Brexit: "No short-term measures"

Your employees are probably the most important factor in the success of your company. How do you ensure that you find the right skilled workers? Are you affected by the immigration initiative in Switzerland and do you feel a shortage of skilled workers?

You are right, our employees are indeed the decisive success factor for our company, and we attach the greatest importance to hiring the best talent worldwide. To ensure this, all applicants undergo an intensive interview process lasting several hours or spread over several days, during which we place particular emphasis on "cultural fit" in addition to qualifications and work experience, in order to promote a team-oriented corporate culture with a long-term focus.

As we are a very globally positioned company, the immigration initiative affects us much less than companies that have the majority of their workforce in Switzerland and rely on international specialists on site. Our more than 850 employees are spread across 19 offices worldwide, and we recruit globally accordingly. As one of the leading private market specialists in an industry with rapidly growing demand, we received around 15,000 applications for around 100 vacancies last year.

We are therefore in the comfortable position that many qualified talents want to work for us and approach us directly. While we don't have to complain about a shortage of skilled workers on a global basis, the Zug site, our "headquarters", is, however, dependent on regular work permits for qualified applicants, and that is why we are in close contact with the local employment office.

Will the Swiss financial center gain relative importance after BREXIT?

First and foremost is the question of whether the UK can retain passporting, which allows companies such as banks, insurance companies and asset managers to offer financial services in the EU from the UK. If passporting is retained, the changes will be limited and we should not see a substantial shift of labor from one financial center to another - such as from London to Frankfurt. If, on the other hand, contrary to expectations, a scenario were to occur in which passporting for the UK could not be maintained, then relocations would occur. However, Switzerland must first do its homework and adapt its financial market regulation to international standards in order to be able to cut a slice of the cake. In particular, this involves adopting the FinSA and FinIA and obtaining a certificate of equivalence, e.g. from the EU. If this happens, then locations such as Zurich or Geneva will be serious competitors to the EU locations Frankfurt, Paris or Milan, despite high labor costs, thanks to decades of experience for banks and asset managers. However, we will have to wait until the negotiations between the EU and the UK take shape, which may still take years. As Partners Group, we feel well positioned with our offices in Europe, which are partly inside and partly outside the EU, and are therefore not taking any short-term measures at the moment.

What impact will BREXIT have on your company?

Every participant in the financial markets - including Partners Group - is directly and/or indirectly affected by a BREXIT. For our company itself, however, the impact is manageable because less than 3% of our sales are booked in British pounds and the devaluation of the currency compared to the Swiss franc will therefore only have a marginal impact on our results. However, we have many customers in the UK and of course there is currently some uncertainty with regard to investments. However, we firmly believe that UK institutional investors will continue to be interested in private market investments for yield and diversification reasons, even if the country will no longer be part of the EU. On the investment side, we think the impact will be limited in the medium term, as only around 6% of our assets under management are invested in the UK, and not all assets will be equally affected by BREXIT. Especially here we feel confirmed in our global investment approach.

What is Partners Group's recipe for success?

We focus on private markets, there on equity and debt capital for medium-sized companies, as well as real estate and infrastructure investments. To this end, we have built a global platform with 19 offices and over 850 employees. Thanks to this, we can compare investment opportunities and make investments in all private markets worldwide.

Events such as BREXIT highlight the risks of those investment strategies that focus solely on one country, industry and/or sector. At Partners Group, we believe very strongly in a globally diversified investment approach to minimize the risks for our investors, and this is also true for our client base. For example, around one third of our assets under management come from German-speaking Europe, one third from the Anglo-Saxon region and one third from the rest of the world. Our income is thus also correspondingly broadly diversified, which plays an important role in the stability of our company.

In what light do you see the current year?

The investment environment is broadly the same as in 2015. Valuations are at high levels given high liquidity in the market and we cannot expect our investments to achieve return targets "only" via global economic growth. We need to actively add value to our portfolio, which we do, among other things, with specialists in various industries (such as telecommunications or medical) working for us and being part of the investment process. In addition, we pursue a very long-term investment horizon in our asset classes. Specifically, we make investments in companies, real estate and infrastructure assets to develop them over a period of 4-8 years. We can live well with long holding periods, as we can basically decide for ourselves when is the best time to exit. This is a key advantage of the private markets compared with the public markets (equity markets): the maturities for the majority of our products are ten to twelve years, and over this period we need to achieve the best possible return.

In the first half of 2016, we received capital commitments from our clients in the amount of EUR 4.6 billion, spread across all asset classes, thus increasing total assets under management to EUR 49 billion. For the full year 2016, we expect new capital commitments from our clients in the amount of EUR 8-9 billion.

André Frei will speak on November 14 at the Europe Forum Lucerne. He is Co-CEO of the Partners Group, a global private markets investment manager with over 850 institutional investors worldwide.