ownership and other interests held;
• Performed recalculations of valuation workings to ensure
mathematical accuracy;
• Agreed data inputs in the valuation model, such as fee rates and
assets under management, to supporting documentation on a sample
basis; and
• Agreed the amounts per the valuation reports to the accounting
records and the financial statements.
In addition, given the inherent subjectivity involved in the valuation of
the investments, and therefore the need for specialised market
knowledge when determining the most appropriate assumptions and
the technicalities of the valuation methodology, we engaged our internal
valuation experts to assist us in our audit of this area. The experts
performed the following procedures:
• Reviewed the appropriateness of valuation methodology;
• Reviewed key valuation inputs and estimates used, such as
comparable company multiples and discount rates at 31 December
2022 for a sample of investments; and
• Reported their findings and conclusions to the Group audit team for
overall consideration and conclusions.
We considered the appropriateness and adequacy of the disclosures
around the estimation uncertainty and sensitivities on the accounting
estimates.
Our testing did not identify any evidence of material misstatement.
Petershill Partners plc | Annual Report 202274
Key audit matter How our audit addressed the key audit matter
Valuation of liability for Tax Receivables Agreement (Group)
The Group recorded a Liability for the Tax Receivables
Agreement (“TRA”) of $185.7m as at 31 December 2022.
has estimated the step-up tax basis of the acquired assets
based on tax information provided by the Partner-firms,
projected the amortisation of the step-up tax basis to occur
over 15 years, applied an effective interest rate of 18% and
utilised the current effective tax rate of Petershill Partners
Inc in calculating the future tax benefits and resulting
payments under the TRA. The valuation of the Liability for
Tax Receivables Agreement is identified as a key audit matter
due to the complexity of the underlying tax laws and the
magnitude of the balance.
We understood and evaluated the calculation and methodologies
applied, by reference to industry practice and relevant tax laws, and
tested the techniques used by management in determining the liability
for the TRA.
We obtained management’s computations and workings relating to the
amounts recognised for the liability of the TRA as at 31 December 2022.
We performed the following procedures:
• Checked the mathematical accuracy of management’s calculation;
• On a sample basis agreed the inputs used in the computations to
supporting documentation;
• Challenged management about the rationale of assumptions used in
the calculation and obtained corroborative evidence;
• Confirmed management had appropriately reflected US federal and
state tax rates in the calculations; and
• Agreed the disclosures made in the financial statements back to
supporting documentation.
Given the complexity of tax laws, and therefore the need for specialised
market knowledge when determining the most appropriate assumptions
and the technicalities, we engaged our internal tax experts to assist us in
our audit of this area.
Our testing did not identify any evidence of material misstatement.
Valuation of investment in subsidiary undertakings (Company)
The investments in subsidiary undertakings relate to the
direct ownerships in Petershill Partners Inc., Petershill
Partners Ltd and Petershill Partners II Ltd. These entities
hold either directly or indirectly interests in stakes in the
Partner-firms. The investments in subsidiary undertakings
are held at fair value which is their net asset value. The
valuation of the investments in subsidiary undertakings was
identified as a key audit matter given the components of the
underlying valuation such as investments in Partner-firms
are inherently subjective as noted in the key audit matter
above.
We obtained management’s calculations of the fair value of the
investments in subsidiary undertakings. We performed the following
procedures:
• Agreed inputs to supporting documentation and other audit work
performed over areas such as the valuation of investments at fair
value through profit and loss as noted in the key audit matter above;
• Tested the mathematical accuracy of the calculation; and
• Agreed ownership to supporting documentation.
Our testing did not identify any evidence of material misstatement.
75 Petershill Partners plc | Annual Report 2022
Independent Auditors’ Report continued
Key audit matter How our audit addressed the key audit matter
Income from Investments in Partner-firms (Group)
Refer to the Audit and Risk Committee Report, Notes to the
The income from investments in Partner-firms for the Group
was US$385.0m and is based on contractual terms in place
with the Partner-firms, and are a significant proportion of
the Group’s income.
• We confirmed our understanding of and evaluated the accounting
policies relating to recognition and measurement of the income from
investments in Partner-firms, as well as confirmed our understanding
basis;
• We understood and evaluated the design of the relevant controls over
income recognition;
• We performed the following procedures over income from
investments in Partner-firms:
• Reviewed the contracts of the Group with each Partner-firm to
ensure that income receivable from the Partner-firms is recognised
in line with the contractual terms;
• Tested a sample of journals to supporting documentation, focusing
• Agreed the income from the Partner-firms booked by the Group
Partner-firms. We supplemented our procedures with back-testing
the Partner-firms, through agreeing management fee income and
performance fee income to the audited financial statements of the
Partner-firms, where available;
• Agreed the settlement of income received during the reporting year
year-end balance of income receivable to confirmations received
directly from the Partner-firms;
• Tested post year-end settlements of the income receivable to the
bank statements; and
• Challenged the Operator on the appropriateness of the
assumptions used in the computation of the expected credit losses
on the amounts receivable from the Partner-firms.
Our testing did not identify any evidence of material misstatement.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a
whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which
they operate.
We audited the consolidated financial information of the Group as a whole. As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the Group and Company financial statements. In particular, we looked at where the Directors
made significant judgements and estimates. As in all of our audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
The Impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the Group’s and
Company’s financial statements, and we remained alert when performing our audit procedures for any indicators of the impact of climate
risk. In particular, we understood management’s consideration of the impact of climate change in the valuation of investments in so far as
they are able. We also considered the consistency of the climate change disclosures included in the Strategic Report with the financial
statements and our knowledge from our audit. Our procedures did not identify any material impact as a result of climate risk on the Group’s
and Company’s financial statements.
Petershill Partners plc | Annual Report 202276
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group Financial statements – Company
Overall materiality US$47.2m (2021: US$53.0m). US$44.8m (2021: US$50.3m).
How we determined it 1% of Net assets 1% of Net assets, capped at 95% of Group materiality
Rationale for
benchmark applied
Given the objective of the Group is to hold stakes in
Partner-firms, which will then generate returns, the
primary focus of financial statements was the fair
value of investments at fair value through profit or
loss. Therefore we consider that the net assets of the
Group is the appropriate benchmark for calculating
overall materiality.
Consistent with the Group’s objective to hold stakes in
Partner-firms, which will then generate returns, the
primary focus for the financial statements was the
valuation of the investments in subsidiary
undertakings. Therefore we consider that the net
assets of the Company is the appropriate benchmark
for calculating overall materiality. This was restricted
to 95% of the Group’s total materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the
performance materiality was 75% (2021: 75%) of overall materiality, amounting to US$35.4m (2021: US$39.7m) for the Group financial
statements and US$33.6m (2021: US$37.7m) for the Company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.
In addition to overall Group materiality, a specific materiality was also applied to the Consolidated Statement of Comprehensive Income line
items that impact Adjusted EBIT, namely Income from investments in Partner-firms; Interest Income; Board of Directors’ fees and expenses;
Operator charge; Other operating expenses; and Finance Cost. We set a specific materiality level of US$13.5m (2021: US$5.5m). In arriving
at this judgement, we considered the fact that Adjusted EBIT is a secondary financial indicator of the Group.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above US$2.36m
(Group audit) (2021: US$2.6m) and US$2.24m (Company audit) (2021: US$2.52m) as well as misstatements below those amounts that, in
our view, warranted reporting for qualitative reasons.
77 Petershill Partners plc | Annual Report 2022
Independent Auditors’ Report continued
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and
the Company’s ability to continue to adopt the going concern
basis of accounting included:
• Obtained the Directors’ going concern assessment and
corroborated key assumptions to underlying documentation
and ensured this was consistent with our audit work in these
areas;
• Assessed the appropriateness of the key assumptions used
both in the base case and in the severe but plausible downside
scenario, including assessing whether we considered the
downside sensitivities to be appropriately severe;
• Tested the integrity of the underlying formulae and
calculations within the going concern and cash flow models;
• Considered the appropriateness of the mitigating actions
available to management in the event of the downside scenario
materialising. Specifically, we focused on whether these
actions are within the Group’s control and are achievable; and
• Reviewed the disclosures provided relating to the going
concern basis of preparation and found that these provided an
explanation of the Directors’ assessment that was consistent
with the evidence we obtained.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group’s and the Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the Group’s and
the Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied
the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in
the financial statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The Directors are responsible for the
other information. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on
these responsibilities.
With respect to the Strategic Report and Report of the Directors,
we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic Report and Report of the Directors
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic Report and Report of
with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and
Company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the
Strategic Report and Report of the Directors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Petershill Partners plc | Annual Report 202278
Corporate governance statement
The Listing Rules require us to review the Directors’ statements in
relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with
respect to the corporate governance statement as other
information are described in the Reporting on other information
section of this report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement, included within the Strategic Report and
Corporate Governance Report is materially consistent with the
financial statements and our knowledge obtained during the
audit, and we have nothing material to add or draw attention to
in relation to:
• The Directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being
managed or mitigated;
• The Directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the Group’s and
Company’s ability to continue to do so over a period of at least
twelve months from the date of approval of the financial
statements;
• The Directors’ explanation as to their assessment of the
Group’s and Company’s prospects, the period this assessment
covers and why the period is appropriate; and
• The Directors’ statement as to whether they have a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the
period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or
assumptions.
Our review of the Directors’ statement regarding the longer-term
viability of the Group and Company was substantially less in
scope than an audit and only consisted of making inquiries and
considering the Directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements
and our knowledge and understanding of the Group and Company
and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
corporate governance statement is materially consistent with the
financial statements and our knowledge obtained during the
audit:
• The Directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess
the Group’s and Company’s position, performance, business
model and strategy;
• The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems;
and
• The section of the Annual Report describing the work of the
Audit and Risk Committee.
We have nothing to report in respect of our responsibility to
report when the Directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
79 Petershill Partners plc | Annual Report 2022
Independent Auditors’ Report continued
Responsibilities for the financial statements
and the audit
Responsibilities of the Directors for the
financial statements
As explained more fully in the Directors’ Responsibilities
Statement, the Directors are responsible for the preparation of
the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair
view. The Directors are also responsible for such internal control
as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Company’s ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the
Group or the Company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud, is detailed below.
Based on our understanding of the Group and industry, we
identified that the principal risks of non-compliance with laws
and regulations related to UK regulatory principles, such as those
governed by the Financial Conduct Authority’s Listing Rules, and
we considered the extent to which non-compliance might have a
material effect on the financial statements. We also considered
those laws and regulations that have a direct impact on the
financial statements such as the Companies Act 2006, as well as
US State and Federal Tax rules. We evaluated management’s
incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls),
and determined that the principal risks were related to posting
inappropriate journal entries, management bias in accounting
estimates such as the valuation of investments and the carrying
value of liability for the Tax Receivables Agreement. Audit
procedures performed by the engagement team included:
• Discussions with the Audit and Risk Committee, the Directors,
the Administrator and the Operator, including consideration of
known or suspected instances of non-compliance with laws and
regulations and fraud, and review of the reports made by
management;
• Reviewing Board minutes as well as the relevant meeting
minutes, including those of the Audit and Risk Committee;
• Performing audit procedures over the tax computations;
• Designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing;
• Challenging assumptions and judgements made by
management in their significant areas of estimation; and
• Identifying and testing journal entries, in particular any journal
entries posted with unusual account combinations.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit
of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors’ report.
Use of this Report
This report, including the opinions, has been prepared for and
only for the Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Petershill Partners plc | Annual Report 202280
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
• we have not obtained all the information and explanations we
require for our audit; or
• adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• the Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
and subsequent financial periods. The period of total
uninterrupted engagement is 2 years, covering the period
Other matter
In due course, as required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R, these
financial statements will form part of the ESEF-prepared annual
financial report filed on the National Storage Mechanism of the
Financial Conduct Authority in accordance with the ESEF
Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report
provides no assurance over whether the annual financial report
will be prepared using the single electronic format specified in
the ESEF RTS.
Richard McGuire (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
81 Petershill Partners plc | Annual Report 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
82 Petershill Partners plc | Annual Report 2022
Note
For the year ended
31 December 2022
$m
For the period from
24 March 2021 to
31 December 2021
$m
Income
Income from investments in Partner-firms derived from: 2(x)
Management fee income 213.0 49.3
Performance fee income 139.4 79.3
Investment income 32.6 8.9
Interest income from investments in money market funds 2(x) 8.6 –
Movement in financial assets and liabilities held at fair value
Change in fair value of investments at fair value through profit or loss 2(vi),4 (806.7 ) 234.0
(806.7 ) 234.0
Expenses
Board of Directors' fees and expenses (1.5 ) (1.0 )
Operator charge 5 (27.8 ) (9.2 )
Other operating expenses (14.4 ) (12.6 )
Unrealised divestment fee credit/(expense) 5 0.9 (45.2 )
Total expenses (42.8 ) (68.0 )
Operating (loss)/profit for the year/period (455.9 ) 303.5
Finance income /(expense)
Finance cost 11,12 (45.6 ) (4.6 )
Movement in liability to Petershill Funds 13 15.4 (31.6 )
Change in liability for tax receivables agreement 2(v),3 (19.0 ) (6.8 )
Total finance expense (49.2 ) (43.0 )
(Loss)/profit for the year/period before tax (505.1 ) 260.5
Tax credit/(expense) 7 52.2 (12.6 )
(Loss)/profit for the year/period after tax (452.9 ) 247.9
(Loss)/profit and total comprehensive (expense)/income for the year/period (452.9 ) 247.9
(Loss)/profit and total comprehensive (expense)/income attributable to:
Equity holders of the Company (452.9 ) 247.9
Earnings per share
Basic and diluted earnings per Share (cents) 8 (39.36 64.12
The accompanying notes on pages 86 to 114 form an integral part of these financial statements.
Petershill Partners plc | Annual Report 202282
Consolidated Statement of Financial Position
As at 31 December 2022
Petershill Partners plc | Annual Report 2022 83
Note
31 December 2022
$m
31 December 2021
$m
Non-current assets
Investments at fair value through profit or loss 4 4,958.9 6,023.1
Deferred tax asset 7 44.0 –
Current assets
Investments in money market funds at fair value through profit or loss 4 483.4 453.1
Cash and cash equivalents 2(xii) 97.6 124.8
Trade and other receivables 9 138.2 102.0
Total assets 5,722.1 6,703.0
Non-current liabilities
Liability to Petershill Funds 13 – 597.2
Unsecured Notes payable 12 493.2 –
Notes payable 11 – 340.9
Deferred payment obligations 2(vi) 50.0 133.4
Liability for Tax Receivables Agreement 2(v) 150.6 166.7
Fee payable on divestment of investments 5 44.3 45.2
Deferred tax liability 7 – 12.6
Current liabilities
Trade and other payables 10 29.7 28.3
Deferred payment obligations 2(vi) 189.9 74.8
Interest payable 10.0 8.1
Liability for Tax Receivables Agreement 2(v) 35.1 –
Total liabilities 1,002.8 1,407.2
Net assets 4,719.3 5,295.8
Equity
Share capital 2(ix), 14 11.4 11.6
Share premium 2(ix), 14 3,346.7 3,346.7
Other reserve 2(ix), 14 1,689.6 1,689.6
Capital redemption reserve 2(ix), 14 0.3 –
Retained earnings 15 (328.7 ) 247.9
Total shareholders' funds 4,719.3 5,295.8
Number of Ordinary Shares in issue at year/period end 1,135,399,597 1,156,696,029
Net assets per share (cents) 16 415.65 457.84
The financial statements of the Group were approved and authorised for issue by the Board of Directors on 5 April 2023 and signed on its
behalf by:
Naguib Kheraj Mark Merson
Chairman Director
The accompanying notes on pages 86 to 114 form an integral part of these financial statements.
83 Petershill Partners plc | Annual Report 2022
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
84 Petershill Partners plc | Annual Report 2022
Note
Share
capital
$m
Share
premium
$m
Other
reserve
$m
Capital
redemption
reserve
$m
Retained
earnings
$m
Total
$m
Opening net assets attributable to Shareholders
at 1 January 2022
Issue of share capital 14 – – – – – –
Share issue costs 14 – – – – – –
Repurchase and cancellation of Ordinary Shares 14 (0.2 ) – – 0.2 (53.3 ) (53.3 )
Redemption and cancellation of Redeemable Shares 14 – – – 0.1 (0.1 ) –
Dividends paid in the year 17 – – – – (70.3 ) (70.3 )
Loss and total comprehensive expense for the year – – – – (452.9 ) (452.9 )
Closing net assets attributable to Shareholders
at 31 December 2022
For the period from 24 March 2021 to 31 December 2021
Note
Share
capital
$m
Share
premium
$m
Other
reserve
$m
Capital
redemption
reserve
$m
Retained
earnings
$m
Total
$m
Opening net assets attributable to Shareholders
at 24 March 2021 – – – – –
Issue of share capital 14 11.6 3,378.9 1,689.6 – – 5,080.1
Share issue costs 14 – (32.2 ) – – – (32.2 )
Profit and total comprehensive income for the period – – – – 247.9 247.9
Closing net assets attributable to Shareholders
at 31 December 2021 11.6 3,346.7 1,689.6 – 247.9 5,295.8
The accompanying notes on pages 86 to 114 form an integral part of these financial statements.
Petershill Partners plc | Annual Report 202284
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
Petershill Partners plc | Annual Report 2022 85
Note
For the year ended
31 December 2022
$m
For the period from
24 March 2021 to
31 December 2021
$m
Cash flows from operating activities
(Loss)/profit for the year/period before tax (505.1 ) 260.5
Adjustments to reconcile operating loss for the financial period to net cash flows from operating
activities:
Finance expense 49.2 43.0
Purchase of investments in money market funds 4 (1,051.4 ) (806.7 )
Sale of investments in money market funds 4 1,021.1 353.6
Reinvestment of income from investments in Partner-firms (42.6 ) (8.1 )
Movement in financial assets and liabilities held at fair value through profit and loss 4 806.7 (234.0 )
Movement in trade and other receivables (59.1 ) (56.1 )
Movement in trade and other payables 3.8 22.6
Movement in fee payable on divestment of investments 5 (0.9 ) 45.2
Movement in liability to Petershill Funds – 31.6
Taxes paid (4.4 ) –
Net cash flows from operating activities 217.3 (348.4 )
Cash flows from investing activities
Purchase of investments at fair value through profit or loss 4 (149.7 ) (247.0 )
Capital proceeds received 4 6.7 –
Net cash flows from investing activities (143.0 ) (247.0 )
Cash flows from financing activities
Issue of shares (net of Share issue costs deducted from proceeds) 14 – 725.0
Payment of share issue costs (5.7 ) (4.8 )
Share repurchases 14 (50.0 ) –
Dividends paid 17 (70.3 ) –
Proceeds from Unsecured Notes 12 500.0 –
Repayment of Notes payable 11 (350.0 ) –
Payment of transaction costs related to debt issuance and repayment (8.1 ) –
Interest expense payments (27.8 ) –
Extinguishment of liability to Petershill funds 13 (89.6 ) –
Net cash flows from financing activities (101.5 ) 720.2
Net (decrease)/increase in cash and cash equivalents during the year/period (27.2 ) 124.8
Cash and cash equivalents at the beginning of the year/period 124.8 –
Cash and cash equivalents at the end of the year/period 97.6 124.8
Non-cash investing and financing activities
In kind distribution of investments in Partner-firms and Trade and other receivables held at Issuer
SPVs to Petershill Funds 13 492.2 –
Acquisition of Partner-firms stakes by issuing 1,000,000,000 of Ordinary Shares, liability towards
Tax Receivables agreement and assumption of Notes payable 2(ix) – 4,843.3
The accompanying notes on pages 86 to 114 form an integral part of these financial statements.
85 Petershill Partners plc | Annual Report 2022
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Less than 1 year
1-5 years
5+ years
Total
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113 Petershill Partners plc | Annual Report 2022
Petershill Partners plc | Annual Report 2022114
Company Statement of Financial Position
As at 31 December 2022
Petershill Partners plc | Annual Report 2022 115
Note
31 December 2022
$m
31 December 2021
$m
Non-current assets
Investments in Subsidiary undertakings 5 4,125.9 4,830.0
Intercompany note receivable 5 84.1 –
4,210.0 4,830.0
Current assets
Investments in money market funds at fair value through profit or loss 414.2 453.1
Trade and other receivables 6 21.7 8.2
Cash and cash equivalents 83.9 17.9
519.8 479.2
Total assets 4,729.8 5,309.2
Current liabilities
Trade and other payables 7 10.5 13.4
10.5 13.4
Total liabilities 10.5 13.4
Net assets 4,719.3 5,295.8
Equity
Share capital 8 11.4 11.6
Share premium 8 3,346.7 3,346.7
Other reserve 8 1,689.6 1,689.6
Capital redemption reserve 8 0.3 –
Retained earnings (328.7) 247.9
Total Shareholders' funds 4,719.3 5,295.8
Number of Ordinary Shares in issue at year/period end 8 1,135,399,597 1,156,696,029
Net assets per share (cents) 415.65 457.84
The Board of Directors has taken advantage of the exemption available under section 408 of the Companies Act 2006 and has not presented a
Statement of Comprehensive Income for the Company. The Company’s (loss)/profit for the year ended 31 December 2022 was $(452.9) million
(31 December 2021: $247.9 million).
The financial statements of the Company were approved and authorised for issue by the Board of Directors on 4 April 2023 and signed on its
behalf by:
Naguib Kheraj Mark Merson
Chairman Director
The accompanying notes on pages 118 to 125 form an integral part of these financial statements.
115 Petershill Partners plc | Annual Report 2022
Company Statement of Changes in Equity
For the year ended 31 December 2022
116 Petershill Partners plc | Annual Report 2022
For the year ended 31 December 2022
Note
Share
capital
$m
Share
premium
$m
Other
reserve
$m
Capital
redemption
reserve
$m
Retained
earnings
$m
Total
$m
Opening net assets attributable to Shareholders 11.6 3,346.7 1,689.6 – 247.9 5,295.8
Repurchase and cancellation of Ordinary Shares 8 (0.2) – – 0.2 (53.3) (53.3)
Redemption and cancellation of Redeemable Shares 8 – – – 0.1 (0.1) –
Dividends paid in year 9 – – – – (70.3) (70.3)
Loss and total comprehensive expense for the year – – – – (452.9) (452.9)
Closing net assets attributable to Shareholders 11.4 3,346.7 1,689.6 0.3 (328.7) 4,719.3
For the period from 24 March 2021 to 31 December 2021
Note
Share
capital
$m
Share
premium
$m
Other
reserve
$m
Capital
redemption
reserve
$m
Retained
earnings
$m
Total
$m
Opening net assets attributable to Shareholders – – – – – –
Issue of share capital 8 11.6 3,378.9 1,689.6 – – 5,080.1
Share issue costs 8 – (32.2) – – – (32.2)
Profit and total comprehensive income for the period – – – – 247.9 247.9
Closing net assets attributable to Shareholders 11.6 3,346.7 1,689.6 – 247.9 5,295.8
Petershill Partners plc | Annual Report 2022116
Company Statement of Cash Flows
For the year ended 31 December 2022
Petershill Partners plc | Annual Report 2022 117
Note
For the year ended
31 December 2022
$m
For the period ended
31 December 2021
$m
Cash flows from operating activities
(Loss)/Profit for the period before tax (452.9) 247.9
Adjustments to reconcile operating loss for the financial period to net cash flows
from operating activities:
Finance cost 0.6 –
Movement of investments at fair value through profit or loss 5 724.1 (253.1)
Purchase of investments in money market funds 5 (292.5) (806.7)
Sale of investments in money market funds 5 331.4 353.6
Movement in trade and other receivables (13.5) (8.2)
Movement in trade and other payables (0.5) 7.7
Net cash flows from operating activities 296.7 (458.8)
Cash flows from investing activities
Purchase of investments at fair value through profit or loss (20.0) (243.5)
Issuance of Intercompany note receivable 5 (83.8) –
Net cash flows from investing activities (103.8) (243.5)
Cash flows from financing activities
Issue of shares (net of Share issue costs deducted from proceeds) – 725.0
Payment of share issue costs (5.7) (4.8)
Repurchase of Ordinary Shares 8 (50.0) –
Dividends paid 9 (70.3) –
Finance costs (0.9) –
Net cash flows from financing activities (126.9) 720.2
Net increase in cash and cash equivalents during the year/period 66.0 17.9
Cash and cash equivalents at the beginning of the year/period 17.9 –
Cash and cash equivalents at the end of the year/period 83.9 17.9
Non-cash investing and financing activities
1,000,000 Ordinary Shares issued to Petershill Funds in return for Investments
in Subsidiary undertakings – 4,333.4
The accompanying notes on pages 118 to 125 form an integral part of these financial statements.
117 Petershill Partners plc | Annual Report 2022
Notes to the Company Financial Statements
For the year ended 31 December 2022
118 Petershill Partners plc | Annual Report 2022
1. Basis of preparation
The annual financial statements of the Company have been prepared and approved by the Board of Directors in accordance with UK-adopted
International Accounting Standards (“IFRS”) and with the requirements of the Companies Act 2006 as applicable to companies reporting under
those standards. The financial statements are presented to the nearest million United States Dollar ($m), being the functional and reporting
currency of the Company.
The financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation
of financial assets and liabilities at fair value through profit or loss. The preparation of the financial statements requires estimates and
assumptions to be made that may affect the amounts reported in the financial statements and accompanying notes. Actual amounts could
differ from the estimates included in the financial statements herein. It also requires judgement to be exercised in the process of applying the
accounting policies.
The significant accounting policies and basis of preparation of the annual financial statements of the Company follow those as disclosed for the
Group in note 2 of the Consolidated Financial Statements unless otherwise described below.
2. Investments in subsidiary undertakings
The Company measures its investments in subsidiaries at fair value. Fair value is defined as the price that would be received to sell an asset or
paid to transfer a liability (i.e. the exit price) in an orderly transaction between market participants at the measurement date. In the absence of
quoted market prices, fair value is determined by the Operator. Gains and losses arising from changes in the fair value of financial assets and
financial liabilities at fair value through profit or loss are presented in the Statement of Comprehensive Income in the period in which they arise.
For the year ended 31 December 2022 and the period ended 31 December 2021, the Investments in subsidiary undertakings were valued at the
most recent NAV per unit which represents the fair value of these investments. The Board of Directors believes that it is appropriate to measure
the Investments in Subsidiaries at their net asset value which has taken into account risks to fair value, inclusive of liquidity discounts, through
appropriate discount rates.
Investments in Partner-firms held by the subsidiary undertakings are held at fair value through profit and loss, further details can be found in
note 4 of the Consolidated Financial Statements.
3. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term investments in an active market with
original maturities of three months or less.
4. Audit fees
The auditors’ remuneration for audit services and other audit-related services is disclosed in note 6 to the Consolidated Financial Statements.
5. Investments held at fair value through profit or loss
Non-current investments
Investments in Subsidiary undertakings
The Company’s non-current investments comprise investments in Subsidiaries.
31 December
2022
$m
31 December
2021
$m
Opening balance 4,830.0 –
Additions 20.0 4,576.9
Unrealised movement in investments in Subsidiaries (724.1) 253.1
4,125.9 4,830.0
The Company's investments in Subsidiaries are comprised of the below entities.
Petershill Partners plc | Annual Report 2022118
Petershill Partners plc | Annual Report 2022 119
Name of subsidiary undertaking Activity Holding 2022 Holding 2021 Registered Office
Petershill Partners Inc. (formerly Delta Epsilon Delaware Inc.) Investment
company
100% 100% 251 Little Falls Drive
Wilmington, DE 19808
Petershill Partners Ltd (formerly Delta Epsilon Cayman Ltd) Investment
company
100% 100% One Nexus Way Camana Bay,
KY1-9005 Cayman Islands
Petershill Partners II Ltd (formerly Delta Epsilon Cayman II Ltd)
1
Investment
company
100% N/A One Nexus Way Camana Bay,
KY1-9005, Cayman Islands
1. Incorporated and acquired by the Company on 28 April 2022.
Refer to note 2(xvi) of the Consolidated Financial Statements for a full list of the Company's related subsidiary undertakings.
Intercompany note receivable
The Company and the Cayman Subsidiary have entered into a loan agreement (“Intercompany Note”) with a maturity date of 9 November 2031
under which the Company shall provide loans to the Cayman Subsidiary. The Intercompany Note shall carry an annual interest rate of 3% to be
paid at the end of every month. Any unpaid interest shall be capitalised and added to the amount of principal outstanding.
As of 31 December 2022, an amount of $84.1 million (31 December 2021: $nil) is due from the Cayman Subsidiary to the Company including
capitalised interest of $0.3 million.
Current investments
The Company invests its overnight cash balance in Money Market Funds representing a collective investment scheme promoted by an affiliate of
the Operator. The Company holds these investments for cash management purposes with the intent to manage excess cash and ensure these can
be readily liquidated to meet the Company’s investment commitments. These investments are redeemable at short notice and have been
classified as debt investments. As at 31 December 2022, the Company held investments in Money Market Funds of $414.2 million (31 December
2021: $453.1 million) and earned interest of $6.8 million (31 December 2021: $29 thousand).
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial assets or financial liabilities is
determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are
classified in their entirety into only one of the following 3 levels:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
Level 3 – inputs for assets or liabilities that are not based on observable market data (unobservable inputs).
The determination of what constitutes “observable” requires significant judgement by the Group. The Board of Directors considers observable
data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by
independent sources that are actively involved in the relevant market.
119 Petershill Partners plc | Annual Report 2022
120 Petershill Partners plc | Annual Report 2022
The following tables analyse within the fair value hierarchy the assets and liabilities (by class) measured at fair value:
31 December 2022
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Assets
Investment in Money Market Funds – 414.2 – 414.2
Investments in Subsidiaries – – 4,125.9 4,125.9
Total – 414.2 4,125.9 4,540.1
31 December 2021
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Assets
Investment in Money Market Funds – 453.1 – 453.1
Investments in Subsidiaries – – 4,830.0 4,830.0
Total – 453.1 4,830.0 5,283.1
Due to the nature of the Company’s investments in its Subsidiaries, they are always expected to be classified as Level 3. There have been no
transfers between levels during the year/period. Any transfers between the levels would be accounted for on the last day of each financial
year/period.
Quantitative information of significant unobservable inputs – Level 3 – Investments
The Board of Directors believes that it is appropriate to measure the Investments in Subsidiaries at their net asset value which has taken into
account risks to fair value, inclusive of liquidity discounts, through appropriate discount rates.
Sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy
Significant unobservable inputs are used in the fair value measurement categorised within Level 3 of the fair value hierarchy. If the fair value
of the investments in Subsidiaries was to increase or decrease by 10% then the fair value of investments would increase or decrease by
$412.6 million respectively (31 December 2021: $483.0 million).
As the Company’s investments are not publicly quoted, valuations require meaningful judgement to establish a range of values, and the ultimate
value at which an investment is realised may differ from its most recent valuation and the difference may be significant.
6. Trade and other receivables
31 December
2022
$m
31 December
2021
$m
Amounts receivable from investments 19.8 8.2
Prepayments and other receivables 1.7 –
Tax recoverable 0.2 –
21.7 8.2
7. Trade and other payables
31 December
2022
$m
31 December
2021
$m
Other payables 10.5 7.7
Share issue costs payable – 5.7
10.5 13.4
Petershill Partners plc | Annual Report 2022120
Petershill Partners plc | Annual Report 2022 121
8. Share capital and other reserve
For the year ended 31 December 2022
Issued and fully paid
Number of
shares issued
Share
capital
$m
Share
premium
$m
Other
reserve
$m
Capital
redemption
reserve
$m
Total
$m
Shares at 1 January 2022 1,156,696,029 11.6 3,346.7 1,689.6 – 5,047.9
Redemption and cancellation of Redeemable Shares – – – – 0.1 0.1
Repurchase and cancellation of Ordinary Shares – $0.01 (21,296,432) (0.2) – – 0.2 –
1,135,399,597 11.4 3,346.7 1,689.6 0.3 5,048.0
For the period from 24 March 2021 to December 2021
Date Issued and fully paid
Number of
shares issued
Share
capital
$m
Share
premium
$m
Other
reserve
$m
Total
$m
Shares at inception – – – – –
24 March 2021 Incorporation – Ordinary -$0.01 1
3
– – –
28 September 2021 Capital raise – Ordinary -$0.01 1,000,000,000
1
10.0 2,633.8 1,689.6 4,333.4
1 October 2021 Capital raise – Ordinary -$0.01 156,696,028
2
1.6 745.1 – 746.7
28 September 2021 Less share issue costs – – (32.2) – (32.2)
1,156,696,029 11.6 3,346.7 1,689.6 5,047.9
During the year, the Company repurchased and cancelled 21,296,432 Ordinary Shares as part of its buyback programme for a total consideration
of $53.3 million including transaction costs. The Company also purchased and cancelled 50,000 Redeemable Deferred Shares for a consideration
of $68k.
1.Represents the Ordinary Shares issued to Petershill Funds in return for Investments in Subsidiary undertakings.
2.Represents Ordinary Shares issued to the public as part of the IPO process.
3.To enable the Company to obtain a certificate to commence business and to exercise its borrowing powers under section 761 CA 2006,
on 24 March 2021, 1 Ordinary Share of US$0.01 was issued.
For the period ended 31 December 2021, Other payables in note 7 include an amount of $0.1 million in relation to 50,000 Redeemable Deferred
Shares of £1 issued by the Company on 5 August 2021. The Redeemable Deferred Shares conferred no right on the Redeemable Shareholders
to receive notice of, or to attend or vote at, any general meeting of the Company, but conferred on each holder thereof a right to receive notice
of and to attend and to vote at any separate class meeting of the holders of Redeemable Deferred Shares. As disclosed in note 2(ix) to the
Consolidated Financial Statements, the Company’s Redeemable Deferred Shares are classified as financial liabilities. On 6 June 2022 the
Redeemable Shares were fully redeemed.
As at 31 December 2022, the Company’s issued share capital comprised 1,135,399,597 of Ordinary Shares (31 December 2021: 1,156,696,029)
and nil Redeemable Deferred Shares (31 December 2021: 50,000). Ordinary Shareholders are entitled to all dividends paid by the Company.
Refer to note 2(ix) to the Consolidated Financial Statements for further details.
9. Dividends declared and paid
Dividends declared and paid Paid on
Dividend
per share
cents
Total
dividend
$m
Final dividend with respect to the period ended 31 December 2021 14 June 2022 2.6 30.1
Interim dividend with respect to the year ended 31 December 2022 24 October 2022 3.5 40.2
Total 6.1 70.3
10.Critical accounting estimates and judgements
The Board of Directors has made judgements and estimates with respect to those items that have the most significant effect on the carrying
amounts of the assets and liabilities in the financial statements. The Board of Directors has concluded that in arriving at the Net Asset Value of
the Subsidiaries, significant judgement is required in estimating the fair value of investments held by the Subsidiaries in Partner-firms as
discussed in note 2.
121 Petershill Partners plc | Annual Report 2022
122 Petershill Partners plc | Annual Report 2022
11. Financial instruments risk
In the normal course of business, the Company uses certain financial instruments including cash, trade and other receivables and investments.
The Company is exposed to a number of risks through the performance of its normal operations. Refer to note 18 to the Consolidated Financial
Statements for further details.
31 December
2022
31 December
2021
Financial assets
Investment at fair value through profit or loss:
Investments in Subsidiary undertakings 4,125.9 4,830.0
Intercompany note receivable 84.1 –
Other financial assets:
Investments in money market at fair value through profit or loss 414.2 453.1
Cash and cash equivalents 83.9 17.9
Trade and other receivables (excluding prepayments) 20.0 8.2
Financial liabilities
Current liabilities:
Trade and other payables 10.5 13.4
Capital risk management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the returns to Shareholders.
The Board of Directors recommends to Shareholders the level of dividend distributions to Shareholders. The Company may purchase its own
shares within the limits defined by the Board of Directors subject to restrictions imposed by applicable laws.
The capital structure of the Company consists of issued share capital, share premium, other reserve, capital redemption reserve and retained
earnings as stated in the Company Statement of Financial Position.
Market risk
Market risk includes price risk, foreign currency risk and interest rate risk.
Price risk
The investments held by the Company's Subsidiaries in Partner-firms present a potential risk of loss of capital to the Company. Price risk arises
from changes in fair value of the investments in Partner-firms held by the Group. As discussed in note 3 of the Consolidated financial statements,
the fair value of these investments are determined using valuation techniques including earnings multiples, discounted cash flows and recent
comparable transactions. In valuing the investments, key assumptions include estimates around future fundraise timing and sizes, expected
management and performance fee rates and margins of the Partner-firms, expected current and future fund returns and timing of realisations
etc. Such valuations are reviewed and approved semi-annually by committees and working groups functionally independent of the Operator prior
to being incorporated into the Group's net assets. As new information surfaces on these key assumptions, the valuation techniques may be
adjusted causing the fair value of these investments to change.
As at 31 December 2022, the fair value of investments in Partner-firms held by the subsidiaries was $4,958.9 million (31 December 2021:
$6,023.1 million). As presented in the Sensitivity analysis to significant changes in unobservable inputs table in the Consolidated Financial
Statements, the valuation of these investments could vary from $(597.0) million to $366.9 million (31 December 2021: $(788.9 million) to
$405.5 million) depending on the valuation techniques used while keeping the key assumptions constant.
The Company is exposed to a variety of risks which may have an impact on the carrying value of the Company’s investments. The Company’s risk
factors are set out below.
(i) Not actively traded
The Company’s investments are not generally traded in an active market but are indirectly exposed to market price risk arising from uncertainties
about future values of the investments held. The investments held by the Company’s subsidiaries vary as to industry sub-sector, geographic
distribution of operations and size, all of which may impact the susceptibility of their valuation to uncertainty. Although the investments
are in the same industry, this risk is managed through careful selection of investments within the specified limits of the investment policy.
The investments are monitored on a regular basis by the Operator.
Petershill Partners plc | Annual Report 2022122
Petershill Partners plc | Annual Report 2022 123
(ii) Concentration
The Company invests in the alternative asset sector, with a particular focus on asset classes such as private equity, private credit, private real
assets, and absolute return strategies. This means that the Company is exposed to the concentration risk of only making investments in the
alternative asset sector, which concentration risk may further relate to sub-sector, geography, and the relative size of an investment or other
factors. While the Company is subject to the investment and diversification restrictions in its investment policy, within those limits, material
concentrations of investments may arise.
The Board of Directors and the Operator monitor the concentration of the investments on a quarterly basis to ensure compliance with the
investment policy.
(iii) Liquidity
The Group’s liquidity risk arises from its investment commitments to Partner-firms and the flexibility for the Partner-firms to call capital as
required. The Group will maintain flexibility in funding by keeping sufficient liquidity in cash and cash equivalents, which may be invested
on a temporary basis in line with the cash management policy as agreed by the Board of Directors from time to time.
As at 31 December 2022, $498.1 million or 10.6% (31 December 2021: $471.0 million or 8.9%) of the Company’s financial assets, were
investments in Money Market Funds and cash balances held on deposit with a AA- rated bank.
(b) Foreign currency risk
The Company transacts in currencies other than US$. Consequently, the Company is exposed to risks that the exchange rate of its currency
relative to other foreign currencies may change in a manner that has an adverse effect on the value of that portion of the Company’s assets or
liabilities denominated in currencies other than the US$. Any exposure to foreign currency risk at the underlying investment level is captured
within price risk.
The following table sets out, in US$, the Company’s total exposure to foreign currency risk and the net exposure to foreign currencies of the
monetary assets and liabilities:
As at 31 December 2022
US$
$m
GBP£
$m
Total
$m
Non-current assets
Investments at fair value through profit or loss 4,125.9 – 4,125.9
Intercompany note receivable 84.1 – 84.1
Total non-current assets 4,210.0 – 4,210.0
Current assets
Investments in money market at fair value through profit or loss 414.2 – 414.2
Cash and cash equivalents 81.5 2.4 83.9
Trade and other receivables 20.0 – 20.0
Total current assets 515.7 2.4 518.1
Current liabilities
Trade and other payables (8.4) (2.1) (10.5)
Total current liabilities (8.4) (2.1) (10.5)
123 Petershill Partners plc | Annual Report 2022
124 Petershill Partners plc | Annual Report 2022
As at 31 December 2021
US$
$m
GBP£
$m
Total
$m
Non-current assets
Investments at fair value through profit or loss 4,830.0 – 4,830.0
Total non-current assets 4,830.0 – 4,830.0
Current assets
Investments in money market at fair value through profit or loss 453.1 – 453.1
Cash and cash equivalents 2.0 15.9 17.9
Trade and other receivables 8.2 – 8.2
Total current assets 463.3 15.9 479.2
Current liabilities
Trade and other payables (4.1) (9.3) (13.4)
Total current liabilities (4.1) (9.3) (13.4)
Total net assets 5,289.2 6.6 5,295.8
b) Interest rate risk
The Company's exposure to interest rate risk relates to the Company's cash and cash equivalents and money market investments. The Company
is subject to risk due to fluctuations in the prevailing levels of market interest rates. Any excess cash and cash equivalents are invested at short-
term market interest rates. As at the date of the Statement of Financial Position, the majority of the Company's cash and cash equivalents were
held on interest bearing fixed deposit accounts.
The Company's investment in Money Market Funds is variable and is subject to fluctuations. Any exposure to interest rate risk at the underlying
investment level is captured within price risk. An increase of 100 basis points, based on the closing balance sheet position over a 12-month
period, would lead to an approximate increase in total profit before tax of $4.1 million (31 December 2021: 4.5 million) for the Company.
The Intercompany note agreement entered into with the Cayman Subsidiary carries a fixed rate of interest and is not subject to interest rate risk.
In addition, the Company has indirect exposure to interest rates through changes to the financial performance and the valuation of investments
in Partner-firms caused by rate fluctuations held through the Subsidiaries.
Petershill Partners plc | Annual Report 2022124
Petershill Partners plc | Annual Report 2022 125
12. Related party transactions
The details of each individual Director’s remuneration, as set out in the tables contained in the Directors’ Remuneration Report on pages 65 to
68, form part of these financial statements.
Subsidiaries
The Company entered into a consultancy agreement (“Consultancy Agreement”) with the Subsidiaries whereby the Company will provide services
including but not limited to acquisition advice and review, and advice on strategy setting. An amount of $11.3 million (31 December 2021:
$8.2 million) was earned by the Company under this arrangement of which $9.1million (31 December 2021: $6.6 million) was charged to
Petershill Partners and $2.2 million (31 December 2021: $1.6 million) was charged to Petershill Partners Ltd for the year ended 31 December
2022. $19.5 million (31 December 2021: $8.2 million) was outstanding at year end.
On 24 August 2022, the Delaware Subsidiary issued US private placement senior unsecured notes (the "Unsecured Notes") to a group of
institutional investors in the amount of $500 million and the Unsecured Notes are guaranteed by the Company. These contracts are accounted
for under IFRS 9 and no liability has been recognised in respect of these guarantees on the basis of materiality. The likelihood of these
guarantees being called upon is considered remote. Refer to note 12 of the Consolidated Financial Statements for further information.
The Company and the Cayman Subsidiary have entered into an Intercompany Note agreement with a maturity date of 9 November 2031 under
which the Company shall provide loans to the Cayman Subsidiary. Refer to note 5 for additional details.
Please refer to note 18 to the Consolidated Financial Statements for further details on related party transactions.
13. Subsequent events
The Company has evaluated activity to 5 April 2023, the date that the audited financial statements were available to be issued.
On 6 January 2023 the Company together with the Delaware Subsidiary entered into a $100 million revolving credit facility with a syndicate of
banks.
On 10 March 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed
the Federal Deposit Insurance Corporation (“FDIC” ) as receiver. The Group has no bank accounts or any relationship with SVB. From our enquiries,
we understand that the Partner-firms do not have material exposure to SVB either directly or indirectly through the funds they managed.
However, the Group will continue to monitor the impact on global markets and macroeconomic conditions.
On 12 March 2023, Signature Bank was closed by the New York State Department of Financial Services, which appointed the FDIC as receiver.
The Group has no bank accounts or any relationship with Signature Bank. From our enquiries, we understand that the Partner-firms do not have
material exposure to Signature Bank either directly or indirectly through the funds they managed. However, the Group will continue to monitor
the impact on global markets and macroeconomic conditions.
Please refer to note 21 to the Consolidated Financial Statements for other post balance sheet events.
125 Petershill Partners plc | Annual Report 2022
Glossary of Capitalised
Defined Terms
Acquisition Strategy and Investment Policy means the
Company’s acquisition strategy and investment policy as detailed
on pages 22 to 24 of the Strategic Report
Administrator means Ocorian Administration (UK) Limited
Admission means admission of all of the Ordinary Shares issued
and to be issued in connection with the Offer to the premium
listing segment of the Official List and to trading on the London
Stock Exchange’s main market for listed securities
AGM means Annual General Meeting
AIC means the Association of Investment Companies
AIC Code means the AIC’s Code of Corporate Governance, as
amended from time to time
AIFM means alternative investment fund manager, within the
meaning of the EU AIFMD and the UK AIFMR
Annual Report means the Company’s report and financial
statements for the period from 1 January 2022 to
31 December 2022
Articles of Association means the articles of association of the
Company from time to time
Auditor means PricewaterhouseCoopers LLP or PwC and
its affiliates
BEIS means the Department for Business, Energy and Industrial
Strategy of the UK Government
Board means the Board of Directors of the Company
Companies Act means the Companies Act 2006 which forms the
primary source of UK company law
Capital Amount means the amount of gross proceeds of the IPO,
plus the net proceeds of any future issues of Ordinary Shares, less
any amounts expended by the Company on share repurchases and
redemptions or, following a Realisation Election, attributable to
Realisation Shares
Closed-ended Investment Fund means closed-ended investment
fund as per the Financial Conduct Authority’s definition
Company means Petershill Partners Plc
Company Secretary means Ocorian Administration (UK) Limited
Directors means the Directors of the Company
DTR means the Disclosure Guidance and Transparency Rules
sourcebook issued by the Financial Conduct Authority
ESG means Environmental, Social and Governance
EU AIFMD means Directive 2011/61/EU of the European
Parliament and of the Council of 8 June 2011 on Alternative
Investment Fund Managers and amending Directives 2003/41/EC
and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU)
No. 1095/2010 as supplemented by the AIFMD Delegated
Regulation and, where applicable, as transposed (i) in Ireland by
the European Union (Alternative Investment Fund Managers)
Regulations 2013 (as amended) and (ii) in any other European
Economic Area member state by the corresponding national
implementing measures
Existing Petershill Group means the current and historic
Petershill Funds being Petershill I, Petershill II, Petershill III,
Petershill PE Seeding, Petershill IV and Vintage VII, as well as
certain co-investment vehicles and GSAM
FCA or means the UK Financial Conduct Authority (or its successor
bodies)
Goldman Sachs or Goldman Sachs group means Goldman Sachs
Group, Inc. and its subsidiaries and subsidiary undertakings
GP means general partner
GP Services means the assistance provided to Partner-firms by
the Operator through the GP Services Team including in the
following areas: (a) Human Capital, (b) Operational Consulting &
Digital Transformation, (c) Investment Portfolio Services, (d)
Capital Formation, (e) Strategy, Corporate Finance and M&A, (f)
Product Development & Peer Benchmarking, (g) Environment,
Social & Governance, (h) Legal, Tax & Regulatory, and (i) Portfolio
Monitoring, Reporting & Communication
Group or Petershill Partners Group means the Company
together with its subsidiaries and its indirect subsidiaries
IFRS means the International Financial Reporting Standards,
being the accounting standards issued by the International
Accounting Standards Board (IASB). The Company’s consolidated
financial statements have been prepared in accordance with
UK-adopted International Accounting Standards
Initial Acquisition means the acquisition that occurred prior to
Admission, which saw the transfer of a portfolio of assets from
the Petershill Funds to the Group
Investment Advisor means Goldman Sachs Asset Management, L.P.
Investment Manager means Goldman Sachs Asset Management
International
IPEV Valuation Guidelines means the International Private
Equity and Venture Capital Valuation Guidelines
Listing Rules means the listing rules made by the UK Listing
Authority under section 73A of the Financial Services and Markets
Act 2000
Petershill Partners plc | Annual Report 2022126
London Stock Exchange means London Stock Exchange plc
Main Market means the main market of the London
Money Market Funds means open-ended mutual funds, that the
Operator may or may not manage, which invest in cash and
cash-equivalent securities
NAV or Net Asset Value means the value of the assets of the
Company less its liabilities as calculated in accordance with the
Company’s valuation policy and expressed in US dollars
Offer or IPO means the offer of the new Ordinary Shares by the
Company and existing Ordinary Shares by the
Selling Shareholders
Official List means the official list maintained by the FCA
Operator means Goldman Sachs Asset Management Fund
Services Limited
Operator Agreement means the Operator Agreement entered
into between the Operator and the Company
Ordinary Shares means Ordinary Shares of $0.01 in the capital
of the Company issued and designated as “Ordinary Shares” and
having the rights, restrictions and entitlements set out in the
Company’s articles of incorporation
Partner-firms means the alternative asset managers in which
the Group holds, from time to time, investments representing
minority ownership positions and rights to certain revenue
streams of the alternative asset managers
Premium Listing Segment means the Premium Listing Segment
of the London Stock Exchange’s main market
Profit Sharing Charge means the profit-sharing charge payable
to the Operator pursuant to the Operator Agreement, as
described in the Notes to the Consolidated Financial Statements
Profit Sharing Required Investment Return means the
investment return required in respect of certain investments in
order for the Profit Sharing Charge to become chargeable, as
described in the Notes to the Consolidated Financial Statements
Recurring Operating Charges means the recurring operating
charges payable to the Operator pursuant to the Operator
Agreement, as described in the Notes to the Consolidated
Financial Statements
Redeemable Deferred Shares means redeemable deferred
shares having a nominal value of £1.00 each in the capital of
the Company
Redeemable Shareholders means the holders of the
Redeemable Deferred Shares
SFDR means Regulation (EU) 2019/2088 of the European
Parliament and of the Council on sustainability-related
disclosures in the financial services sector
Shareholders means the holders of the Ordinary Shares
Tax Receivables Agreement or TRA means the tax receivables
Delaware Inc. and various subsidiaries of the Petershill Funds
TCFD means the Task Force on Climate-related Financial
Disclosures issued by the Financial Stability Board to develop
consistent climate-related financial risk disclosures for use by
companies, banks and investors in providing information
to stakeholders
Transfer Vehicles means the transfer vehicles established by the
Petershill Funds to transfer a portfolio of assets to the Petershill
Partners Group pursuant to the Initial Acquisition
UK AIFMR means the Alternative Investment Fund Managers
Regulation 2013 (as amended) and supplemental measures
relating thereto, including rules contained in the FCA’s Handbook
UK Code means the UK Corporate Governance Code issued by
the Financial Reporting Council
United Kingdom or UK means the United Kingdom of Great
Britain and Northern Ireland
United States or US means the United States of America, its
territories and possessions, any state of the United States and the
District of Columbia
127 Petershill Partners plc | Annual Report 2022
The Petershill Partners
Group’s Assets
Accel-KKR
Accel-KKR is a technology-focused investment firm that focuses
on middle-market software and IT-enabled companies and
provides a broad range of capital solutions including buyout
capital, minority-growth investments and credit alternatives
across its buyout, growth capital and credit investment strategies.
Accel-KKR has invested in more than 250 companies over the last
20 years. On 27 April 2017, the Existing Petershill Group acquired
an equity stake in Accel-KKR. The investment was structured as a
primary commitment and no capital was distributed to Accel-KKR
principals as part of the transaction. The investment is being used
by Accel-KKR to increase its capital commitments to current
strategies and to support potential new initiatives in the future.
ArcLight Capital Partners
Founded in 2001, ArcLight Capital Partners is a Boston-based
energy-and-infrastructure-focused private equity manager that
currently manages a single fund family and primarily invests in
the midstream, infrastructure and power sectors. ArcLight helped
pioneer an asset-based private equity approach to investing in
the dynamic energy sector, targeting midstream power and
production. It has invested approximately US$23 billion in 110
transactions since inception and completed 69 exits across
diverse market cycles. On 23 December 2016, the Existing
Petershill Group acquired an equity stake in ArcLight.
The investment was used by ArcLight to fund current and future
general partner commitments to ArcLight funds, as well as to
facilitate leadership succession at the firm.
Arlington Capital Partners
Arlington Capital Partners is a North American middle-market
private equity firm focused on investing in regulated industries
and their adjacent markets. Arlington was founded in 1999 and is
headquartered in Washington, DC.
Arsenal Capital Partners
Arsenal Capital Partners is a North American private equity firm
specialising in buyout and growth investments in middle-market
industrials and healthcare companies. Arsenal was founded
Caxton Associates
Founded in 1983, Caxton Associates is a New York-based trading
and investment management firm specialising in global macro
hedge fund strategies across a variety of global markets
Group acquired an equity stake in Caxton Associates.
The investment provided secondary proceeds and facilitated
generational succession.
Clearlake
Clearlake is a Santa Monica, California-based buyout and
distressed debt investment firm founded in 2006. Clearlake’s
targets investments in private equity, special situations and
credit in the middle-market under three product platforms:
Clearlake Capital Partners, Clearlake Opportunities Partners and
Clearlake Credit Partners. On 25 May 2018, the Existing Petershill
Group acquired a passive minority equity stake in Clearlake.
as strategic capital to further invest in the business and fund
future development initiatives.
Fort Investment Management
Founded in 1993, Fort Investment Management is a systematic
investment management firm. Fort implements three proprietary
trading programmes in managing funds and accounts: (i) Global
Contrarian, a trend-anticipating trading programme; (ii) Global
Diversified, a combination of a managed futures strategy and an
equity-market-neutral strategy and (iii) Equity Market Neutral, an
equity-market-neutral trading programme. On 6 January 2016,
the Existing Petershill Group closed on the acquisition of an
equity stake to simplify Fort’s capital structure.
Francisco Partners
Francisco Partners is a San Francisco, California-based
middle-market technology buyout investment firm founded
communications, security, software and fintech, with a focus
European and Israeli technology companies under two product
platforms: Francisco Partners Private Equity and Agility. Francisco
Partners targets businesses ranging from US$20 million to more
than 110 companies with more than 175 follow-on acquisitions.
On 9 July 2018, the Existing Petershill Group acquired
development initiatives.
General Catalyst
General Catalyst is a Cambridge, Massachusetts-based growth
and venture capital firm founded in 2000. General Catalyst has
additional offices in New York, Palo Alto and San Francisco and is
managed by the two founding partners as well as Hemant Taneja
and Ken Chenault. General Catalyst targets early stage venture
and growth investments in technology or tech-enabled
businesses. On 21 November 2018, the Existing Petershill Group
acquired a passive minority revenue share in General Catalyst.
The investment is being used by General Catalyst to fund future
GP commitments and facilitate the continued growth of the
General Catalyst platform.
Petershill Partners plc | Annual Report 2022128
Harvest Partners
Harvest Partners is a New York-based middle-market leveraged
buyout firm founded in 1981. Harvest is focused on the
industrials, business services, healthcare, manufacturing and
distribution and consumer sectors. Harvest targets control and
non-controlling investments in the middle-market under two
product platforms: Harvest Partners and the Harvest Partners
Structured Capital Fund. On 12 October 2018, the Existing
Petershill Group acquired a passive minority equity stake in
Harvest. The investment is being used by Harvest to fund future
GP commitments and facilitate the continued growth of the
Harvest platform.
Industry Ventures
Industry Ventures is a venture capital investment firm that
focuses on investing in companies and venture capital
partnerships directly and via secondary transactions, from early
stage to growth stage, and seeks to address inefficiencies in
venture capital with flexible solutions for entrepreneurs, venture
funds and limited partners. Industry Ventures was founded in
1999 and is headquartered in San Francisco, CA, with additional
offices in Washington, DC and London.
Kayne Anderson Real Estate
Kayne Anderson Real Estate (“KARE”) was founded in 2007 and
is a US real estate asset management platform, focusing on
opportunistic, core equity and debt investments in alternative
sectors, including medical office, senior housing, multi-family
housing, student housing and self-storage. KARE currently has
more than 60 employees across its business. KARE targets
investments ranging from US$30 million to US$500 million, with
an aim to enhance value through asset consolidation and the
creation of geographically diverse portfolios. On 17 January 2020,
the Existing Petershill Group acquired a minority interest in KARE.
The investment is being used by KARE to fund GP commitments
and facilitate employee retention through equalisation and
long-term commitments to the business.
Knighthead Capital Management
Founded in 2008, Knighthead Capital Management is a New
York-based hedge fund specialising in long/short event-driven,
distressed credit and other special situations across a broad array
of industries. On 6 January 2014, the Existing Petershill Group
acquired an equity stake in Knighthead, with the proceeds being
used by Knighthead to simplify Knighthead’s capital structure.
Lakewood
Founded in 2007, Lakewood is a value-oriented equity long/short
investment firm. It employs a broad investment strategy with the
flexibility to capitalise on opportunities in all parts of the capital
structure and across geographies, market capitalisations and
industries. Lakewood makes investments in long equity, short
equity and fixed income. Its long equity strategy comprises a
concentrated portfolio of companies with attractive long-term
appreciation potential with a minimised risk of capital loss.
The short equity strategy seeks to generate profits in all market
environments through a focus on a prudently diversified portfolio
of significantly overvalued securities. The Existing Petershill
Group acquired an equity stake in Lakewood on 27 June 2017,
which provided necessary capital to transition out an existing
minority partner while also increasing the Lakewood partner’s
capital commitment to the investment fund.
Littlejohn & Co.
Founded in 1996, Littlejohn & Co. is a Greenwich, Connecticut-
based mid-market private equity manager. Littlejohn & Co.’s
flagship private equity programme is focused on investing in
middle-market companies that are undergoing a fundamental
change in capital structure, strategy, operations or growth that
can benefit from its operational and strategic approach. In
addition, Littlejohn & Co. has built out a distressed credit product
and a performing credit platform. On 8 August 2016, the Existing
Petershill Group acquired an equity stake in Littlejohn & Co. The
investment was structured as a primary capital contribution to
build a balance sheet that enables Littlejohn & Co. to grow its
private equity and credit strategies, including funding GP
commitments and CLO equity retention tranches.
LLR Partners
LLR Partners is a lower middle market private equity firm
investing in technology and healthcare businesses. LLR was
founded in 1999 and is based in Philadelphia, USA.
LMR Partners
LMR Partners is a global multi-strategy asset manager founded in
2009 with offices in London, Hong Kong and New York. LMR
Partners predominantly focuses on relative value and event-
driven multi-manager strategies across four distinct products.
On 14 August 2018, the Existing Petershill Group acquired
a passive minority equity stake in LMR Partners. Proceeds of the
investment were used partly to reorganise LMR Partners’ capital
structure and partly to reinvest in its funds.
Pelham Capital
Founded in 2007, Pelham Capital is a London-based European
equity long/short hedge fund that invests across a range of
sectors and specialises in event-driven distressed credit and
special situation opportunity funds. On 2 January 2014, the
Existing Petershill Group acquired an equity stake in Pelham
Capital. The investment was used by Pelham Capital for
investment in its business or its funds.
Piney Lake Partners
Piney Lake Partners, a Greenwich, Connecticut firm, is an
opportunistic private credit manager and focuses on lending
capital to middle-market business, primarily in North America,
that are either stressed or in a period of transition. On 21 June
2018, the Existing Petershill Group acquired a revenue share in
Piney Lake Partners, with capital provided to help fund its initial
credit portfolio.
Riverstone Holdings LLC
Riverstone Holdings LLC, founded in 2000, is one of the world’s
largest energy-focused private equity firms. Riverstone manages
a portfolio of more than 200 energy, natural resources and
renewables companies in 15 countries across a diversified
product platform including private equity funds, private credit
funds and permanent capital vehicles. On 4 May 2017, the
Existing Petershill Group acquired a passive minority revenue
interest in Riverstone. The investment provided Riverstone with
strategic capital to further invest in the business, fund business
development and address certain capital commitments.
129 Petershill Partners plc | Annual Report 2022
Slate Asset Management
Slate Asset Management, founded in 2005 with offices in
Toronto, Chicago, Frankfurt and London, is a real-estate-focused
alternative investment platform. Slate is a value-oriented
manager across private and publicly traded investment vehicles,
investing across Canada, the United States and Europe, through
multiple vehicles, including co-investments with global
institutional partners, private equity funds and publicly traded
Real Estate Investment Trusts. On 26 September 2019, the
Existing Petershill Group acquired a minority interest in Slate.
The investment is being used by Slate as balance sheet capital
commitments to facilitate development of the Slate platform.
SLR Capital Partners
SLR Capital Partners LLC is an independent boutique asset
manager focused on direct lending with expertise across a range
of primarily senior secured financing solutions for US middle
market companies. SLR was founded in 2006 and is based
in New York, USA.
Symphony Technology Group
Symphony Technology Group is a North American, technology-
focused private equity buyout firm, focusing on investments
Technology Group targets opportunities in the value-focused
enterprise software market. Symphony Technology Group
Westbrook Partners
Westbrook Partners is a value-added global real estate
investment platform. Westbrook’s strategy is focused on
value-added investments in global gateway cities, investing
across property types and the capital structure. On 5 October
2018, the Existing Petershill Group acquired a passive minority
Wind Point Partners
Wind Point Partners is a North American private equity firm
focusing on buyout investments in middle-market consumer
products, industrial products and business services companies.
Wind Point was founded in 1984 and is headquartered in
Chicago, IL.
continued
Petershill Partners plc | Annual Report 2022130
Glossary of Key Operating Metrics
This document contains certain key operating metrics that are
The Operator and the Directors use these key operating
Partner-firms and the Company, analyse and test dividends
received from the Partner-firms and inform operating, budgeting
and re-investment decisions. The Directors believe that these
metrics, which present certain operating and other information
understanding of the underlying portfolios and performance
The key operating metrics described in this section are derived
from financial and other information reported to the Operator
independent accounting firm, performs due diligence procedures
on the information provided by the Partner-firms. It should be
noted, however, that these due diligence procedures do not
constitute an audit.
In addition, each Partner-firm may account for and define certain
financial and other information differently from one another.
For example, each Partner-firm may calculate its fee-paying
of the Company’s Aggregate Fee-paying AuM are not
Whilst the operating metrics described in this section are similar
to those used by other alternative asset managers, there are no
generally accepted principles governing their calculation, and the
criteria upon which these metrics are based can vary from firm
to firm. These metrics, by themselves, do not provide a sufficient
basis to compare the Partner-firms’ or the Company’s
performance with that of other companies.
None of Partner Distributable Earnings, Partner FRE, Partner
Realised Performance Revenues or Partner Realised Investment
Income are measures of or provide any indication of profits
available for the purpose of a distribution by the Company within
the meaning of section 830 of the Companies Act 2006, or of any
Partner-firm in accordance with the equivalent applicable rules.
Aggregate Partner-firm AuM
Aggregate Partner-firm AuM is defined as the sum of (a) the net
asset value of the Partner-firms’ underlying funds and investment
vehicles, and in most cases includes co-investment vehicles,
and (b) uncalled commitments from these entities, as reported
This is an aggregated figure across all Partner-firms and includes
Partner-firm AuM outside of the Company’s ownership interest
in the Partner-firms.
The Operator and the Directors consider Aggregate Partner-firm
of the Partner-firms, as well as of their capital raising activities.
The Operator uses Aggregate Partner-firm AuM to inform
operating, budgeting and reinvestment decisions.
Aggregate Fee-paying AuM
Aggregate Fee-paying AuM is defined as the portion of Aggregate
Partner-firm AuM for which Partner-firms are entitled to receive
management fees, as reported by the Partner-firms to the
Operator. The principal difference between Aggregate Fee-paying
AuM and Aggregate Partner-firm AuM is that Aggregate
Fee-paying AuM typically excludes co- investment on which
Partner-firms generally do not charge fees and, to a lesser extent,
fund commitments in Partner-firm funds (i) on which fees are
only earned on investment, rather than from the point of
commitment and (ii) where capital has been raised but fees have
not yet been activated. This may also include legacy assets where
fees are no longer being charged.
The Operator and the Directors consider Aggregate Fee-paying
AuM to be a meaningful measure of the Partner-firms’ capital
base upon which they earn management fees and use the
measure in assessing the management fee-related performance
of the Partner-firms and to inform operating, budgeting and
re-investment decisions.
Aggregate Performance Fee Eligible
Partner-firm AuM
The amount of Aggregate Partner-firm AuM that is eligible
for performance fees.
AuM and Associated Data
The data presented in this document for the following key
operating metrics reflects AuM data reported to the Operator on
a three-month lag. This three-month data lag is due to the timing
of the financial information received by the Operator from the
Partner-firms, which generally require at least 90 days following
each period end to present final financial information to the
Operator. The key operating metrics reflected on a three-month
lag are:
• Aggregate Partner-firm AuM
• Aggregate Fee-paying Partner-firm AuM
• Average Aggregate Fee-paying Partner-firm AuM
• Aggregate Performance Fee Eligible Partner-firm AuM
• Average Aggregate Performance Fee Eligible Partner-firm AuM
• Partner Blended Net Management Fee Rate
• Implied Blended Partner-firm FRE Ownership
• Investment Capital
Issuer SPVs
Issuer SPVs comprise the following entities – PH Offshore GP
Issuer, PH Offshore IM Issuer, PH Onshore GP Issuer,
PH Onshore IM Issuer
Intermediary Entities
Intermediary Entities comprise the following entities – PH
Offshore GP Aggregator, PH Offshore IM Aggregator,
PH Onshore GP Aggregator, PH Onshore IM Aggregator
Glossary of Key Operating Metrics
131 Petershill Partners plc | Annual Report 2022
Investment Capital
Investment Capital is defined as the sum of the reported value
of the balance sheet investments from the Partner-firms.
The Operator and the Directors consider Investment Capital
to be a meaningful measure of the performance of the
Partner-firms’ balance sheet investments and potential future
Partner Realised Investment Income. The Operator therefore
uses Investment Capital to assess future expected Partner
Realised Investment Income and inform operating, budgeting
and reinvestment decisions.
In respect of Investment Capital, the data may be adjusted for
information received from the Partner-firms.
Ownership weighted AuM
Ownership weighted AuM represents the Company’s ownership
stake of each Partner-firms’ Aggregate Partner-firm AuM.
Partner Blended Net Management Fee Rate
Partner Blended Net Management Fee Rate is defined as Partner
Net Management and Advisory Fees for the period, divided by the
average Aggregate Fee-paying AuM weighted for the Company’s
ownership interests in each Partner-firm. The average Aggregate
Fee-paying AuM is calculated as the mean of the Aggregate
Fee-paying AuM at the start and the end of the reporting period
and excludes new acquisitions where the Company has not yet
started to receive or have only received partial period amounts
of Partner Net Management and Advisory Fees.
The Operator and the Directors consider Partner Blended Net
Management Fee Rate to be a key metric in assessing the
Company’s overall management fee-related performance.
Implied Blended Partner-firm FRE Ownership
Implied Blended Partner-firm FRE Ownership is defined as the
weighted average of the Company’s ownership stake in the
Partner-firms’ management fee-related earnings and is
calculated based on the contribution of average Aggregate
Fee-paying AuM from Partner-firms in each period. It will
therefore be expected to change to some degree from period to
period based on the contribution to average Aggregate Fee-
paying AuM of each Partner-firm, even if the actual ownership of
each underlying Partner-firm does not change. Excludes new
acquisitions where Petershill has not yet started to receive or
have only received partial period amounts of Partner Net
Management and Advisory Fees.
The Operator and the Directors consider Implied Blended
Partner-firm FRE Ownership to be a meaningful measure
of the composition of the Company’s investments.
Partner Net Management and Advisory Fees
Partner Net Management and Advisory Fees is defined as the
Company’s aggregate proportionate share of the Partner-firms’
net management fees (as reported by the Partner-firms to the
Operator), including monitoring and advisory fees and less any
management fee offsets, payable by the Partner-firms’ funds to
their respective Partner-firms for the provision of investment
management and advisory services.
Certain Partner-firms provide transaction and advisory services, as
well as services to monitor ongoing operations of portfolio
companies. Management fees paid to the Partner-firms may be
subject to fee offsets, which are reductions to management fees
and are based on a percentage of monitoring fees and transaction
and advisory fees paid by portfolio companies to the Partner-firms.
The Operator and the Directors consider Partner Net
Management and Advisory Fees to be a meaningful measure of
the management fee-related performance of the Partner-firms,
and the Operator uses this metric to analyse and test income
received from the Partner-firms and to inform operating,
budgeting and re-investment decisions.
Partner Fee Related Earnings (FRE) and
Partner FRE Margin
Partner FRE is defined as Partner Net Management and Advisory
Fees, less the Partner-firms’ operating expenses, fixed and bonus
compensation, net interest income/(expense) and taxes (but not
performance fee-related expenses) allocable to the Company’s
share of Partner Net Management and Advisory Fees, as reported
by the Partner-firms to the Operator, and subject to applicable
contractual margin protections in respect of certain Partner-
firms. Partner FRE Margin is defined as Partner FRE divided by
Partner Net Management and Advisory Fees.
The Operator and the Directors consider Partner FRE and Partner
FRE Margin to be meaningful measures of the management
fee-related earnings of the Partner-firms and key performance
indicators of the Company’s income from investments in
management companies derived from management fee income.
The Operator uses this metric to analyse and test dividends
received from the Partner-firms, as well as to inform operating,
budgeting and reinvestment decisions.
Partner Realised Performance Revenues
Partner Realised Performance Revenues is defined as the
Company’s aggregate proportionate share of the Partner-firms’
realised carried interest allocations and incentive fees payable
by the Partner-firms’ funds to their respective Partner-firms,
less any realised performance fee-related expenses of the
Partner-firms allocable to the Company’s share of performance
fee-related revenues, as reported by the Partner-firms
to the Operator.
The Company’s share of the Partner-firms’ performance
fee-related earnings will be lower than its share of the Partner-
firms’ management fee-related earnings because the Company’s
ownership stake in the Partner-firms’ performance fee-related
earnings is lower than its ownership stake in the Partner-firms’
management fee-related earnings.
The Operator and the Directors consider Partner Realised
Performance Revenues to be a meaningful measure of the
performance fee-related earnings of the Partner-firms and
from investments in management companies derived from
performance fee income. The Operator uses this metric to analyse
and test dividends received from the Partner-firms, as well
as to inform operating, budgeting and reinvestment decisions.
Glossary of Key Operating Metrics continued
Petershill Partners plc | Annual Report 2022132
Partner Realised Investment Income
Partner Realised Investment Income is defined as the Company’s
aggregate proportionate share of Partner-firm earnings resulting
from the realised gains and losses, or any distributed income,
from the investments held on Partner-firms’ balance sheets, as
reported by the Partner-firms to the Operator. Partner Realised
Investment Income is also realised by the Company through a
limited number of direct stakes in certain Partner-firms’ funds.
Realised Investment Income includes income that has been
realised but not yet paid, as well as amounts that are realised
and either fully or partially reinvested.
The Company’s share of the Partner-firms’ investment and
balance sheet income will be lower than its share of the
Partner-firms’ management fee-related earnings because the
Company’s ownership stake in the Partner-firms’ investment and
balance sheet income is lower than its ownership stake in the
Partner-firms’ management fee-related earnings.
The Operator and the Directors consider Partner Realised
Investment Income to be a meaningful measure of the investment
performance of certain assets held by the Partner-firms
investments in management companies derived from investment
income. The Operator uses this metric to analyse and test
dividends received from the Partner-firms, as well as to inform
operating, budgeting and reinvestment decisions.
Partner Distributable Earnings and Partner
Distributable Earnings Margin
Partner Distributable Earnings is defined as the sum of Partner
FRE, Partner Realised Performance Revenues and Partner
Realised Investment Income. Partner Distributable Earnings
Margin is defined as Partner Distributable Earnings divided
by the sum of Partner Net Management and Advisory Fees,
Partner Realised Performance Revenues and Partner Realised
Investment Income.
The Operator and the Directors consider Partner Distributable
Earnings and Partner Distributable Earnings Margin to be
meaningful measures of the overall performance of the Partner-
firms and key performance indicators of the Company’s total
income from investments in management companies.
The Operator uses this metric to analyse and test dividends
received from the Partner-firms, as well as to inform operating,
budgeting and re-investment decisions. These measures reflect
any contractual margin protections or revenue share interests
that the Company may have with the Partner-firms, which means
that the Partner Distributable Earnings Margin may differ from
the margins achieved by other shareholders or partners of the
Partner-firms.
Partner Revenues
Partner Revenues is defined as the sum of Partner
Net Management and Advisory Fees, Partner Realised
Performance Revenues and Partner Realised Investment Income.
The Operator and the Directors consider Partner Revenues
to be a meaningful measure of the overall performance of the
Partner-firms. The Operator uses this metric to inform operating,
budgeting and re-investment decisions.
Partner Private Markets Accrued
Carried Interest
Partner Private Markets Accrued Carried Interest is defined as the
Company’s proportionate share of the Partner-firms’ balance
sheet accrued carry (as reported by the Partner-firms to the
Operator) and represents the Company’s proportionate share of
the accumulated balance of unrealised profits from the Partner-
firms’ funds.
The Operator and the Company consider Partner Accrued Carried
Interest to be a meaningful measure of the performance of the
private markets Partner-firms and potential future private
markets Partner Realised Performance Revenues. Absolute return
performance fees are not accrued and are instead realised
annually. The Operator uses Partner Accrued Carried Interest
to assess future expected carried interest payments and inform
operating, budgeting and re-investment decisions. This key
operating metric reflects data reported to the Operator on a
three-month lag.
Petershill Funds
The Petershill Funds refers to the following entities: Petershill II
L.P. and Petershill II Offshore L.P., Petershill Private Equity L.P.,
Petershill Private Equity Offshore L.P., Vintage VII L.P.
and related entities and certain co-investment vehicles.
Weighted Average Capital Duration
Weighted Average Capital Duration is a key measure of the long
term, locked-up capital of Aggregate Fee-paying Partner-firm
AuM. It is defined as the average life of the underlying Partner-
firm funds weighted based on Fee-Paying AuM.
133 Petershill Partners plc | Annual Report 2022
Alternative Performance Measures
(“APMs”)
Alternative Performance Measures (“APMs”)
As part of the initial acquisition of the portfolio of Partner-firms
on 28 September 2021, the Company acquired interests in several
trusts (“Issuers”), which previously issued $350m of long-term
debt (“Notes”) with a 5% coupon and a maturity date of 2039. The
Notes were secured by the rights to the cash flows of certain
Partner-firm investments held by the Company and other
investments held by the Petershill Funds.
For the period ended 31 December 2021, under IFRS, the
Company was required to consolidate them, although the
Company did not have rights to the cash flows of the collateral
that were held by the Petershill Funds, This consolidation
resulted in reflecting all of the assets and liabilities of these
entities in the consolidated statement of financial position and all
of the income, investment gain and finance cost in the
consolidated statement of comprehensive income. However,
shareholder returns were only affected by the interests that the
Company owns.
For the year ended 31 December 2022, the Notes were repaid,
and the collateral was released to the Petershill Funds and the
Subsidiaries of the Company. Other assets comprised of income
receivable and cash in the Issuer SPVs were distributed as well.
The Issuer SPVs and the Intermediary Entities were dissolved on
19 December 2022. As a result, the Petershill Funds ceased to
have any exposure to the Issuer SPVs effective this date.
Pursuant to the above, the Company has consolidated the
accounts of the Issuer SPVs and the Intermediary Entities in
preparing these consolidated financial statements for the period
of 1 January 2022 through 19 December 2022, the date these
Issuer SPVs and the Intermediary Entities were dissolved.
The APM basis, which presents the financial information on
income, investment gain and finance cost which do not affect
shareholder returns, aids shareholders in assessing their
The IFRS and APM basis numbers discussed and presented below
include significant ‘unrealised’ and non-cash items that include
unrealised change in fair value of investments and it should be
noted that while permitted, it is not the Company’s core strategy
to exit or realise these investments. Therefore, management
results are also presented excluding the unrealised change in fair
value of investments at fair value through profit and loss and
related unrealised divestment fee.
APMs are used by the Directors and the Operator to analyse the
business and financial performance, track the Company’s
progress and help develop long-term strategic plans and they
also reflect more closely the cash flow of the Company. The
Directors believe that these APMs are used by investors, analysts
and other interested parties as supplemental measures of
performance and liquidity.
The Pro Forma EPS APM was removed this year since the
Company has been in operation for the full year of 2022 and the
IFRS EPS result and Adjusted EPS APM are more meaningful
measures to use.
The Adjusted Earnings per share (EPS) measure was updated
from the prior year to reflect the weighted average number of
Ordinary Shares in issue for the period in the denominator,
consistent with the approach required under IFRS when
calculating earnings per share. For 2022, this is a more
appropriate measure of per share results on an adjusted earnings
basis. In 2021, the Company had 1 share outstanding from
24 March 2021 through 28 September 2021 and the Ordinary
Shares in issue at the measurement date was a more appropriate
indicator at that time.
A Free cash flow APM was added this year. This reflects the APM
basis of Net cash flow from operating activities excluding certain
investment activity and tax and related expenses as a percent of
the Adjusted EBIT. This measure is useful in demonstrating the
conversion of certain income to cash, which can be used by the
Company. Certain Income from investments in Partner-firms
derived from Performance fee income and Management fee
income may be earned in the current period and paid following
period end, which may result in a temporary difference in the Free
cash flow.
New APM introduced 2022
Key
N
Petershill Partners plc | Annual Report 2022134
Consolidated Statement of Comprehensive Income APM Basis
For the year ended 31 December 2022
Year ended 31 December 2022 For the period from 24 March 2021 to 31 December 2021
Alternative
performance
measurement
basis (APM) Adjustments IFRS basis
Alternative
performance
measurement
basis (APM) Adjustments IFRS basis
$m $m $m $m $m $m
Income
Income from Investments in Partner-firms derived
from:
Management fee income 213.2 (0.2) 213.0 52.3 (3.0) 49.3
Performance fee income 131.6 7.8 139.4 62.3 17.0 79.3
Investment income 25.4 7.2 32.6 7.7 1.2 8.9
Interest income from investments in money
market funds 8.6 – 8.6 – – –
Total income 378.8 14.8 393.6 122.3 15.2 137.5
Movement in financial assets held at fair value
Change in fair value of investments at fair value
through profit or loss (776.5) (30.2) (806.7) 217.6 16.4 234.0
(776.5) (30.2) (806.7) 217.6 16.4 234.0
Expenses
Board of Directors’ fees and expenses (1.5) – (1.5) (1.0) – (1.0)
Operator charge (27.8) – (27.8) (9.2) – (9.2)
Other operating expenses (14.4) – (14.4) (12.6) – (12.6)
Unrealised divestment fee credit/(expense) 0.9 – 0.9 (45.2) – (45.2)
Total expenses 42.8 – 42.8 (68.0) – (68.0)
Operating profit/(loss) for the year/period (440.5) (15.4) (455.9) 271.9 31.6 303.5
Finance income/(expense)
Finance cost (45.6) – (45.6) (4.6) – (4.6)
Movement in liability to Petershill Funds – 15.4 15.4 – (31.6) (31.6)
Change in liability for tax receivables agreement (19.0) (19.0) (6.8) – (6.8)
Total finance expense (64.6) 15.4 (49.2) (11.4) (31.6) (43.0)
(Loss)/profit for the year/period before tax (505.1) – (505.1) 260.5 – 260.5
Tax credit/(expense) 52.2 – 52.2 (12.6) – (12.6)
(Loss)/profit for the year/period after tax (452.9) – (452.9) 247.9 – 247.9
(Loss)/profit and total comprehensive
(expense)/income for the year/period (452.9) – (452.9) 247.9 247.9
(Loss)/profit and total comprehensive
(expense)/income attributable to:
Equity holders of the Company (452.9) – (452.9) 247.9 – 247.9
Earnings per share
Basic and diluted earnings
per share (cents) (39.36) – (39.36) 64.12 – 64.12
135 Petershill Partners plc | Annual Report 2022
Consolidated Statement of Financial Position APM Basis
As at 31 December 2022
31 December 2022 31 December 2021
Alternative
performance
measurement basis
(APMs) Adjustments IFRS basis
Alternative
performance
measurement basis
(APMs) Adjustments IFRS basis
$m $m $m $m $m $m
Non-current assets
Investments at fair value through
profit or loss 4,958.9 – 4,958.9 5,524.3 498.8 6,023.1
Deferred tax asset 44.0 – 44.0 – – –
5,002.9 – 5,002.9 5,524.3 498.8 6,023.1
Current assets
Investments in money market funds
at fair value through profit or loss 483.4 – 483.4 453.1 – 453.1
Cash and cash equivalents 97.6 – 97.6 68.7 56.1 124.8
Trade and other receivables 138.2 – 138.2 64.8 37.2 102.0
719.2 – 719.2 586.6 93.3 679.9
Total assets 5,722.1 – 5,722.1 6,110.9 592.1 6,703.0
Non-current liabilities
Liability to Petershill Funds – – – – 597.2 597.2
Unsecured Notes payable 493.2 – 493.2 – – –
Notes payable – – – 350.0 (9.1) 340.9
Deferred payment obligations 50.0 – 50.0 133.4 133.4
Liability for Tax Receivables
Agreement 150.6 – 150.6 166.7 – 166.7
Fee payable on divestment of
investments 44.3 – 44.3 45.2 45.2
Deferred tax liability – – – 12.6 12.6
738.1 – 738.1 707.9 588.1 1,296.0
Current liabilities
Trade and other payables 29.7 – 29.7 28.3 – 28.3
Deferred payment obligations 189.9 – 189.9 74.8 – 74.8
Interest payable 10.0 – 10.0 4.1 4.0 8.1
Liability for Tax Receivables
Agreement 35.1 – 35.1 – – –
264.7 – 264.7 107.2 4.0 111.2
Total liabilities 1,002.8 – 1,002.8 815.1 592.1 1,407.2
Equity
Share capital 11.4 – 11.4 11.6 – 11.6
Share premium 3,346.7 – 3,346.7 3,346.7 – 3,346.7
Other reserve 1,689.6 – 1,689.6 1,689.6 – 1,689.6
Capital redemption reserve 0.3 – 0.3 – – –
Retained earnings (328.7) – (328.7) 247.9 – 247.9
Total Shareholders’ funds 4,719.3 – 4,719.3 5,295.8 – 5,295.8
Number of Ordinary Shares in issue
at year/period end 1,135,399,597 1,135,399,597 1,156,696,029 1,156,696,029
Net assets per share (cents) 415.65 415.65 457.84 457.84
Alternative Performance Measures (“APMs”) continued
Petershill Partners plc | Annual Report 2022136
Consolidated Statement of Cash Flows APM Basis
For the year ended 31 December 2022
Year ended 31 December 2022 For the period from 24 March 2021 to 31 December 2021
Alternative
performance
measurement
basis (APMs)
Adjustments IFRS basis
Alternative
performance
measurement
basis (APMs)
Adjustments IFRS basis
$m $m $m $m $m $m
Cash flows from operating activities
(Loss)/profit for the year/period before tax (505.1) – (505.1) 260.5 – 260.5
Adjustments to reconcile operating loss for the
financial year to net cash used in operating
activities:
Finance expense 64.6 (15.4) 49.2 43.0 – 43.0
Purchase of investments in money market funds (1,051.4) – (1,051.4) (806.7) – (806.7)
Sale of investments in money market funds 1,021.1 – 1,021.1 353.6 – 353.6
Reinvestment of income from investments in
Partner-firms (42.4) (0.2) (42.6) (8.1) – (8.1)
Movement in financial assets and liabilities held at
fair value through profit and loss 776.5 30.2 806.7 (217.6) (16.4) (234.0)
Movement in trade and other receivables (82.0) 22.9 (59.1) (97.0) 40.9 (56.1)
Movement in trade and other payables 3.8 – 3.8 22.6 – 22.6
Movement in liability to Petershill Funds – – – – 31.6 31.6
Movement in fee payable on divestment of
investments (0.9) – (0.9) 45.2 – 45.2
Taxes paid (4.4) – (4.4) – – –
Net cash outflow from operating activities 179.8 37.5 217.3 (404.5) 56.1 (348.4)
Cash flows from investing activities
Purchase of investments at fair value through
profit or loss (149.7) – (149.7) (247.0) – (247.0)
Capital proceeds received 6.7 – 6.7 – – –
Net cash outflow from investing activities (143.0) – (143.0) (247.0) – (247.0)
Cash flows from financing activities
Issue of shares (net of share issue costs deducted
from proceeds) – – – 725.0 – 725.0
Payment of share issue costs (5.7) – (5.7) (4.8) – (4.8)
Share repurchases (50.0) – (50.0) – – –
Dividends paid (70.3) – (70.3) – – –
Proceeds from Unsecured Notes 500.0 – 500.0 – – –
Repayment of Notes payable (350.0) – (350.0) – – –
Payment of transactions costs related to debt
issuance and repayment (8.1) – (8.1) – – –
Interest expense payments (23.8) (4.0) (27.8) – – –
Extinguishment of liability to Petershill Funds – (89.6) (89.6) – – –
Net cash (outflow)/inflow from financing
activities (7.9) (93.6) (101.5) 720.2 – 720.2
Net (decrease)/increase in cash and cash
equivalents during the year/period 28.9 (56.1) (27.2) 68.7 56.1 124.8
Cash and cash equivalents at the beginning
of the year 68.7 56.1 124.8 – – –
Cash and cash equivalents at the end of the
year/period 97.6 – 97.6 68.7 56.1 124.8
137 Petershill Partners plc | Annual Report 2022
Net cash position at end of year
Cash and cash equivalents APM basis plus investments in money market funds less deferred payment obligations and long term debt.
31 December 2022
$m
31 December 2021
$m
Cash and cash equivalents
APM basis
97.6 68.7
Investments in money market funds at fair value through profit or loss 483.4 453.1
Notes payable (gross) – (350.0)
Unsecured Notes payable (gross) (500.0) –
Deferred payment obligations (239.9) (208.2)
Net cash position at end of year/period (158.9) (36.4)
Free cash flow
N
The Net cash flows from operating activities
APM basis
less Purchase of investments in money market funds, Sale of investments in money
market funds, Reinvestment of income from investments in Partner-firms
APM basis
and Taxes paid as a percent of the Adjusted EBIT. This
amount can differ year over year as the timing of settlement of certain income from investments in Partner-firms may vary.
31 December 2022
$m
31 December 2021
$m
Net cash flows from operating activities
APM basis
179.8 (404.5)
Purchase of investments in money market funds 1,051.4 806.7
Sale of investments in money market funds (1,021.1) (353.6)
Reinvestment of income from investments in Partner-firms
APM basis
42.4 8.1
Taxes paid 4.4 –
Adjusted net cash flows from operating activities 256.9 56.7
Adjusted EBIT 336.3 106.4
Free cash flow 76% 53%
Book value
Total Shareholders’ funds.
31 December 2022
$m
31 December 2021
$m
Total Shareholders’ funds 4,719.3 5,295.8
Book value per share
Total Shareholders’ funds divided by the Number of Ordinary Shares in issue at year/period end.
31 December 2022
$m
31 December 2021
$m
Total Shareholders’ funds ($m) 4,719.3 5,295.8
Number of Ordinary Shares in issue at year/period end 1,135,399,597 1,156,696,029
Book value per share (cents) 415.65 457.84
Alternative Performance Measures (“APMs”) continued
Petershill Partners plc | Annual Report 2022138
Adjusted Earnings Before Interest and Tax (EBIT)
Sum of total income
APM basis
and expenses excluding non-recurring charges before net finance result and before income taxes, change in fair
value of investments at fair value through profit or loss
APM basis
and unrealised divestment fee.
For the year ended
31 December 2022
$m
For the period from 24 March
2021 to 31 December 2021
$m
Total income
APM basis
378.8 122.3
Board of Directors’ fees and expenses (1.5) (1.0)
Operator charge (27.8) (9.2)
Other operating expenses (14.4) (12.6)
Non-recurring operating expenses 1.2 6.9
Adjusted Earnings Before Interest and Tax (EBIT) 336.3 106.4
Adjusted EBIT margin
Adjusted EBIT divided by APM basis total income.
For the
year ended
31 December 2022
$m
For the period from
24 March 2021 to
31 December 2021
$m
Total income
APM basis
378.8 122.3
Adjusted EBIT 336.3 106.4
Adjusted EBIT margin 88.8% 87.0%
Adjusted Earnings Before Tax (EBT)
Sum of total income
APM basis
and expenses excluding deferred divestment fee, income taxes, change in liability for tax receivables agreement,
movement in liability to Petershill Funds, change in fair value of investments at fair value through profit or loss
APM basis
and non-recurring
charges.
For the
year ended
31 December 2022
$m
For the period from
24 March 2021 to
31 December 2021
$m
Total income
APM basis
378.8 122.3
Directors’ fees and expenses (1.5) (1.0)
Operator charge (27.8) (9.2)
Other operating expenses (14.4) (12.6)
Finance cost (45.6) (4.6)
Non-recurring operating expenses 1.2 6.9
Non-recurring charges related to financing 17.3 –
Adjusted Earnings before tax (EBT) 308.0 101.8
Tax and tax related expenses
The current tax plus the expected payment under the tax receivables agreement for the current year.
For the
year ended
31 December 2022
$m
For the period from
24 March 2021 to
31 December 2021
$m
Current tax (4.2) –
Expected payment under the tax receivables agreement (31.2) (3.4)
Tax and tax related expenses (35.4) (3.4)
Adjusted tax and tax related expense rate
The Tax and tax related expenses divided by the Adjusted EBT.
For the
year ended
31 December 2022
$m
For the period from
24 March 2021 to
31 December 2021
$m
Tax and related expenses 35.4 3.4
Adjusted EBT and tax related expenses 308.0 101.8
Adjusted tax and tax related expense rate 11.5% 3.3%
139 Petershill Partners plc | Annual Report 2022
Adjusted Profit After Tax
Sum of total income
APM basis
and expense excluding unrealised divestment fee, income taxes, change in liability for tax receivables agreement,
movement in liability to Petershill Funds, change in fair value of investments at fair value through profit or loss
APM basis
and non-recurring
charges and including tax and related expenses under the tax receivables agreement.
For the
year ended
31 December 2022
$m
For the period from
24 March 2021 to
31 December 2021
$m
Total income
APM basis
378.8 122.3
Board of Directors’ fees and expenses (1.5) (1.0)
Operator charge (27.8) (9.2)
Other operating expenses (14.4) (12.6)
Finance Cost (45.6) (4.6)
Non-recurring operating expenses 1.2 6.9
Tax and tax related expenses (35.4) (3.4)
Non-recurring charges related to financing 17.3 –
Adjusted profit after tax 272.6 98.4
Adjusted Earnings Per Share (EPS)
Adjusted profit after tax divided by weighted average number of Ordinary Shares in issue.
31 December 2022
$m
31 December 2021
$m
Adjusted profit after tax 272.6 98.4
Weighted average number of Ordinary Shares in issue 1,150,241,568 386,629,098
Adjusted Earnings per share (EPS) (cents) 23.70 25.45
Alternative Performance Measures (“APMs”) continued
Petershill Partners plc | Annual Report 2022140
Company Information
Company Information
Board of Directors (all Non-Executive)
Naguib Kheraj (Chairman)
Everard Barclay Simmons
Annemarie Durbin
Erica Handling
Mark Merson
All independent and of the registered office below.
Registered Office
Operator
Goldman Sachs Asset Management Fund Services Limited
1
47–49 St. Stephen’s Green
Dublin
D02 W634
Republic of Ireland
Investment Manager
Goldman Sachs Asset Management International
1
Plumtree Court
25 Shoe Lane
London
EC4A 4AU
United Kingdom
Investment Advisor
Goldman Sachs Asset Management, L.P.
1
200 West Street
New York
NY 10282
United States
Independent Auditor
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
United Kingdom
Company Secretary and Administrator
Ocorian Administration (UK) Limited
5
th
Floor
20 Fenchurch Street
London
EC3M 3BY
United Kingdom
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
United Kingdom
Depositary
Ocorian Depositary (UK) Limited
5
th
Floor
20 Fenchurch Street
London
EC3M 3BY
United Kingdom
Website: www.petershillpartners.com
ISIN GB00BL9ZF303
Ticker PHLL
Sedol BL9ZF30
Registered Company Number 13289144
1. Wholly owned affiliates of the Goldman Sachs Group.
141 Petershill Partners plc | Annual Report 2022
Cautionary Statement
The Chairman’s Statement and Operator’s Report have been prepared solely to provide additional information for Shareholders to assess
the Company’s strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any
The Chairman’s Statement and Operator’s Report may include statements that are, or may be deemed to be, “forward-looking statements”.
These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”,
“anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this
document and include statements regarding the intentions, beliefs or current expectations of the Board of Directors and the Operator,
concerning, among other things, the investment objectives and investment policy, financing strategies, investment performance, results
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances
The Group’s actual investment performance, results of operations, financial condition, liquidity, distribution policy and the development
Subject to their legal and regulatory obligations, the Board of Directors and the Operator expressly disclaim any obligations to update or
revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events,
conditions or circumstances on which any statement is based.
Cautionary Statement
Petershill Partners plc | Annual Report 2022142
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PETERSHILL PARTNERS PLC
www.petershillpartners.com
Registered Office
5
th
Floor, 20 Fenchurch Street
London EC3M 3BY
United Kingdom