The private markets segment has operated in a challenging environment since the interest rate turnaround in 2022, making it difficult for Partners Group and its competitors to divest assets as originally expected. This depressed both performance fees and new client commitments. When the situation began to brighten toward the end of 2024, a series of negative developments weighed on the sector. In April 2025, an international tariff dispute erupted originating from the US, followed by prominent credit defaults in the US in the autumn that unsettled investors. At the beginning of 2026, concerns emerged that software providers heavily backed by the private equity sector would suffer setbacks due to artificial intelligence, though Partners Group was more cautious regarding software companies compared to the wider industry. Most recently, a wave of redemptions hit certain evergreen funds.
This redemption wave, triggered by prominent credit defaults in the US, spilled over from the private credit to the private equity segment at the beginning of the year. Partners Group was caught up in this shift due to its greater exposure to private equity evergreen funds. Additional uncertainty stemmed from a report by US investor and short seller Grizzly, which alleged that Partners Group systematically overvalued its investments. Daniel Regli, analyst at Zürcher Kantonalbank, considers the report unserious and sensationalist, noting that available data renders the accusation baseless. Regli points out that the report confuses investments, references assets already sold at a profit, compares disparate time periods, and relies on outdated data points. Furthermore, the report's introduction exaggerates its own findings by applying a 40 percent overvaluation claim regarding Western Europe—representing only about a quarter of the analyzed fund—while later figures in the text refer only to a questionable valuation share of 21 percent across the entire fund.
Further evidence against the Grizzly report comes from quarterly filings submitted by Partners Group to the US Securities and Exchange Commission regarding the US Private Equity Master Fund, which detail monthly realized and unrealized valuation gains and losses. Regli notes that if the overvaluation claims were correct, unrealized gains would tend to be positive while realized gains would be negative, resulting in losses upon sale. In reality, the reverse is true, indicating that Partners Group evaluates its investments conservatively and sells them at a profit, with company figures showing assets are sold on average 10 percent above book value.
Zürcher Kantonalbank rates Partners Group as overweight with a fair value of 900 francs, which is nearly 50 percent higher than the current share price. Regli argues that the current stock price prices in an excessive amount of negativity, while the dividend yield stands at approximately 7 percent. Although headwinds exist, performance fees are expected to normalize starting next year, which should keep dividends stable or higher. Partners Group is projected to grow in the mid-to-high single-digit percentage range over the coming years, with double-digit growth realistic should the evergreen fund situation normalize. The current valuation is viewed as too low, leaving substantial upside potential.
The stock has suffered disproportionately from negative sentiment across the private market industry, particularly concerning market participants heavily exposed to private clients through evergreen funds. While Partners Group played a pioneering role in evergreen funds, the company cannot be reduced solely to that product lineup. The headwinds in the evergreen segment originate from three mature funds active well before 2021, a period of high demand and expensive investments. These older funds carry higher exposure to assets from those years compared to newer funds, temporarily depressing investor returns and contributing to redemption waves and restrictions.
Such restrictions led to a 16 percent share price decline in a single trading day in early June. Regli reduced his earnings-per-share estimates by only 1 to 2 percent in response, explaining that gating mechanisms are typical features of such funds designed to protect against heavy outflows and return-impairing fire sales, unlike traditional equity funds where redemption restrictions serve as warning signals. Regli suggests investors mistakenly applied traditional equity fund assumptions to Partners Group vehicles.
Evaluating fund quality requires distinguishing between private credit and private equity. Within private credit, where risks taken by firms vary widely, Partners Group remained conservative, maintaining a very manageable default rate of 0.1 percent.
