Charter Hall : Partnership with Paradice Investment Management - Pres

ersonal use only

Charter Hall Group

Partnership with Paradice Investment Management

22 December 2021

Transaction overview

onlyTransaction overview

useStrategic Rationale

Transaction

ersonalConsideration Impact of the

Transaction

Chart r Hall Group

• Charter Hall Group ("CHC") has entered into a binding sale agreement with Paradice Investment Management Pty Ltd ("PIM") to acquire 50% of the shares in PIM from PIM's existing shareholders (all of whom are active existing PIM management) (the "Transaction")
• • CHC have an option to acquire the remaining 50% interest in PIM in FY25, subject to certain confidential conditions
• All PIM employees will remain with the business, whilst the board of PIM will have 3 directors from CHC and 3 from PIM management
• The transaction is expected to complete by 31 December, 2021
• CHC sees this partnership as an expansion of its Funds Management capability to service investor customers across multiple equity segments
• PIM is a large scale, high-quality listed equities manager with $18.2bn of FUM and a 20 year track record, with both domestic and global equities capability and historical performance
• Strengthens CHC's deep investor relationships with domestic and global capital and introduces new capital relationship opportunities for both CHC and PIM
• Core business of PIM, like CHC, is to act as a fiduciary of others' capital to deliver outperformance to investors - its in the "DNA" of both PIM and CHC to deliver performance for its investors
• Scalable business model with growth potential in existing & new strategies
• Investment price of $207 million represents a 10.0x multiple of net profit after tax, which equates to 2.3% of PIM's funds under management ("FUM")
• Consideration to be provided to PIM shareholders in the form of CHC securities (70%) and cash (30%)
• Securities issued as consideration represent approximately 1.55% of CHC's total securities outstanding pre-transaction
• • CHC securities provided to PIM shareholders will be held in escrow and released in two equal annual tranches at 30 June 2023 and 2024 respectively
• The investment is expected to be earnings accretive to CHC in FY22, more so on an annualised basis
• Charter Hall re-affirms FY22 operating earnings per security guidance of no less than 105 cents per security, subject to no material adverse conditions

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Overview of Paradice Investment Management (PIM) - a listed equities Fund Manager

only					$18.2bn FUM
Australian FUM		Global FUM		51 employees across 3
use			offices-Sydney, Denver
	$12.1bn		$6.1bn
			and San Francisco
		Australian Large Cap			Australian Mid Cap		Global Small Cap		26 investment focused
		$5.6bn			$3.7bn		$5.5bn		employees
ersonal
Australian Small Cap			Australian Long/Short		Emerging Market Equities		Offices in Sydney,
		$2.7bn			$51m		$0.6bn		Denver & San Francisco
	Chart r Hall Group						3

Strategic rationale: ~$80 billion FUM multi-asset class Fund Manager

1

Diversifies and expands capabilities

2

Broadens investor relationships

3

Aligned business models & culture



CHC partnership with a listed equities Fund



Expands and deepens CHC's deep

 Core business of PIM, like CHC, is to act as a

Manager with scalable $18.2bn FUM portfolio

relationships with domestic and global investors

fiduciary of investors capital to deliver



Strategic extension of Charter Hall Maxim listed



Introduces new investor relationships to CHC,

outperformance

real estate equities platform into broader listed

providing multi-sector opportunities for investors

 Complementary management capability &

equities



Majority of PIM investors have invested over the

culture

 Diversifies CHC's FUM and earnings streams

long term, across multiple strategies

 Key PIM executives will become CHC

onlywith low correlation to real estate returns



Expands choice of investments that can be

securityholders and will be committed to the

 Expands CHC's investible universe to the

continued success of combined CHC / PIM

offered to clients

use

$2.4 trillion Australian listed equities market and

$70 trillion global listed equities market

ersonal

4

High quality, scalable business

5

Favourable financial impacts

 PIM is a well known and respected organisation

 Acquisition expected to be accretive in first full

operating in the Australian market for over 20

year of earnings

years

 Securities issued as consideration represent

 Long track record of attracting capital and

~1.55% of CHC's total securities outstanding

delivering outperformance

pre-transaction

 Profitable and efficiently managed

 Investment secured at an attractive 10.0x NPAT

 Scalable business model with growth potential in

multiple (2.3% of FUM)

existing & new strategies

 Investment 70% scrip funded, with cash

component covered by available liquidity

Chart r Hall Group

4

Illustrative pro-forma platform composition

FUM by sector (Dec-211)

FUM by equity source (Dec-211)

onlyuse	Pre
ersonal

Pro-

forma

Chart r Hall Group

	Social Infrastructure	Listed Equities
		$3.5bn	$0.3bn
Long WALE	5.7%	0.5%
Retail
$9.2bn				Office
15.1%
				$25.2bn
SC Retail		$61.3bn	41.1%
$4.2bn
6.8%

Industrial $18.9bn 30.9%

Listed Equities
$18.5bn	Office
23.2%
$25.2bn
	31.7%

Social$79.5bn

Infrastructure

$3.5bn 4.4%

Long WALE

Retail

$9.2bn	SC Retail	Industrial
11.6%	$18.9bn
$4.2bn
	23.8%
	5.3%

1. Charter Hall FUM at Dec 21, post revaluations.

			Retail
			$9.9bn
	Wholesale -		16.1%
	Partnerships
	$19.6bn
	32.0%	$61.3bn
Pre		Listed REITs
			$12.9bn
				21.1%
	Wholesale -
	Pooled
	$18.9bn
	30.8%
		Retail
		$10.3bn
		13.0%
			Listed REITs
Pro-				$12.9bn
	$79.5bn		16.2%
forma	Wholesale -
Partnerships
	$36.7bn
	46.1%

Wholesale -

Pooled

$19.6bn 24.6%

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