Analysis-How investor doubts halted Swiss Partners Group’s meteoric rise

By Dave Graham

ZURICH, June 5 (Reuters) – Setting out as a trio of ambitious young former Goldman Sachs bankers, Partners Group rose from plucky startup to become a global player in private equity, turning its founders into some of the wealthiest men in Switzerland.

That meteoric rise, already sputtering, this week came to a shuddering halt.

The Zug-based company suffered its worst-ever pummelling on the stock exchange after Partners Group halted withdrawals on an $8.6 billion private equity fund that had seen clients demand their money back over worries about its investments.

On Thursday, sources said Partners Group would gate an even bigger U.S. fund that has also seen withdrawals accelerate in part driven by fears assets could be overvalued, as financial markets went into a spin.

“The market has concluded that Partners Group’s long-term growth potential has been damaged,” Vontobel analyst Andreas Venditti said, after its shares plunged by as much as 18% on Wednesday. “Sentiment has been shaken.”

Cutting its teeth first on private equity, Partners Group grew as it diversified into areas such as property and infrastructure, becoming a bulwark of the Swiss financial scene.

Now its woes are sending ripples through the Alpine nation and beyond.

A close partner of Swiss banking giant UBS, Partners Group’s reach today extends into national politics. It even helped Switzerland navigate a trade dispute with U.S. President Donald Trump.

GROWING CONCERNS    

This week’s events, however, did not surprise everyone who has watched its star ascend and then fade. 

Concerns about how Partners Group was performing had been growing for months, particularly over its evergreen funds, a novum in the industry designed to allow clients to access their money more easily.

Withdrawals steadily crept up this year, and at the end of April, short seller Grizzly Research published a report alleging that Partners had overvalued some investments that had fared modestly.

The company vigorously rejected the accusations and later vowed to take legal action against Grizzly. But the damage was done. Senior figures including CEO David Layton admitted the report had hurt it.

Partners is the first major instance of private equity being sucked into a wider trend of investors pulling their money out of funds. Initially property funds were hit as interest rates rose, and then concerns grew about those focusing on private credit, where unregulated financial firms lend to companies.

Some privately run funds try to contain selloffs by capping demands from investors to exit, which buys them time to find cash. It comes, however, at a cost to their credibility.

BILLIONAIRE FOUNDERS

Founded by ex-Goldman bankers Marcel Erni, Alfred Gantner and Urs Wietlisbach in 1996, Partners Group launched its first private equity fund in Luxembourg the following year. Today it manages some $185 billion.

But years of share price gains after Partners Group’s 2006 listing began petering out following shocks such as post-pandemic inflation, Russia’s invasion of Ukraine, rising interest rates and Trump’s tariffs on trade.

“Partners Group is invariably affected by macroeconomic concerns given its deep roots in the real economy,” said Daniel Regli, an analyst at Swiss bank ZKB.

The firm has diversified across private markets, ploughing the savings of wealthy individuals and pension fund pots into companies around the globe. Individual investors make up about 20% of its client base, benefiting from stability at home in neutral Switzerland. 

Its founders, whose wealth the Forbes rich list puts at almost $3 billion each, have thrown their weight behind campaigns aimed at restricting Switzerland’s integration with the European Union.

Gantner, the most prominent of the three, also took on a leading role in a Swiss delegation of business leaders to the White House last year that helped persuade Trump to lower crippling tariffs he had imposed on Switzerland.

The firm has powerful friends in the country, and this week UBS, in an unusual move, came out to publicly back the embattled firm.

In a statement, the Swiss bank said: “We continue to view them as a valued partner.”

The coming months may put these alliances to the test. Partners Group warned on Thursday that the growth in the assets it manages could be slowed this year and next.   

(Reporting by Dave Graham; Additional reporting by Oliver Hirt and Ariane Luthi; Editing by John O’Donnell and Nick Zieminski)