The net proceeds from the sale of shares of our Class A common stock by us in
this offering will be approximately $306.4 million, or approximately
$352.9 million if the underwriters exercise in full their option to purchase
additional shares of Class A common stock, in each case after deducting
underwriting discounts and estimated offering expenses payable by us. We intend
to use $90.0 million of the net proceeds to repay all of the outstanding
principal amount of loans under our revolving credit agreement, approximately
$76.3 million of the net proceeds to purchase an aggregate of 2,720,823 Class A
common units from certain of our initial outside investors, approximately
$64.7 million to make a distribution of retained profits of Artisan Partners
Holdings to its pre-offering partners and the balance for general corporate
purposes, including working capital. Investors who purchase Class A common stock
in this offering will not be entitled to a portion of the distribution of the
retained profits. Pending the use of proceeds for general corporate purposes, we
intend to invest that portion of the net proceeds in short-term money market and
money-market equivalent securities. In connection with, but prior to the closing
of, this offering, we also intend to make cash incentive compensation payments
aggregating approximately $56.8 million to certain of our portfolio managers and
to make an initial distribution of $40.0 million of Artisan Partners Holdings’
retained earnings to its pre-offering partners. These payments will be made
prior to the consummation of the offering out of cash on hand.
Any outstanding loans under the revolving credit agreement will mature, and
commitments will terminate, in August 2017. We intend to use $90.0 million of
the net proceeds of this offering to repay all of the outstanding loans under
the revolving credit agreement. The proceeds of the outstanding loans under the
revolving credit agreement were used, together with proceeds from our issuance
of notes, to repay in August 2012 all of the outstanding principal amount of our
previously existing term loan. Outstanding loans under the revolving credit
agreement currently bear interest at a rate equal to, at our election, (i) LIBOR
adjusted by a statutory reserve percentage plus an applicable margin ranging
from 1.50% to 3.00%, depending on Artisan Partners Holdings’ leverage ratio (as
defined in the agreement) or (ii) an alternate base rate equal to the highest of
Citibank, N.A.’s prime rate, the federal funds effective rate plus 0.50% and the
daily one-month LIBOR adjusted by a statutory reserve percentage plus 1.00%,
plus an applicable margin ranging from 0.50% to 2.00%, depending on Artisan
Partners Holdings’ leverage ratio (as defined in the agreement). Unused
commitments under the revolving credit agreement bear interest at a rate that
ranges from 0.175% to 0.625%, depending on Artisan Partners Holdings’ leverage
ratio (as defined in the agreement).
across multiple
strategies and products. Our goal in management of client portfolios is to
achieve superior long-term investment performance. Through December 31, 2012, 11
of our 12 investment strategies (comprising 96% of our assets under management)
had outperformed their respective benchmarks, on a gross basis, since inception,
with inception dates ranging from April 1, 1995 for our U.S. Small-Cap Growth
strategy to April 1, 2010 for our Global Equity strategy.
Since our founding, we have pursued a business model that is designed to
maximize our ability to produce attractive investment results for our clients,
and we believe this model has contributed to our success in doing so. We focus
on attracting, retaining and developing talented investment professionals by
creating an environment in which each investment team is provided ample
resources and support, transparent and direct financial incentives, and a high
degree of investment autonomy. We currently offer 12 actively-managed equity
investment strategies, managed by five distinct investment teams. Each team is
led by one or more experienced portfolio managers with a track record of strong
investment performance and is devoted to identifying long-term investment
opportunities. We believe this autonomous structure promotes independent
analysis and accountability among our investment professionals, which we believe
promotes superior investment results.
Our 12 equity investment strategies span different market capitalization
segments and investing styles in both U.S. and non-U.S. markets. Each strategy
is designed to have a clearly articulated, consistent and replicable investment
process that is well-understood by clients and managed to achieve long-term
performance. Throughout our history, we have expanded our investment management
capabilities in a disciplined manner that we believe is consistent with our
overall philosophy of offering high value-added investment strategies in growing
asset classes.
In addition to our investment teams, we have a strong and seasoned management
team that is focused on our business objectives of achieving profitable growth,
expanding our investment capabilities, diversifying the source of our assets
under management and delivering superior client service. Our management team
supports our investment management capabilities and manages a centralized
infrastructure, which allows our investment professionals to focus primarily on
making investment decisions and generating returns for our clients.
We have attracted and retained a diverse base of clients across a range of
distribution channels. Our assets under management have increased from $19.2
billion as of December 31, 2002 to $74.3 billion as of December 31, 2012,
representing a compound annual growth rate, or CAGR, of 14.5%. From December 31,
2012 to February 15, 2013, our assets under management increased by an
additional $5.2 billion to $79.5 billion, as a result of $0.4 billion in net
client cash flows and $4.8 billion in market appreciation. While our assets
under management have generally increased over time, we have also had periods in
which our assets under management have decreased. See “Management’s Discussion
and Analysis of Financial Condition and Results of Operations—Financial
Overview—Assets Under Management and Investment Management Fees” for changes in
our assets under management since December 31, 2007.
We offer our investment management capabilities primarily to institutions and
through intermediaries that operate with institutional-like decision-making
processes and have longer-term investment horizons, by means of separate
accounts and mutual funds. As of December 31, 2012, we managed 182 separate
accounts representing $34.7 billion, or 47%, of our assets under management,
spanning 130 client relationships. Our clients include pension and profit
sharing plans, trusts, endowments, foundations, charitable organizations,
government entities, private funds and non-U.S. pooled investment vehicles that
are generally comparable to U.S. mutual funds, as well as mutual funds, non-U.S.
funds and collective trusts we sub-advise. We serve as the investment adviser to
Artisan Funds, an SEC-registered family of mutual funds, and as investment
manager and promoter of Artisan Global Funds, a family of Ireland-based UCITS
funds. Artisan Funds and Artisan Global Funds comprised $39.6 billion, or 53%,
of our assets under management as of December 31, 2012.
We derive essentially all of our revenues from investment management fees, which
primarily are based on a specified percentage of clients’ average assets under
management. These fees are derived from investment advisory and sub-advisory
agreements that are terminable by clients upon short notice or no notice. Our
growth in assets under management has resulted in an increase in our revenues
from $147.9 million for the year ended December 31, 2002 to $505.6 million for
the year ended December 31, 2012. Despite this growth, we have had periods in
which revenues declined. See “Selected Historical Consolidated Financial Data”
for our revenues and net income for the years ended December 31, 2008, 2009,
2010, 2011 and 2012.
As of December 31, 2012, we had 273 employees, including 55 employee-partners.
Immediately following the completion of this offering, our investment
professionals, senior management and other employees will collectively own
approximately 53% of the economic interests in our company. Our culture of
employee ownership strongly aligns our management’s and clients’ interests in
our delivery of strong investment performance and growth.
Following the completion of this offering, we will conduct all of our business
activities through operating subsidiaries of our direct subsidiary, Artisan
Partners Holdings, an intermediate holding company of which we are the general
partner. Based on the ownership that will exist immediately after giving effect
to the transactions described herein, net profits and net losses of Artisan
Partners Holdings will be allocated, and distributions of profits will be made,
approximately 20% to us and 80% in the aggregate to Artisan Partners Holdings’
limited partners (or 22% and 78%, respectively, if the underwriters exercise
their option to purchase additional shares in full). As described under “Our
Structure and Reorganization—Reorganization Transactions and Post-IPO
Structure—Preferential Distributions to Holders of Preferred Units and
Convertible Preferred Stock”, the holders of preferred units of Artisan Partners
Holdings will be entitled to preferential distributions in the case of a partial
capital event or upon dissolution of Artisan Partners Holdings. In the case of
any preferential distributions on the preferred units, we will be obligated to
pay the holders of our convertible preferred stock a preferential distribution
equal to the distribution we receive in respect of the preferred units held by
us, net of taxes, if any. We refer to those preference rights as the H&F
preference.
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Our principal executive offices are located at 875 E. Wisconsin Avenue, Suite
800, Milwaukee, Wisconsin 53202. Our telephone number at this address is
(414) 390-6100 and our website address is www.artisanpartners.com. Information
contained on our website is not part of this prospectus. The company was
incorporated in Wisconsin on March 21, 2011 and converted to a Delaware
corporation on October 29, 2012.