REG - Pantheon Infrastrct. - Annual Financial Report
03/04/2024 07:00
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RNS Number : 0595J Pantheon Infrastructure PLC 03 April 2024
03 April 2024
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PANTHEON INFRASTRUCTURE PLC
Results for the year ended 31 December 2023
The Directors of the Company are pleased to announce the Company's full year
results for the year ended 31 December 2023. The full annual report and
financial statements can be accessed via the Company's website at
www.pantheoninfrastructure.com or by contacting the Company Secretary by
telephone on +44 (0) 333 300 1950.
Highlights:
· The Company has now fully deployed its funds into a diversified
portfolio of high-quality infrastructure assets, generating dividends in line
with, and NAV total returns exceeding, its pre-IPO target.
· As at 31 December 2023, the Company had invested in or committed
£487m to thirteen assets.
· The Company announced three new investments during the year
totalling £96m: European towers business GD Towers, Nordic fibre operator
GlobalConnect, and UK based battery storage and electric bus fleet specialist
Zenobē.
· Net asset value (NAV) of £504m; 106.6 pence per share as at 31
December 2023.
· NAV growth of 7.8% during the year, and NAV Total Return of 10.4%.
· The second interim dividend payment of 2p per share for the year
ended 31 December 2023, payable on 23 April 2024, takes the full year dividend
to 4p per share.
· £397m Market cap at 31 December 2023.
· Increased revolving credit facility to £115m and extended to March
2027 after the year end, increasing available liquidity.
· £5.8m of share buybacks during the year and a further £2.6m after
the year end, increasing NAV by 0.5p per share.
· Refreshed buyback programme, after the year end, for up to £10m
going forward.
The portfolio comprises assets in the following sectors: Digital, including
wireless towers, data centres, and fibre-optic networks; Power &
Utilities, including electricity generation, gas transmission and district
heating; Renewables & Energy Efficiency, including smart infrastructure,
wind, solar, and sustainable waste; and Transport & Logistics, including
ports, rail, roads, airports and logistics assets.
Vagn Sørensen, Chair, Pantheon Infrastructure Plc, said: "I am pleased to
present our annual report. PINT's impressive performance, despite the economic
challenges of the last year, such as fluctuations in inflation, interest
rates, and valuation discount rates, speaks volumes. The resilience of PINT's
portfolio is further enhanced by its geographical and sector split, ensuring
increased diversification and mitigating ongoing risks and uncertainty
effectively. The dedication and discipline of the team, backed by tried and
tested investment processes, have played a crucial role in overcoming
obstacles and enabling PINT to continue to deliver against its objectives."
Richard Sem, Partner at Pantheon, PINT's investment manager, said: "Reflecting
on our achievements amid challenging market conditions this past year, it is
very rewarding to have been able to deliver on our stated strategy for
investors. PINT's thematic approach to investment, gaining exposure to assets
and companies backed by long-term secular trends, is underpinned by Pantheon's
robust processes, risk management, patience and price discipline. We are
particularly pleased to have fully deployed our funds and exceeded our pre-IPO
NAV total return target - and we look forward to continuing to build value for
our investors over the long term by providing access to a diversified
portfolio of high-quality, global infrastructure assets."
Ends
For further information, contact:
Pantheon Ventures (UK) LLP
Investment Manager +44 (0) 20 3356 1800
pint@pantheon.com (mailto:pint@pantheon.com)
Richard Sem, Partner
Ben Perkins, Principal
Investec Bank plc +44 (0) 20 7597 4000
Sole Sponsor, Financial Adviser and Bookrunner
Tom Skinner
Lucy Lewis
Lansons
Public relations advisors pint@lansons.com (mailto:pint@lansons.com)
Lucy Horne +44 (0)7921 468 515
Millie Steyn +44 (0)7593 527 234
Notes to editors
Pantheon Infrastructure PLC (PINT)
Pantheon Infrastructure PLC is a closed-ended investment company and an
approved UK Investment Trust, listed on the Premium Segment of the London
Stock Exchange's Main Market. Its Ordinary Shares trade under the ticker
'PINT'. The independent Board of Directors of PINT have appointed Pantheon,
one of the leading private markets investment managers globally, as investment
manager. PINT aims to provide exposure to a global, diversified portfolio of
high-quality infrastructure assets through building a portfolio of direct
co-investments in infrastructure assets with strong defensive characteristics,
typically benefitting from contracted cash flows, inflation protection and
conservative leverage profiles.
Further details can be found at www.pantheoninfrastructure.com
LEI 213800CKJXQX64XMRK69
Pantheon
Pantheon has been at the forefront of private markets investing for more than
40 years, earning a reputation for providing innovative solutions covering the
full lifecycle of investments, from primary fund commitments to co-investments
and secondary purchases, across private equity, real assets and private
credit. The firm has partnered with more than 1,000 clients, including
institutional investors of all sizes as well as a growing number of private
wealth advisers and investors, with approximately $62bn in discretionary
assets under management (as of June 30, 2023).
Leveraging specialized experience and a global team of professionals across
Europe, the Americas and Asia, Pantheon invests with purpose and leads with
expertise to build secure financial futures. Further details can be found at
www.pantheon.com.
PANTHEON INFRASTRUCTURE PLC
Access to high-quality global infrastructure assets
Purpose
Our purpose is to provide investors of all types with easy and immediate
access to a diversified portfolio of high‑quality global infrastructure
assets via a single vehicle, offering both a regular dividend payment and
targeting capital growth.
This portfolio, which is diversified by sector and geography, is designed to
generate sustainable, attractive returns over the long term. We achieve this
by targeting assets which have strong environmental, social and governance
(ESG) credentials, and underpin the transition to a low‑carbon economy. We
invest in private assets which we believe will benefit from strong downside
protection through inflation linkage and other defensive characteristics.
About us
Pantheon Infrastructure Plc (the 'Company' or 'PINT') is a closed-ended
investment company and an approved UK investment trust, listed on the Premium
Segment of the London Stock Exchange's Main Market.
PINT provides exposure to a global, diversified portfolio (the 'Portfolio')
through direct co‑investments in high‑quality infrastructure assets with
strong defensive characteristics, typically benefiting from contracted cash
flows, inflation protection and conservative leverage profiles. PINT targets
assets which have strong sustainability credentials, which include projects
that support the transition to a low‑carbon economy. The Portfolio focuses
on assets benefiting from long‑term secular tailwinds. The Company is
overseen by an independent Board of non‑executive Directors and managed by
Pantheon Ventures (UK) LLP ('Pantheon' or the 'Investment Manager'),
a leading multi-strategy investment manager in infrastructure and real
assets, private equity, private debt and real estate.
Highlights
At a glance as at 31 December 2023
£487m(1)
Capital committed
£504m
Net asset value (NAV)
4p per share
Total dividends(2)
£397m
Market cap
106.6p
NAV per share
10.4%
NAV Total Return
1. This refers to the investment fair values or amounts committed as of 31
December 2023. Invested assets represent those that have reached financial
close and have been, or are in the process of, being funded, and may include
amounts reserved for follow‑on investments; and committed assets represent
those which are announced and are subject to final financial close; and in
legal closing assets represent those which are not yet announced but are in
the final stages of legal closing. As at 31 December 2023, £471.7 million
was invested and £15.7 million was committed across 13 assets.
2. Total dividends declared in relation to the year ended 31 December 2023.
Why invest in pint
The Company is building a global portfolio of investments with blended
risk/return profiles, in line with targets across deal types, sectors and
geographies for diversification.
1. Unique access to private infrastructure co‑investment assets
Pantheon, PINT's Investment Manager, has a large and global infrastructure
network
PINT invests in infrastructure assets via co‑investments alongside highly
experienced general partner sponsors ('Sponsors'), typically without
additional management fees or carried interest leakage.
This is attractive for several reasons, including:
Unique opportunities
PINT provides investors with the opportunity to access Pantheon's substantial
deal flow from its extensive network of blue‑chip infrastructure investors.
These opportunities arise because Pantheon's wider infrastructure platform
invests directly into Sponsors' funds and secondary transactions. As a trusted
investor of scale, Pantheon then gains access to Sponsors' co‑investment
deal flow.
Liquid access to illiquid markets
There are fewer public market infrastructure opportunities to access private
infrastructure assets, as infrastructure companies often remain private for
long periods of time and are structured in longer-term vehicles, which are
aimed at institutional investors only. Investing in PINT provides immediate
access to high‑quality co‑investment infrastructure assets not normally
accessible to public market investors more broadly, both institutional and
retail.
Portfolio construction
Pantheon uses co‑investments to select individual assets to gain exposure
to, and tilt the Portfolio, within the parameters of PINT's investment policy,
towards sectors based on the Investment Manager's view on relative value. This
leads to the creation of a global and diversified portfolio, with the ability
to focus on major investment and economic tailwinds.
Cost-effective access
The use of co‑investments can reduce the overall expense ratio and
gross‑to‑net performance spread of a portfolio, as most deals are offered
with no ongoing management fee or carried interest charged by the Sponsor.
Sponsor specialisation
Pantheon, on behalf of PINT, is able to choose deals alongside a Sponsor with
a distinct edge who may be best placed to create value in that particular
sub‑sector.
ESG
Through the Investment Manager, PINT looks to partner with Sponsors that have
demonstrated strong capabilities in managing ESG risks and will actively
engage with the Investment Manager where it identifies areas of concern.
Pantheon has developed a bespoke ESG due diligence process, which utilises an
in-house tool (an ESG scorecard) in addition to consultation with an external
ESG specialist, which utilises a range of different data ESG sources.
For more information, please refer to the ESG section below and on pages
58-62 of the full Annual Report and Accounts.
Infrastructure assets combine a range of attractive characteristics for
long‑term investors. Distinctively, infrastructure may mitigate the adverse
effects of rising inflation and may provide an income‑generating investment
outside of traditional fixed income.
2. Favourable defensive long‑term characteristics
Infrastructure assets can offer reliable income streams with inflation
protection
Infrastructure assets may provide embedded value and downside protection
across market cycles given the regulated and contracted nature of many of the
underlying cash flows.
Infrastructure assets may provide a range of attractive investment attributes,
including the following:
Stable cash flow profile
Infrastructure may provide a compelling, stable distribution profile similar
to traditional fixed income, but backed by tangible assets. Infrastructure
assets often offer reliable income streams governed by regulation, hedges or
long‑term contracts with reputable counterparties.
Inflation hedge
Infrastructure investments can provide a natural hedge to rising inflation, as
many sub‑sectors have contracts with explicit inflation linkage or implicit
protection through regulation or market position. The majority of PINT's
assets benefit from such protection.
Embedded downside protection
The vital role that many infrastructure sub‑sectors play in our daily lives
can make them an innately defensive investment. The tangible nature of
infrastructure investments can provide a basis for liquidation and recovery
value in downside cases. Furthermore, infrastructure investing is generally
focused on gaining exposure to assets in a monopolistic or oligopolistic
market which, with high upfront costs, can be a barrier to entry for new
participants. Investments typically have long-term contracts with price
escalators or inflation linkage with high‑quality counterparties, which
offer further downside protection. Finally, high friction costs in certain
sectors have been seen to discourage customers from switching providers, which
can provide a stable and long-term customer base.
Diversification
Infrastructure can be a valuable portfolio diversifier alongside traditional
and alternative investments. Historically, listed infrastructure returns have
been only moderately correlated to traditional asset classes. The
sub‑sectors within the infrastructure universe and the drivers of such
sub‑sector returns tend not to be correlated with one another.
PINT continues to develop its diversified portfolio across sectors that
benefit from secular tailwinds.
Pantheon has taken, and continues to take, a disciplined approach to PINT's
strategy to construct a globally diversified portfolio with exposure across
sub‑sectors and geographies, while maintaining the flexibility to tilt
exposures based on opportunities which may present compelling relative value.
The Company has built a global portfolio of investments with blended
risk/return profiles, in line with targets across deal types, sectors and
geographies for diversification. Please refer to page 39 of the full Annual
Report and Accounts or below for more detail.
3. Access to secular trends
Digital Infrastructure | 44%
Power & Utilities | 27%
Renewables & Energy Efficiency | 17%
Transport & Logistics | 9%
Net working capital | 3%
DIGITAL INFRASTRUCTURE
44%(1)
Data centres, fibre networks and towers
POWER & UTILITIES
27%(1)
Energy utilities, water and conventional power
RENEWABLES & ENERGY EFFICIENCY
17%(1)
Wind, solar, sustainable waste and smart infrastructure
TRANSPORT & LOGISTICS
9%(1)
Ports, rail and road, airports and e-mobility
1. Proportion of NAV of £504 million at 31 December 2023. Includes assets
which, at 31 December 2023, were invested, committed or in legal closing.
Targeting capital growth and dividend returns.
The Company seeks to generate attractive risk‑adjusted total returns for
shareholders over the longer term. This comprises capital growth with a
progressive dividend, through the acquisition of equity or equity‑related
investments in a diversified portfolio of infrastructure assets with a primary
focus on developed OECD markets.
The Company targets a NAV Total Return per share of 8‑10% per annum.
4. PINT seeks to generate attractive risk‑adjusted returns
£487m
Capital committed
£504m
Net asset value (NAV)
2p per share
Second interim dividend per share(1)
1. Second interim dividend of 2p per share declared in relation to the year
ended 31 December 2023. The Company is paying a total dividend of 4p per share
for the year ended 31 December 2023 and, thereafter, is targeting a
progressive dividend.
PINT AT A GLANCE
Thirteen infrastructure co‑investment assets(1)
Geographic diversification(2)
Europe 46%
North America 34%
UK 17%
Net working capital 3%
Sector diversification(2)
Digital Infrastructure 44%
Power & Utilities 27%
Renewables & Energy Efficiency 17%
Transport & Logistics 9%
Net working capital 3%
DIGITAL INFRASTRUCTURE
POWER & UTILITIES
RENEWABLES & ENERGY EFFICIENCY
TRANSPORT & LOGISTICS
1.Based on assets invested and committed at 31 December 2023.
2.Based on NAV of £504 million at 31 December 2023.
Netherlands (DIGITAL INFRASTRUCTURE, RENEWABLES & ENERGY EFFICIENCY)
Delta Fiber
Fudura
United Kingdom (POWER & UTILITIES, RENEWABLES & ENERGY EFFICIENCY)
National Gas
Zenobē
Ireland (DIGITAL INFRASTRUCTURE)
NBI
North America (DIGITAL INFRASTRUCTURE, POWER & UTILITIES)
CyrusOne
Cartier Energy
Calpine
Vantage Data Centers
Vertical Bridge
Spain (TRANSPORT & LOGISTICS)
Primafrio
Nordic (DIGITAL INFRASTRUCTURE)
GlobalConnect
Germany/Austria (DIGITAL INFRASTRUCTURE)
GD Towers
CHAIR'S STATEMENT
Investing in infrastructure has never been so important.
"It is satisfying that the successful period of deployment has been followed
up with strong portfolio performance."
Vagn Sørensen
Chair, Pantheon Infrastructure Plc
Introduction
I am pleased to present the annual report for Pantheon Infrastructure Plc for
the year ended 31 December 2023. This is the second annual report since the
Company's launch, and it is pleasing to see the Company has now fully deployed
its funds into a diversified portfolio of high-quality infrastructure assets,
generating dividends in line with, and NAV Total Returns exceeding, its
pre-IPO target.
During the year, the Company's NAV per share grew by 7.8% to 106.6p per share,
with earnings per share of 10.4p. Accounting for dividends of 3p per share
paid in the year to 31 December 2023, this represents a NAV Total Return of
10.4% since 31 December 2022, or 10.7% after adjusting for the positive NAV
impact of share buybacks, which exceeds the pre-IPO target of an 8-10% NAV
Total Return per annum. Naturally, it is satisfying that the successful period
of deployment has been followed up with strong portfolio performance.
Economic environment
The reporting period and subsequent months have continued to be characterised
by further economic uncertainty. Most of the developed economies in which we
invest have so far avoided the recessions that were widely expected in the
first half of 2023, and market sentiment appears to foresee a soft rather than
hard landing. Furthermore, there have been encouraging signs that central bank
interventions have begun to curtail inflation, with strong indications that we
have reached the interest rate peak, albeit one that policymakers have
indicated will endure well into 2024. Nevertheless, the next twelve months
will be characterised by important elections across a number of key market
jurisdictions that might impact the future path of economic growth and
interest rates, and regardless of when they may drop again, it looks likely
that we have entered a new interest rate environment compared to that we have
been in for the past 15 years.
Investor sentiment and discount management
With increased risk-free rates, some investors have sought to de-risk their
portfolios with a move to the perceived safety of fixed income. Retail flows
throughout the year were particularly affected by the increased cost of living
resulting from high inflation and significantly higher mortgage servicing
costs, which reduced the levels of surplus cash available for savings and
investment.
In this environment, demand for the shares of listed investment trusts as a
whole, including the infrastructure sector and PINT, has been subdued. As at
31 December 2023, PINT's shares traded at a discount of 21% to NAV, despite
the performance and valuations of the underlying assets being robust.
We continue to believe that any share price discount to NAV is unjustified, as
an investment in PINT offers a meaningful asset-backed yield, as well as
capital growth and inflation protection that cannot be achieved by investment
in a fixed income alternative. The Portfolio continues to perform robustly to
varying economic and project-specific assumptions, including inflation,
interest rates and valuation discount rates, as evidenced by the sensitivity
analysis set out in the Investment Manager's report below and on page 35 of
the full Annual Report and Accounts. As this demonstrates, portfolio
diversification means the Company does not carry material exposure to any
single sector-specific risk.
The Board continues to focus on the current level of discount and the impact
it has on Shareholders' reported returns. Having set out our views relating to
discounts prior to the launch of the Company, we were quick to react as the
discount widened. On 31 March 2023, the Board announced the commencement of
a programme to buy back shares up to a total consideration of £10 million.
£487 million of assets invested or committed(1)
4p per share total dividends declared for the year
1. This refers to the capital committed to assets which were invested,
committed and in legal closing at 31 December 2023.
As at 31 December 2023, the Company had repurchased 7.4 million shares for a
total consideration of £5.8 million, resulting in a NAV increase of 0.3p per
share. Since that date, the Company has repurchased a further 3.1 million
shares for a consideration of £2.6 million, resulting in a NAV increase of
0.1p per share. In total, the Company has now repurchased 10.5 million shares
for £8.4 million since the buyback programme was announced.
Despite the positive NAV impact of the buyback programme, the Board remains
acutely aware of the continued discount to NAV at which the Company still
trades, and continues to believe that share buybacks represent an attractive
use of shareholders' capital where surplus means are available. Accordingly,
the Board can confirm that an additional £8.4 million has been allocated for
further share buybacks, to restore the total remaining programme commitment to
£10 million. The Board will continue to regularly monitor the Company's
approach to buybacks in consideration of the prevailing share price discount
to NAV and the Company's available liquidity.
Portfolio deployment and performance
As at 31 December 2023, the Company had invested in or committed to 13 assets
totalling £487 million. The Company announced three new investments during
the year totalling £96 million: European towers business, GD Towers, Nordic
fibre operator, GlobalConnect, and UK-based battery storage and electric bus
fleet specialist, Zenobē.
When considered alongside the total amounts deployed to and committed under
the ongoing share buyback programme, the Company has now fully deployed its
net IPO and subscription share proceeds. Whilst this clearly represents a
major success for the Company and its shareholders, importantly it has been
followed up with a period of strong performance across the Portfolio, with
fair valuation gains translating to a higher NAV Total Return for the period
versus the pre-IPO target.
The Company declared dividends totalling 4p per share in relation to the year
to 31 December 2023, and remains committed to paying a progressive dividend,
commencing with the first interim dividend for 2024. The Board is considering
the dividend level for the current financial year and will announce the level
of the first interim dividend in due course.
With all this considered, an investment into PINT continues to give an
immediate exposure to a high‑quality, established and highly diversified
portfolio. Further details of the Portfolio Companies and their
diversification can be found in the Investment Manager's report below and on
page 12 of the full Annual Report and Accounts.
Revolving credit facility
The Board was pleased to announce on 7 June 2023 a £52.5 million increase to
its existing £62.5 million multi‑currency revolving credit facility (RCF),
bringing the total to £115 million. In addition, after the year end the
Company extended the term of the RCF by 15 months, effectively resetting the
tenor at three years with the same pricing and terms.
The increase and extension to the RCF provide the Company with an enduring and
flexible way to cover its risk buffers and working capital needs. It also
gives us additional liquidity to increase diversification through further
investment in high‑quality infrastructure assets from PINT's near-term
investment pipeline, where we continue to see compelling opportunities.
However, such investment will only be considered where it is materially
accretive to shareholders in light of the current cost of such borrowings, and
providing that the Company would not, as a result, become inappropriately
levered or the facility to be fully drawn.
Oversight of the investment process and strategy
Investment management is delegated to Pantheon by the Board. Pantheon is
responsible for reviewing, selecting and executing investment opportunities
for the Company. However, it is a vital part of the Board's responsibilities
to oversee these activities, to ensure the investment process is robust, and
that the investments made are consistent with the aims, objectives and
investment strategy of the Company.
To that end, the Board was delighted to join members of Pantheon's team on a
site visit to Primafrio's Head Office and major distribution centre in Murcia,
Spain, in June 2023. Primafrio was the Company's first investment commitment,
announced a few months after our launch, and it was very pleasing to see the
progress that it continues to make in the development of existing and new
distribution centres and logistics infrastructure.
The Board, the Investment Manager and our corporate brokers, Investec, met
with senior representatives from both Primafrio and Apollo, the Sponsor
partner on the transaction. The visit provided the Board with valuable insight
into, and assurance regarding, the Investment Manager's robust investment and
underwriting processes, the strength of relationships with Sponsors, and an
example of the access to the management teams of the Company's underlying
assets accorded to the Investment Manager. The Board was delighted to be able
to extend this visibility to shareholders when hosting the Company's inaugural
capital markets day in November, covering key topics including market outlook,
Portfolio overview and introducing some of Pantheon's key Sponsor
relationships. We look forward to hosting more of these events in the future
and welcome any suggestions on future content.
Through our oversight, such as the Primafrio site visit and regular meetings
with the Investment Manager, the Board maintains comfort in the investment
process and the quality of the Company's portfolio. As evidenced by the
continued NAV growth, these businesses are in aggregate operating solidly and
executing in line with the business plans on which our investments
were based.
Strategy
As it has done since launch, the Company seeks to generate attractive
risk-adjusted returns by constructing a diversified portfolio of high-quality
assets across the global infrastructure investment universe. The Company
focuses on assets that offer downside and inflation protection, which is
particularly relevant in the current market environment. Leveraging Pantheon's
extensive 14-year experience in infrastructure investing and its c.$22 billion
infrastructure platform, PINT targets specific transactions that Pantheon
deems to be most attractive, notably opportunities in businesses with strong
operations and growth potential, in sub‑sectors benefiting from long-term
positive trends and managed by high-quality Sponsors. I am delighted that this
approach to investment is now evident in the Portfolio that the Company has
assembled through the opportunities provided by Pantheon.
Governance and sustainability
The Board takes its responsibilities to its shareholders, in accordance with
good governance standards, very seriously, and we continually strive to
improve our oversight of the Company and its transparency. During the period,
we have had a particular focus on ESG matters and sustainability.
To ensure sufficient focus on these matters, we have formally created a new
ESG & Sustainability Committee, which is chaired by Ms Finegan. Ms Finegan
has been a non‑executive Director of the Company since its launch and is an
experienced infrastructure asset management professional with over 30 years of
sector experience, performing a number of other board and advisory roles with
an emphasis on ESG outcomes.
PINT's ESG & Sustainability Committee has responsibility for: agreeing,
overseeing and monitoring the Company's ESG strategy; its ESG reporting and
disclosure; its ESG risk management (alongside the Audit and Risk Committee);
and ensuring effective stakeholder engagement.
Under the oversight of this committee, the Company published its inaugural
sustainability report on 19 September 2023, providing (among other things)
further insight into the sustainability characteristics of PINT's portfolio
and relevant emissions data. The full report can be found on the Company's
website: www.pantheoninfrastructure.com and a summary of the information can
be found below and on page 58 of the full Annual Report and Accounts.
Shareholder engagement
A major part of the Board's purpose is to represent the interests, needs and
wishes of the Company's shareholders. We are committed to maintaining open
channels of communication and to engaging with shareholders in a manner which
they find most meaningful, in order to gain an understanding of their views.
Shareholder meetings take place throughout the year with the Investment
Manager, but as Chair I believe it is vitally important for the Board and I to
hear views first hand. Throughout the year, the Chair of the Audit and Risk
Committee and I offered meetings to a significant number of shareholders
representing a majority of the share register by issued share capital. Several
of them accepted our offer and we met with investors representing more than
one‑fifth of the register.
Feedback from these meetings was overall very positive, and the engagement
from the Board was well received. Naturally, shareholders were keen to see
continued improvement and we have endeavoured to respond to many of the issues
raised, such as: the share price discount to NAV (we have announced a
programme of buybacks); providing confidence in valuations (we have continued
to disclose valuation sensitivities); and improved ESG and climate disclosures
(we have since published our sustainability report).
The Board always welcomes contact with shareholders, so if there are matters
you wish to raise with us or if you would like a meeting, please feel free to
contact us at the registered office or via the Company Secretary using the
details below or on page 140 of the full Annual Report and Accounts.
Outlook
Infrastructure remains a key driver of economic growth, and therefore the need
for investment into new infrastructure is arguably stronger than ever. Indeed,
in the current environment, private investment is especially needed, and we
believe will be ultimately rewarded, at a time where governments are facing
significant budget deficits and rising debt levels.
The last six months or so have seen an even greater international focus on
decarbonisation. According to the World Meteorological Organization, 2023 was
the warmest year on record, and the annual average global temperature
approached 1.5°C above pre-industrial levels. The road to net zero globally
requires sustained and extraordinary investment in new infrastructure. Private
infrastructure has demonstrated a necessary role in filling that gap, and we
believe it will continue to play an important part in funding global
infrastructure investments.
The market for infrastructure investment remains competitive, and despite some
recent signs of recovery, fundraising in private markets was challenging in
2023. PINT's strategy continues to be to identify and target companies that
are set to benefit from key sectoral tailwinds, whilst exhibiting defensive
characteristics and delivering growth in real terms across the economic cycle.
Pantheon's wide capability to source new investments through its vast network
and established partnerships, as demonstrated since PINT's launch, is all the
more crucial in current market conditions. The Board remains optimistic about
PINT's future investment opportunities and value creation potential.
With this in mind, and as already stated, we believe that the current level of
discount is unjustified, and represents a compelling value opportunity for
those seeking to invest into a fully deployed and diversified portfolio of
high-quality infrastructure assets.
Currently, it appears that much of the market is focusing purely on yield from
gilts and bonds without considering prospects for capital appreciation.
We continue to believe that PINT's strategy means it is well positioned for
when investors again start to recognise the importance of growth potential in
a well-balanced investment strategy, and have been further encouraged by the
increased awareness relating to the ongoing cost disclosures issues affecting
AIFMs, which may in time provide further buying stimulus in a market showing
signs of recovery. The Board is confident of the Manager's ability to
continue to source new assets and to manage the existing portfolio to deliver
that growth. We also believe that infrastructure assets will provide
much-needed resilience in the current uncertain world.
Board composition
It is now over two years since the Company's launch, and as Chair I have had
no issues in committing the necessary time to oversee the Company alongside my
other non-executive roles. Nevertheless, mindful of the perception, if not the
reality, of my capacity to act as Chair, I intend to step-down at the
Company's annual general meeting in 2025. It has been an extremely enjoyable
experience to serve as Chair during such an exciting period for the Company,
and I look forward to supporting the rest of the Board in the process to
appoint my successor in the coming months, which will be led by our Senior
Independent Director (SID), Ms Baldock.
Vagn Sørensen
Chair
2 April 2024
PINT INVESTMENTS
EXISTING PORTFOLIO
TRANSPORT & LOGISTICS
Primafrio
Specialised temperature‑controlled transportation and logistics company in
Europe primarily focused on the export of fresh fruit and vegetables from
Iberia to Northern Europe.
Sector:
Transport & Logistics
Geography:
Europe
Sponsor:
Apollo
Website:
www.primafrio.com
Date of commitment:
21.03.2022
PINT NAV 31 December 2023: £47m
Investment thesis and value creation strategy(1)
· Niche market leader providing an essential service to resilient end
markets. The company has demonstrated strong organic growth over a 15+ year
operating history, including during major economic dislocations (2008‑2009
global financial crisis and 2020‑2021 Covid-19). The essential nature of
Primafrio's market and its operations provide strong downside protection.
· Value creation opportunities include inorganic growth, strategic
M&A, and continued investment in Primafrio's cold storage logistics
infrastructure footprint.
DIGITAL INFRASTRUCTURE
CyrusOne
Operates more than 50 high‑performance data centres representing more than
four million sq ft of capacity across North America and Europe.
Sector:
Digital: Data Centre
Geography:
North America
Sponsor:
KKR
Website:
www.cyrusone.com
Date of commitment:
28.03.2022
PINT NAV 31 December 2023: £27m
Investment thesis and value creation strategy(1)
· Growth in data usage continues to drive data centre demand.
In particular, the hyperscale segment represents a strong growth opportunity
due to increasing cloud adoption and increasingly data‑heavy technologies
(5G, AI, gaming, video streaming).
· Benefits from defensive characteristics such as long‑term
contracts with a largely investment grade credit quality customer base, price
escalators and limited historical customer churn.
POWER & UTILITIES
National Gas
The owner and operator of the UK's sole gas transmission network, regulated by
Ofgem, and an independent, highly contracted metering business.
Sector:
Power & Utilities: Gas Utility and Metering
Geography:
UK
Sponsor:
Macquarie
Website:
www.nationalgas.com
Date of commitment:
28.03.2022
PINT NAV 31 December 2023: £47m
Investment thesis and value creation strategy(1)
· Stable inflation‑linked cash flows with returns positively
correlated to inflation, supported by tailwinds of the current macroeconomic
environment.
· Strong downside protection; regulatory framework allows for the
recovery of costs and a minimum return on capital. The company also holds a
monopolistic position through sole ownership of the UK's gas transmission
network.
· Significant growth opportunity. The transmission system will play a
leading role in making the network ready for any future transition from
natural gas to hydrogen. It will support the expansion of hydrogen's role in
the energy mix while working closely with the government and Ofgem to maintain
security of supply.
1. There is no guarantee that the investment thesis will be achieved. Pantheon
opinion. Past performance is not indicative of future results. Future results
are not guaranteed, and loss of principal may occur. Please refer to
'Disclosure 1 - Investments' towards the back of this announcement.
DIGITAL INFRASTRUCTURE
Vertical Bridge
The largest private owner and operator of towers and other wireless
infrastructure in the US, with more than 7,000 owned towers across the
country.
Sector:
Digital: Towers
Geography:
North America
Sponsor:
DigitalBridge
Website:
www.verticalbridge.com
Date of commitment:
04.04.2022
PINT NAV 31 December 2023: £27m
Investment thesis and value creation strategy(1)
· Track record of organic and inorganic growth: since its founding in
2014, Vertical Bridge has been one of the most active acquirers and
'build‑to‑suit' developers amongst tower companies, and expects to further
accelerate these activities.
· 5G build-out supporting continued growth: US carrier annual capex is
forecast to increase by over 30% by 2025, prioritising macro towers in the 5G
rollout.
· Top‑tier management team and Sponsor: key members of
Vertical Bridge and DigitalBridge (including both CEOs) have worked together
since 2003, and have exceeded the original Vertical Bridge business plan.
DIGITAL INFRASTRUCTURE
Delta Fiber
Owner and operator of fixed telecom infrastructure in the Netherlands,
providing broadband, TV, telephone and mobile services to retail and wholesale
customers over a predominantly fibre network.
Sector:
Digital: Fibre
Geography:
Europe
Sponsor:
Stonepeak
Website:
www.deltafibernederland.nl
Date of commitment:
26.04.2022
PINT NAV 31 December 2023: £25m
Investment thesis and value creation strategy(1)
· Opportunity to invest in high-quality fibre network with high
barriers to entry as a regional leader in its core footprint of suburban and
rural areas with historically high penetration and low churn rates.
· Well positioned to capitalise on extensive rollout programme via
first mover advantage in its core markets, exhibited through its track record
of fast build rates and ramp up of construction capacity.
POWER & UTILITIES
Cartier Energy
Platform of eight district energy systems located across the Northeast,
Mid‑Atlantic and Midwest of the US.
Sector:
Power & Utilities: District Heating
Geography:
North America
Sponsor:
Vauban
Website:
Not available
Date of commitment:
23.05.2022
PINT NAV 31 December 2023: £31m
Investment thesis and value creation strategy(1)
· Gross margin structure underpinned by availability‑based fixed
capacity payments and consumption charges, and pass‑through pricing
mechanism limits commodity price exposure providing robust downside
protection.
· 'Sticky' customer base with an average relationship tenure of
~15‑20 years and ~10‑12-year average remaining contractual life.
· Provides customers with a path to decarbonisation and increased
thermal efficiency.
1. There is no guarantee that the investment thesis will be achieved. Pantheon
opinion. Past performance is not indicative of future results. Future results
are not guaranteed, and loss of principal may occur. Please refer to
'Disclosure 1 - Investments' towards the back of this announcement.
POWER & UTILITIES
Calpine
Independent power producer with c.26GW of principally gas-fired generating
capacity, including c.770MW of operational renewables.
Sector:
Power & Utilities: Electricity Generation
Geography:
North America
Sponsor:
ECP
Website:
www.calpine.com
Date of commitment:
27.06.2022
PINT NAV 31 December 2023: £56m
Investment thesis and value creation strategy(1)
· Vital supplier to the US electricity grid, providing reliable power
generation capacity and playing an important role in the energy transition as
the US targets net zero carbon by 2050. Calpine benefits from highly
predictable diversified cash flows underpinned by contracts supported by a
robust hedging programme.
· Strong renewables development pipeline of solar and battery storage
projects, financeable through the cash flows generated by existing assets,
which are projected to nearly triple its renewables power generation capacity
over the next five to six years.
DIGITAL INFRASTRUCTURE
Vantage Data Centers
Leading provider of wholesale data centre infrastructure to large enterprises
and hyperscale cloud providers.
Sector:
Digital: Data Centre
Geography:
North America
Sponsor:
DigitalBridge
Website:
www.vantage-dc.com
Date of commitment:
01.07.2022
PINT NAV 31 December 2023: £26m
Investment thesis and value creation strategy(1)
· Secular data usage growth through increasing cloud adoption
and increasing data‑heavy technologies continues to drive data centre
demand.
· Strong growth pipeline from favourable existing relationships with
hyperscale customers.
· Downside protection from strong position in supply‑constrained core
geographies, long‑term contracts with investment‑grade counterparties, and
low churn due to high switching costs and barriers to entry.
RENEWABLES & ENERGY EFFICIENCY
Fudura
Dutch market-leading owner and provider of medium‑voltage electricity
infrastructure to business customers, with a focus on transformers, metering
devices and related data services.
Sector:
Renewables & Energy Efficiency
Geography:
Europe
Sponsor:
DIF
Website:
www.fudura.nl
Date of commitment:
25.07.2022
PINT NAV 31 December 2023: £46m
Investment thesis and value creation strategy(1)
· Highly stable inflation‑linked cash flows from large and
diversified locked‑in customer base with long-term contracts, low churn and
inflation protection.
· Strong downside protection with a quasi‑monopoly positioning in
its core regional markets characterised by high barriers to entry.
· Energy efficiency and decarbonisation tailwinds driving growth
opportunities to broaden service offering to customers including EV charging,
solar panels, heat pumps and battery storage.
1. There is no guarantee that the investment thesis will be achieved. Pantheon
opinion. Past performance is not indicative of future results. Future results
are not guaranteed, and loss of principal may occur. Please refer to
'Disclosure 1 - Investments' towards the back of this announcement.
DIGITAL INFRASTRUCTURE
National Broadband Ireland ("NBI")
Fibre-to-the-premises network developer and operator working with the Irish
Government to support the rollout of the National Broadband Plan, targeting
connection to 560,000 rural homes.
Sector:
Digital: Fibre
Geography:
Ireland
Sponsor:
Asterion
Website:
www.nbi.ie
Date of commitment:
09.11.2022
PINT NAV 31 December 2023: £47m
Investment thesis and value creation strategy(1)
· Stable cash flows with inflation protection expected through the
terms of the project agreement and the prices NBI can charge to internet
service providers for access.
· Downside protection through a unique positioning in the intervention
area (the franchise area granted by the Irish Government) and a flexible
government subsidy regime.
· Attractive macro trends including increased remote working,
demographics and growth in fibre broadband take‑up to date underpin the
long‑term commercial viability of the network.
1. There is no guarantee that the investment thesis will be achieved. Pantheon
opinion. Past performance is not indicative of future results. Future results
are not guaranteed, and loss of principal may occur. Please refer to
'Disclosure 1 - Investments' towards the back of this announcement.
PINT INVESTMENTS
NEW INVESTMENTS
DIGITAL INFRASTRUCTURE
GD Towers
Largest tower operator and telecom infrastructure network in Western Europe
with c.40,000 tower sites across Germany and Austria.
Sector:
Digital: Towers
Geography:
Europe
Sponsor:
DigitalBridge
Website:
Not available
Date of commitment:
31.01.2023
PINT NAV 31 December 2023: £38m
Transaction/company overview
· In Q3 2022, DigitalBridge, alongside Brookfield Asset Management,
agreed to buy 51% of GD Towers from Deutsche Telekom for a total enterprise
value of €17.5 billion, with PINT investing as part of the subsequent
co-investment syndication process.
· GD Towers has one of the largest tower and telecom infrastructure
networks in Western Europe with c.40,000 tower sites across Germany and
Austria, making it the market leader in Germany and second largest in Austria.
· GD Towers' high-quality portfolio is supported by an anchor tenancy
agreement with Deutsche Telekom, which has retained a 49% ownership stake in
GD Towers.
Investment thesis and value creation strategy(1)
· Majority of cash flows are contracted and index-linked, offering
strong downside protection in challenging macroeconomic conditions.
· Favourable market tailwinds from regulatory‑driven 5G coverage
requirements with significant growth opportunities.
· Organic and inorganic growth opportunities arising from other market
participants, and numerous consolidation opportunities in Europe.
ESG(2)
· Deutsche Telekom AG has a net zero carbon strategy that is aligned
with the Science Based Targets initiative (SBTi) and has been highly rated by
the Carbon Disclosure Project.
· The majority of power for the tower sites now comes from renewable
sources, with carbon offsetting arrangements in place for any fossil fuel
power consumption.
1. There is no guarantee that the investment thesis will be achieved.
Pantheon opinion. Past performance is not indicative of future results.
Future results are not guaranteed, and loss of principal may occur. Please
refer to 'Disclosure 1 - Investments' towards the back of this announcement.
2. Source: ERM. While DigitalBridge may consider ESG factors when making an
investment decision, DigitalBridge does not pursue an ESG-based investment
strategy or limit its investments to those that meet specific ESG criteria or
standards. Any reference herein to environmental or social considerations is
not intended to qualify DigitalBridge's duty to maximise risk-adjusted
returns.
DIGITAL INFRASTRUCTURE
GlobalConnect
Leading pan-Nordic wholesale and retail telecoms business with extensive fibre
network and data centre portfolio.
Sector:
Digital: Fibre
Geography:
Europe
Sponsor:
EQT
Website:
https://www.globalconnectgroup.com
Date of commitment:
22.06.2023
PINT NAV 31 December 2023: £20m
Transaction/company overview
· In Q4 2022, EQT Infrastructure III announced the sale of a minority
stake (15%) of its shareholding in GlobalConnect (GC) to Mubadala. PINT
invested alongside other co‑investors following this transaction, while EQT
retained a majority (controlling) stake.
· GC is a pan-Nordic digital infrastructure platform with a 155,000 km
fibre network and 17 (35,000 m²) data centres.
· GC is a leading challenger and is well positioned to increase its
market share across verticals and geographies given its blue‑chip customer
base, one-stop-shop solution and high barriers to entry.
Investment thesis and value creation strategy(1)
· Majority of cash flows are contracted and index‑linked, offering
downside protection in challenging macroeconomic conditions.
· Favourable market tailwinds from regulatory-driven 5G coverage
requirements with significant growth opportunities and long‑term secured
revenues, protecting its market position.
· Organic and inorganic growth opportunities arising from rural fibre
rollout, growing demand for larger bandwidth and numerous consolidation
opportunities.
ESG
· In June 2023, GC was approved by the SBTi, committing to reducing its
absolute carbon emissions by 42% by 2030.
· In 2022, GC raised €1 billion in ESG-linked financing and recently
won an award for the sustainability-linked loan of the year in Europe.
· Its sustainable data centres, powered by 100% green energy, are
achieving ~25% lower power usage than the European average.
1. There is no guarantee that the investment thesis will be achieved.
Pantheon opinion. Past performance is not indicative of future results.
Future results are not guaranteed, and loss of principal may occur. Please
refer to 'Disclosure 1 - Investments' towards the back of this announcement.
RENEWABLES & ENERGY EFFICIENCY
Zenobē
Zenobē provides essential infrastructure that contributes to international
power and transport sector decarbonisation targets.
Sector:
Renewables & Energy Efficiency
Geography:
UK
Sponsor:
Infracapital
Website:
www.Zenobe.com
Date of commitment:
07.09.2023
PINT NAV 31 December 2023: £33m
Transaction/company overview
· Co-investment alongside Infracapital in their 2023 equity raise to
support Zenobē's business plan growth. Infracapital retained a co-control
stake alongside a new investor (KKR), forming a strategic partnership to
support Zenobē's expansion into North America, Europe and Australasia.
· Zenobē develops, finances, owns and operates electric buses and
transmission grid-scale batteries, providing turnkey service offerings to its
customers.
· Since Infracapital's initial investment in 2020, Zenobē has grown
to establish itself as a market leader at the forefront of these increasingly
important industries in UK, Benelux, Australia and New Zealand.
Investment thesis and value creation strategy(1)
· Substantial and growing market opportunity driven by significant
capex required to meet demand for EV charging and electricity grid stability.
· Market leader in core regions in a high-growth sector with
attractive expansion opportunities.
· Downside protection and inflation protection via long‑term
availability-style contracts with high-quality counterparties.
ESG(2)
· In addition to providing electrification solutions for vehicle fleet
owners, Zenobē's batteries help balance the supply of renewable energy to the
grid.
· By financing, designing, building and operating battery systems,
Zenobē is accelerating the switch to electric vehicles and maximising the
uptake of renewable energy.
· Zenobē has committed to net zero value chain carbon emissions by
2050 and was awarded the IJGlobal ESG Award for Europe 2023.
1. There is no guarantee that the investment thesis will be achieved. Pantheon
opinion. Past performance is not indicative of future results. Future results
are not guaranteed, and loss of principal may occur. Please refer to the slide
titled 'Disclosure 1 - Investments' towards the back of this announcement.
2. Source: Infracapital and Zenobē. The information herein has been compiled
by Pantheon based on information supplied to it by Infracapital and Zenobē.
For the avoidance of doubt, Pantheon is not acting on behalf of Infracapital
in communicating any information set out herein.
PINT TIMELINE
November 2021
Raised £400m gross IPO proceeds
March 2022
Commitment of to $47.6m Primafrio - European transport & logistics
business
Commitment of $32.3m to CyrusOne - North American data centre business
Commitment of £39.6m to National Gas - UK regulated gas transmission network
and metering business
April 2022
Commitment of €28.4m to Delta Fiber - Dutch fibre company
Commitment of $30.2m to Vertical Bridge - US towers company
May 2022
Commitment of $41.4m to Cartier Energy - US district energy platform
June 2022
Commitment of $55.4m to Calpine - US power generation business
July 2022
Commitment of $33.2m to Vantage Data Centers - North American data centre
business
Commitment of €47.0m to Fudura - Dutch electricity infrastructure provider
September 2022
Raised £81m of gross proceeds through exercise of subscriptions shares
October 2022
Paid first interim dividend of 1p per share
November 2022
Commitment of €52.7m to National Broadband Ireland - Irish digital
Infrastructure company
January 2023
Commitment of €47.2m to GD Towers - German and Austrian towers company
March 2023
Paid second interim dividend of 1p per share
Board announces £10m share buyback programme
June 2023
Agreed £52.5m increase to RCF, bringing total to £115m
Commitment of €22.0m to GlobalConnect - Nordic fibre networks company
September 2023
Commitment of £35m to Zenobē - UK battery storage and electric bus fleet
specialist
Declared first interim dividend for 2023 of 2p per share, paid on 27 October
2023
November 2023
PINT hosts maiden capital markets day
March 2024
Agreed extension to existing £115m RCF, resetting maturity to March 2027
Declared second interim dividend for 2023 of 2p per share, payable on 23 April
2024
INVESTMENT MANAGER'S REPORT
Founded in 1982, Pantheon has established itself as a leading global
multi‑strategy investor in private equity, infrastructure and real assets,
private debt and real estate.
Pantheon's infrastructure experience
Since 2009, Pantheon has completed 218 infrastructure investments across
primaries, secondaries and co‑investments alongside more than 58 asset
sourcing partners, solidifying its position as one of the largest managers
investing in infrastructure. Total infrastructure co-investment and Sponsor
relationships exceeded 50 as of December 2023, including investments closed
or in legal closing. The global infrastructure investment team managed c. $22
billion in AUM as at 30 September 2023.
Pantheon platform
128
Investment professionals
$95bn(1)
Funds under management
>1,000
Institutional investors globally
13
Global offices
Pantheon private infrastructure
$22bn(1)
AUM
218
Investments
33
Investment professionals
22 years
Average years' experience of Investment Committee
Pantheon private infrastructure co-investments
$4bn
Total commitments
52
Total investments
58+
Asset sourcing partners
13.2%
Notional net IRR(2)
1. As at 30 September 2023. This figure includes assets subject to
discretionary or non-discretionary management or advice. Infrastructure AUM
includes all infrastructure and real asset programmes which have an allocation
to natural resources.
2. Performance data as of 30 September 2023. Past performance is not
indicative of future results. Future performance is not guaranteed and a loss
of principal may occur. Performance data includes all infrastructure
co‑investments approved by Pantheon's Global Infrastructure and Real Assets
Committee (GIRAC) since 2015, when Pantheon established its infrastructure
co-investment strategy. Notional net performance is based on an average
forecast annualised fee of 1.5% of NAV.
Pantheon has extensive experience of and expertise in primary, secondary and
co-investments, which are defined as follows:
· primary investments: involve a commitment to a newly launched
limited life fund managed by a Sponsor, seeking to exit improved businesses in
the later years of the fund term at a profit;
· secondary investments: traditionally involve the purchase of an
interest in an established private fund or a portfolio of companies from an
existing investor; and
· co-investments: afford the opportunity for investors to invest
alongside Sponsors in specific Portfolio Companies, typically on a fee and
carried interest‑free basis.
PINT focuses on gaining exposure to infrastructure assets via
co‑investments.
Pantheon primary funds strategy
AUM in primary commitments since 2009(1)
$10bn
· Pantheon develops long‑term relationships with top tier Sponsors by
investing in their underlying flagship funds.
· Sponsors consider Pantheon to be a strategic partner, rather than a
direct competitor.
Sponsors require co‑investment partner
Co‑investment opportunities screened since 2015(2)
$88bn
Sponsors may offer co‑investments for the following reasons:
· size of transaction;
· manage concentration limits;
· raise follow‑on capital; and
· strengthen investor relationships.
Pantheon co‑investment strategy
Committed across 52 co‑investment assets
$4bn
Committed across 52 co‑investment assets(3)
· Access to co‑investment assets, typically on a no-fee,
no‑carry basis.
· Proven track record as a valuable partner by providing experience
in complex deals; speed and certainty of deal execution within short
time frames.
· Co-investment track record has produced notional net IRR to date
of 13.2%(4).
1. As at 30 September 2023. This figure includes assets subject to
discretionary or non-discretionary management or advice. Infrastructure AUM
includes all infrastructure and real asset programmes which have an allocation
to natural resources.
2. Pantheon internal data from 2015 to December 2023. Screened deal flow is
based on total value of transactions ($).
3. Total infrastructure co-investment count and committed amount as of
December 2023, includes all Pantheon infrastructure co-investments closed or
in legal closing.
4. Performance data as of 30 September 2023. Performance data includes all
consummated infrastructure co-investments approved by GIRAC since 2015,
when Pantheon established its infrastructure co-investment strategy.
PORTFOLIO
PINT is constructing a diversified global portfolio with a focus on developed
market OECD countries, with the majority of exposure in Western Europe and
North America. Over the medium term, the Investment Manager expects, in line
with the initial prospectus, the composition of the Portfolio to include
investments in the following sub‑sectors: Digital Infrastructure, Power
& Utilities, Transport & Logistics, Renewables & Energy Efficiency
and Social & Other Infrastructure.
In the year to 31 December 2023, the Company announced three further
investments, amounting to £96 million, with a total of £487 million now
invested or committed across 13 investments.
The Portfolio assembled is diversified across sectors and geographies, and the
Investment Manager believes that it is well positioned to withstand any
external market challenges. The investments typically benefit from defensive
characteristics including long-term contracted cash flows, inflation
protection and robust capital structures.
Seven investments are in Digital Infrastructure, representing 44% of NAV,
across the data centre, towers and fibre sub‑sectors. Three investments,
representing 27%, are in the Power & Utilities sector including: gas
transmission, district heating and electricity generation. Two investments are
in Renewables & Energy Efficiency (17%) and the remaining investment is in
Transport & Logistics (9%). The largest geographical exposure is in Europe
(46%), with the remaining exposure in North America (34%) and the UK (17%).
Net working capital reflects 3% of NAV.
NAV pence per share movement (Year to 31 December 2023)
NAV increased over the year by 7.7p per share (period to 31 December 2022:
0.9p per share), after adjusting for the dividends paid of 3.0p per share over
the year (period to 31 December 2022: 1.0p per share). The movement in the
year was principally driven by fair value gains of 12.0p per share (period to
31 December 2022: 2.0p per share), partially offset by foreign exchange
movements of (3.0)p per share (period to 31 December 2022: 2.1p per share),
attributable to the weakening of both EUR and USD during the year, which was
partially offset by a 2.6p per share movement from the foreign exchange
hedging programme (period to 31 December 2022: (1.8)p per share). Interest on
cash deposits contributed 0.7p per share (period to 31 December 2022: 0.4p per
share), and share buybacks contributed 0.3p per share (period to 31 December
2022: nil), with a reduction of (1.9)p per share (period to 31 December 2022:
(1.0)p per share) related to fund operating and financing expenses, resulting
in a closing NAV of 106.6p per share. This excludes the impact of the second
interim dividend of 2.0p per share, which is to be paid on 23 April 2024.
Nav Pence Per Share Movement
31 December 2022 - 98.9p
Fair value gains - 12.0p
Foreign exchange movement - (3.0)p
Foreign exchange hedge - 2.6p
Finance income - 0.7p
Expenses(1) - (1.9)p
Share buybacks - 0.3p
Dividends paid (3.0)p
31 December 2023 - 106.6p
1. Expenses include operating and capital expenses.
PORTFOLIO IN NUMBERS(1)
Exposure to operational infrastructure assets
POWER & UTILITIES
26GW
of electric generation capacity, including 729MW of renewables, generating
111TWh annually
RENEWABLES & ENERGY EFFICIENCY
67,000
smart meters helping to reduce domestic energy bills
DIGITAL INFRASTRUCTURE
1,444,000
homes connected to high speed fibre
DIGITAL INFRASTRUCTURE
94
data centres providing 1,440MW of power capacity
RENEWABLES & ENERGY EFFICIENCY
1,000
electric buses supported, saving 66,000 tonnes of CO(2) annually
POWER & UTILITIES
8
district heating networks, with 96 km of piping serving 190 buildings
RENEWABLES & ENERGY EFFICIENCY
17,200
medium and high voltage transformers
DIGITAL INFRASTRUCTURE
416,000 km
of fibre cable, passing 2.9 million homes
TRANSPORT & LOGISTICS
2,500
temperature controlled trucks and 40,000 m² of temperature controlled
warehouse capacity
DIGITAL INFRASTRUCTURE
51,000
telecom towers
POWER & UTILITIES
7,630 km
of pressurised gas transmission pipes, 71 gas compressors and nine gas and LNG
terminals
RENEWABLES & ENERGY EFFICIENCY
1,494MW
of battery energy storage capacity, supporting the transition to net zero
1. Figures represent the total infrastructure assets across PINT's Portfolio
Companies.
The breakdown of the Company's NAV(1) as at 31 December 2023 is shown below by
reference to sector and geography. The breakdowns are shown relative to
amounts invested(2) and committed(3).
Sector diversification (as at 31 December 2023)(4)
Outer ring: total (invested(2) + committed(3))
Inner ring: invested and committed breakdown
Digital Infrastructure | 43.9%
Invested | 41.8%
Committed | 2.1%
Power & Utilities | 26.7%
Invested | 26.7%
Committed | 0.0%
Renewables & Energy Efficiency | 16.6%
Invested | 15.7%
Committed | 0.9%
Transport & Logistics | 9.4%
Invested | 9.3%
Committed | 0.1%
Net Working Capital | 3.3%
Geographic diversification (as at 31 December 2023)(4)
Outer ring: total (invested + committed)
Inner ring: invested(2) and committed(3) breakdown
Europe | 46.1%
Invested | 44.4%
Committed | 1.8%
North America | 34.0%
Invested | 33.2%
Committed | 0.8%
UK | 16.6%
Invested | 16.0%
Committed | 0.6%
Net Working Capital | 3.3%
1. Based on NAV of £504 million at 31 December 2023.
2. Invested amounts at 31 December 2023 totalled £471.7 million,
representing the fair value of the Company's funded investments in those
sectors or geographies.
3. Committed but not yet invested amounts at 31 December 2023 totalled
£15.7 million, representing cash held in respect of as yet undrawn
commitments and/or deals in legal closing in those sectors or geographies.
Undrawn commitments are a feature of the Company's investments and occur when
completions are deferred due to commercial or regulatory approval processes,
or where capital calls are intentionally staggered over time for follow-on
purposes, for example for capex or M&A requirements.
4. Charts do not add up to 100.0% due to rounding.
13.6%
Weighted average discount rate
Weighted average discount rate of 13.6% is based on the discount rate of each
Portfolio Company investment at 31 December 2023, weighted on an investment
fair value basis (excluding undrawn commitments) across all 13 investments.
36%
Weighted average gearing
Weighted average gearing calculated by reference to the ratio of net debt to
enterprise value of each Portfolio Company, weighted across all 13
investments.
77%
Weighted average hedged debt
Weighted average hedged debt calculated by reference to ratio of hedged debt
relative to net debt of each Portfolio Company.
£60m
Weighted average EBITDA
Weighted average EBITDA is based on the annual EBITDA of each Portfolio
Company at 31 December 2023, weighted by PINT's ownership of underlying
Portfolio Companies and converted to GBP as necessary.
Portfolio value 31 December Asset valuation FX Portfolio value 31 December Undrawn commitments 31 December Allocation of foreign exchange hedge Portfolio total return for the
2022 Drawn Distributions movement movement 2023 2023 movements year
Asset Region Sponsor (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m)
Primafrio Europe Apollo 40.4 0.1 - 7.5 (1.0) 47.0 0.5 1.0 7.5
CyrusOne North America KKR 22.8 - - 5.2 (1.4) 26.6 3.8 1.2 5.0
National Gas UK Macquarie - 40.8 - 6.6 - 47.4 - - 6.6
Vertical Bridge North America DigitalBridge 27.0 - - 1.9 (1.6) 27.3 - 1.4 1.7
Delta Fiber Europe Stonepeak 23.0 - - 3.2 (1.4) 24.8 1.5 - 1.8
Cartier Energy North America Vauban 34.8 - - (1.5) (2.0) 31.3 - 1.7 (1.8)
Calpine North America ECP 47.0 - (9.0) 21.0 (3.1) 55.9 - 2.8 20.7
Vantage Data Centers North America DigitalBridge 22.3 5.4 - - (1.4) 26.3 - 1.3 (0.1)
Fudura Europe DIF 41.3 - - 5.9 (1.0) 46.2 1.6 1.0 5.9
National Broadband Ireland Europe Asterion 42.8 1.0 - 4.6 (1.0) 47.4 2.9 1.1 4.7
GD Towers Europe DigitalBridge - 39.3 (1.0) 0.6 (0.9) 38.0 2.5 0.6 0.3
GlobalConnect Europe EQT - 19.0 - 1.1 0.2 20.3 - - 1.3
Zenobē UK Infracapital - 32.1 - 1.1 - 33.2 2.9 - 1.1
Grand Total 301.4 137.7 (10.0) 57.2 (14.6) 471.7 15.7 12.1 54.7
Key:
DIGITAL INFRASTRUCTURE
RENEWABLES & ENERGY EFFICIENCY
POWER & UTILITIES
TRANSPORT & LOGISTICS
ASSET UPDATES
PRIMAFRIO
Primafrio performed resilliently despite a challenging trading environment.
With a backdrop of flat volumes arising from a weak macroeconomic environment
in key European markets, the company has been able to continually grow revenue
through increasing market share and expanding into new markets with new and
existing clients. Whilst margins have recently been impacted by high cost
inflation and fuel costs, the Company's valuation has benefitted from strong
downside protection afforded to Apollo and its co-investors within the
transaction structure.
CYRUSONE
CyrusOne recovered initial capex backlogs and earnings for the year were in
line with the original investment case. The company entered into a joint
venture with Kansai Electric Power Company during the period, which is
expected to unlock significant opportunities in the Asian market, and
AI‑based computing is expected to provide significant further tailwinds.
NATIONAL GAS
National Gas experienced no material deviations from the original investment
case, with the operation of the existing regulated asset base on track. The
National Infrastructure Commission gave its backing to a long‑term backbone
hydrogen network to aid the decarbonisation of heavy industry. Furthermore,
the government confirmed its strategy to seek hydrogen blending up to 20%
across the existing network, following similar moves on the continent. The
recent successful pilot project to run 100% hydrogen in repurposed gas
transmission assets was a world first and an important step in support of
hydrogen blending across the network. Stakeholders are working towards the
first blending to align with the start of scalable hydrogen production in
2026.
VERTICAL BRIDGE
Vertical Bridge shifted priorities to its build-to-suit (BTS) business given
an unfavourable market for tower portfolio acquisitions. The most notable
development to date is a joint venture announced with Verizon for up to 3,000
BTS developments. The company still sees some delays to rollout due to
carriers deferring capex spend given recent macroeconomic headwinds, but
longer term rollout of increased coverage is not in doubt given 5G coverage
requirements. Furthermore, there have been some recent positive signals in the
M&A market for acquiring existing tower portfolios, with a number of
transactions closing in the period and an executable pipeline emerging for
2024, which is now more in line with the original investment case after a
cooling off since late 2022.
DELTA FIBER
Delta Fiber's rollout is progressing on plan and it expects to have completed
activities by mid-2025 on budget. Retail fibre adoption is tracking near to
plan with no changes to long-term penetration assumptions, and the company is
seeking to replicate a recently announced wholesale network sharing agreement
with Odido (formerly T-Mobile Netherlands) with other internet service
providers.
CARTIER ENERGY
Cartier Energy had a challenging year after facing a number of issues
including the imperfect pass-through of energy costs, materially lower volumes
due to significant seasonality shifts, and the loss of a key customer due to
financial challenges. However, the business is actively working on converting
its pipeline of shorter-term "fill-in" opportunities as well as some capex
initiatives which were identified in the original investment case.
CALPINE
Calpine continues to outperform its original investment case due to materially
higher short and medium-term profitability arising from sustained higher spark
spreads in its key markets. The company continues to mitigate its exposure to
near-term energy prices through proactive hedging activities which lock in
short-term profitability. Construction also commenced on its flagship Nova
battery storage project, as well as additional capex deployment into both its
existing renewables fleet and new renewables opportunities. The company was
also awarded federal funding support for two carbon capture and sequestration
projects.
VANTAGE DATA CENTERS
Vantage Data Centers sees increased opportunity relative to the original
investment case, principally due to increased cloud and AI computing demands,
for which a significant additional primary equity commitment was secured in Q4
2023 from both Digital Bridge and technology focused private equity investor
Silver Lake. The company continues to effectively navigate supply chain and
grid capacity challenges.
FUDURA
Fudura has outperformed its original investment case since entry. Higher
profit margins have resulted from undertaking higher complexity and higher
margin projects, and revenues from its ancillary growth initiatives, including
EV charging, solar and batteries, are now ramping up.
NATIONAL BROADBAND IRELAND
National Broadband Ireland remains on track with its rollout plan, which
continues to stay on budget. Final rollout is ahead of the revised contractual
targets that were set to address the impact of Covid-19 and the main
deployment is expected to be largely completed by the end of 2026. A large
number of internet service providers are now signed up, which in turn is
supporting adoption by end users greater than foreseen in the original
investment case, with the resulting revenues supporting the company's
profitability and liquidity during construction.
GD TOWERS
GD Towers enjoyed good progress during the year, with revenues and profits
coming in largely on track with the original investment case. The business has
been focused on implementing several immediate and significant organisational
changes geared towards delivering process efficiencies in its BTS programme.
Along with other efficiency programmes being explored, the company anticipates
several areas of potential outperformance to the investment case, but until Q1
2024 will continue to be valued at cost.
GLOBALCONNECT
GlobalConnect's management remain focused on ensuring the optimal allocation
of capital given the varied markets it operates in, which has resulted in a
recent re-emphasis back towards its core market of fibre-to-the-home
opportunities in the Nordics. The company also reached an important milestone
with more than one million homes passed.
ZENOBĒ
Zenobē has been busy since PINT's investment was made in Q4 2023, with
further project financing secured for strategically important greenfield
battery projects in Scotland as part of the £750 million rollout commitment
in Scotland by 2026, as well as the announcement of an all-electric fleet
replacement for Oxfordshire County Council.
Portfolio movement
During the year, the Portfolio generated underlying growth of £57.2 million,
reflecting a 13.0% movement on the opening capital invested, adjusted for
capital calls and investments, but before adjusting for distributions
totalling £10.0 million. Movements in foreign currencies resulted in a
foreign exchange loss of £14.6 million (offset at a company level by
a foreign exchange hedging gain of £12.1 million), resulting in a closing
value of £471.7 million at 31 December 2023.
The Portfolio had a weighted average discount rate (WADR) of 13.6%(1) at the
year end (31 December 2022: 14.2%).
1. WADR of 13.6% is based on the discount rate or implied discount
rate of each completed investment at 31 December 2023, weighted on an
investment fair value basis (excluding undrawn commitments).
Portfolio movement (£million)
Portfolio value 31 December 2022 - 301.4
Capital calls and investments - 137.7
Distributions - (10.0)
Asset valuation movement - 57.2
Foreign exchange movement - (14.6)
Portfolio value 31 December 2023 - 471.7
Outlook
The Investment Manager remains confident about the prospects of the Portfolio
going forward. The tailwinds that support the demand for new infrastructure,
and the growth opportunities that accompany it, remain strong across all the
sub-sectors in which the Company is active.
From a valuation perspective, the Investment Manager has seen limited evidence
of any material downward trends across the core-plus infrastructure universe.
The consensus amongst Sponsors that the Investment Manager works with is that
the full extent of discount rate increases attributable to the increased
interest rate environment have now flowed through to valuations. The volume of
remaining dry-powder in the sector, coupled with a recovery in private markets
fundraising since H1 2023, and the core-plus nature of the Company's assets,
continue to support a constructive valuation environment.
Furthermore the Investment Manager continues to see sustained transactional
evidence of realised premiums to holding valuations at exit, which adds in
further long-term headroom and potential for outperformance. Specifically,
there continues to be increased appetite for assets with some a high degree of
inflation linkage and those that play a direct role in the energy transition.
Portfolio cash flows
Over the medium term, the Company expects the Portfolio to generate cash flows
both through distributions from its investments and from investment exits, the
latter becoming realised in cash in due course through asset disposals. In
turn, these cash flows are expected to support both the reinvestment of
capital and a progressive dividend policy.
The Company's investment approach is to invest in assets with an expected hold
period that is typically, but not always, 5-7 years, after which it is
expected to realise value by exiting positions according to the relevant
Sponsor's time horizon. Whilst the Company does expect some of its investments
to make distributions, cash generation through this approach is expected to be
heavily weighted towards the receipt of sale proceeds at the point of
investment exit, and in some cases no distributions are forecast.
The Company maintains a long-term forecast of both sources of cash flow, which
is derived from either investment base case expectations or Sponsor updates
where available. The latest projection of the Company's cash flows from the
Portfolio is summarised opposite, as at 31 December 2023.
The projection is based on existing investments only and does not factor in
any potential for re-investment of capital after realisations, which
accordingly accounts for the downward trend of distributions after
realisations occur.
Whilst these projections are intended to present a plausible long-term
expectation of the current Portfolio's cash flow generation, there is no
guarantee around the quantum or timing of distributions or realisations, which
remain dependent on multiple factors including underlying asset performance,
exit timing, and long-term FX rate assumptions. Accordingly they should not be
considered as guidance around financial performance.
For a Projected Portfolio cash flows chart, please see page 31 of the full
Annual Report and Accounts.
H2 2023 dividend
At IPO, the Company said it would target a NAV Total Return of 8-10% p.a.
following full investment of the IPO proceeds, and an initial dividend of at
least 2p per share for the first financial period ended 31 December 2022,
rising to 4p per share for the year ended 31 December 2023, and a progressive
dividend thereafter. In line with this, the Board recently declared the
Company's second interim dividend of 2p per share in respect of the year ended
31 December 2023, which is due to be paid on 23 April 2024. This is in line
with the IPO target.
Dividend cover
The Company has devised a measure to assess dividend coverage by calculating
the ratio of net cash flow to dividends declared in respect of a given period.
This is calculated across the whole group, including the Company's subsidiary,
Pantheon Infrastructure Holdings LP (PIH LP), through which the Company holds
the majority of its investments. Net cash flow for this purpose is calculated
as income (the sum of all income and capital distributions that are not
related to asset disposals, plus deposit interest income) plus disposal
profits (realised profits on disposal, or disposal proceeds less original
investment cost), less operating and financing expenses incurred during the
same period.
On this basis, the Company's dividend cover for 2022 and 2023 was 0.2x as
detailed below. As set out in the previous exhibit of cash flows, the Company
expects material progression in cash flows from the Portfolio, which in turn
is expected to flow through to improved dividend coverage.
£m 2022 2023
Income 6.1 13.1
Disposal profits - -
Operating costs (4.6) (6.6)
Financing costs (0.0) (1.5)
Net cash flow for dividend cover 1.5 4.9
Dividend declared 9.6 18.9
Dividend cover 0.2x 0.3x
Cumulative dividend cover 0.2x 0.2x
Borrowings
In June 2023, the Company agreed a £52.5 million increase to its existing
£62.5 million three-year multi-currency RCF, bringing the total to £115.0
million. As part of the increase, the Company sought to diversify the lender
group, with the introduction of RBS International (RBSI), alongside Lloyds
Bank Corporate Markets plc ('Lloyds').
After the period end, the Company extended the term of the RCF by 15 months,
effectively resetting the tenor at three years with the same pricing and
terms. The enlarged and extended RCF allows the Company to maintain liquidity
for unfunded commitments and working capital requirements whilst minimising
the inefficiencies of holding excessive cash. The RCF, which is secured on
the assets of the Company, includes an uncommitted accordion feature,
which will be accessible, subject to approval, by additional lenders, and is
intended to increase over time in line with the Company's NAV progression.
Share buybacks
As at 31 December 2023, the Company had deployed £5.8 million in buying
back 7.4 million of its own shares, and subsequent to the year end, spent a
further £2.6 million in buying back 3.1 million shares. Reacquired shares are
held in treasury and may be subsequently re-issued if the Company's shares
return to trading at a premium to NAV. At the year end the Company continued
to make allowance for the remaining £4.2 million of the £10 million
originally allocated to share buybacks, as part of its liquidity management as
detailed on the analysis presented below.
The Board continues to regularly assess the Company's optimal approach to
capital allocation in light of its forecast cash flows, dividend target and
expectations of dividend cover, and as detailed in the Chair's statement, has
allocated an additional £8.4 million for share buybacks.
Cash and liquidity management
At the year end, the Company had total available liquidity of £144.4 million
(31 December 2022: £245.4 million), comprising £29.4 million of cash (31
December 2022: £182.9 million) and £115.0 million (31 December 2022:
£62.5 million) of undrawn RCF.
The Company maintains a policy to hold liquidity sufficient to cover all
investment commitments, including for share buybacks, due in the next twelve
months. At the year end, this amount totalled £20.0 million.
In addition to this, the Company has adopted a risk-based policy to hold
specific cash buffers in respect of potential further liquidity requirements.
These buffers include forecast operating costs, dividend payments, FX hedge
settlements due (based on mark-to-market valuations), an allowance for
emergency co-investment capital across the Portfolio, allowances for FX
movements on undrawn non‑GBP commitments, and amounts held against potential
movements in the Company's FX hedging positions (calculated relative to
notional amounts and contractual maturity). At the year end, these amounts
totalled £79.9 million.
The net balance after taking account of all these considerations represents
the funds available to the Company for further investment. As at the year end,
this stood at £44.5 million (31 December 2022: £72.0 million).
£m(1)
Sources
Cash & equivalents 29.4
RCF 115.0
Total (A) 144.4
Commitments
Undrawn investment commitments 15.7
Share buybacks 4.2
Total (B) 20.0
Buffers
Operating costs 8.5
Dividends 18.8
Co-investment buffer 22.1
FX buffers on undrawn investment commitments 2.4
FX hedging buffer (see below) 28.2
Total (C) 79.9
Available funds (= A - B - C) 44.5
1. Totals do not match due to rounding.
Ongoing charges
The Company's ongoing charges figure is calculated in accordance with the
Association of Investment Companies (AIC) recommended methodology and was
1.35% for the year to 31 December 2023 (period to 31 December 2022: 1.02%).
The ongoing charges were lower in the period to 31 December 2022 as no
management fee was paid on undeployed cash until 75% of the net issue proceeds
were deployed, which was achieved in the quarter to 30 September 2022.
Foreign exchange impact
In order to limit the potential impact from material movements in major
foreign exchange rates on non‑local currency investments, the Company has
put in place a foreign exchange hedging programme. The aim of this programme
is to reduce (rather than eliminate) the impact of movements in foreign
exchange rates on the Company's NAV, and to this end the Company has an
internal policy to seek to limit its unhedged exposure to 25% of NAV at any
time. Hedging is achieved through the execution of foreign exchange hedging
contracts relative to the ongoing non-local currency investment exposure. This
is subject to, inter alia, market liquidity and pricing for hedges, foreign
exchange volatilities, the composition of the Company's portfolio and the
Company's balance sheet.
The Company has entered into arrangements with six hedging counterparties, all
on an unsecured basis and subject only to margin calls if pre-specified credit
limits are breached on an individual counterparty (not aggregate) basis.
Furthermore, in line with the Investment Manager's risk policies, the Company
has adopted a policy to maintain strict liquidity buffers in relation to these
hedging positions to protect against extreme volatility‑driven margin
requirements. Details of the Company's hedging positions and associated cash
buffers are set out in the table opposite.
The depreciation of USD and EUR resulted in a negative foreign exchange
movement in the year to 31 December 2023 of (£14.6) million (period to
31 December 2022, gain of £9.9 million), which was partially offset by a
gain on the hedging programme of £12.1 million (period to 31 December
2022, loss of £8.5 million).
For a chart of Foreign exchange hedging - NAV impact (price per share) please
see page 34 of the full Annual Report and Accounts.
EUR notional USD notional Mark-to-market Buffer
Counterparty (€m) ($m) (£m) (£m)
A - 76.1 (0.1) 8.4
B - 36.2 (0.4) 3.4
C 45.3 12.4 1.1 -
D 23.7 8.8 0.7 2.1
E 76.4 24.5 1.4 6.6
F 53.8 55.8 1.3 7.7
Total 119.2 213.8 3.9 28.2
ASSUMPTIONS AND SENSITIVITIES
Introduction
The Portfolio valuation is the largest component of the Company's NAV and is
determined by the valuations provided by the underlying investment Sponsors.
These valuations are typically calculated on a discounted cash flow (DCF)
basis, which are subject to a variety of underlying assumptions that are
specific to the sector and characteristics of each Portfolio Company, and are
determined by the investment Sponsors.
The degree to which these long-term assumptions change or are adjusted has the
potential to impact the Company's NAV.With this in mind, the Investment
Manager has performed a detailed analysis across the Portfolio to determine
the Company's sensitivity to changes across a range of key assumptions, which
are presented below.
Macroeconomic
Discount rates
Discount rates are a measure of the relative risk of an investment, and will
typically comprise a risk-free rate component along with a sector or
project-specific equity risk premium, which is determined relative to specific
project risks and benchmark transactions. In some cases, Sponsors use a
WACC-based discount rate to derive an enterprise valuation which is then
adjusted by net debt to give an equity value. The Company does not disclose
individual discount rates but reports its aggregated WADR, which at the year
end was 13.6%.
Inflation
The extent to which a Portfolio Company's existing revenues and costs are
expected to inflate, or escalate, also impacts valuations. The escalation of
revenues and costs is often determined through contractual arrangements, with
measures including direct pass-through of a local inflation measure, fixed
escalators, inflation linkage subject to escalation caps and/or floors, or no
indexation at all. Where revenues and/or costs are directly linked to
inflation, any changes to the inflation assumptions determined by Sponsors
will impact on valuations. Sponsors typically utilise external economic
forecasts or central bank guidance for inflation assumptions. Where revenues
or costs are not contracted, escalation will be determined by pricing power
and therefore requires a greater degree of judgement.
Interest rate
Interest rate assumptions impact valuations if a Portfolio Company has an
element of unhedged debt or expects to drawdown on floating rate borrowing
facilities within its business plan. Where this is the case, Sponsors will
usually update valuations to reflect the latest projections for long‑term
interbank lending, swap or risk-free rates.
For PINT NAV sensitivities as 31 December 2023 (Macroeconomic) chart please
see page 35 of the full Annual Report and Accounts.
Performance
Earnings growth
Earnings growth assumptions represent a key valuation assumption across the
Portfolio. The most common earnings measure used is EBITDA, however other
variations include Towers Cash Flow (towers) and Net Operating Income (data
centres). Earnings growth forecasts represent a key area of judgement for
Sponsors at the underwriting stage and usually incorporate several factors,
including long-term assessments of market growth, market share and the
barriers to entry in the sector, details of any high conviction opportunities
and the potential for customer churn.
Exit valuation
The Company's stated business model is to invest in assets with a typical hold
period of 5-7 years, before realising value through disposals, and recycling
proceeds into new investments.
Accordingly, the Company's valuations are determined by assumptions around the
terminal value of a Portfolio Company at the end of this 5-7 year period.
Common methods of determining exit valuations include the application of a
terminal earnings (EBITDA, Towers Cash Flow, Net Operating Income etc.)
multiple, or a DCF approach based on a long‑term or even perpetual stream of
cash flows discounted at an assumed secondary purchaser IRR. The assumptions
around these methods are typically taken from comparable recent transactions.
Exit timing
As with exit valuations, the assumptions around exit timing also impact the
valuations of investment. The main drivers that feed in to this assumption are
the duration of any capex rollout plans, the time horizon of the Sponsor's
funds that are invested alongside PINT, as well as the expectations around
longer-term market growth trends.
Operational expenditure ('Opex')
Operating expenditure will impact the profitability of Portfolio Companies,
and increases that cannot be contractually passed on to customers have the
potential to impact valuations. Sponsors also expect to achieve business
efficiencies and for Portfolio Companies to operate at improved margins at
increased business scale, and so the extent to which such views are revised in
their assumptions will also impact valuations.
Capital expenditure ('Capex')
Determining capital expenditure is particularly critical for businesses with
significant growth or remedial plans, and those that price offtake agreements
around expected construction costs. Whilst in some cases there may be the
ability to pass on increased input costs arising from capital expenditure to
customers, this is not always possible, so Sponsors will usually incorporate a
degree of contingency in their capital expenditure assumptions, whilst also
mitigating the potential for cost increases through effective sub‑contractor
arrangements.
For a chart of PINT NAV sensitivities at 31 December 2023 (Performance) please
see page 36 of the full Annual Report and Accounts.
Sector specific
Energy volumes
PINT is exposed to the level of energy volume consumption or generation across
some of its Power & Utilities investments. Long-term assumptions in this
regard are typically based on a combination of historic volumes, the ongoing
availability/efficiency of equipment and infrastructure and the presence of
any minimum offtake or "take-or-pay" provisions or manufacturer availability
guarantees.
Commodity prices
Commodity prices impact a number of the Company's investments that have
long-term exposure to wholesale energy markets, through uncontracted revenues
or imperfect pass-through of costs. As with other macroeconomic factors such
as inflation and interest rates, Sponsors will often utilise external
consultants to provide updated forecasts for such prices for inclusion in
long-term cash flow/earnings forecasts.
Fibre penetration
Along with average revenue per unit (ARPU), fibre penetration is one of the
key long-term inputs for a fibre business. The penetration assumption is the
degree to which a Portfolio Company operating a fibre network assumes it will
convert the number of homes it passes into paying customers and significantly
impacts long-term earnings forecasts. The long-term assumptions in this regard
are specific to the geography that the Portfolio Company operates in and the
associated market dynamics (e.g. transaction structure or location, or any
competitive advantage providing protections against overbuild or churn risks).
Hydrogen adoption
PINT is exposed to future hydrogen policy through its Power & Utilities
investment in National Gas. The degree to which hydrogen adoption is assumed
in the UK as an alternative energy source for domestic and industrial heating
and eventually transport and energy, impacts the valuation of the investment.
A range of potential outcomes for this adoption exist, with the downside being
low hydrogen adoption though an "electric future" scenario and the upside
being an accelerated hydrogen adoption "green has future" scenario .
M&A
A number of the Company's investments, most notably in the towers sector,
include long-term assumptions around accretive M&A activities (i.e. the
ability to acquire additional towers at favourable pricing). Such assumptions
are subject to extensive due diligence and reflect very specific factors to
each transaction, including geographic location, current ownership of M&A
targets, potential acquisition synergies and/or strategic benefits, and any
relevant exclusivity agreements.
For a chart of PINT NAV sensitivities at 31 December 2023 (sector specific)
please see page 37 of the full Annual Report and Accounts.
ALTERNATIVE PERFORMANCE MEASURES (APMs)
PINT assesses its performance using a variety of measures that may not
specifically be defined under FRS 102 and are therefore termed APMs.
The APMs used may not be directly comparable with those used by other
companies. These APMs provide additional information as to how the Company
has performed over the period and allow the Board, management and
stakeholders to compare its performance.
APM Details Calculation Reconciliation to FRS 102 How has PINT performed?
NAV Total Return Total return comprises the investment return from the Portfolio and income It is calculated as the total return of £49.6 million (period to The calculation uses the total comprehensive income reported in the income Total return for the year to 31 December 2023 was 10.4% (period to 31
from any cash balances, net of management, operating and finance costs. It 31 December 2022: £8.0 million), as shown in the Income statement, as a statement and net assets reported in the balance sheet, both being FRS December 2022: 2.1%).
also includes foreign exchange movement and movement in the fair value of percentage of the opening NAV of £474.8 million (31 December 2022: £392.1 102 measures.
derivatives and taxes. million which was based on the net IPO proceeds).
Net asset value per share A measure of the NAV per share in the Company. It is calculated as the NAV divided by the total number of shares in issue at The calculation uses FRS 102 measures and is set out in Note 18 to the NAV per share at 31 December 2023 was 106.6p per share (31 December 2022:
the balance sheet date. accounts. 98.9p per share).
Annual distribution This measure reflects the dividends distributed to shareholders in respect of The dividend is measured on a pence per share basis. The calculation uses FRS 102 measures, set out in Note 9 to the accounts. Second interim dividend of 2p per share declared, to be paid on 23
each year. April 2024, which together with the dividend of 2p per share paid in
October 2023 totals 4p per share for the year ended 31 December 2023.
The Company intends to continue paying dividends on a semi-annual basis in
line with its progressive dividend policy.
Investment value and outstanding commitments A measure of the size of the investment portfolio including the value of It is calculated as the Portfolio asset value plus the amount of contracted The Portfolio asset value uses the FRS 102 measure investments at fair value, The portfolio asset value at 31 December 2023 was £471.7 million (31 December
further contracted future investments committed by the Company. commitments. set out in Note 1. The value of outstanding commitments is set out in 2022: £301.4 million).
Note 21 to the accounts.
Outstanding commitments at 31 December 2023 were £15.7 million (31 December
2022: £57.9 million)
INVESTMENT POLICY
As stated in its prospectus, the Company invests in a diversified portfolio of
high-quality operational infrastructure assets which provide essential
physical structures, systems and/or services to allow economies and
communities to function effectively. The Company invests in both yielding and
growth infrastructure assets which the Manager believes offer strong downside
protection and typically offer strong inflation protection.
The Company invests globally, with a primary focus on developed OECD markets,
with the majority of its investments in Europe and North America. The
Company's portfolio is diversified across infrastructure sectors.
In each case, the Manager invests where it believes it can generate the most
attractive risk‑adjusted returns.
The Company focuses on gaining exposure to infrastructure assets via
co-investments alongside leading third-party private direct infrastructure
asset investment managers who are acting as general partner or manager of a
fund in which Pantheon, or any investment scheme, pooled investment vehicle or
portfolio fund managed by Pantheon, has invested or may invest ('Sponsors').
In doing so, the Company may invest on its own or alongside other
institutional clients of the Manager.
The Company may also invest in other direct or single asset investment
opportunities originated by the Manager or by other third-party asset sourcing
partners. The Company does not invest in private funds targeting a diversified
portfolio of infrastructure investments.
Investment restrictions
The Company invests and manages its assets with the objective of spreading
risk and, in doing so, is subject to the following investment restrictions,
which are measured at the time of investment:
· no single portfolio investment will represent more than 15% of
Gross Asset Value;
· no more than 20% of Gross Asset Value will be invested in
investments where the underlying infrastructure asset is located in a non-OECD
country; and
· no more than 30% of Gross Asset Value will be invested alongside
funds or accounts of any single Sponsor (other than Pantheon).
In addition, the Company does not invest in infrastructure assets whose
principal operations are in any of the following sectors (each a 'Restricted
Sector'):
· coal (including coal-fired generation, transportation and mining);
· oil (including upstream, midstream and storage);
· upstream gas;
· nuclear energy; and
· mining.
The Company may invest in infrastructure assets whose principal operations are
not in a Restricted Sector, but that nonetheless have some exposure to a
Restricted Sector (for example, a diversified freight rail transportation
asset that has some exposure to the coal sector), provided that: (i) no more
than 15% of any such infrastructure asset's total revenues are derived from
Restricted Sectors; (ii) no more than 5% of total revenues across the
Portfolio (measured on a look-through basis) will be so derived.
DIGITAL INFRASTRUCTURE
(including wireless towers, data centres and fibre-optic networks)
TRANSPORT & LOGISTICS
(including ports, rail, roads, airports and logistics assets)
RENEWABLES & ENERGY EFFICIENCY
(including smart infrastructure, wind, solar and sustainable waste)
SOCIAL & OTHER INFRASTRUCTURE
(including education, healthcare, government and community buildings)
POWER & UTILITIES
(including transmission and distribution networks, regulated utility companies
and efficient conventional power assets)
Q&A WITH THE INVESTMENT MANAGER
How has PINT performed in the year, in shareholder return and NAV terms?
From a NAV perspective, we are very happy to have seen performance come
through during the year as the exciting potential of PINT's portfolio has
translated into fair value gains. This NAV progression, in addition to the
dividends paid during the year, accounted for a NAV Total Return of 10.4%,
which is tracking above the original IPO target of 8-10% per annum.
It is frustrating that PINT's share price return has not progressed in the
same manner. The Company continues to be impacted by the wider market factors
stemming from the increased interest rate environment, most acutely the
outflows from retail and wealth managers, which have resulted in the current
share price discount to NAV. We remain focused on maintaining the robust
performance of the Portfolio and retain full confidence that in time the
Company's share price will reflect NAV.
PINT is very active in the Digital Infrastructure sector, with more than 40%
of its assets invested in the sector - why are you so heavily invested in the
sector, and is this a trend you expect to continue? What are the risks
associated with this sector?
PINT remains committed to a long-term allocation of around 35% in digital, and
the volume of transactions done to date is a function of the high-quality deal
flow we have seen across the fibre, towers and data centre sub-sectors. An
increasingly connected world with a great reliance on the sharing of data
means the favourable tailwinds in this sector are only likely to grow in time,
which makes it an incredibly exciting space to be investing in.
As with an investment in any specific sector, this has to be done mindful of
the apparent risks. Some of the factors that have been considered during the
process of investing in PINT's digital assets include assessing prospective
market share and overbuild risk (fibre), the tenor of contracts with customers
(data centres and towers), access to power grid capacity (data centres) and
the ability to add additional carriers to existing towers to increase tenancy
ratios (towers).
What headwinds do you anticipate for the infrastructure asset class over the
next year, and what are you doing to mitigate them?
We continue to be focused on the key risks around leverage, effective
management of interest rate and merchant price exposures, and limiting
exposure to GDP or demand-based risks. We think that speaks as much to what we
consider to be infrastructure risk as much as it reflects an approach to
mitigate risks in the current environment.
How are you going to continue to generate returns in a higher interest rate
environment?
By investing in operating companies with favourable growth potential, there is
some degree of exposure to interest rate risk (through capex facilities/RCFs
which cannot be locked down in the way the debt of a solely operating asset
can be). However, what we are seeing is that the companies PINT invests in
have broadly been very effective at passing on these costs through their
pricing models. More simplistically, these companies maintain discipline
through their capital allocation and the returns for new projects or
initiatives need to make sense in the current environment. We are encouraged
to have seen this capital discipline maintained across the Portfolio.
Given the interest rate and economic environment, what new strategies or
approaches are you considering to meet your targets in terms of income and
total returns?
Given the positive NAV development we are seeing and the overall Portfolio
performance in what has been a challenging macro environment, we do not see
any immediate need to change PINT's approach. In fact, if anything, we think
the approach has been bolstered by the fact we are now seeing investors place
a greater emphasis on the need for capital growth from their infrastructure
allocations.
How will the Company grow while the share price trades at a discount to NAV?
PINT's investment approach is to deliver NAV growth through capital
appreciation across its Portfolio. This is important because as well as being
a differentiator amongst a peer group that has traditionally been
predominantly income focused, it means that the vehicle will naturally grow
through the passage of time, providing investment objectives are achieved. We
believe that realising this NAV growth through investment exits, then
recycling proceeds into further growth opportunities, presents a valid basis
for the Company's share price to return to a premium in the long-term,
providing opportunities to materially increase the size of the Company through
additional equity issuances.
OUR MARKET
Infrastructure continues to demonstrate resilience against a challenging
macroeconomic backdrop.
Market growth
In 2023, AUM in the private infrastructure market grew to in excess of $1
trillion, with a projected CAGR of ~11% between 2023 and 2027(1). Against this
backdrop, competition for assets has intensified, with allocations to
infrastructure increasing and new participants entering the market in
specialised sub‑sectors. Increased competition in the market has
necessitated a focus on maintaining a disciplined and selective
investment approach.
Macro
Deterioration in the global macro economy has continued to demonstrate the
resilience of the infrastructure asset class. Rising inflation, although
directly benefiting those assets with inflation linkage, led to central bank
policy tightening throughout 2023. However, Pantheon's experience is that any
upward pressure on discount rates for infrastructure asset valuations has
largely been offset by valuation benefits associated with inflation and other
sector-specific tailwinds.
Key macro themes
01. Rising inflation
· Peak inflation appears to have passed and, in most developed
economies, inflation rates are falling.
· Contracted and inflation-linked revenues can provide protection
during periods of rising inflation.
02. Rising energy prices
· Energy markets have dramatically changed over the past year or two,
which has knock-on effects for certain types of infrastructure assets.
· Power generation assets with merchant price exposure should
continue to see yield and valuation benefits.
· Assets with pricing power will continue, where possible, to pass on
higher energy costs to customers.
· Energy-intensive infrastructure assets may experience headwinds as
a result of higher costs.
03. Interest rates
· Increased bond yields have driven up risk-free rates, although
transactional evidence is not showing any significant increase in discount
rates for core plus assets, and yields now seem to have peaked.
· Historic debt financing on favourable terms, hedging and
availability of longer-term fixed debt have provided a good degree of
downside protection. Higher future refinancing rates could lead to lower
enterprise valuations.
04. Foreign exchange
· Although PINT's foreign exchange risk is partly hedged,
USD strength will continue to benefit assets with USD‑denominated revenue.
1. Source: Preqin Special Report - The Future of Alternatives in 2027.
Closed‑ended funds only; October 2022.
Infrastructure market indicators
Upward trends in deal activity, recovering fundraising and improving investor
sentiment provide a positive backdrop for future growth.
For charts showing:
Deal activity by geography;
Deal activity by sector;
Infrastructure fundraising; and
Investor sentiment for future allocations
please see page 43 of the full Annual Report and Accounts.
The way in which societies and economies function over time is changing, which
creates new long-term tailwinds for the sectors that serve them.
PINT has constructed a portfolio in these growing markets with favourable
tailwinds which should provide sustainable returns to shareholders.
Global changes
Urbanisation
Digitalisation
Smart cities
Telecommunications
Work from home
Decarbonisation
Population growth
Supply chain realignment
Key sector themes
DIGITAL INFRASTRUCTURE
· Sustained increase in demand due to global trends requiring major
increase in data/connectivity (remote working, gaming, AI, streaming, videos
etc.).
· Labour and supply chain shortages/issues are impacting certain
build-out and development projects.
POWER & UTILITIES
· The role of hydrogen has the potential to be significant in energy
transition, which impacts utilities such as gas transmission and distribution
companies.
· Revenues tend to be inflation-linked, which is highly beneficial in
the current market environment.
· High demand and lack of supply in the market has driven asset
prices up.
RENEWABLES & ENERGY EFFICIENCY
· Governments and supranational organisations globally are
prioritising climate change issues and clean energy, leading to tangible and
targets for many organisations.
· Infrastructure supporting the development of energy transition is
still under‑developed in areas such as the electric grid/EVs; further
investment in this sector is in high demand.
· However, the process to build/transition relevant assets is
comparatively slow.
TRANSPORT & LOGISTICS
· Increased demand for cleaner modes of transport in line with
aforementioned global trends.
SOCIAL & OTHER INFRASTRUCTURE
· Growth in life sciences, medical services and research, and an
ageing population are driving demand for infrastructure in this sector.
· Challenges include lack of tangible current deal flow, and limited
relative attractiveness due to pricing, which has meant PINT has not made any
social infrastructure investments to date.
Pantheon opinion. There is no guarantee that these trends will persist.
SECTOR SPOTLIGHT - HYDROGEN
Introduction
Hydrogen is an abundant, energy-dense and combustible element which exists in
gas form at temperatures above -253˚C. Its properties give it the potential
to displace fossil fuels in a range of industrial processes and power
generation.
Some of its potential end uses include:
· Transport fuel - shipping, aviation, heavy vehicles
· Fertiliser production
· Plastics and chemical manufacturing
· Steel production
There is also ongoing consideration of hydrogen's role in heat and power
generation, the viability of which continues to be debated relative to the
process efficiency compared to other low-carbon sources, such as renewable
power generation and district heating.
Production
Globally, approximately 95% of all hydrogen is produced by the steam methane
reforming (SMR) process. The SMR process involves reacting fossil fuels
(mainly natural gas) with steam at high temperatures to produce hydrogen and
carbon monoxide. Without the addition of carbon capture technology, carbon
dioxide is released as a byproduct of this process, creating what is commonly
referred to as "grey hydrogen". There are a variety of other methods that seek
to reduce the carbon intensity of production, including:
· green hydrogen - typically produced through splitting water by
electrolysis using renewable power;
· blue hydrogen - produced from SMR with carbon capture; and
· pink hydrogen - produced through splitting water by electrolysis
using power generated from nuclear power.
Role of hydrogen in energy transition
The International Energy Agency (IEA), in its latest Net Zero Roadmap Update,
estimates that hydrogen will be responsible for c.4% of the emissions
abatement in a scenario where net zero emissions are achieved by 2050.
Emissions reduction by mitigation in the net zero scenario, 2021-2050
Renewables | 32%
Electrification | 20%
Energy efficiency | 12%
CCUS | 8%
Behaviour and avoided demand | 12%
Hydrogen | 4%
Other fuel shifts | 12%
This contribution implies an increase in demand for hydrogen from around 100
million tonnes (Mt) today to 150Mt by 2030, increasing to 430Mt in 2050, all
of which will need to be produced from low-carbon sources. The significant
contributors to this increase are transport (main impact from 2035), industry
(significant current demand expected to grow as industrial processes are
decarbonised) and power generation (replacement of natural gas and
coal‑fired power generation).
For chart showing the Announced annual electrolyser manufacturing capacity
(GW) - % of NZE capacity please see page 46 of the full Annual Report and
Accounts.
Hydrogen infrastructure
Governments around the world have set targets for green hydrogen production to
support the decarbonisation of industrial processes and transport.
The forecast increase in demand for low-carbon hydrogen and associated support
schemes put in place by governments has spurred investment across the value
chain by corporate and infrastructure investors into electrolysis derived
green hydrogen opportunities. The IEA estimates that electrolyser
manufacturing investments announced to date will cover 73% of the total
required global capacity by 2030.
United Kingdom
2GW by 2025
10GW by 2030
· Net Zero Hydrogen Fund - £240 million pathfinder funding.
· Low Carbon Hydrogen Agreement - Govt. backed
Contract-for-Difference (CfD).
· Supporting "no regrets" transportation and storage.
United States
10Mt by 2030
50Mt by 2050
· Target to produce clean hydrogen at $1/kg by 2030.
· Focus on regional networks near off-takers.
· H2Hubs - $7 billion of federal funding to support 3Mt p.a.
capacity.
European Union
10Mt, 40GW by 2030
· REPowerEU - innovation funding and carbon CfDs.
· EC regulation will require replacement of 40% grey hydrogen with
renewable hydrogen by 2025.
· €6 billion Connecting Europe Facility funding for cross-border
energy projects.
Australia
Up to 10% of global supply in 2050
· Target to produce clean hydrogen at A$2/kg.
· A$1.2 billion of investment to date, including seven clean hydrogen
hubs.
· Australian mining company, Fortescue, is targeting 15Mt production
by 2030.
PINT approach
PINT's approach to identifying investment opportunities in hydrogen is focused
on projects that demonstrate characteristics aligned with traditional
infrastructure assets, namely with downside protection through a high
proportion of contractual or regulated cash flows that feature some explicit
or implicit link to inflation.
Currently, hydrogen projects in development typically have limited visibility
of long-term offtake agreements at the outset, making it difficult to assess
the balance of risk and reward. Some subsidy regimes, such as the Low Carbon
Hydrogen Agreement in the UK, can help to mitigate cash flow uncertainty once
a project is operational.
Transactions that involve the decarbonisation of an existing asset can provide
increased cash flow visibility and downside protection if the transition to
hydrogen is delayed or the terms of supply/offtake agreements and state
support are initially unknown. In this respect, PINT has invested in National
Gas, a regulated utility which owns and operates the gas transmission network
in Great Britain. Its current network supplies natural gas used in power
generation, industrial processes and by the 85% of UK households that use
gas-fired heating. It connects Great Britain to key gas import and export
infrastructure including onshore terminals for gas fields in the North Sea,
LNG terminals and interconnectors with Europe. National Gas is working
together with other key stakeholders, including gas distribution networks, to
develop a facility from decommissioned assets which will carry out safety and
feasibility tests on hydrogen blending in existing gas infrastructure. This
will inform a broader project to upgrade and repurpose the transmission
network to carry hydrogen from key production sites across Great Britain to
industrial clusters and distribution networks. The decision on whether to
proceed with hydrogen blending and undertake related network investment will
ultimately be made in conjunction with regulator Ofgem, the Health &
Safety Executive and the UK government.
BUSINESS MODEL
Purpose
The Company has built a global portfolio of investments with
blended risk/return profiles, and set targets across deal
types, sectors and geographies for diversification.
Our co-investment strategy differentiates us in the listed infrastructure
market.
What sets us apart
1 Deal Selectivity
Sponsor relationships drive strong deal flow, allowing for highly selective
investment process.
2 Diversification
Access to investments across sourcing Sponsors, sectors and geographies.
3 Sponsor Specialisation
Ability to choose deals alongside a Sponsor with a distinct edge who may be
best placed to create value.
4 Fee efficient
Co-investments typically offered with no ongoing management fee/carried
interest charged by the Sponsors.
Capturing secular growth
DIGITAL
INFRASTRUCTURE
· Growth in mobile data traffic
· Growth in 5G connected devices
RENEWABLES & ENERGY
EFFICIENCY
· Average cost reduction for solar/wind
· Increasing global installed wind/solar capacity
POWER & UTILITIES
· US/Europe transitioning grids to accommodate more renewable energy
· US coal power plant retirements
TRANSPORT & LOGISTICS
· Increased global trade
· Higher e‑commerce penetration
How we create value
Investors Shareholders PINT's business model creates value by allowing Pantheon, the Investment
Manager, to allocate capital and invest on its behalf alongside the Sponsors
Investors in PINT can participate in a globally diversified portfolio of that it believes have a distinct edge in a particular infrastructure sector.
infrastructure assets alongside other leading private asset managers and
institutional investors.
Vehicle PINT (public) PANTHEON
PINT has access to Pantheon's deal sourcing platform. Other Pantheon Funds (private)
Pantheon provides a broad sourcing network with leading private asset
investment managers and has strong relationships with Sponsors it can leverage
Since PINT is publicly listed, any retail or institutional investor is able to on behalf of PINT.
benefit from any value it creates.
Refer to the Investment Manager's report for more details.
Portfolio Infrastructure assets
High‑quality infrastructure assets typically benefit from long‑term
contractual cash flows, positive correlation to inflation and exposure to
secular changes in society.
Value creation
8-10%
p.a.
NAV Total Return per share
4p
per share(1)
second year dividend, progressive thereafter
1. The Company is paying a dividend of 4p per share for the year ended 31
December 2023, and, thereafter, progressive.
Background to co-investments
There are broadly three routes to investing in private infrastructure assets:
Co-investments
Co-investments give investors the opportunity to invest alongside Sponsors in
specific Portfolio Companies. Allocating to co-investments can provide
incremental advantages to investors, including targeted deal selection and
fee-efficient exposure to transactions which are often offered by Sponsors on
a no-fee and no‑carry basis.
Primaries
Primaries involve a commitment to a newly launched limited life fund managed
by a Sponsor who will build a portfolio of private investments and seek to
exit improved businesses in the later years of the fund term at a
profit.
Secondaries
Secondaries traditionally involve the purchase of an interest in an
established private fund or a portfolio of funds from an existing investor.
PINT's investment policy is to gain exposure to infrastructure assets via
co-investments. This can take the form of the following types of transaction:
· Co-bid: partnering with a lead Sponsor to underwrite a deal prior
to final bid submission, requiring the need for a sophisticated investor who
can lead independent due diligence on an asset.
· Targeted syndication: following the signing of a deal, a Sponsor
will offer a select group of investors a portion of the deal. This will
typically comprise fewer than five parties, who may have undertaken some early
due diligence on the transaction.
· General syndication: following the signing of a deal, a Sponsor
will offer all of its existing fund investors the opportunity to gain exposure
to a transaction.
Sale process initiated Final bid submitted Deal signing
Co-bid Targeted syndication
General syndication
Advantages of investing in infrastructure via co-investments
Investing in co-investments can be an attractive way to gain access to private
infrastructure for several reasons, including:
Access
There are fewer public market opportunities to access infrastructure assets,
as infrastructure companies tend to remain private for longer periods of time.
Therefore, investing through co-investments provides access to assets not
normally accessible by public market investors.
Enhanced economics
The use of co-investments can reduce the overall expense ratio and
gross-to‑net performance spread of a portfolio, as most deals are offered
with no ongoing management fee or carried interest charged by the Sponsor.
Alignment
The structure of co-investments provides significant alignment through the
incentivisation of both deal Sponsors, who typically provide the majority of
capital through their primary fund vehicles, and Portfolio Company management
who are typically tied in under long-term incentive programmes.
Portfolio construction
Pantheon is able to utilise co-investments to select individual assets to gain
exposure to, and tilt the Portfolio towards, sectors based on the Investment
Manager's view on relative value.
Diversification
Co-investments enable a portfolio to be constructed that is diversified across
infrastructure sectors, geographies, stages and Sponsor.
Exposure to nascent sectors
Co-investments can provide access to nascent and emerging sectors that may
otherwise be underweight or not be available within primary or secondary
investment opportunities.
Sponsor specialisation
Co-investors have the ability to choose deals alongside a Sponsor with a
distinct edge who may be best placed to create value.
Pantheon's investment process
Sourcing
Screening
Due diligence
Approval
Execution
Sourcing and origination
In its role as Investment Manager to the Company, Pantheon is responsible for
the sourcing and execution of transactions on behalf of PINT.
The Investment Manager's sourcing leads to a wide array of investment
opportunities as Sponsors embrace new transaction models and co-investment
appetite from investors increases. Pantheon's primary relationships and
network of Sponsors allow it to be a preferred co-investor, screening a high
volume of proprietary transactions. Pantheon's ability to work with partners
to provide capital solutions in complex scenarios is expected to continue to
generate differentiated deal flow and allow it to acquire high-quality and
difficult‑to‑access assets for the Company's portfolio and other Pantheon
clients.
Co-investment capital makes up a sizeable portion of the infrastructure
investment universe, and Pantheon continues to see strong deal flow, with
continued signs of growth. This is driven by Sponsors continuing to see the
wider franchise benefit in offering their trusted partners co-investment deal
flow, and in particular due to such Sponsors being constrained by fund
concentration limits. Such limits may restrict the volume of capital many
Sponsors can invest from their funds in larger transactions, potentially
restricting their access to many deals unless they have access to additional
co-investment capital.
Global sourcing and rigorous screening with highly selective conversion rate
Pantheon's infrastructure co-investment deal funnel, 2015-2023
Deals screened
$88bn 863 deals
Advanced diligence
$8bn 82 deals
5% conversion rate
Closed
$4.3bn 52 deals
Pantheon: annual infrastructure co-investments screened ($bn):
2015 4
2016 5
2017 5
2018 8
2019 10
2020 14
2021 12
2022 12
2023 18
CAGR 22%
Screening
Screening is the first of three stages of the Pantheon investment due
diligence and approval process. This stage involves preliminary due diligence
of the opportunity, which includes:
· assessing the deal fit to fund strategy;
· review potential returns profile;
· explore risk factors;
· determine manager track record;
· understand transaction dynamics and sponsor alignment; and
· conduct fund/company overview.
Reasons to decline
· Poor-quality assets
· Business/firm franchise issue
· Lack of coverage
· Overly competitive process
· Limited Pantheon edge
· Poor fit with portfolio strategy
· ESG considerations
Due diligence and underwriting
After Screening, due diligence will be undertaken as part of the "Advanced
Notice" stage, including:
· review financial model and underlying assumptions;
· review internal and company databases;
· evaluate macro trends and sector themes/outlook and review
compatibility with assumptions; and
· identify risks and mitigants.
Reasons to decline
· High debt levels
· High purchase price
· Commodity price risk
· Concentration risk
· Quality of assets/Sponsors
· Lack of embedded value
· Pricing disconnect
If a deal is approved at Advanced Notice stage, it will proceed to the final
investment committee stage, Investment Thesis. Transactional and due diligence
work undertaken ahead of this includes:
· benchmark performance;
· extensive asset due diligence;
· assess downside protection;
· finalise financial model;
· onsite manager visits;
· ESG and climate change risk assessment;
· tax due diligence;
· conduct background checks/reference calls; and
· complete "Investment Thesis" for submission to Global
Infrastructure & Real Assets Committee (GIRAC).
Reasons to decline
· Legal considerations
· Limited downside protection
· Inconclusive references
· Weak governance
· ESG considerations
For co‑investments, the Company is typically entering the acquisition at the
same time as the Sponsor who sets the valuation and enters at the same price,
creating alignment with the Company. The Sponsor provides its valuation
assumptions for the target asset and the Investment Manager will seek to
verify them, and either enter the deal at the same return target as the
Sponsor, or take a more conservative view on some of the valuation assumptions
which may result in a lower base case return target. This process involves
the Investment Manager conducting its own independent review of the valuation
assumptions which includes, but is not limited to, the following analysis as
part of the Investment Thesis:
· review of all due diligence material available, including
technical, market, legal, financial and tax, usually prepared by third-party
independent consultants. Assumptions for the valuation are driven from these
reports;
· consult with external market contacts to verify key assumptions;
· review financial model driving the valuation; and
· conduct downside and upside sensitivities to prepare a Pantheon
base case that still meets relevant return requirements.
The base case prepared during the investment process forms the basis of the
final Investment Thesis. The investment return targets can be attributed to
several key components of a target business, which may include:
· existing business: returns from the profitability of the target's
existing assets/contracts.
· organic growth: returns derived from initiatives to greater utilise
existing infrastructure, such as leasing further antennae capacity on an
existing tower installation or supplying other energy products to existing
clients of a district heating business.
· growth capital: returns generated from capital expenditure
initiatives, taking the form of expanding and/or upgrading existing or
developing new infrastructure. Such initiatives will depend on the target
company's ability to source and execute on a pipeline of growth opportunities.
· capital structure: returns generated from optimising the target's
debt structure in tandem with its growth trajectory.
· M&A activity: returns generated from the increased scale and
efficiencies achieved through bolt-on acquisition activity.
· operational efficiencies: increased returns generated from reduced
operating costs achievable through greater business scale.
· multiple expansion: returns generated from delivering an exit at an
increased earnings multiple relative to the initial entry valuation. An
increased exit multiple would be in keeping with the expectations to both
increase the scale of the target as well as reducing the risk profile over
time.
The expected holding period for each co-investment is typically between
five to seven years, however this does not form the basis of any guaranteed
exit timing or method from the Sponsor. The final timing of a co-investment
exit will be a function of business performance and economic conditions, and
accordingly this is sensitised during the underwriting process to ensure any
delays will not materially compromise expected returns.
Several key financial metrics are used for analytical purposes, including
internal rate of return (IRR) and multiple on invested capital (MOIC). IRR is
the annual rate of growth that an investment is expected to generate over its
life, and MOIC measures investment returns by comparing the total realised
value of an investment at the exit date relative to the initial investment
amount. The illustrative bridge chart below demonstrates the contributions to
expected returns of certain assumptions in a typical private market
infrastructure co‑investment transaction.
Approval and execution
The final path approval of a deal includes:
· Presentation of final Investment Thesis
· Approval by GIRAC
· Allocation between Pantheon clients in line with investment
allocation policy
· Funding ringfenced pending completion
For chart showing Illustrative MOIC composition please see page 55 of the
Annual Report and Accounts.
Once a deal has been approved, it will move to legal closing and execution,
which involves:
· Optimising deal structure
· Review and negotiate agreements
· Finalise reporting requirements
· Negotiate preferential terms and rights
· Execute transfer and payments
· Implement hedging initiatives
The Company invests in infrastructure assets typically through a
co‑investment programme.
Valuations
The Company invests in infrastructure assets typically through a co-investment
programme. In a typical co‑investment the Company partakes in the investment
alongside a lead investor or a Sponsor. The Sponsor will typically set up a
co-investment vehicle, subject to annual statutory audits, that invests in the
underlying infrastructure investment and will issue a NAV and capital accounts
on a quarterly basis.
The Sponsor will usually own the majority of equity and have significant or
controlling influence in the asset. Accordingly, Pantheon considers the
Sponsor to be the responsible party for preparing the valuation on behalf of
the co-investment vehicle, and will largely rely upon the valuations prepared
by the Sponsor that have been prepared in-line with relevant accounting
standards and IPEV guidelines.
In private market investing, the Sponsor is usually considered to be the best
party to determine the appropriate valuation due to the following:
· intimate knowledge of the underlying infrastructure asset held in
the SPV and its business financials and the fundamental business environment
in which it operates;
· knowledge of the market environment in which transactions
of comparable companies take place; and
· the Company's economic interest in an investment as
a co‑investor is aligned with that of the Sponsor.
In private market transactions, the purchase cost of the investment is an
indication of its initial fair value and is thereafter calibrated for
subsequent events and changes in valuation inputs. Infrastructure assets often
display particular characteristics allowing long-term financial forecasts to
be prepared, which tends to result in a high prevalence of the use of DCF
methodology in the valuation.
In such cases, fair value is estimated by deriving the present value of the
expected cash flows generated by the investment through the use of reasonable
assumptions such as appropriate discount rates to reflect the inherent risk of
the assets forming the investment.
Valuation governance
Pantheon operates a valuation committee, which is independent of the
investment and investor relations teams, which ensures that there are robust
governance, oversight and process frameworks in place, guaranteeing compliance
with standards and consistent application of policy.
The valuation committee reviews and challenges the valuations provided by the
Sponsors and reviews the accounting policies and valuations methodologies
applied. The valuation committee has responsibility for approving investment
valuations which determine the fair value of the Portfolio, with input from
the investment team who are responsible for managing the Portfolio.
INVESTMENT STRATEGY
The Company seeks to generate attractive risk‑adjusted total returns for
shareholders over the long term, comprising both capital growth and
a progressive dividend.
Through the acquisition of equity or equity‑related investments, PINT
offers a diversified portfolio of infrastructure assets with a primary focus
on developed OECD markets.
Total returns:
Diversification
Global portfolio with exposure to regions, sectors and sourcing partners and
the ability to tilt the Portfolio over time to the best risk/return
opportunities.
Capturing long‑term growth
Exposure to growth dynamics within infrastructure sub‑sectors including the
transition to a net zero carbon economy and the digitalisation of social and
economic activity.
Resilient cash flow assets
Emphasis on direct infrastructure assets with substantial contracted cash
flows and conservative leverage creates a portfolio with downside protection.
Value‑creation opportunities
Assets where added value can be created through operational optimisation,
incremental expansion of a platform or industry consolidation, utilising the
skill set and track record of Sponsors.
Inflation protection
Natural hedge against rising inflation with certain assets benefiting from
inflation protection.
Strong ESG characteristics
Robust asset and Sponsor ESG risk assessment through due diligence, ongoing
asset monitoring and exclusion of high‑risk ESG sectors from the strategy,
including coal, oil, gas (upstream), mining and nuclear.
RESPONSIBLE INVESTING AND ESG
An enhanced approach to responsible investing
The Board of PINT recognises that a focus on environmental, social and
governance (ESG) is an important tool for risk mitigation and can lead to
value creation across the investment portfolio.
Adherence to ESG principles has been incorporated in Pantheon's pre and
post-investment processes for many years and the Investment Manager will
continue to play an influential role in promoting ESG standards and diversity
and inclusion in private markets.
The Directors of PINT have full oversight of ESG matters within PINT's
portfolio and fully support Pantheon's long-standing commitment in this area.
Investing responsibly in infrastructure is central to PINT's business model.
Sound ESG practices and operating sustainably are integral to building a
resilient infrastructure business and creating long-term value for our
shareholders and other stakeholders.
PINT is classified as Article 8 under the European Union's Sustainable Finance
Disclosure Regulation (SFDR). To support its promoted environmental/social
characteristics, PINT has adopted an investment policy which restricts
investments in specific excluded sectors, i.e. coal (including coal-fired
generation, transportation and mining), oil (including upstream, midstream and
storage), upstream gas, nuclear energy and mining.
PINT's Board is ultimately responsible for its sustainability and established
its ESG & Sustainability Committee in July 2023 to oversee and review its
ESG & Sustainability Policy, which can be found on PINT's website
(www.pantheoninfrastructure.com). The Committee is chaired by Ms Finegan, an
independent Non-Executive Director, and consists of PINT's Board members along
with Pantheon's Global Head of ESG. Full biographies of the Board Committee
members can be found below and on pages 74 to 75 of the full Annual Report and
Accounts.
Looking ahead, the Company is aiming to improve data collection, resulting in
increased disclosures with the aim of improving ESG performance of
investments. The focus over the next year will be very much on engagement with
suppliers and Sponsors to develop data collection and disclosure in relation
to Scope 1, 2 and 3 emissions and climate risk assessments.
As Investment Manager, Pantheon is tasked with delivering this ESG and
Sustainability Policy day-to-day.
Pantheon's group-wide Sustainability Policy can be found on Pantheon's
website (www.pantheon.com). It's objective is to ensure that material ESG
considerations are appropriately reflected in Pantheon's pre and
post-investment processes.
Pantheon is rigorous in assessing and managing sustainability-related risks in
its managed portfolio and identifying opportunities. Pantheon believes this is
crucial to harnessing the potential for value creation, as well as in
protecting the interests and reputations of its firm and clients.
Equally, Pantheon is experienced in actively seeking investments in
opportunities arising from the development of solutions to global
sustainability challenges. These long‑term trends are aligned with PINT's
strategy and investment mandate.
Pantheon has deeply embedded ESG considerations into its investment processes,
from the initial screening of opportunities, through due diligence and
engagement and post-investment monitoring.
Pantheon's focus recently has been on enhancing its screening and due
diligence on deals from an ESG perspective. Pantheon has introduced a new
approach to ESG called TIES - which stands for Transparency, Integration,
Engagement and Solutions - as this encapsulates the strong ties between
Pantheon, the Sponsors and the Portfolio Companies. As part of this, Pantheon
recently developed a proprietary ESG due diligence scorecard, incorporating a
range of topics including climate risk, reputational risk, diversity, equity
and inclusion (DEI) and biodiversity.
PINT's focus on co-investments provides the Investment Manager with more
control over ESG and enables Pantheon to undertake ESG due diligence on
Portfolio companies prior to investing.
Pantheon is committed to advocating for ESG practices across the
infrastructure industry through its participation in a variety of industry
initiatives and by using its position on advisory boards worldwide to promote
high ESG standards on behalf of PINT among Sponsors and investee companies.
Pantheon TIES
Transparency
Enhanced transparency through improved ESG practices
Integration
Integration of ESG screening, due diligence and monitoring
Engagement
Consistent Sponsor, industry and investor engagement leads to improved ESG
outcomes
Solutions
Developing Pantheon's capability to offer solutions that meet investors' ESG
and sustainability requirements
Pantheon's enhanced ESG framework
Screening Due diligence Monitoring/engagement Reporting
ESG screening process applied to all investment opportunities ESG scorecard used to assess: Monitoring: Focusing efforts on standardised ESG reporting templates to align with:
1. Private markets manager 1. Private markets manager data collection 1. SFDR metrics
2. Private markets fund 2. Portfolio Company data collection 2. ESG Data Convergence Initiative metrics
3. Single-company deal Engagement: 3. Task Force on Climate-related Financial Disclosure requirements
4. Multi-company deal 1. Private markets manager: targeted engagement based on scorecard
2. Industry: advocate for ESG best practice through industry trade bodies
In practice In practice In practice
Integrated into ESG due diligence scorecard ESG due diligence scoreboard output included in investment committee memos Enhancing ESG data collection systems
During the period, PINT's 2022 sustainability report was released, which
included detailed climate risk disclosures, guided by the recommendations of
the Task Force for Climate-related Financial Disclosures (TCFD). The
sustainability report set out how climate-related risks are integrated into
PINT's governance, strategy, risk management and metrics and targets.
The Company looks forward to sharing PINT's 2023 sustainability report, which
will incorporate more detailed reporting in accordance with the TCFD
recommendations. The table below illustrates the progress made to date.
Area Disclosures Reference Summary of progress
Governance a) Describe the Board's oversight of climate‑related risks and opportunities · Corporate governance: page 79 of the full Annual Report and · PINT's Board is ultimately responsible for its sustainability, and
Accounts formally established its ESG & Sustainability Committee in July 2023 to
b) Describe management's role in assessing and managing climate-related risks
oversee and review these activities as set out in the ESG and Sustainability
and opportunities · Investment process: above and page 52 of the full Annual Report and Policy. PINT is committed to sustainability throughout its supply chain. The
Accounts appointment of third parties is overseen by the PINT Board and reviewed
annually at the Management Engagement Committee.
· Responsible investing & ESG: above and page 58 of the full
Annual Report and Accounts · Pantheon executes PINT's strategy, makes investment decisions,
monitors climate-related performance and reports to the Board on progress.
· ESG & Sustainability Committee: page 94 of the full Annual
Report and Accounts
Strategy a) Describe the climate-related risks and opportunities the organisation has · Chair's statement: above and page 8 of the full Annual Report and · PINT will not invest in infrastructure assets whose principal
identified over the short, medium and long term Accounts operations are in:
b) Describe the impact of climate‑related risks and opportunities on the · Our market: above and page 42 of the full Annual Report and · Coal (including coal-fired generation, transportation and mining)
organisation's businesses, strategy and financial planning Accounts
· Oil (including upstream, midstream and storage)
c) Describe the resilience of the organisation's strategy, taking into · Investment strategy: above and page 57 of the full Annual Report
consideration different climate-related scenarios, including a 2°C or lower and Accounts · Upstream gas
scenario
· Principal risks and uncertainties: below and page 68 of the full · Nuclear energy
Annual Report and Accounts
· Mining
· Viability statement: below and page 72 of the full Annual Report
and Accounts · Following climate risk assessments in 2022, the impact of climate
related drivers associated with both changing climatic conditions and the
transition to a low carbon economy have been considered. Pantheon has engaged
an external consultant to enable a more granular assessment of these risks.
Risk management a) Describe the organisation's processes for identifying and assessing · Principal risks and uncertainties: below and page 68 of the full · The Company has a comprehensive risk and governance framework to
climate-related risks Annual Report and Accounts ensure all risks, including ESG and climate‑related risks, are monitored and
managed with due care and diligence
b) Describe the organisation's processes for managing climate‑related risks
· The Board exercises oversight of this framework, through its Audit
c) Describe how processes for identifying, assessing and managing and Risk Committee, and ESG risks and opportunities are additionally
climate-related risks are integrated into the organisation's overall risk considered by the ESG & Sustainability Committee
management
· Based on the results of Pantheon's scenario analysis assessment,
100% of PINT's portfolio is expected to see a neutral or positive transition
impact. 87% of PINT's portfolio present an opportunity in the transition.
Metrics and targets a) Disclose the metrics used by the organisation to assess climate-related · Responsible investing and ESG: above and page 58 of the full Annual · PINT has committed to report certain climate-related metrics, as
risks and opportunities in line with its strategy and risk management process Report and Accounts set out above and on page 10 of the full Annual Report and Accounts of its
recent Sustainability Report, including:
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas
(GHG) emissions, and the related risks · GHG emissions data (tCO(2)e)
c) Describe the targets used by the organisation to manage climate-related · Year of emissions
risks and opportunities and performance against targets
· Carbon intensity (tCO(2)e/£m revenue)
· Carbon footprint (tCO(2)e/£m NAV)
· Coverage (% of NAV reported)
· The Company is in the process of calculating its Scope 1, 2 and
relevant Scope 3 emissions for the purposes of its upcoming TCFD reporting.
Looking ahead, the Company is aiming to improve data collection resulting in
better disclosures and also improved ESG performance of investments. We
acknowledge that as an investment company without control of the underlying
investee companies, we are heavily reliant on Pantheon and the Sponsors for
the collection of data and delivery of any ESG objectives.
The focus over the next year will be very much on engagement with suppliers
and Sponsors to develop the communication, data collection and disclosure. In
particular:
1. Data and KPIs - increasing the capture of ESG data e.g. capturing
actual Scope 1, 2 and 3 emissions rather than relying on estimates through
increasing engagement with Sponsors;
2. Disclosures - we will review the TCFD product report which the
Investment Manager is required to publish in the course of 2024. Additionally,
we will monitor and keep up to date with the development of the TNFD
("Taskforce on Nature-related Financial Disclosures");
3. Climate risk assessment - Pantheon is working on enhancing its
transparency of climate-related risk analysis and it assesses each individual
investment and climate-related risks
4. Supplier reporting - as a Company we are reliant on the service
providers we have engaged and intend to collect more information and data on
the ESG focussed policies they have in place, as well as monitoring compliance
reporting, with the aim of disclosing this information in the sustainability
report.
S172(1) Statement
The overarching duty of the Directors is to act in good faith and in a way
that is most likely to promote the success of the Company, as set out in
section 172 of the Companies Act 2006 ('the Act').
Directors' duties
Overview
The Directors must take into consideration the interests of the various
stakeholders of the Company, the impact the Company has on the community and
the environment, take a long‑term view on the consequences of the decisions
they make, and aim to maintain a reputation for high standards of business
conduct and fair treatment between the members of the Company. Fulfilling this
duty supports the Company in achieving its investment strategy and making
decisions in a responsible and sustainable way.
During the year, the Directors consider, in good faith, that they have acted
in a way that would most likely promote the long-term success of PINT for the
benefit of its members as a whole, with due regard to the likely consequences
of any decisions in the long term, as well as the interests of shareholders
and other stakeholders, as required by the Act. Below, the Directors explain
how they discharged these duties.
Stakeholders and long-term decisions
PINT is an externally managed investment company and does not have any
employees or customers. Its key stakeholders are its shareholders, the
Investment Manager, Sponsors, Portfolio Companies, service providers, lenders
and regulators. The Board considers the feedback from, and views of, PINT's
stakeholders at every Board meeting, and all discussions involve careful
consideration of the longer‑term consequences of any decisions and their
impact on stakeholders. Overleaf, we describe how we engage with our
stakeholders to understand their views, how they are affected by the Board's
decisions, how their feedback shapes decisions, and any outcomes. We also
explain how PINT fosters business relationships with suppliers, customers and
others, and maintains a reputation for high standards of business conduct.
PINT's impact on the environment, and how PINT and the Investment Manager
approach ESG, is explained in detail above and on pages 58 to 62 of the full
Annual Report and Accounts.
Shareholders
Importance Board engagement
Holding PINT's shares offers investors a liquid investment vehicle through The Board is committed to maintaining open channels of communication and to
which they can obtain exposure to PINT's portfolio of infrastructure engaging with shareholders in a way they find most meaningful, these include:
investments, therefore, continued shareholder support and engagement are
critical to the business and the delivery of PINT's long‑term strategy. · AGM
The Company will hold its second AGM on 20 June 2024 and welcomes and
encourages shareholders to participate in the meeting. Shareholders will have
the opportunity to meet the Directors and the Investment Manager, ask
questions and provide us with feedback. The Board values the feedback and
questions it receives and takes action or makes changes, as and when
appropriate.
· Publications
The annual report and half‑year reports are an opportunity for PINT to
provide information and updates on the Company's business model, strategy,
portfolio and financial position. Feedback and/or questions PINT receives from
shareholders help the Company to evolve its reporting, aiming to render the
reports and updates more transparent and understandable.
· Shareholder meetings
The Chair, the Board and Pantheon meet with shareholders throughout the year;
the Investment Manager holds presentations for institutional investors and
analysts, and all shareholders are invited to join PINT's capital markets day.
The Company always responds to communications from shareholders, and anyone
wishing to communicate directly with the Board can contact the Company
Secretary at: pintcosec@linkgroup.co.uk or by writing to PINT's registered
office. Feedback from all meetings with shareholders is shared and discussed
with the Board and taken into account when taking decisions (examples are
included below and on page 67 of the full Annual Report and Accounts).
· Shareholder concerns
In the event that shareholders wish to raise issues or concerns, they are
welcome to do so at any time by writing to the Chair or the SID at PINT's
registered office. All Board members are also available to shareholders if
they have concerns or questions.
· Investor relations updates
At every Board meeting, the Directors receive updates from the Investment
Manager and the Company's broker on the Company's trading activity and share
price performance, especially during periods when PINT's shares are trading at
a discount.
The Investment Manager
Importance Board engagement
The Investment Manager's performance is critical for the Company to deliver Maintaining a close and constructive working relationship with the Investment
its investment strategy successfully and meet its objective of providing Manager is crucial as the Board and the Investment Manager both aim to achieve
shareholders with attractive and consistent returns over the long term. consistent, long‑term returns in line with the Company's investment
strategy. Important components in the collaboration with the Investment
Manager, representative of the Company's culture, are:
· encouraging an open discussion with the Investment Manager,
including adopting a tone of constructive challenge;
· the interests of the Company, shareholders and the Investment
Manager are, for the most part, well aligned, and recognising any instances
where that might change;
· thorough review of the Investment Manager's performance, including
adherence to the investment policy and strategy, and considering the terms of
engagement;
· drawing on Directors' individual experience and knowledge to
support and challenge the Investment Manager in its monitoring of Portfolio
Companies and engagement with Sponsors; and
· willingness to make the Directors' experience available to support
the Investment Manager in the long‑term development of its business,
recognising that the long‑term health of the Investment Manager's business
is in the interests of shareholders in the Company.
Sponsors/Portfolio Companies
Importance Board engagement
PINT's investment strategy is focused on backing Sponsors who create The Board receives updates at each scheduled Board meeting from the Investment
sustainable value in the underlying Portfolio Companies. The Investment Manager on specific investments, including regular valuation reports and
Manager has extensive networks and relationships with Sponsors globally, which detailed portfolio and returns analyses. The Board also makes an active effort
gives the Company access to attractive investment opportunities. to better understand the Portfolio Companies, and in 2023, the Directors
undertook a site visit to Alhama de Murcia, headquarters of Primafrio, a
European leader in logistics and transport of temperature-controlled goods.
More details of Pantheon's engagement with Sponsors and due diligence of
Portfolio Companies through the investment process and its investment
strategies can be found above and on pages 52 to 55 of the full Annual Report
and Accounts and in the Investment Manager's report. Pantheon engages with
Sponsors on a day‑to‑day basis. Details of how Pantheon carries out
portfolio management, as well as information on how Sponsors consistently
transform companies to create long‑term value, can be found in the
Investment Manager's report above and on pages 12 to 18 of the full Annual
Report and Accounts.
The Administrator, the Company Secretary, the Registrar, the Depositary and
the Broker
Importance Board engagement
In order to function as an investment trust with a premium listing on the The Board maintains regular contact with its key external providers and
London Stock Exchange, the Company relies on a diverse range of advisers for receives regular reports from them, both through Board and Committee meetings,
support in meeting all its relevant obligations. as well as outside the regular meeting cycle. Their advice, as well as their
needs and views, are routinely taken into account. The Board (through the
Management Engagement Committee) formally assesses the performance, fees and
continuing appointment of key service providers to ensure that they continue
to function at an acceptable level and are appropriately remunerated to
deliver the expected level of service.
The environment and society
Importance Board engagement
The Board of PINT believes that sound ESG practices and operating sustainably The Board (through the ESG & Sustainability Committee) works closely with
are integral to building a resilient infrastructure business and creating Pantheon and, despite the fact that its level of control over investments is
long-term value for our shareholders and other stakeholders. Investing limited, seeks, through its Investment Manager and the Sponsors, to encourage
responsibly in infrastructure is central to PINT's business model. and influence investee companies to improve their ESG performance.
Full details of the Investment Manager's approach to ESG can be found above
and on pages 58 to 62 of the full Annual Report and Accounts . Details of the
activities of the Company's ESG & Sustainability Committee can be found on
pages 94 to 95 of the full Annual Report and Accounts , and PINT's inaugural
Sustainability Report for 2022 can be accessed on PINT's website
at www.pantheoninfrastructure.com.
Lenders
Importance Board engagement
Availability of funding is crucial to PINT's ability to take advantage of During the year, the Board decided to increase the RCF and engaged regularly
investment opportunities as they arise, as well as to meet any future unfunded with the Investment Manager throughout the process. More details on the RCF
commitments. increase can be found above and on page 33 of the full Annual Report and
Accounts . The Company aims to demonstrate to its facility providers, Lloyds
and RBSI, that it is a well‑managed business, capable of consistently
delivering long‑term returns. Regular dialogue between the Investment
Manager and lenders is crucial to supporting the Company's relationship with
them.
Regulators
Importance Board engagement
The Company can only operate as an investment trust and a premium listed The Board regularly considers how it meets various regulatory and statutory
company if it conducts its affairs in compliance with applicable rules and obligations and how any governance decisions it makes can have an impact on
regulations. Regulators such as the Financial Conduct Authority (FCA) and the its stakeholders, both in the shorter and in the longer term. The Board
Financial Reporting Council (FRC) have a legitimate interest in how PINT receives reports from its third-party providers, including the Investment
operates in the market and treats its shareholders. Manager and the Company Secretary, on the Company's compliance and considers
any inspections or reviews that are commissioned by regulatory bodies.
The mechanisms for engaging with stakeholders are kept under review by the
Directors and are discussed on a regular basis at Board meetings to ensure
that they remain effective. Examples of the Board's principal decisions
during the year, how the Board fulfilled its duties under section 172, and the
related engagement activities, are set out below:
Principal decision Long‑term impact Stakeholder considerations Outcome
and engagement
Increase in the RCF In line with its agreed approach to balance sheet management, PINT increased Effective engagement with Lloyds and RBSI was key to agreeing the increase to Following extensive discussions by the Board throughout the period, on 7 June
its multi-currency RCF during the year. This provides additional flexibility the facility. The Board considers that the additional liquidity available for 2023 PINT announced that it had agreed an increase to its multi‑currency RCF
to manage PINT's balance sheet to support continued NAV growth. working capital, and to support further investments in high‑quality of £52.5 million for an aggregate commitment of £115 million with Lloyds and
infrastructure assets from PINT's near‑term investment pipeline, will help RBSI.
support the Company's growth while also maintaining a robust balance sheet.
Establishing a share buyback programme When the Company's share price trades at a material discount to NAV, the Board The Directors considered a number of factors when debating the introduction of On 31 March 2023 the Company announced the commencement of a share buyback
considers that share price to undervalue PINT's portfolio and prospects. a buyback programme, including the availability of funding; current investment programme up to a total consideration of £10 million. By the end of December
opportunities; market conditions; and the likely impact on future NAV growth. 2023, the Company had purchased over 7 million shares.
The Board made its decision following hearing the views of, and feedback from,
shareholders, as well as the advice of our broker and the Manager, because the
Board believes that seeking to address the discount is important to the
Company and our investors.
The Board considers that, in some circumstances, share buybacks can be an
attractive use of capital, which can be balanced with retaining sufficient
capital to access the attractive pipeline of investment opportunities.
Establishing an ESG & Sustainability Committee Sub-committees of the Board enable greater focus to be provided to areas The Board recognises the importance of ESG to our shareholders and other On 10 July 2023 the Board formally established an ESG & Sustainability
judged to be of importance to the long‑term success of the Company. stakeholders. Based on feedback from investors, and given the Directors' Committee of the Company, chaired by Ms Finegan. The report from the Committee
appetite and keen focus on ESG, the Board decided that a dedicated Committee can be found on page 94 of the full Annual Report and Accounts.
would be a more suitable approach of overseeing ESG matters.
PRINCIPAL RISKS AND UNCERTAINTIES
Integrity, objectivity and accountability are embedded in the Company's
approach to risk management.
Patrick O'Donnell Bourke
Chair of the Audit and Risk Committee
The Company is exposed to a variety of risks and uncertainties and the Board
is ultimately responsible for the risk management of the Company. It seeks to
achieve an appropriate balance between mitigating risk and generating
long-term sustainable risk-adjusted returns for shareholders. Integrity,
objectivity and accountability are embedded in the Company's approach to risk
management. The Board exercises oversight of the risk framework, through its
Audit and Risk Committee, and has undertaken a robust assessment and review of
the principal risks facing the Company, including those that would threaten
its business model, future performance, solvency or liquidity.
The Company is reliant on the risk management frameworks of the Investment
Manager and other key service providers, as well as on the risk management
operations of each Portfolio Company. The Board manages risks through reports
from the Investment Manager and other service providers and through regular
updates on the operational and financial performance of Portfolio Companies.
For each risk, and for emerging risks, the likelihood and consequences are
identified, and the management controls and frequency of monitoring are
confirmed and reviewed during Audit and Risk Committee meetings. Please see
below a summary of the principal risks and their mitigation.
Risk management procedure
Risk appetite
Risk identification and assessment
Control and mitigation
Monitoring and reporting
RISK DESCRIPTION OF RISK MITIGATION
Market conditions · Macroeconomic or market volatility, as the result of the Russian · The Company targets a diversified infrastructure programme with
invasion of Ukraine and the conflict in the Middle East, presents a exposures across sectors and geographies; historically, infrastructure
Higher significant threat to the global economy, resulting in a potential combination sub‑sectors have exhibited low to moderate correlation of returns relative
of high inflation, interest rates and uncertain supply chains, which flows to one another.
through to pricing, valuations and Portfolio performance.
· The Company monitors the impact of geopolitical trends on the
· Change in foreign exchange rates may affect the value of the overall Portfolio as well as on individual sectors and companies.
Company's investments.
· The Company has a foreign exchange hedging programme in place.
· Recession in Europe, the US or the UK could impact the growth
prospects of one or more of the Portfolio Companies. · Portfolio Companies could put in place inflation protection by
seeking to include inflation adjustment mechanisms in their contracts.
· Rising inflation and interest rates may lead to higher financing
costs for a Portfolio Company, which could adversely impact its profits. · Certain Portfolio assets already provide inflation protection via
contracted revenues linked to inflation.
· Discount rates used in the valuation of investments may need to
increase in line with the interest rate environment. · Portfolio Companies could also put in place interest rate hedges.
· Discount rates are reviewed regularly as part of quarterly
valuations.
Political and regulatory changes · Political actions and regulatory changes may adversely impact the · The Company predominantly targets investments in North America,
operating and revenue structure of Portfolio Companies. Europe and Australasia which have broadly stable legal, political and
Level
regulatory regimes.
· Complexity of government regulatory standards may result in
litigation/disputes over interpretation and enforceability. · The Investment Manager conducts due diligence on the regulatory
risks of a prospective Portfolio Company to ensure protections in the
underlying contracts are in place.
Operational performance · A fall in demand for the Portfolio Companies' services or products · The Investment Manager conducts sensitivity analysis and demand
or an increase in their input costs. A Portfolio Company's revenue is exposed stress testing in its due diligence for assets.
Level to market supply and demand forces. Falls in demand or cost increases that are
respectively below or above the levels used in underlying valuation · The Company co-invests alongside experienced Sponsors who work
assumptions could lead to adverse financial performance of the closely with the management teams of each Portfolio Company.
Portfolio Company.
· The investment strategy is to target assets that have the majority
of their cash flows protected through contractual structures, which limits
demand risk.
Returns target · The Company may not meet its investment objective; this could · The Investment Manager adheres to the investment policy and
result in returns being materially lower than targeted and dissatisfied criteria when making investment decisions.
Level investors.
· The Board reviews the investment performance of the Company on a
quarterly basis to ensure adherence to the investment policy.
Investor sentiment · The Company's share price has fallen below its NAV, which is · Alternative forms of capital such as debt can be considered.
currently preventing new equity capital raises. An inability to raise new
Higher equity capital is inhibitive to scaling the Portfolio. · Opportunistic sale of targeted existing assets.
· The Company has put in place a share buyback programme and has been
buying back shares.
· The Investment Manager constantly targets new shareholders.
Lack of suitable investment opportunities · Unavailability of appropriate investments to acquire due to · The Board reviews investment guidelines and will make appropriate
unfavourable deal terms. recommendations to shareholders if it believes changes are needed.
Level
· Re‑investment risk which could arise from delayed redeployment of · The Investment Manager seeks to continue actively sourcing
any proceeds from the sale of assets. appropriate investments by engaging with Sponsors and negotiate
co‑investment rights when committing capital to the Sponsors'
underlying funds.
· The demand and need for infrastructure should ensure continuing
deal flow.
Liquidity management, including level and cost of debt · Failure to manage the Company's liquidity position, including cash · Regular reporting of current and projected liquidity, under both
and credit facilities, could result in insufficient liquidity to pay dividends normal and stress conditions.
Level and operating expenses or to make new or support existing investments.
· Liquidity availability is assessed during the allocation of new
· High levels and cost of debt within the Company and/or the special investment opportunities.
purpose vehicles which invest in the Portfolio Companies could result in
covenant breaches and/or increased volatility in the Company's NAV. · The Board and Investment Manager review Company debt levels and
covenants, on a quarterly basis, to ensure they stay within the leverage cap
that has been established to limit exposure to debt‑related risks.
· Debt levels within Portfolio Companies are reviewed by the
Investment Manager as part of due diligence.
Portfolio concentration risk · Portfolio concentration risk in relation to exposure to individual · The Board conducts quarterly reviews of the investment portfolio
assets, operators, geographies and asset types. This could impact NAV and against the Company's investment policy and criteria.
Reducing ultimately affect the Company's targeted rate of return.
· Investment restrictions outlined in the investment policy are
designed to reduce portfolio concentration risk.
· The Company currently has a balanced portfolio of 13 investments
across the infrastructure sub-sectors it targets.
Investment Manager · An over‑reliance on the Investment Manager. A failure of the · The Board performs an ongoing review of the Investment Manager's
Investment Manager to retain or recruit appropriately qualified personnel, or performance in addition to a formal annual review.
Level put in place an appropriate succession plan, may have a material adverse
effect on the Company's overall performance. · Pantheon continues to invest in its talent and regularly considers
succession planning.
Tax status and legislation · Failure to observe requirements to maintain investment trust tax · The Board, through the Company Secretary, ensures that the Company
status in the UK. meets the criteria to maintain the current investment trust status of the
Level
Company.
· Failure to understand tax risks when investing or divesting could
lead to tax exposure or financial loss. · The Board has engaged a third party to provide taxation advice and
Pantheon's investment process incorporates the assessment of tax.
Third‑party providers · Poor performance by third‑party service providers could result in · The Board reviews and signs off contractual arrangements with all
an inability to perform key functions (e.g. reporting, record keeping etc.) key service providers.
Level effectively. This could result in loss of Company information, errors in
published information or damage to its reputation. · The Board reviews the performance of key service providers
annually.
Cyber security · Cyber security risk which could arise from reputational damage from · The Audit and Risk Committee reviews service providers' cyber
theft or loss of confidential data through cyber hacking. security arrangements, controls and business continuity processes to ensure
Level any data loss is mitigated and reputational damage is minimised.
Climate change · Climate change causing physical and transition risks could impact · The Investment Manager conducts due diligence in relation to
the financial performance of the Portfolio. Physical risks arising from climate change matters before making investment decisions.
Level extreme weather events could impact the operations of a Portfolio Company. In
addition, transition risk in terms of policy, legal, technological, market and · The Company invests in assets with strong management teams that
reputation risks could negatively impact the operations of the assets. have a long track record of actively managing physical risks such as
maintenance schedules.
· The Company has in place an ESG & Sustainability Policy,
including taking account of sector exclusions.
Viability Statement
Period of assessment
Pursuant to provision 31 of the UK Corporate Governance Code 2018, and the AIC
Code of Corporate Governance, the Board has assessed the viability of the
Company over a three‑year period from 31 December 2023. The Directors
consider that a three‑year period to December 2026 is appropriate for
assessing the Company's viability. There is greater predictability of the
Company's cash flows over that time period and increased uncertainty
surrounding economic, political and regulatory changes over the longer term.
The Company has a diverse Portfolio of infrastructure investments, expected to
produce cash distributions which cover costs, and eventually expected to cover
the Company's dividend target as the Portfolio matures. The defensive nature
of the Portfolio and of the essential services that the businesses in which
the Company invest provide to their customers, are being demonstrated in the
current climate, with infrastructure assets providing strong downside
protection across market cycles given the regulated and highly contracted
nature of cash flows, which typically offer strong inflation protection.
Against this background, in making their assessment, the Directors reviewed
the reports of the Investment Manager in relation to the resilience of the
Company, taking account of its current position, the principal risks facing it
in a downside scenario due to the geopolitical uncertainties as a result of
the Russia-Ukraine conflict, including disruption to the supply chain and
increases in the cost of living as a result of this conflict, inflationary
expectations, interest rate rises and, the impact of climate change on the
Company's portfolio. As discussed in Note 1 to the financial statements, the
effectiveness of any mitigating actions and the Company's risk appetite were
also considered as part of the various downside liquidity scenario modelling
carried out, after which the Directors came to their conclusion as to the
Company's viability over the three year period.
The Investment Manager considers the future cash requirements of the Company
before acquiring or funding investments in Portfolio Companies. Furthermore,
the Board receives regular updates from the Investment Manager on the
Company's cash and debt position, which allows the Board to maintain its
fiduciary responsibility to the shareholders and, if required, limit funding
for existing commitments.
The Board considered the Company's viability over the three year period based
on a working capital model prepared by the Investment Manager. The working
capital model forecasts key cash flow drivers such as capital deployment rate,
investment returns and operating expenses. In connection with the preparation
of the working capital model, no capital raises were assumed to occur during
the three‑year period.
The results of stress testing showed that the Company would be able to
withstand the impact of various scenarios occurring over the three-year
period. The Directors also considered the Company's position with reference to
its investment trust structure, its business model, its business objectives,
the principal risks and uncertainties as detailed above and on pages 69 to 71
of the full Annual Report and Accounts and its present and projected financial
position. As part of the overall assessment, the Directors took into account
the Investment Manager's culture, which emphasises collaboration and
accountability, the Investment Manager's conservative approach to balance
sheet management, and its emphasis on investing with underlying Sponsors that
are focused on generating outperformance.
To support their statement, the Directors also took into account the nature of
the Company's business, including the available liquidity, the potential of
its portfolio of investments to generate future income and capital proceeds,
and the ability of the Directors to minimise the level of cash outflows, if
necessary. Based on the above assessment, the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the three-year period to December 2026.
On behalf of the Board
Vagn Sørensen
Chair
2 April 2024
Board of Directors
Vagn Sørensen
Chair and Nomination Committee Chair
Appointed to the Board 4 October 2021
Mr Vagn Sørensen is an experienced non‑executive chair and director of
listed and private companies.
After attending Aarhus Business School and graduating with a MSc degree in
Economics and Business Administration, Mr Sørensen began his career at
Scandinavian Airlines Systems in Sweden, rising through numerous positions in
a 17‑year career before becoming Deputy CEO with special responsibility for
Denmark. Between 2001 and 2006, Mr Sørensen served as President and Chief
Executive Officer for Austrian Airlines Group in Austria, a business with
approximately €2.5 billion of turnover, 8,000 employees and listed on the
Vienna Stock Exchange.
Mr Sørensen also served as Chair of the Association of European Airlines in
2004. Since 1999, Mr Sørensen has been a Tier 1 senior industrial adviser to
EQT, a private equity sponsor, and has been a non‑executive director or
Chair of a number of their Portfolio Companies. Since 2008, Mr Sørensen has
been a senior adviser to Morgan Stanley Investment Bank.
Mr Sørensen is currently Chair of Air Canada (since 2017) and a
non‑executive director of CNH Industrial and Royal Caribbean Cruises.
Previous non‑executive appointments have included Chair of SSP Group
(2006-2020), Chair of Scandic Hotels AB (2007‑2018), Chair of TDC A/S
(2006‑2017) and Chair of FLSmidth & Co (2009‑2022).
Anne Baldock
Senior Independent Director and Chair of the Remuneration Committee
Appointed to the Board 4 October 2021
Ms Anne Baldock is an experienced board member and lawyer with over 30 years'
experience in the infrastructure sector.
Ms Baldock graduated in law from the London School of Economics and was a
qualified Solicitor in England and Wales from 1984 to 2012. Ms Baldock was a
Partner at Allen & Overy LLP between 1990 and 2012, during which time she
was Managing Partner, Projects Group London (1995‑2007), member of the
firm's Global/Main Strategic Board (2000‑2006) and Global Head of Projects,
Energy and Infrastructure (2007‑2012).
Notable transactions included the Second Severn Crossing, Eurostar, the
securitisation of a major UK water utility and several major PPP projects in
the UK and abroad.
Ms Baldock's current roles include Senior Independent Director and Chair of
the Audit and Risk Committee for East West Railway Company Limited (the
Government‑owned company constructing the new Oxford to Cambridge railway)
and non‑executive director of Electricity North West Limited. Ms Baldock
also serves as the Senior Independent Director, as well as Chair of the
Remuneration and Nomination Committees, of the Restoration and Renewal
Delivery Authority Limited (the delivery body created by Parliament to deal
with the restoration of the Houses of Parliament). Among her previous roles,
Anne served as a non‑executive director of Thames Tideway Tunnel,
non‑executive director of Hydrogen Group (AIM‑listed) and a Trustee of
Cancer Research UK.
Andrea Finegan
Management Engagement Committee and ESG & Sustainability Committee Chair
Appointed to the Board 4 October 2021
Ms Andrea Finegan is an experienced infrastructure asset management
professional with over 30 years of sector experience.
After graduating from Loughborough University, Ms Finegan held investment
banking roles at Deutsche Bank and Barclays Capital, before joining Hyder
Investments as Head of the Deal Closing Team. Between 1999 and 2007, Ms
Finegan worked at Innisfree Limited, the investment manager of an £8 billion
infrastructure asset portfolio, latterly as Board Director and Head of Asset
Management. Ms Finegan subsequently served as Chief Operating Officer, ING
Infrastructure Funds and Fund Consultant to Climate Change Capital.
In 2012 Ms Finegan joined Greencoat Capital LLP for the set up and launch of
Greencoat UK Wind Plc, the renewable infrastructure investment trust, then, in
2013, became Chief Operating Officer until 2018, a position that included
structuring and launching another renewable energy infrastructure fund listed
on the London Stock Exchange and Euronext Dublin (Greencoat Renewables Plc)
and a number of private markets solar energy funds.
Ms Finegan is currently Chair of the Valuation Committee of Schroders
Greencoat LLP, a role she has held since 2015, and independent consultant to
the board of Sequoia Economic Infrastructure Income Fund Limited, working
closely with the ESG & Stakeholder Committee and the Risk Committee.
Patrick O'Donnell Bourke
Audit and Risk Committee Chair
Appointed to the Board 4 October 2021
Mr Patrick O'Donnell Bourke is an experienced board member with more than 28
years of experience in energy and infrastructure.
After graduating from Cambridge University, Mr O'Donnell Bourke started his
career at Peat Marwick, Chartered Accountants (now KPMG) and qualified as a
Chartered Accountant. After that he held a variety of investment banking
positions at Hill Samuel and Barclays de Zoete Wedd. In 1995, he joined
Powergen Plc, where he was responsible for mergers and acquisitions before
becoming Group Treasurer. In 2000, Mr O'Donnell Bourke joined Viridian Group
Plc as Group Finance Director and later became Chief Executive, appointed by
the private equity shareholder following take‑over in 2006.
In 2011, he joined John Laing Group, a specialist international investor in,
and manager of, greenfield infrastructure assets where he served as CFO until
his retirement in 2019. While at John Laing, he was part of the team which
launched the John Laing Environmental Assets Fund on the London Stock Exchange
in 2014.
Mr O'Donnell Bourke currently serves as Chair of Ecofin US Renewables
Infrastructure Trust Plc and as Chair of the Audit Committee of Harworth Group
Plc (a leading UK regenerator of land and property for development and
investment). Mr O'Donnell Bourke was previously Chair of the Audit and Risk
Committee at Calisen Plc (an owner and operator of smart meters in the UK) and
Chair of the Audit Committee at Affinity Water.
Extracts from the Directors' report
Share capital and voting rights
The rights attaching to the Company's shares are set out in the Company's
Articles of Association. Further details can be found in Note 16 of the
financial statements. As at 31 December 2023 and as at the date of this
report, the Company's share capital is as follows:
Total number
of shares in
Number of Voting rights Number of issue (including
Share capital and voting rights shares in circulation attached to each share shares held in treasury shares held in treasury)
As at 31 December 2023 472,615,000 1 7,385,000 480,000,000
As at 2 April 2024 469,550,000 1 10,450,000 480,000,000
There are no restrictions on the free transferability of the shares, subject
to compliance with applicable securities laws and provisions in the Articles
entitling the Board to decline to register certain transfers in a limited
number of circumstances, such as where the transfer might cause the Company to
be subject to or operate in accordance with applicable US laws. The powers of
the Directors are detailed in the Company's Articles and are subject to
relevant legislation and, in certain circumstances (including in relation to
the issuing or buying back the Company of its shares), are subject to the
authority being given to the Directors by PINT's shareholders.
Prior to the Company's listing on 13 October 2021, in accordance with the
Articles the Directors were authorised to allot up to a maximum of two billion
Ordinary and/or C Shares and to disapply pre‑emption rights in respect of
those Ordinary and/or C shares, with the authority expiring on 13 October
2024. To date, no shares have been allotted under this authority, and the
Directors propose to replace this authority with a general authority to allot
new shares up to approximately 33.33% of the issued share capital of the
Company at PINT's forthcoming AGM in June 2024. The Directors will also
propose a resolution to grant the Company the authority to disapply
pre-emption rights, which would enable the Board to issue ordinary shares for
cash, without pre‑emption rights applying, of up to approximately 10% of the
Company's issued share capital.
An authority to repurchase up to 14.99% of the Company's issued share capital
to be held in treasury or for cancellation was granted to the Directors on 30
March 2023. Given a challenging period for many infrastructure investment
companies, and PINT's shares trading at a material discount to NAV, on 31
March 2023 the Board announced its intention to commence a share buyback
programme up to a total consideration of £10 million.
The Directors considered that the share price at which the Company's Shares
were trading materially undervalued PINT's portfolio and prospects, and in
April 2023 begun buying back shares. During 2023, the Company purchased a
total of 7,385,000 Ordinary Shares of 1p each (nominal value of £73,850) at a
total cost of £5.79 million (at a weighted average price of £0.78 per
share), representing c. 1.5% of the Company's issued share capital. All
purchased shares are kept in treasury. As at 31 December 2023, the Company had
a remaining authority to purchase a further 64,567,000 shares; this authority
will expire at the conclusion of the 2024 AGM, and the Board intends to
propose a resolution to renew this authority at the forthcoming AGM in
June 2024.
Going concern
The Company's business activities, together with the factors likely to affect
its future development, performance and position, including its financial
position, are set out in the strategic report and Investment Manager's report.
The Directors have made an assessment of going concern, taking into account
both the Company's financial position at the balance sheet date and the
expected performance of the Company, using the information available up to the
date of issue of the financial statements.
Total available financing as at 31 December 2023 stood at £144.4 million,
comprising £29.4 million in available cash balances and £115.0 million
through the Company's RCF, which matures in March 2027. The Company maintains
a policy to hold liquidity sufficient to cover all future operating and
financial commitments due in the next twelve months. This includes all
forecast operating costs, anticipated dividend payments, foreign exchange
hedge settlements due (based on mark‑to‑market valuations), and all
unfunded investment commitments which could be called during the period as
detailed in the Cash and liquidity management section above and on page 33 of
the full Annual Report and Accounts.
As part of the going concern review, the Directors considered different
downside scenarios and their potential impact on PINT's liquidity.
The scenarios modelled included varying degrees of decline in investment
valuations and other key drivers such as: a slower deployment rate; lower than
expected investment returns; higher than expected operating expenses; and
absence of equity capital raises, realisations and distribution payments. The
Company has several ways in which it could limit or mitigate the impact these
possible developments could have on the balance sheet, including drawing on
the RCF, which includes the provision of additional liquidity for
working capital.
After due consideration of the activities of the Company, its assets,
liabilities, commitments and financial resources, the Directors concluded that
the Company has adequate resources to continue in operation for at least
twelve months from the financial statements for the year ended 31 December
2023. For this reason, the Board considers it appropriate to continue to adopt
the going concern basis in preparing the financial statements.
Directors' Responsibility statement
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable laws and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial
statements in accordance with applicable law and UK Accounting Standards
(United Kingdom Generally Accepted Accounting Practice). Under company law the
Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Company as
at the end of each financial year and of the profit or loss of the Company for
that period.
In preparing these financial statements, the Directors are required to:
· present a true and fair view of the financial position, financial
performance and cash flows of the Company;
· select suitable accounting policies in accordance with FRS 102 and
then apply them consistently;
· present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable information;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the
financial statements; and
· prepare the financial statements on a going concern basis unless it
is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for preparing the strategic report, the
Directors' report, the Directors' remuneration report, the Corporate
Governance Statement and the report of the Audit and Risk Committee in
accordance with the Companies Act 2006 and applicable regulations, including
the requirements of the Listing Rules and the Disclosure Guidance and
Transparency Rules. The Directors have delegated responsibility to the
Investment Manager for the maintenance and integrity of the Company's
corporate and financial information included on the Company's website
(www.pantheoninfrastructure.com). Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Each of the Directors, whose names are listed above and on pages 74 and 75 of
the full Annual Report and Accounts, confirms that to the best of his or her
knowledge:
· the financial statements, prepared in accordance with applicable
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
· the management report, which is incorporated in the strategic
report and Directors' report, includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
The UK Corporate Governance Code requires Directors to ensure that the annual
report and financial statements are fair, balanced and understandable. In
order to reach a conclusion on this matter, the Board has requested that the
Audit and Risk Committee advises on whether it considers that the annual
report and financial statements fulfil these requirements. The process by
which the Audit and Risk Committee has reached these conclusions is set out in
its report on pages 85 to 89 of the full Annual Report and Accounts . As a
result, the Board has concluded that the annual report and financial
statements for the year ended 31 December 2023, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.
Signed on behalf of the Board by
Vagn Sørensen
Chair
2 April 2024
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's
statutory accounts for the period ended 31 December 2023 but is derived from
those accounts. Statutory accounts for the year ended December 2023 will be
delivered to the Registrar of Companies in due course. The Auditors have
reported on those accounts; their report was (i) unqualified, (ii) did not
include a reference to any matters to which the Auditors drew attention by way
of emphasis without qualifying their report and (iii) did not contain a
statement under Section 498 (2) or (3) of the Companies Act 2006. The text of
the Auditors' report can be found in the Company's full Annual Report and
Accounts at www.pantheoninfrastructure.com.
FINANCIAL STATEMENTS
Income Statement
For the year ended 31 December 2023
For the year ended 31 December 2023 9 September 2021 to 31 December 2022
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Gain on investments at fair value through profit or loss(1) 10 - 44,298 44,298 - 19,592 19,592
Gains/(losses) on financial instruments at fair value through profit or loss 13 - 12,081 12,081 - (8,520) (8,520)
Foreign exchange gains on cash and non-portfolio assets - 77 77 - 5 5
Investment management fees 2 (4,939) - (4,939) (3,194) - (3,194)
Other expenses 3 (1,702) (157) (1,859) (1,360) (555) (1,915)
(Loss)/profit before financing and taxation (6,641) 56,299 49,658 (4,554) 10,522 5,968
Finance income 5 3,109 - 3,109 2,096 - 2,096
Interest payable and similar expenses 6 (1,484) - (1,484) (36) - (36)
(Loss)/profit before taxation (5,016) 56,299 51,283 (2,494) 10,522 8,028
Taxation 7 (1,697) - (1,697) - - -
(Loss)/profit for the period, being total comprehensive income for the period (6,713) 56,299 49,586 (2,494) 10,522 8,028
Earnings per share - basic and diluted 8 (1.40)p 11.79p 10.39p (0.58)p 2.45p 1.87p
1. Includes foreign exchange movements on investments.
The Company does not have any income or expense that is not included in the
return for the year, therefore the return for the year is also the total
comprehensive income for the year. The supplementary revenue and capital
columns are prepared under guidance published in the Statement of Recommended
Practice (SORP) issued by the Association of Investment Companies (AIC). The
total column of the statement represents the Company's statement of total
comprehensive income prepared in accordance with FRS 102.
All revenue and capital items in the above statement relate to continuing
operations.
The Notes below and on pages 117 to 135 of the full Annual report and Accounts
form part of these financial statements.
Statement of changes in equity
For the year ended 31 December 2023
Movement for the year ended 31 December 2023 Note Share Share Capital redemption reserve(1) Capital Revenue reserve(1) Total
premium
£'000
Capital
£'000 reserve(1) £'000
£'000
£'000 £'000
Balance at 1 January 2023 4,800 79,449 382,484 10,522 (2,494) 474,761
Share issue costs - (187) - - - (187)
Ordinary Shares bought back and held in treasury 16 - - (5,789) - - (5,789)
Share buyback costs - - (35) - - (35)
Dividends paid 9 - - (14,303) - - (14,303)
Profit/(loss) for the period - - - 56,299 (6,713) 49,586
Closing equity shareholders' funds 4,800 79,262 362,357 66,821 (9,207) 504,033
Movement for the period 9 September 2021 to 31 December 2022
Balance at 9 September 2021 - - - - - -
Share issue costs - (9,267) - - - (9,267)
Ordinary Shares issued 16 4,800 395,200 - - - 400,000
Subscription shares issued (subsequently converted to Ordinary Shares) 16 - 80,800 - - - 80,800
Cancellation of share premium - (387,284) 387,284 - - -
Dividends paid 9 - - (4,800) - - (4,800)
Profit/(loss) for the period - - - 10,522 (2,494) 8,028
Closing equity shareholders' funds 4,800 79,449 382,484 10,522 (2,494) 474,761
1. The capital redemption reserve, capital reserve and revenue reserve are all
the Company's distributable reserves. The capital redemption reserve arose
from the cancellation of the Company's share premium account in 2022 and is a
distributable reserve. The Company is also able to distribute realised gains
from the capital reserve. As at 31 December 2023, there were £nil reserves
available for distribution from this reserve.
The Notes below and on pages 117 to 135 of the full Annual Report and Accounts
form part of these financial statements.
Balance Sheet
As at 31 December 2023
31 December 31 December
2023 2022
Note £'000 £'000
Fixed assets
Investments at fair value 10 471,668 301,382
Debtors 11 609 740
Current assets
Derivative financial instruments 13 4,447 -
Debtors 11 817 959
Cash and cash equivalents 12 29,361 182,937
34,625 183,896
Creditors: amounts falling due within one year
Derivative financial instruments 13 - (1,983)
Other creditors 14 (2,309) (2,737)
(2,309) (4,720)
Net current assets 32,316 179,176
Total assets less current liabilities 504,593 481,298
Creditors: amounts falling due after one year
Derivative financial instruments 13 (560) (6,537)
Net assets 504,033 474,761
Capital and reserves
Called-up share capital 16 4,800 4,800
Share premium 17 79,262 79,449
Capital redemption reserve 17 362,357 382,484
Capital reserve 17 66,821 10,522
Revenue reserve 17 (9,207) (2,494)
Total equity shareholders' funds 504,033 474,761
NAV per Ordinary Share 18 106.6p 98.9p
The financial statements were approved by the Board of Pantheon Infrastructure
Plc on 2 April 2024 and were authorised for issue by:
Vagn Sørensen
Chair
Company Number: 13611678
The Notes below and on pages 117 to 135 of the full Annual Report and Accounts
form part of these financial statements.
Cash flow Statement
For the year ended 31 December 2023
31 December 31 December
2023 2022
£'000 £'000
Cash flow from operating activities
Investment management fees paid (4,810) (1,994)
Operating expenses paid (1,403) (1,581)
Other cash payments (259) (110)
Net cash outflow from operating activities (6,472) (3,685)
Cash flow from investing activities
Purchase of investments (130,300) (283,031)
Return of capital 2,615 1,241
Derivative financial instruments loss on settlements (326) -
Net cash outflow from investing activities (128,011) (281,790)
Cash flow from financing activities
Share issue proceeds - 480,800
Share issue costs (187) (9,267)
Share buyback costs (5,619) -
Dividends paid (14,303) (4,800)
Loan facility arrangement fee (1,889) -
Loan facility commitment fee (620) -
Finance costs (2) (1)
Finance income 3,450 1,675
Net cash (outflow)/inflow from financing activities (19,170) 468,407
(Decrease)/increase in cash and cash equivalents in the period (153,653) 182,932
Cash and cash equivalents at the beginning of the period 182,937 -
Foreign exchange gains 77 5
Cash and cash equivalents at the end of the period 29,361 182,937
The Notes below and on pages 117 to 135 of the full Annual Report and Accounts
form part of these financial statements.
Notes to the financial statements
1. Accounting policies
Pantheon Infrastructure Plc (the 'Company') is a listed closed‑ended
investment company incorporated in England and Wales on 9 September 2021,
with registered "company number" 13611678. The Company began trading on
15 November 2021 when the Company's Ordinary Shares were admitted to trading
on the London Stock Exchange. The registered office of the Company is Link
Company Matters Limited, 6th Floor, 65 Gresham Street, London, EC2V 7NQ.
A. Basis of preparation
The Company's financial statements have been prepared in compliance with FRS
102 as it applies to the financial statements of the Company for the year
ended 31 December 2023. They have been prepared under the historical cost
basis of accounting, modified to include the revaluation of certain assets at
fair value. They have also been prepared on the assumption that approval as an
investment trust will continue to be granted. The Company's audited financial
statements are presented in GBP and all values are rounded to the nearest
thousand pounds (£'000) except when indicated otherwise.
The financial statements have been prepared in accordance with the SORP for
the financial statements of investment trust companies and venture capital
trusts issued by the AIC in July 2022.
The financial statements comprise the results of the Company only.
The Company has control over two subsidiaries, further details of which are
given in Note 20. Where the Company owns a subsidiary that is held as part of
the investment portfolio, the Company excludes it from consolidation. As the
value of such subsidiaries to the Company is through fair value rather than as
the medium through which the group carries out business, they are measured at
fair value in accordance with 9.9C(a) of FRS 102.
The Company was incorporated on 9 September 2021 and a set of accounts to 31
December 2022 was filed, therefore the period from 9 September 2021 to 31
December 2022 has been presented as the comparative. Thus the comparative
information may not present a representative comparative.
B. Going concern
The Directors have made an assessment of going concern, taking into account
the Company's current performance and financial position as at
31 December 2023.
In addition, the Directors have assessed the outlook, which considers the
ongoing geopolitical uncertainties including disruption to global supply
chains, increases in the cost of living, persistent inflation, interest rate
rises and the impact of climate change on the Company's portfolio using the
information available up to the date of issue of the financial statements.
The Directors have also considered the impact of climate change on PINT's
portfolio and have come to the conclusion that there is no significant
negative impact on the Company as a result of climate change, during the going
concern period.
In reaching this conclusion, the Board considered budgeted and projected
results of the business, including projected cash flows, various downside
modelling scenarios and the risks that could impact the Company's liquidity.
Having performed their assessment, the Directors considered it appropriate to
prepare the financial statements of the Company on a going concern basis.
The Company has sufficient financial resources and liquidity, is well placed
to manage business risks in the current economic environment, and can continue
operations for a period of at least twelve months from the date of issue of
these financial statements.
C. Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being investment in infrastructure to generate
investment returns while preserving capital. The financial information used
by the Directors and Investment Manager to allocate resources and manage the
Company presents the business as a single segment comprising a
diversified portfolio of infrastructure investments.
D. Investments
The Company's underlying assets comprise unlisted investments, the majority
of which are held through its subsidiary, Pantheon Infrastructure Holdings LP
(PIH LP) with one investment held directly. While the Company operates a
robust and consistent valuation process, there is significant estimation
uncertainty in the underlying asset valuations which are estimated at a point
in time. Accordingly, while relevant information relating to but received
after the measurement date is considered, the Directors will only consider an
adjustment to the financial statements if it were to have a significant impact
and is indicative of conditions present at the measurement date.
The Company has fully adopted sections 11 and 12 of FRS 102. All investments
held by the Company are classified as 'fair value through profit or loss'.
The Company's business is investing in infrastructure assets with a view to
profiting from their total return in the form of interest, dividends or
increases in fair value. The investments are recognised at fair value on
initial recognition represented by the cost of acquisition and the Company
manages and evaluates the performance of its investments on a fair value
basis.
Upon initial recognition, investments held by the Company are classified 'at
fair value through profit or loss'. All gains and losses are allocated to the
capital column within the Income statement as 'Gains on investments held at
fair value through profit or loss'. When a purchase or sale is made under a
contract, the terms of which require delivery within the time frame of the
relevant market, the investments concerned are recognised or derecognised on
the trade date. Subsequent to initial recognition, investments are valued at
fair value through profit or loss. The fair values for the Company's
investments are established by the Directors after discussion with the
Investment Manager using valuation techniques in accordance with the
International Private Equity and Venture Capital (IPEV) guidelines. Valuations
are based on periodic valuations provided by the Sponsors of the investments
and recorded up to the measurement date. Such valuations are necessarily
dependent upon the reasonableness of the valuations by the Sponsor of the
underlying assets. In the absence of contrary information the values are
assumed to be reliable.
The Sponsor is usually the best placed party to determine the appropriate
valuation. The annual and quarterly reports received from the Sponsors are
reviewed by the Investment Manager to ensure consistency and appropriateness
of approach to reported valuations.
The basis of valuation for infrastructure assets provided by the Sponsors
depends on the nature of the underlying assets and will typically involve a
fair value approach in line with recognised accounting standards and industry
best practice guidelines such as IPEV. Infrastructure assets often display
particular characteristics which affect the valuation approach, tending to
result in a higher prevalence of discounted cash flows in the valuation, where
the fair value is estimated by deriving the present value of the expected cash
flows generated by the investment through the use of reasonable assumptions
such as appropriate discount rate(s) to reflect the inherent risk of the
asset(s) forming the investment.
The discounted cash flow basis requires assumptions to be made regarding
future cash flows, terminal value and the discount rate to be applied to these
cash flows. There is also consideration given to the impact of wider
megatrends such as the transition to a lower-carbon economy and climate
change.
The fair value will generally reflect the latest valuations available from the
Sponsor which may not coincide with the Company's reporting date. In such
cases the Investment Manager performs a roll forward from the latest available
valuation to the relevant reporting date. The roll forward process takes
consideration of the following factors:
i. transactions and foreign exchange movements in the intervening
period; and
ii. adjustments for expected performance of the investment in the
intervening period.
The process may also include, but not be limited to, in consultation with the
Sponsor, changes in multiples/discount rates, asset fundamentals (for instance
operating performance) and the macroeconomic environment.
On an annual basis the Investment Manager receives annual audited financial
statements from the Sponsors of the asset. The Investment Manager utilises the
audited accounts to gain comfort that the underlying infrastructure asset is
fair valued in line with recognised accounting standards and audited by a
recognised auditor. This is in addition to the analysis performed by the
Investment Manager to determine the reasonableness of the valuation and that
it is appropriate to the investment and performance thereof.
If the Sponsor does not provide audited financial statements, to the extent
that the Board of the Company or the Investment Manager deem it appropriate,
and it is possible to do in conjunction with the Sponsor, the valuation of the
underlying infrastructure asset is independently verified. The scope of this
verification is determined on a case-by-case basis and, dependent on the
asset, could include an independent valuation report from a valuation provider
engaged by the Investment Manager. The Investment Manager then analyses the
independent valuation report to determine the reasonableness of the valuation
and that it is appropriate to the investment and performance thereof before
presenting to the Investment Manager's Valuation Committee and the Board for
approval.
E. Financial instruments
The Company makes investments and has commitments in currencies other than
GBP, its reporting currency, and accordingly, a significant proportion of its
investments and cash balances are in currencies other than GBP. The Company
uses forward foreign currency exchange contracts to hedge foreign exchange
risks associated with its underlying investment activities. The contracts
entered into by the Company are denominated in the currency of the geographic
area in which the Company has significant exposure against its
reporting currency.
Forward foreign currency exchange contracts are initially recognised and
subsequently measured at fair value.
The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data is available to measure fair
value, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs significant to the fair value measurement as a whole.
The Company has elected not to apply hedge accounting and therefore changes
in the fair value of forward foreign currency exchange contracts are
recognised within the capital column of the Income statement in the period in
which they occur.
F. Income
Distributions receivable from investments are recognised on the appropriate
ex-dividend date. Where no ex‑dividend date is quoted, distributions are
recognised when the Company's right to receive payment is established.
Overseas dividends are gross of the appropriate rate of withholding tax, with
any withholding tax suffered being accounted for separately.
Other income is accounted for on an accruals basis.
G. Expenses
All expenses are accounted for on an accruals basis. Expenses, including
investment management fees, are charged through the revenue account,
except expenses which are incidental to the acquisition or disposal of an
investment. These are treated as capital costs, separately identified, and
charged to the capital account of the Income statement.
H. Finance income
Finance income comprises interest received on funds invested into deposit
accounts. Finance income is accounted for on an accruals basis.
I. Finance costs
Finance costs consist of interest and other costs that the Company incurs in
connection with bank and other borrowings. Finance costs also include the
amortisation charge of arrangement fees or other costs associated with the
set-up of borrowings; these are amortised over the period of the loan.
All other finance costs are expensed in the period in which they occur.
J. Taxation
Corporation tax is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity, in which case it is
recognised in equity.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The amount of deferred tax that is provided is
based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantially
enacted at the period end date.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Company meets (and intends
to continue for the foreseeable future to meet) the conditions for approval as
an investment trust company, pursuant to sections 1158 and 1159 of the CTA.
Deferred tax assets are only recognised if it is considered more likely than
not that there will be suitable profits from which the future reversal of
timing differences can be deducted.
K. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks and other short‑term highly liquid investments with original
maturities of three months or less at the date of placement, free of any
encumbrances, which are readily convertible into known amounts of cash and
subject to insignificant risk of changes in value.
L. Debtors
Trade and other debtors are initially recognised at transaction value.
Subsequent measurement is at the initially recognised value less any cash
payments from the debtor, and less provision or write off for doubtful debts.
A provision is made where there is objective evidence that the Company will
not be able to recover balances in full. Any adjustment is recognised in
profit or loss as an impairment gain or loss.
M. Creditors
Trade and other creditors are initially recognised at fair value and
subsequently held at amortised cost.
N. Interest-bearing loans and liabilities
All bank borrowings are initially recognised at transaction value net of
attributable transaction costs. After initial recognition, all bank
borrowings are measured at amortised cost using the effective
interest method.
O. Dividends payable to shareholders
Equity dividends are recognised when they become legally payable.
Interim equity dividends are recognised when paid. Final equity dividends
are recognised when approved by shareholders at an Annual General Meeting.
P. Share premium
The share premium account represents the accumulated premium paid for shares
issued above their nominal value less issue expenses. This is a reserve
forming part of the non-distributable reserves. The following items are taken
to this reserve:
· costs associated with the issue of equity; and
· premium on the issue of shares.
Q. Capital redemption reserve
The capital redemption reserve represents cancelled share premium less
dividends paid from this reserve. This is a distributable reserve.
This reserve also includes the cost of acquiring the Company's Ordinary
Shares if the Company is in a position to buy back shares.
R. Capital reserve
The following are accounted for in this reserve:
· gains and losses on the realisation of investments;
· unrealised gains and losses on investments;
· gains and losses on foreign exchange forward contracts;
· realised foreign exchange differences of a capital nature; and
· expenses, together with related taxation effect, charged to this
reserve in accordance with the above policies.
The Company is able to distribute realised gains from this reserve.
S. Revenue reserve
The revenue reserve represents the surplus of accumulated profits from the
revenue column of the Income statement and is distributable.
T. Foreign exchange
The functional and presentational currency of the Company is GBP because it is
the primary currency in the economic environment in which the Company operates
and, as a UK listed company, GBP is also its capital raising currency.
Transactions denominated in foreign currencies are recorded in the local
currency at actual foreign exchange rates as at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies at the
period end are reported at the rates of foreign exchange prevailing at the
period end. Any gain or loss arising from a change in exchange rates
subsequent to the date of the transaction is included as a foreign exchange
gain or loss in the revenue or capital column of the Income statement
depending on whether the gain or loss is of a capital or revenue nature.
For non‑monetary assets these are recognised as fair value adjustments.
U. Significant judgements, estimates and assumptions
The preparation of financial statements requires the Company and Investment
Manager to make judgements, estimates and assumptions that affect the reported
amounts of investments at fair value at the financial reporting date and the
reported fair value movements during the reporting period. Uncertainty about
these assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of the investments at fair value in
future years. Details of how the fair values of infrastructure assets are
estimated and any associated judgements applied are provided in Note 22.
2. Investment management fees
Year ended 31 December 2023 Period ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees 4,939 - 4,939 3,194 - 3,194
4,939 - 4,939 3,194 - 3,194
The Investment Manager is entitled to a quarterly management fee at an annual
rate of:
· 1.0% of the part of the Company's net asset value up to and
including £750 million; and
· 0.9% of the part of such net asset value in excess of
£750 million.
As at 31 December 2023, £1,329,000 (31 December 2022: £1,200,000) was owed
for investment management fees.
The Investment Manager does not charge a performance fee.
3. Other expenses
Year ended 31 December 2023 Period ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Secretarial and accountancy services 215 - 215 201 - 201
Depositary services 77 - 77 74 - 74
Fees payable to the Company's Auditor for audit-related assurance services
- Initial accounts - - - 25 - 25
- Annual financial statements 150 - 150 135 - 135
Fees payable to the Company's Auditor for non-audit related assurance 35 - 35 35 - 35
services(1)
Directors' remuneration (see Note 4) 180 - 180 220 - 220
Employer's National Insurance 21 - 21 24 - 24
Legal and professional fees 102 151 253 186 534 720
VAT irrecoverable 367 - 367 9 - 9
Other fees 555 6 561 451 21 472
1,702 157 1,859 1,360 555 1,915
1.The non-audit fees payable to the Auditor relate to the review of the
Company's June 2023 half-yearly report.
4. Directors' remuneration
A breakdown of Directors' emoluments is provided in the Directors'
remuneration report on pages 96 to 100 of the full Annual Report and Accounts.
5. Finance income
Year ended Period ended
31 December 31 December
2023 2022
£'000 £'000
Finance income 82 73
Bank interest 3,027 2,023
Total 3,109 2,096
6. Interest payable and similar expenses
Year ended Period ended
31 December 31 December
2023 2022
£'000 £'000
Commitment fees payable on borrowings 913 22
Amortisation of loan facility arrangement fee 569 13
Bank interest expense 2 1
1,484 36
7. Taxation
Year ended 31 December 2023 Period ended 31 December
2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Withholding tax deducted from investment distributions 1,697 - 1,697 - - -
Tax charge from investments
The tax charge for the year differs from the standard rate of corporation tax
in the UK of 19% to 31 March 2023, rising to 25% from 1 April 2023, giving a
weighted average for the year of 23.5% (31 December 2022: 19%). The
differences are explained below:
Year ended 31 December 2023 Period ended 31 December 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net return before tax (5,016) 56,299 51,283 (2,494) 10,522 8,028
Tax at UK corporation tax rate at 23.5% (2022: 19%) (1,179) 13,230 12,051 (474) 1,999 1,525
Non-taxable investment, derivative and currency gains - (13,230) (13,230) - (1,999) (1,999)
Carry forward management expenses 1,179 - 1,179 474 - 474
Withholding tax deducted from investment distributions 1,697 - 1,697 - - -
1,697 - 1,697 - - -
Factors that may affect future tax charges
The Company is an investment trust and is therefore not subject to tax on
capital gains. Deferred tax is not provided on capital gains and losses
arising on the revaluation or disposal of investments because the Company
meets (and intends to meet for the foreseeable future) the conditions for
approval as an investment trust. No deferred tax asset has been recognised in
respect of excess management expenses and expenses in excess of taxable income
as they will only be recoverable to the extent that there is sufficient future
taxable revenue.
As at 31 December 2023, excess management expenses are estimated to be in
excess of £8.22 million (2022: £3.05 million).
At 31 December 2023, the Company had no unprovided deferred tax liabilities.
8. Earnings per share
Earnings per share (EPS) are calculated by dividing profit for the year
attributable to ordinary shareholders of the Company by the weighted average
number of Ordinary Shares in issue during the period. As there are no dilutive
instruments outstanding, both basic and diluted earnings per share are shown
below:
Year ended
31 December 2023 Revenue Capital Total
Earnings for the year to 31 December 2023 (£'000) (6,713) 56,299 49,586
Weighted average Ordinary Shares (number) 477,411,877
Basic and diluted earnings per share (1.40)p 11.79p 10.39p
Period 9 September 2021 to 31 December 2022 Revenue Capital Total
Earnings for the period (£'000) (2,494) 10,522 8,028
Weighted average Ordinary Shares (number)(1) 428,272,575
Basic and diluted earnings per share (0.58)p 2.45p 1.87p
There were no meaningful shareholders or corporate activity between
incorporation of the Company on 9 September 2021 and 16 November 2021, the
IPO date, and therefore this period has not been included for the purpose
of calculating the weighted average number of shares.
9. Dividends paid
Amounts recognised as distributions to equity holders in the year:
Year ended Period ended
31 December 31 December
2023 2022
£'000 £'000
Second interim dividend for the period ended 31 December 2022 of 1p (2022: 4,800 -
nil) per Ordinary Share
First interim dividend for the year ended 31 December 2023 of 2p (2022: 1p) 9,503 4,800
per Ordinary Share
14,303 4,800
On 21 March 2024 the Company declared a second interim dividend of 2p per
Ordinary Share, which will be paid on 23 April 2024.
10. Investments
31 December 31 December
2023 2022
£'000 £'000
Cost brought forward 281,790 -
Opening unrealised appreciation on investments held
- Unlisted investments 19,592 -
- Listed Investments - -
Valuation of investments brought forward 301,382 -
Movement in period:
Acquisitions at cost 128,603 281,790
Capital distributions - proceeds (2,615) -
Appreciation on investments held 44,298 19,592
Valuation of investments at period end 471,668 301,382
Cost at year end 407,778 281,790
Closing unrealised appreciation on investments held
- Unlisted investments 63,890 19,592
- Listed investments - -
Valuation of investments at period end 471,668 301,382
11. Debtors
31 December 31 December
2023 2022
£'000 £'000
Other debtors - non-current(1) 609 740
Other debtors - current 698 486
Prepayments and accrued income 119 473
1,426 1,699
1. Relates to loan arrangement fees paid up front which are to be released to
the Income statement until the loan maturity date of 18 December 2025.
12. Cash and cash equivalents
31 December 31 December
2023 2022
£'000 £'000
Cash 11,649 26,670
Cash equivalents 17,712 156,267
29,361 182,937
Cash equivalents of £17,712,000 were held in a money market fund at
31 December 2023 (31 December 2022: £156,267,000).
13. Derivative financial instruments
Year ended Period ended
31 December 31 December
2023 2022
£'000 £'000
At the beginning of the period (8,520) -
Unrealised gains/(losses) on derivative financial instruments 12,407 (8,520)
At the end of the period 3,887 (8,520)
Realised loss on settlement of derivative financial instruments (326) -
Total gain/(losses) on derivative financial instruments at fair value through 12,081 (8,520)
profit or loss
The Company uses forward foreign exchange contracts to minimise the effect of
fluctuations in the value of the investment portfolio from movements in
exchange rates.
As at 31 December 2023, there were 20 contracts due to expire in the next
twelve months with a valuation of £4,447,000 (31 December 2022:
three contracts valued at a liability of £1,983,000). The remaining
contracts due to expire after the twelve months following the period end were
valued as a liability of £560,000 (31 December 2022: £6,537,000 liability).
The fair value of these contracts is recorded in the Balance sheet.
No contracts are designated as hedging instruments and consequently
all changes in fair value are taken through profit or loss.
As at 31 December 2023, the notional amount of the forward foreign exchange
contracts held by the Company was £340.3 million (31 December 2022: £278.9
million).
14. Other creditors
31 December 31 December
2023 2022
£'000 £'000
Investment management fees payable 1,329 1,200
Other creditors and accruals 980 1,537
2,309 2,737
15. Interest-bearing loans and borrowings
31 December 31 December
2023 2022
£'000 £'000
Interest-bearing loans and borrowings - -
Loan arrangement fee brought forward 1,087 -
Loan arrangement fee incurred in the period 788 1,100
Loan arrangement fee amortised for the period (569) (13)
Loan arrangement fee carried forward 1,306 1,087
Total credit facility payable - -
The Company entered into a £62.5 million RCF with Lloyds Bank Corporate
Markets in December 2022. In June 2023, this was increased by £52.5 million,
bringing the RCF total to £115 million. As part of the increase, the Company
sought to diversify the lender group through the introduction of The Royal
Bank of Scotland International Limited alongside Lloyds Bank Corporate
Markets.
The RCF is denominated in GBP, with the option to be utilised in other major
currencies. The rate of interest is the relevant currency benchmark plus an
initial margin of 2.85% per annum, reducing to 2.65% once certain expansion
thresholds have been met. A commitment fee of 1.00% per annum is payable on
undrawn amounts, and the tenor of the RCF as at 31 December 2023 was three
years from December 2022. The facility is secured against the assets held in
the Company's subsidiary, Pantheon Infrastructure Holdings LP.
As at 31 December 2023 the RCF was undrawn.
Borrowing costs associated with the RCF are shown as interest payable and
similar expenses in Note 6 to these financial statements.
The loan arrangement fee of £1,306,000 carried forward at 31 December 2023
(2022: £1,087,000) is included within Debtors, Note 11 to these financial
statements.
The debt facility includes loan to value covenants. The Company has complied
with all covenants throughout the financial period.
16. Called-up share capital
31 December 2023 31 December 2022
Allotted, called up and fully paid: Shares £'000 Shares £'000
Ordinary Shares of £0.01
Opening balance 480,000,000 4,800 - -
Ordinary Shares issued in the period - - 400,000,000 4,000
Conversion of Subscription Shares in the period - - 80,000,000 800
Closing balance 480,000,000 4,800 480,000,000 4,800
Subscription shares of £0.01
Opening balance - - - -
Subscription Shares issued in the period - - 80,000,000 800
Conversion of Subscription Shares in the period - - (80,000,000) (800)
Closing balance - - - -
Treasury shares
Opening balance - - - -
Shares bought back in the year (7,385,000) (74) - -
Closing balance (7,385,000) (74) - -
Total Ordinary Share capital excluding treasury shares 472,615,000 4,726 480,000,000 4,800
During the year to 31 December 2023, 7,385,000 Ordinary Shares were bought
back in the market, and are held in treasury (31 December 2022: nil) at a
total cost, including stamp duty, of £5,824,000.
17. Reserves
Capital
Share redemption Capital Revenue
premium reserve reserve reserve Total
Year ended 31 December 2023 £'000 £'000 £'000 £'000 £'000
Opening balance 79,449 382,484 10,522 (2,494) 469,961
Ordinary Shares bought back and held in treasury - (5,824) - - (5,824)
Share issue costs (187) - - - (187)
Gains on financial instruments at fair value through profit or loss - - 12,081 - 12,081
Gains on investments at fair value through profit or loss - - 44,298 - 44,298
Foreign exchange differences on cash and non-portfolio assets - - 77 - 77
Legal and professional expenses charged to capital - - (151) - (151)
Other fees - - (6) (6)
Revenue loss for the period - - - (6,713) (6,713)
Dividends in the period - (14,303) - - (14,303)
Closing balance 79,262 362,357 66,821 (9,207) 499,233
Capital
Share redemption Capital Revenue
premium reserve reserve reserve Total
Period ended 31 December 2022 £'000 £'000 £'000 £'000 £'000
Opening balance - - - - -
Ordinary Shares issued 395,200 - - - 395,200
Subscription shares issued (subsequently converted to
Ordinary Shares) 80,800 - - - 80,800
Share issue costs (9,267) - - - (9,267)
Cancellation of share premium (387,284) 387,284 - - -
Losses on derivative financial instruments at fair value
through profit or loss - - (8,520) - (8,520)
Gains on investments at fair value through profit or loss - - 19,592 - 19,592
Foreign exchange gains on cash and cash equivalents - - 5 - 5
Legal and professional expenses charged to capital - - (534) - (534)
Other fees - - (21) - (21)
Loss for the period - - - (2,494) (2,494)
Interim dividend paid - (4,800) - - (4,800)
Closing balance 79,449 382,484 10,522 (2,494) 469,961
The Company is able to distribute realised gains from the capital reserve. As
at 31 December 2023 there were £nil reserves available for distribution
from this reserve (31 December 2022: £nil).
18. Net asset value per share
NAV per share is calculated by dividing net assets in the Balance sheet
attributable to ordinary equity holders of the Company by the number of
Ordinary Shares in issue less shares held in Treasury at the end of the
period. As there are no dilutive instruments outstanding, both basic and
diluted NAV per share are shown below:
31 December 31 December
2023 2022
Net assets attributable (£'000) 504,033 474,761
Ordinary Shares in issue excluding shares held in treasury 472,615,000 480,000,000
NAV per Ordinary Share 106.6p 98.9p
19. Reconciliation of loss before financing costs and taxation to net cash
flows from operating activities
9 September
Year to 2021 to
31 December 31 December
2023 2022
£'000 £'000
Profit before financing costs and taxation 49,658 5,968
Gains on investments (44,298) (19,592)
Foreign exchange gains on cash and borrowings (77) (5)
Decrease/(increase) in operating debtors 122 (182)
Increase in operating creditors 204 1,606
(Gains)/losses on financial instruments at fair value through profit or loss (12,081) 8,520
Net cash flows used in operating activities (6,472) (3,685)
20. Subsidiaries
The Company has two wholly-owned subsidiaries. The Company has ownership and
control over these two entities and as such they are deemed to be subsidiaries
by the Board.
Pantheon Infrastructure Holdings LP (PIH LP) was incorporated on 5 November
2021 with a registered address in the State of Delaware, National Registered
Agents, Inc., 209 Orange Street, Wilmington, Delaware, 19801, and is wholly
owned by the Company.
The Company holds an investment in PIH LP. In accordance with FRS 102, the
Company is exempted from the requirement to consolidate PIH LP on the grounds
that its subsidiary is held exclusively with a view to subsequent resale as it
is considered part of an investment portfolio.
PIH LP holds a portfolio of investments that are measured at fair value. The
Company holds a 99.9% investment in PIH LP, with the remaining holding being
held by Pantheon Infrastructure Holdings GP LLC (PIH GP).
The General Partner for PIH LP is PIH GP. PIH GP was incorporated on 5
November 2021 with a registered address in the State of Delaware, National
Registered Agents, Inc., 209 Orange Street, Wilmington, Delaware, 19801, and
is wholly owned by the Company.
PIH GP is immaterial, it is therefore excluded from consolidation.
21. Contingencies, guarantees and financial commitments
At 31 December 2023 there were capital commitments outstanding of £15.7
million in respect of investments in infrastructure assets
(2022: £57.9 million). These commitments will be funded using the Company's
financial resources.
The Company expects 100% of the capital commitments outstanding to be called
within the next twelve months.
22. Fair value
Fair value hierarchy
Financial assets are carried in the Balance sheet at their fair value or
approximation of fair value. The fair value is the amount at which the asset
could be sold in an orderly transaction between market participants, at the
measurement date, other than a forced liquidation sale.
The Company measures fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant assets as follows:
Level 1: Quoted (unadjusted) market prices in active markets for identical
assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly
observable.
Level 3: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on
a recurring basis, the Company determines whether transfers have occurred
between levels in the hierarchy by reassessing categorisation at the end of
each reporting period.
Financial assets and liabilities at fair value through profit or loss
at 31 December 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments - - 471,668 471,668
Derivatives - financial instruments - 3,887 - 3,887
- 3,887 471,668 475,555
Financial assets and liabilities at fair value through profit or loss
at 31 December 2022
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Investments - - 301,382 301,382
Derivatives - financial instruments - (8,520) - (8,520)
- (8,520) 301,382 292,862
The fair value of these investments and derivatives - financial instruments is
recorded in the Balance sheet as at the year end.
There have been no transfers between Level 1 and Level 2 during the year, nor
have there been any transfers between Level 2 and Level 3.
The carrying amount of all assets and liabilities, detailed within the Balance
sheet, is considered to be the same as their fair value.
The majority of the assets held within Level 3 are valued on a discounted cash
flow basis, hence, the valuations are sensitive to the discount rate assumed
for each asset. The assets are held through the Company's subsidiary, PIH LP,
with one investment held directly. Other significant unobservable inputs
include the inflation rate assumption and the interest rate assumption used to
project the future cash flows and the forecast cash flows themselves.
Increasing the discount rate used in the valuation of each asset by 0.5% would
reduce the value of the Portfolio by £4.2 million (31 December 2022: £10.5
million). Decreasing the discount rate used in the valuation of each asset by
0.5% would increase the value of the Portfolio by £4.6 million (31 December
2022: £11.2 million). The WADR of the Portfolio at 31 December 2023
was 13.6% (31 December 2022: 14.2%).
The majority of assets held within Level 3 have revenues that are linked,
partially linked or in some way correlated to inflation. The impact of
increasing the inflation rate assumption by 0.5% would increase the value of
the Portfolio by £2.4 million (31 December 2022: £3.7 million). Decreasing
the inflation rate assumption used in the valuation of each asset by 0.5%
would decrease the value of the Portfolio by £2.2 million (31 December 2022:
£2.6 million).
The valuations are sensitive to changes in interest rates. These comprise a
wide range of interest rates from short-term deposit rates to
longer-term borrowing rates across a broad range of debt products. Increasing
the interest rate assumption for each asset by 0.5% would reduce the value of
the Portfolio by £1.7 million (31 December 2022: £5.9 million). Decreasing
the interest rate assumption used in the valuation of each asset by 0.5% would
increase the value of the Portfolio by £1.9 million (31 December 2022: £6.0
million). This calculation does not take account of any offsetting factors
which may be expected to prevail if interest rates changed, including the
impact of inflation discussed above.
23. Analysis of financial assets and liabilities
The primary investment objective of the Company is to seek to maximise
long-term capital growth for its shareholders by investing in equity or
equity-related investments in a diversified portfolio of infrastructure
assets. Investments are not restricted to a single market but are made when
the opportunity arises and on an international basis.
The Company's financial instruments comprise securities and other investments,
cash balances and debtors and creditors that arise from its operations, for
example sales and purchases awaiting settlement and debtors for accrued
income.
The principal risks the Company faces in its portfolio management activities
are:
· liquidity risk;
· interest rate risk;
· credit risk;
· market price risk; and
· foreign currency risk.
The Investment Manager monitors the financial risks affecting the Company on a
daily basis and the Directors regularly receive financial information, which
is used to identify and monitor risk.
In accordance with FRS 102, an analysis of financial assets and
liabilities, which identifies the risk to the Company of holding such
items, is given below.
Liquidity risk
Due to the nature of the Company's investment policy, the largest proportion
of the portfolio is invested in unquoted securities, many of which are less
readily marketable than, for example, "blue-chip" UK equities. The Directors
believe that the Company, as a closed-end listed fund with no fixed wind-up
date, is ideally suited to making long-term investments in instruments with
limited marketability. The investments in unquoted securities are monitored by
the Board on a regular basis.
As a result, the Company may not be able to quickly liquidate its investments
at an amount close to their fair value in order to meet its liquidity
requirements, including the need to meet outstanding undrawn commitments. The
Company manages its liquid investments to ensure sufficient cash is available
to meet contractual commitments and also seeks to have cash available to meet
other short-term financial needs.
As at 31 December 2023, liquidity risk was considered low given the cash
available to the Company and the headroom on its undrawn RCF.
31 December 31 December
2023 2022
£'000 £'000
Cash and cash equivalents 29,361 182,937
Current debtors 817 959
Other creditors (2,309) (2,737)
27,869 181,159
As at 31 December 2023, capital commitments outstanding totalled £15.7
million (31 December 2022: £57.9 million), therefore liquid resources
available after commitments were £12.2 million (31 December 2022: £184.8
million).
Interest rate risk
Interest rate movements may affect the level of income receivable on cash
deposits and interest payable on variable rate borrowings. Cash deposits
generally comprise overnight call or short-term money market deposits and earn
interest at floating rates based on prevailing bank base rates.
Interest rate movements may affect the interest rate paid on financial
liabilities. Interest on RCF drawings is payable at an initial margin of 2.85%
above the relevant benchmark rate, reducing to 2.65% once certain expansion
thresholds have been met. As at 31 December 2023 the RCF was fully undrawn.
Increases or decreases in interest rates over the medium term may also affect
the discount rates at which investments are valued.
Credit risk
Credit risk is the risk that a counterparty will cause a financial loss to the
Company by failing to discharge its obligations to the Company when
they fall due.
All cash deposits are placed with approved counterparties, all of whom have a
credit rating of A- or above.
At the year end, the Company's financial assets exposed to credit risk
amounted to the following:
31 December 31 December
2023 2022
£'000 £'000
Cash and cash equivalents 29,361 182,937
Market price risk
The fair value of future cash flows of a financial instrument held by the
Company may fluctuate due to changes in market prices of comparable
businesses. This market risk may comprise: currency risk, interest rate risk
and/or fair value risk. The Board of Directors reviews and agrees policies for
managing these risks. The Investment Manager assesses the exposure to market
risk when making each investment decision, and monitors the overall level of
market risk across all of the Investment Manager's investments on an ongoing
basis.
The nature of the Company's investments means that they are valued by the
Directors after due consideration of the most recent available information.
If the Portfolio valuation at 31 December 2023 fell by 20%, with all other
variables held constant, this would have led to a reduction of £94.3 million
in the return before taxation. An increase of 20% would increase the return
before taxation by an equal and opposite amount.
Foreign exchange risk
The Company makes investments and has commitments in currencies other than
GBP, its reporting currency, and, accordingly, a significant proportion of its
investments and cash balances are in currencies other than GBP. Therefore, the
Company's NAV is sensitive to movements in foreign exchange rates.
The Investment Manager monitors the Company's exposure to foreign currencies
and reports to the Board on a regular basis.
The Company uses derivative financial instruments such as forward foreign
currency contracts to manage the currency risks associated with its underlying
investment activities. Contracts entered into by the Company are denominated
in the foreign currency of the geographic areas in which the Company has
significant exposure against its reporting currency. The contracts are used
for hedging and the fair values thereof are recorded in the Balance sheet as
other financial liabilities held at fair value. Unrealised gains and losses
are taken to capital reserves.
The table below sets out the Company's foreign exchange exposure:
GBP USD(1) EUR(1) Total
Foreign exchange risk £'000 £'000 £'000 £'000
At 31 December 2023
Cash and cash equivalents 26,588 2,490 283 29,361
Investments held at fair value through profit or loss 80,598 239,228 151,842 471,668
Other debtors 1,426 - - 1,426
Other payables (2,309) - - (2,309)
Derivatives - financial assets - 2,253 1,634 3,887
106,303 243,971 153,759 504,033
GBP USD(1) EUR(1) Total
Foreign exchange risk £'000 £'000 £'000 £'000
At 31 December 2022
Cash and cash equivalents 181,987 828 122 182,937
Investments held at fair value through profit or loss - 217,282 84,100 301,382
Other debtors 1,699 - - 1,699
Other payables (2,737) - - (2,737)
Derivatives - financial liabilities (8,520) - - (8,520)
172,429 218,110 84,222 474,761
1. These values are expressed in GBP.
If there had been an increase/(decrease) in the GBP/USD exchange rate of 10%,
it would have the effect of (decreasing)/increasing equity shareholders' funds
by £(24.4) million/£24.4 million (2022: £(6.8) million/£8.3 million),
which includes the impact of the foreign currency exchange contracts to
partially offset the movement in value. The calculations are based on the
financial assets and liabilities and the foreign exchange rate as at 31
December 2023 of 1.27479 GBP/USD (2022: 1.2029 GBP/USD).
If there had been an increase/(decrease) in the GBP/EUR exchange rate of 10%,
it would have the effect of (decreasing)/increasing equity shareholders' funds
by £(15.4) million/£15.4 million (2022: £3.1 million/£(3.7) million),
which includes the impact of the foreign currency exchange contracts to
partially offset the movement in value. The calculations are based on the
financial assets and liabilities and the foreign exchange rate as at 31
December 2023 of 1.15403 GBP/EUR (2022: 1.1271 GBP/EUR).
Managing capital
The Company's equity comprises Ordinary Shares as described in Note 16.
Capital is managed so as to maximise the return to shareholders while
maintaining a capital base that allows the Company to operate effectively and
sustain future development of the business.
The Company considers its capital to comprise called-up share capital and net
available cash.
The Company's capital requirement is reviewed regularly by the Board
of Directors.
24. Transactions with the Investment Manager and related parties
The amounts paid to the Investment Manager, together with the details of the
Investment Management Agreement, are disclosed in Note 2. The Company's
related parties are its Directors. The fees paid to the Company's Board are
disclosed in the Directors' remuneration report on pages 96 to 100 of the full
Annual Report and Accounts. There were no outstanding amounts due for
Directors' fees as at 31 December 2023 (2022: £nil).
25. Post balance sheet events
Buybacks
Since the year end, the Company has bought back 3.1 million Ordinary Shares at
a total cost of £2.6 million.
Revolving credit facility
On 18 March 2024 the Company agreed an extension to its £115 million RCF,
resetting its maturity to March 2027.
AIFMD disclosures
The Company is an Alternative Investment Fund (AIF) for the purposes of the
Alternative Investment Fund Managers Directive
(Directive 2011/61/EU) (AIFMD), and the Investment Manager was appointed as
its Alternative Investment Fund Manager (AIFM) for the purposes of the AIFMD.
The Investment Manager is a 'full scope' AIFM for the purposes of the AIFMD.
The AIFMD requires certain disclosures to be made in the annual report of the
Company. Many of these disclosures are already required by the Listing Rules
and/or UK Accounting Standards, and these continue to be presented in other
sections of the annual report, principally the strategic report, the
Investment Manager's report (above and on pages 20 to 37 of the full Annual
Report and Accounts) and the financial statements (above and pages 106 to
135). This section completes the disclosures required by the AIFMD.
Assets subject to special arrangements
The Company holds no assets subject to special arrangements arising from their
illiquid nature.
Remuneration disclosure
The total number of staff of the Investment Manager as at 31 December 2023,
including staff remunerated by affiliates of the Investment Manager, was
approximately 457, of whom 23 were senior management or other members of
staff whose actions have a material impact on the risk profile of the Company
('identified staff'). The total remuneration paid by the Investment Manager
and its affiliates to staff of the Investment Manager in respect of the year
ended 31 December 2023 attributable to work relating to the Company was as
follows:
12 months to 31 December 2023 12 months to 31 December 2022
£'000 Fixed Variable Total Fixed Variable Total
Senior management 73 109 182 70 96 166
Staff 235 144 379 190 143 333
Total staff 308 254 562 260 238 499
Identified staff 42 58 100 44 61 105
No carried interest was paid in respect of the Company during the period.
The above disclosures reflect only that element of the individuals'
remuneration which is attributable to the activities of the Investment Manager
relating to the Company. It is not possible to attribute remuneration paid to
individual staff directly to any fund and hence the above figures represent a
notional approximation only calculated by reference to the assets under
management of the Company as a proportion of the total assets under management
of the Pantheon Group.
In determining the remuneration paid to its staff, the Investment Manager
takes into account a number of factors including the performance of the
Company, the Investment Manager and each individual member of staff.
These factors are considered over a multi-year framework and include whether
staff have met the Investment Manager's compliance standards. In addition,
the Investment Manager seeks to ensure that its remuneration policies and
practices align financial incentives for staff with the risks undertaken and
results achieved by investors, for example by ensuring that a proportion of
the variable income received by identified staff is deferred for a period of
at least three years.
Full details of the Pantheon Group's remuneration policies and practices for
staff (which includes the Investment Manager's staff) can be found at
www.pantheon.com.
The AIFMD requires the Investment Manager of the Company to set leverage
limits for the Company. For the purposes of the AIFMD, leverage is any
method by which the Company's exposure is increased, whether through the
borrowing of cash or by the use of derivatives or by any other means.
The AIFMD requires leverage to be expressed as a ratio between the Company's
exposure and its NAV and prescribes two methodologies, the gross method and
the commitment method (as set out in Commission Delegated Regulation
No. 231/2013), for calculating such exposure.
The following leverage limits have been set for the Company:
i. the maximum leverage of the Company calculated in accordance with
the gross method (under Article 7 of Commission Delegated Regulation
No.231/2013) is 450%; and
ii. the maximum leverage of the Company calculated in accordance with
the commitment method (under Article 8 of the AIFMD Regulation) is 450%.
Using the methodologies prescribed under the AIFMD, the Company's leverage as
at 31 December 2023 is shown below:
Commitment
Gross method method
Leverage ratio 202% 100%
There have been no changes to the maximum level of leverage which the
Investment Manager may employ on behalf of the Company during the year to
31 December 2023. There are no collateral or asset reuse arrangements in
place as at the year end.
Risk profile and risk management
The principal risks to which the Company is exposed to and the approach to
managing those risks are set out in the strategic report (above and on pages
68 to 71 of the full Annual Report and Accounts) and also in Note 23 to the
financial statements (above and on pages 132 to 135 of the full Annual Report
and Accounts). The investment restrictions which seek to mitigate some of
those principal risks in relation to the Company's investment activities are
set out in the investment policy (above and on page 39 of the full Annual
Report and Accounts) and under 'Board responsibilities and relationship with
the Investment Manager' in the Statement on Corporate Governance (page 79 to
84 of the full Annual Report and Accounts). Additionally, the individual
counterparty exposure limit for deposits with each of the Company's bank
counterparties has been set at c.£135 million or the equivalent in foreign
currencies. The Investment Manager's risk management system incorporates
regular review of the principal risks facing the Company and the investment
restrictions applicable to the Company. The Investment Manager has
established appropriate internal control processes to mitigate the risks,
including those described in the 'Mitigation' column in the 'Principal risk
and uncertainties' section of the strategic report (above or pages 68 to 71of
the full Annual Report and Accounts). These investment restrictions were not
exceeded in the year to 31 December 2023.
Article 23(1) disclosures to investors
The AIFMD requires certain information to be made available to investors in
the Company before they invest and requires that material changes to this
information be disclosed in the annual report of the Company. The information
required to be disclosed is contained in the document 'Information for
Investors', which is available on the Company's website at
www.pantheoninfrastructure.com. There have been no material changes to this
information requiring disclosure.
Glossary
AGM
Annual General Meeting.
AIC
The Association of Investment Companies.
AIC Code
The AIC Code of Corporate Governance.
AIFM
Alternative Investment Fund Manager.
Approved investment trust company
An approved investment trust company is a corporate UK tax resident which
fulfils particular UK tax requirements and rules which include that for the
Company to undertake portfolio investment activity it must aim to spread
investment risk. In addition, the Company's shares must be listed on an
approved stock exchange. The 'approved' status for an investment trust must be
authorised by the UK tax authorities and its key benefit is that a portion of
the profits of the Company, principally its capital profits, are not taxable
in the UK.
AUM
Assets under management are the total market value of investments held under
management by an individual or institution. When referring to Pantheon's AUM,
this figure includes assets managed on a fully discretionary basis.
Carbon Disclosure Projects
A not-for-profit charity that runs the global disclosure system for investors,
companies, cities, states and regions to manage their environmental impacts.
Carried interest
Portion of realised investment gains payable to a Sponsor as a profit share.
Cloud
Cloud computing is the on-demand availability of computer system resources,
especially data storage (cloud storage) and computing power, without direct
active management by the user.
Co-investment
Direct shareholding in an investment by invitation alongside a Sponsor.
Commitment
The amount of capital that the Company agrees to contribute to an investment
when and as called by the Sponsor.
Company
Pantheon Infrastructure Plc or 'PINT'.
DCF
Discounted Cash Flow.
Exit
Realisation of an investment, usually through trade sale, sale by public
offering (including IPO), or sale to a financial buyer.
Funds under management
Funds under management includes both assets under management and assets under
advisory (assets managed on a non-discretionary basis
and/or advisory basis).
GHG
Greenhouse gas.
GIRAC
Pantheon's Global Infrastructure and Real Assets Committee.
IEA
International Energy Agency.
Initial public offering (IPO)
The first offering by a company of its own shares to the public on a regulated
stock exchange.
Internet of things
The network of physical objects (things) that are embedded with technologies
such as sensors or software for the purpose of connecting and exchanging data
with other devices and systems via the internet.
Investment Manager
Pantheon Ventures (UK) LLP.
Investment thesis
Pantheon's final stage of approval for infrastructure co-investments.
IPEV
International Private Equity and Venture Capital.
IRR
Internal rate of return is the annual rate of growth that an investment is
expected to generate over its life.
Latency
The delay before a transfer of data begins following an instruction for its
transfer.
Market capitalisation
Share price multiplied by the number of shares outstanding.
Multiple of invested capital (MOIC or cost multiple)
A common measure of private equity performance, MOIC is calculated by dividing
a fund's cumulative distributions and residual value by the
paid‑in capital.
NAV Total Return
This is expressed as a percentage. It is calculated as the total return as
shown in the Income statement, as a percentage of the opening NAV.
Net asset value (NAV)
Amount by which the value of assets of a company exceeds its liabilities.
PIH LP
Pantheon Infrastructure Holdings LP
Portfolio or operating company
A company that PINT invests in. These portfolio or operating companies in turn
own and operate infrastructure assets.
Primaries
Commitments made to private equity funds at the time such funds are formed.
RBS
Royal Bank of Scotland.
RCF
Revolving credit facility.
Science Based Targets
Science-based targets provide companies with a clearly-defined path to reduce
emissions in line with the Paris Agreement goals.
Secondaries
Purchase of existing private equity fund or company interests and commitments
from an investor seeking liquidity in such funds or companies.
SFDR
Sustainable Finance Disclosure Regulation.
SMR
Steam methane reforming.
Sponsor or general partner
The entity managing a private equity fund that has been established as a
limited partnership.
TCFD
Task Force for Climate-related Financial Disclosures.
Total return
This is expressed as a percentage. The denominator is the opening NAV, net of
the final dividend for the previous year, and adjusted (on a time weighted
average basis) to take into account any equity capital raised or capital
returned in the year. The numerator is total NAV growth and dividends paid.
Total shareholder return
Return based on dividends paid plus share price movement in the period,
divided by the opening share price.
WADR
Weighted average discount rate based on each investment's relative proportion
of Portfolio valuation.
Directors and advisers
Directors
Vagn Sørensen (Chair)
Anne Baldock
Andrea Finegan
Patrick O'Donnell Bourke
Investment Manager
Pantheon Ventures (UK) LLP
Authorised and regulated by the FCA
10 Finsbury Square
4th Floor
London
EC2A 1AF
Email: pint@pantheon.com
PINT website: www.pantheoninfrastructure.com
Pantheon website: www.pantheon.com
Secretary and registered office
Link Company Matters Limited
6th Floor, 65 Gresham Street
London
EC2V 7NQ
Telephone: +44 (0)333 300 1950
Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
Communications Adviser
Lansons Communications Holdings Limited
24a St John Street
London
EC1M 4AY
Broker
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
Depositary
BNP Paribas Trust Corporation UK Limited
10 Harewood Avenue
London
NW16 6AA
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Solicitors
Hogan Lovells International LLP
Atlantic House
Holborn Viaduct
London
EC1A 2FG
Disclosure 1 - Investments
This annual report provides information about certain investments made by
PINT. It should NOT be regarded as a recommendation. Pantheon makes no
representation or forecast about the performance, profitability or success of
such investments. You should not assume that future investments will be
profitable or will equal the performance of past recommendations. The
statements made reflect the views and opinions of Pantheon as of the date of
the investment analysis.
FURTHER INFORMATION
PINT's Annual Report and Accounts for the year ended 31 December 2023 will be
available today on www.pantheoninfrastructure.com
(http://www.pantheoninfrastructure.com)
Shortly, it will also be submitted in full unedited text to the Financial
Conduct Authority's National Storage Mechanism and will be available for
inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) in accordance with
DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on this announcement (or any other website) is
incorporated into, or forms part of, this announcement.
ENDS
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