Annual Financial Report
01/08/2024 07:00
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RNS Number : 6854Y Pantheon International PLC 01 August 2024
For immediate release
The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, Canada,
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distribution is or may be unlawful.
PANTHEON INTERNATIONAL PLC
ANNUAL REPORT FOR THE TWELVE MONTHS ENDED 31 MAY 2024
The full Annual Report and Accounts can be accessed via the Company's website
at www.piplc.com (http://www.piplc.com) or by contacting the Company Secretary
by telephone on +44 (0)333 300 1950.
Pantheon International Plc
(the "Company" or "PIP")
Pantheon International Plc, a FTSE 250 investment trust that provides access
to an actively-managed global and diversified portfolio of private
equity-backed companies, today publishes its Annual Report and Accounts for
the twelve months ended 31 May 2024.
A cohesive and holistic strategy that puts shareholders first
· Focused corporate strategy
o Capturing value for shareholders: Share buyback programme of £200m was
completed just after the financial year end. During the year to 31 May 2024,
£196.7m was invested in share buybacks which added +4.7% to the NAV.
o Announcement of a clear capital allocation policy: With effect from 1 June
2024, a proportion of adjusted net cash flow is allocated to share buybacks on
a tiered basis depending on the prevailing discount at which the shares trade
at the time. PIP will continue to invest in exciting new private equity
opportunities, capable of generating market-beating returns over the long
term, alongside share buybacks.
o Stimulating demand for PIP's shares: Commencement of an enhanced marketing
programme to optimise the relevance and attraction of PIP to both existing and
new retail and institutional investors.
· Effective investment strategy
o PIP's underlying portfolio company investments have continued to exhibit
above-market growth, with EBITDA and revenue growth of 17% and 14%
respectively during the year. Over the past five financial years, PIP's
portfolio companies have grown EBITDA and revenue at a rate of 19% and 17%
p.a. respectively. This indicates the strength and resilience of these
companies and underpins our confidence in PIP's reported NAV.
o Minimising risk: PIP's loss ratio for all investments, realised and
unrealised, made over the last 10 years is low at 2.3%(1).
· Robust financing strategy
o Optimising PIP's capital structure: A new £500m equivalent credit
facility, to replace the previous credit facility and Credit Suisse as a
lender, and a private placement of US$150m of loan notes were agreed during
the period.
o More diverse and flexible structure: The number of PIP's credit
counterparties was increased from three to ten within two separate highly
liquid markets.
Performance update
· PIP's share price increased by 20% during the period.
· NAV per share grew by 6.1% during the full year. Valuation gains
across the entire portfolio and NAV accretion from share buybacks were
partially offset by unfavourable currency movements, given that PIP's
portfolio is predominantly USD-denominated. Currency movements tend to balance
out over the long term.
· PIP has a strong long-term track record. Annualised NAV per
share growth over the last 10 years has been 13.5%, beating the public market
benchmarks over the same period.
(( 1 )) Loss ratio is calculated as the sum of 1) the loss made on realised
investments which have exited below cost and 2) the difference between the
unrealised value and the cost of unrealised investments which are held below
cost, divided by the aggregate costs of all investments.
Annualised performance as at 31 MAY
2024
1 yr 3 yrs 5 yrs 10 yrs Since inception(1)
NAV per share (stated net of fees) 6.1% 12.5% 12.1% 13.5% 11.9%
Ordinary share price 19.9% 6.2% 7.9% 11.1% 10.9%
FTSE All-Share, Total Return 15.4% 7.9% 6.5% 5.9% 7.6%
MSCI World, Total Return (Sterling) 22.2% 11.2% 13.1% 12.8% 8.6%
(1) Inception in September 1987.
NAV per share vs. market performance
1 yr 3 yrs 5 yrs 10 yrs Since inception
Versus FTSE All-Share, Total Return -9.3% +4.6% +5.6% +7.6% +4.3%
Versus MSCI World, Total Return (Sterling) -16.1% +1.3% -1.0% +0.7% +3.3%
Share price vs. market performance
1 yr 3 yrs 5 yrs 10 yrs Since inception
Versus FTSE All-Share, Total Return +4.5% -1.7% +1.4% +5.2% +3.3%
Versus MSCI World, Total Return (Sterling) -2.3% -5.0% -5.2% -1.7% +2.3%
Portfolio update
· Direct investments account for majority of the portfolio with 54%
of PIP's portfolio invested in co-investments and single-asset secondaries,
which are complemented by hard-to-access funds.
· PIP had over 400 full exit events during the year. The weighted
average uplift from these fully realised exits was 20% and the weighted
average uplift since 2012 has been 30%.
· The average cost multiple on exit realisations was 3.2 times
during the full year, and that figure since 2012 has been 3.0 times. The cost
multiple on the existing portfolio, as implied by the current NAV, is 1.6
times. These figures point to the significant embedded value in PIP's
portfolio.
· PIP's portfolio has remained cash-generative during the period
with net cash inflow from the portfolio of £37m. PIP has generated £1.6bn of
net cash over the last 10 years.
Financial position update
· As at 31 May 2024, PIP had net available cash of £16m while
£83m was drawn down under the £500m credit facility and £118m of sterling
equivalent loan notes were outstanding.
· Therefore as at 31 May 2024, PIP's net debt to NAV, excluding the
Asset Linked Note, was conservative at 8.1%. The Board currently does not
expect net leverage to exceed 10% of NAV under normal market conditions.
· As at 31 May 2024, PIP's financing cover was 3.9x and its undrawn
coverage ratio was comfortable at 89%.
Commenting on the full year, John Singer CBE, Chair of PIP, said: "This has
been a highly successful year in progressing our medium-term strategy,
integrating corporate and investment activities that put shareholders first.
Our objective remains to deliver attractive risk-return over the long term to
a wide base of investors, and we believe that our flexible, strategic
investment approach and financing structure support this well. Our corporate
measures to date clear the path for the next stage of our journey to stimulate
demand for PIP's shares - the surest route to dealing with the discount
issues. And so we have embarked on a programme to dispel the myths that have
surrounded the private equity sector for so long and to increase our marketing
efforts to widen PIP's appeal. And we will continue to do this in the spirit
of transparency and communication to build on your trust regarding our putting
you first."
Commenting on PIP, Charlotte Morris, Partner at Pantheon and Co-Lead Manager
of PIP, said: "PIP benefits from being an integral part of Pantheon's
platform, having access to a broad set of global relationships, deal
opportunities and expertise. On behalf of PIP, we are backing top quality
managers who are sector specialists, focusing on resilient, non-cyclical
sectors that are benefitting from long-term trends such as automation and
digitalisation, ageing demographics and sustainability. We believe that these
longer-term trends will continue to provide tailwinds to PIP's portfolio
companies."
Commenting on the private equity market, Helen Steers, Partner at Pantheon and
Co-Lead Manager of PIP, said: "One of the fundamental characteristics of the
private equity industry is its ability to adapt, evolve and respond flexibly
to prevailing market conditions. Private equity managers are patient as well
as active investors. We are unable to predict the timing of a resurgent
M&A market, but there are very early signs that the tide may be starting
to turn, which means that several of PIP's portfolio companies, which are
already being prepared for exit, will be ready for sale as the outlook
improves."
Videos of John Singer CBE discussing corporate activity during the year and of
the Pantheon team discussing PIP's full-year results are available on PIP's
website at www.piplc.com (http://www.piplc.com) .
Capital Markets Afternoon
PIP will host a Capital Markets Afternoon on 12 September 2024 during which
there will be presentations from Pantheon and some of PIP's underlying private
equity managers. Institutional investors and analysts wishing to attend should
contact the Pantheon team at pip.ir@pantheon.com (mailto:pip.ir@pantheon.com)
for further details.
LEI: 2138001B3CE5S5PEE928
For more information please contact:
Pantheon
Helen Steers / Charlotte Morris / Vicki Bradley +44 (0)20 3356 1800
pip.ir@pantheon.com (mailto:pip.ir@pantheon.com)
Investec Bank plc +44 (0)20 7597 4000
Joint Corporate Broker
Tom Skinner (Corporate Broking)
Lucy Lewis (Corporate Finance)
J.P. Morgan Cazenove +44 (0)203 493 8000
Joint Corporate Broker
William Simmonds (Corporate Finance)
Montfort Communications +44 (0)7738 912267
Gay Collins / Pippa Bailey / PIP@montfort.london (mailto:PIP@montfort.london)
Michael Schutzer-Weissmann
Follow PIP on LinkedIn:
https://www.linkedin.com/company/pantheon-international-plc
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ANNUAL GENERAL MEETING
The Company's Annual General Meeting ("AGM") will be held at 10-11 Carlton
House Terrace, London, SW1Y 5AH at 10.30 a.m. on Wednesday, 16 October 2024. A
separate circular containing the AGM notice will be published and made
available on the Company's website and the National Storage Mechanism.
NATIONAL STORAGE MECHANISM
A copy of the Annual Report and Financial Statements and the separate circular
containing the AGM notice will be submitted shortly to the National Storage
Mechanism ("NSM") and will be available for inspection at the NSM, which is
situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
This announcement contains inside information.
John Singer CBE
Chair, Pantheon International Plc
Broadwalk House, Southernhay West, Exeter, Devon EX1 1TS
Important Information
A copy of this announcement will be available on the Company's website at
www.piplc.com (http://www.piplc.com/) Neither the content of the Company's
website, nor the content on any website accessible from hyperlinks on its
website for any other website, is incorporated into, or forms part of, this
announcement nor, unless previously published by means of a recognised
information service, should any such content be relied upon in reaching a
decision as to whether or not to acquire, continue to hold, or dispose of,
securities in the Company.
STRATEGIC REPORT
AT A GLANCE
Making the private, public
A share in Pantheon International Plc ("PIP" or the "Company") provides access
to a high-quality diversified portfolio of private-equity backed private
companies around the world that would otherwise be inaccessible to most
investors. Shares in PIP can be bought and sold as they would in any other
publicly listed company.
PIP is a FTSE 250 private equity investment trust, actively managed by
Pantheon, one of the leading private markets investment managers globally.
PIP is overseen by an independent Board of Directors who come from a range of
backgrounds.
As at 31 May 2024
Net asset value ("NAV") £2.3bn
NAV per share growth in the year +6.1%
Annualised NAV per share growth since 1987 (net of fees) +11.9%
Market capitalisation £1.5bn
Share price change in the year +19.9%
Annualised share price return since 1987 +10.9%
Weighted average uplift at exit(1) +20%
Ten-year loss Ratio(2) 2.3%
Association of Investment Companies ("AIC") ongoing charges(3) 1.31%
(1) The uplift on full exit compares the value received upon realisation
against the investment's carrying value 12 months prior to exit or if known,
the latest valuation unaffected by pricing effects arising from market
participants becoming aware of the imminent sale of an asset.
(2) Loss ratio is defined as the sum of (1) the loss made in the realised
investments which have exited below cost and (2) the difference between the
unrealised value and the cost on the
unrealised investments which are held at below cost, divided by the aggregate
investment costs of all investments.
(3)Ongoing charges are calculated based on the AIC definition. Including
financing costs, PIP's total ongoing charges would be 1.87%. See the
Alternative Performance Measures section in the full Annual Report for
calculations and disclosures.
CHAIR'S STATEMENT
Progress built on trust
This has again been a year of great corporate and investment activity for PIP.
It has resulted, I am delighted to report, not only in a continuing increase
in the value of the underlying portfolio, but an even greater one in our share
price, increasing 20% during the period.
I would like to thank my fellow Board members and the PIP Management Team, but
even more so, the shareholders and fellow colleagues in the sector for their
encouragement and input into our progress.
This year, progress for PIP has been based on three factors. Firstly, Boards
in our sector have to go beyond stewardship and administration to greater
strategic proactivity to deliver on Net Asset Value (NAV) and share price
growth, based on a deep understanding of private equity. We should also
proactively aim to increase new demand for quoted private equity from both
retail and institutional investors. Secondly, our Board's corporate,
investment and leverage strategies have been closely integrated to support
each other to deliver investor objectives. And thirdly, now more than ever,
our continuing growth and progress must be built on trust - putting
shareholder interests' ahead of all others through all cycles. In setting out
the year's results below I will focus more on the "why and for whom" rather
than just the "what and how" of everything we are doing.
Comprehensive strategy to deliver attractive risk-return to shareholders
When we started our original review of PIP's authenticity, relevance for
shareholders and differentiation, it was clear that our governance required an
integration of corporate, investment and leverage strategies from the start -
even if the timing and implementation of each would be different. This
required holistic thinking both at the Board and Management Team levels.
Knowing that we are driven by this mindset should provide investors with
reassurance of the Board's focus on improving performance over the long term.
In this financial year, we have made significant progress in all three areas.
Corporate Strategy
After announcing the three-step corporate programme in my Chair's Statement in
August 2023, we have dedicated ourselves to making progress on each of the
three steps that I outline here. These steps form the backbone of our
corporate strategy.
1 Step One
Following the launch of the share buyback programme last summer, PIP embarked
on a £150m(1) reverse tender offer in October 2023, repurchasing 49.2m shares
at a strike price of 305.0p per share, which represented a weighted average
discount of 35% to the then-prevailing NAV per share. Having completed this
part of the share buyback programme successfully, we turned to address the
remaining component of the £200m that had been announced and allocated. Over
the course of the year to 31 May 2024, PIP bought back 64.3m shares (12.1% of
share capital) for a total amount of £196.7m(1), at an average price of
306.0p per share, equivalent to an average 35% discount to NAV, and
representing around 8% of opening NAV. In the weeks after the year-end, we
kept to our word and completed further buybacks, ensuring that the full £200m
allocated to the programme was indeed invested in share repurchases. Overall,
the share buybacks during the year resulted in an uplift to year-end NAV per
share of 4.7%.
+4.7% NAV uplift from share buybacks during the year
I must reiterate that the purpose of the share buybacks was not primarily to
narrow the discount but rather to prepare the groundwork to enhance our
chances of success in stimulating demand for our shares by reducing perceived
obstacles in the minds of investors. Concerns, for example, such as the
overhang of legacy shareholders, or whose interests the Board puts first. We
are pleased to report that the completion of the share buyback programme and
tender offer have resulted in a refreshed share register for PIP, achieved
through new buyers coming onto the register as well as a few large legacy
shareholders reducing their holdings through an equitable and democratic
process available to all. This also represented an excellent opportunity to
invest in our own portfolio, where we know the underlying investments well and
have conviction in the NAV, through buying back £200m worth of shares at a
large discount.
We hope the success of this process and the reasoning behind it will dispel
perceptions that Boards and managers do not put shareholders' interests first.
2 Step Two
With the initial share buyback programme largely completed by 31 May 2024, and
two important elements of our leverage strategy in place, we were pleased to
announce our new Capital Allocation Policy. When I originally announced the
three-step programme, I emphasised the importance of a continuing commitment
to share buybacks during periods when the discount of share price to NAV
remains high. This allows us to take advantage of embedded value in the
portfolio as well as new investment opportunities at all points in the cycle.
Buybacks, when discounts widen, offer an opportunity to invest in an existing,
high-quality portfolio that we know extremely well, and where we benefit both
from embedded value implicit in the discount, and from the eventual uplifts on
NAV that we typically experience at exit.
"We refined our Capital Allocation Policy to provide clear guidance on how we
will seek to allocate available cash between new investments and share
buybacks."
With this objective in mind, we refined our Capital Allocation Policy to
provide clear guidance on how we will seek to allocate available cash between
new investments and share buybacks. We have deliberately laid out a set of
parameters linked to net cash flow, which are to be applied based on the
prevailing discount at the end of each financial quarter. This is designed to
give shareholders clarity on our approach, with assessments made and the
quantum available for buybacks announced at quarterly intervals, effective
from 1 June 2024. The policy is clear, easy to understand and measurable using
underlying metrics that are already reported to the market. We look forward to
implementing this continuing commitment to investing in the most attractive
opportunities, including the repurchase of our own shares. The mechanics of
this are set out below.
3 Step Three
The overall objective is to build on the momentum created by steps one and two
to create more demand for PIP's - and the listed private equity sector's -
shares, which should over time narrow the discount between share price and NAV
sustainably, in a way in which steps one and two alone could not be expected
to achieve. Our mission is to optimise the relevance and attraction of our
offering to both existing and new retail and institutional investors, through
two-way exchanges of conversation and ideas with investors, brokers,
investment bodies, and fellow chairs of other investment trusts, complemented
by a more assertive marketing strategy. As a sector, we must come together to
address the concerns of shareholders, so that a rerating of our sector can be
earned.
Misunderstandings in the sector persist, such as perceptions of inflated
valuations, fees and the lack of consistent disclosure. Investors complain of
inadequate disclosure in areas of policy like leverage and buybacks, and they
are sometimes suspicious of the relationship between Boards, managers and
shareholders. Bringing colleagues across the industry together to provide
education and tackle these misconceptions would be for the good of the sector
overall and should help to remove many of the obstacles that currently dampen
demand for listed private equity.
"As a sector, we must come together to address the concerns of shareholders,
so that a well-deserved rerating of our sector can take place."
Together with sector-wide initiatives to dispel myths, we plan to increase our
PIP marketing effort. I am delighted to report that, since the interim
statement, the Marketing Committee embarked on a process to identify and
appoint a marketing agency, which was recently completed. Our work over the
coming months will focus on clarity of branding, communication and reasons to
purchase and hold PIP shares for the long term through increased marketing
spend. With our marketing agency, we are increasing the resources and
attention dedicated to segmentation analysis. We believe these efforts will
result in maintaining existing and attracting new retail and institutional
investment.
My deeply held belief is that building on the trust and goodwill that we have
created in the market will bring in new investors who, even when educated
about the benefits of Private Equity, feel uneasy about entrusting money to
what can appear as a complex and opaque industry. It is incumbent on us to
explain the "why" at the heart of what we do at PIP and "for whom" we are
doing it. Our deep culture and values have been embedded over decades into
investing shareholder capital and help us maintain our clear focus on investor
interests and ensure they are put first.
The corporate strategy and the associated share buyback programme and Capital
Allocation Policy required detailed scenario analysis and thoughtful
consideration which is woven into our investment and leverage strategies as
set out below.
Investment Strategy
Alongside the share buyback programme and the allocation of capital to invest
in our own portfolio, £153m of capital has been deployed this year into
attractive new investments globally with a continuing focus on direct
investments. These now represent 54% of the portfolio and are growing as we
maintain our investment target of around one third of new capital earmarked
for co-investments and the same for single asset GP-led secondaries. Over five
years ago, we started moving towards more direct exposures, based on the
conviction that such a focus enables PIP to shape its portfolio more
precisely, as well as bringing PIP closer to the assets and the GPs managing
them.
"The tilt towards direct investments in single assets is already bearing
fruit, both in terms of returns and our proximity to the GPs."
The tilt towards direct investments in single assets is already bearing fruit,
both in terms of returns and our proximity to the GPs. Through the process of
selection, monitoring, valuation and advisory board support, we can better
align our objectives on topics such as sustainability, value creation methods
and timing of exit, with those of the GP and management teams of the assets.
Direct investments have the added advantage of carrying lower or no fees.
I continue to highlight the importance of our having a number of Board members
with long experience in Private Equity, as well as a highly experienced
Private Equity Manager in Pantheon, which gives us what I call "double-filter"
Private Equity skills - an additional lens added to that of the GP.
"We believe that investing with GPs who are focused on revenue growth and
operating performance is superior to investing in those relying on one-off
cost cutting and layering on aggressive debt loads."
Importantly, we can use this double filter to reduce risky reliance on the
components of value creation that cannot be controlled, such as multiple
arbitrage and reliance on rising markets to boost returns; and aggressive use
of leverage that was a low-cost way to augment returns between the Global
Financial Crisis and the start of interest rates rising two years ago. During
that period of cheap debt and rising valuations, many GPs were able to
generate returns by virtue of market conditions but in a risky and
unsustainable way. To invest consistently over market cycles and generate
returns whatever the macro environment, we believe that investing with GPs who
are focused on revenue growth and operating performance is superior to
investing in those relying on one-off cost cutting and layering on aggressive
debt loads. The result of this can be seen in the +17% of EBITDA growth within
the underlying portfolio companies over the period. Even in this difficult
year for trading it was in line with +19% of such earnings growth over the
last five years.
Thinking in line with Pantheon's quality GPs and working closely with them
helps us spot trends and capitalise on them swiftly.
+17% Weighted average EBITDA growth for the buyout portfolio(2)
This is especially the case in our expansion in the dynamic GP-led secondaries
space, where we continue to be able to identify opportunities alongside our
GPs to invest in top-performing businesses.
Another important differentiator PIP offers retail and institutional
portfolios is a truly global exposure that is underpinned by our ability to
use global and local teams to offer risk-monitored diversification across
sectors, geographies and currencies. PIP's portfolio is invested in the
deepest and most experienced private equity markets in the world, with 54% in
the USA, 31% in Europe, 8% in global assets and 7% in Asia.
Sustainability, focusing in particular on ESG considerations, is a component
of Pantheon's investment process and provides a further lens for risk
management, value creation and due diligence.
As a reminder, PIP invests directly into the investment opportunities
presented by Pantheon, and is therefore able to control its portfolio
construction and investment deployment flexibly and proactively. The process
of origination, due diligence, execution and monitoring of investments which
is managed by Pantheon - and overseen by our Board - reflects a strong culture
and set of values that is encompassed in our Manager's philosophy and
processes and mirrored in PIP's Board.
Fundamental to the culture is transparency and a genuine commitment to
listening to and understanding shareholder interests and needs. Pantheon was
founded on principles of trust and putting the long-term interests of
investors first and, over its more than 40 years of operations, throughout
cycles, has demonstrated its ability to make the relevant changes to maintain
this behaviour. The sharing of objectives is exemplified by the alignment
created by the PIP holdings of the Directors and Pantheon Partners that
represent a total shareholding of 5.3m (3.8m collectively owned by the Board
Directors and a further 1.5m shares held by 14 Partners of Pantheon,
representing a combined value of £17.2m as at 31 July 2024).
Leverage Strategy
The last component of PIP's holistic and integrated strategy is our approach
to leverage. In order to achieve our aims of delivering attractive risk-return
to shareholders, we take a prudent approach to leverage and seek a sensible
risk balance.
As I reported in my interim statement, we achieved two important milestones
during the year, culminating in a process that had begun in the first half of
2023: the refinancing of PIP's revolving credit facility and a private
placement of long-dated loan notes - a type of financing that had not
previously been used in the sector. The incorporation of prudent use of debt
marked a shift away from a net cash position, with a key benefit to
shareholders being the reduction in idle cash on the balance sheet and
associated cash drag on NAV performance.
In October 2023, PIP refinanced its £500m equivalent revolving credit
facility, securing a more favourable covenant package and a margin increase of
46 basis points, despite the significant change in the lending environment.
Following that, on 12 January 2024, PIP completed a private placement of $150m
(£118m equivalent) of loan notes, which were three times oversubscribed and
purchased by five sophisticated North American institutional investors with
considerable in-house knowledge of the private equity asset class. Overall,
there was no change in PIP's overall leverage immediately after the private
placement, as those proceeds were used to part-repay the RCF.
Through these two actions, we have secured a diversity of lending mix, which
not only strengthened PIP's balance sheet but also provides wider geographic
and financial sector sourcing with carefully selected players for today's
markets. A further benefit was increasing the number of credit counterparties
from three to 10 within two separate highly liquid markets. Consequently, PIP
is now much better placed to replace any particular credit counterparty that
faces a similar situation to Credit Suisse in the future.
After taking these two significant actions, we have been transparent in
disclosing in great detail PIP's gearing policy, the first in the sector to do
so. Openness and transparency are major elements of PIP's and Pantheon's
values and culture. We believe in setting targets for leverage which we
respect, and honouring investor expectations.
These changes to PIP's capital structure better support the integrated
investment and corporate strategies during a time of robust, high-quality deal
flow while share price discounts, though reduced, remain wide. Our more
flexible capital structure is managed with thorough and well-defined processes
with a view to ensuring prudence. In that context, we aim to improve
performance, beat the MSCI World index over the medium to long term and
provide alternative safe options for new growth through the cycles.
Performance
Against a challenging macroeconomic backdrop and a period of scepticism about
private market valuations, I am pleased to report the strong performance that
PIP delivered over the year thanks to its robust, balanced and high quality
underlying portfolio. In a market experiencing continuing lower exit and
distribution levels than historically, and an increase sector-wide in
portfolio company holding periods to six years, maintaining earnings growth in
those companies becomes an even more critical differentiator. I am happy to
report that our portfolio companies have performed well again this year, with
revenue and EBITDA growth CAGRs of 14% (in line with the MSCI) and 17% (higher
than the MSCI at 13%) respectively.
These data points are based on all available information at the company level
and not on a selected group of investments. In contrast to public companies
and investment trusts that invest in listed equities, Private Equity GPs can
do much more operationally with their portfolio companies. Through investment
into additional resources such as portfolio support groups, Operating Partners
providing functional expertise and deal teams that work hand in hand with the
company management, GPs are able to drive superior EBITDA growth.
2.3% Loss ratio over the last ten years
Moreover, PIP's strategy of working in partnership with these GPs and getting
closer to the assets allows us to target investment opportunities with the
most attractive financial profiles and to influence the growth we see in the
portfolio. Contrary to some perceptions that private equity investments are
necessarily risky, our strategies result in a strong performance at a lower
level of risk demonstrated by a loss ratio of only 2.3% over ten years.
The annualised performance of NAV per share over three-, five- and 10-year
periods was 12.5%, 12.1% and 13.5% respectively, and 11.9% since inception,
which reflect the consistent long-term value appreciation that shareholders
trust us to deliver. Over the year to 31 May 2024, NAV per share grew +6.1%.
+6.1% NAV per share growth, over the year to 31 May 2024
The drivers of that performance were: the valuation gains from the underlying
portfolio (+5.0%); and the impact of the share buybacks (+4.7%), which were
then offset by the effects of currency and expenses. Over recent years, some
commentators have claimed that the NAVs quoted by GPs for their portfolio
companies are inflated and haven't reflected the movements in public markets.
In fact, PIP experienced a small contraction in multiples used for EV/EBITDA
valuation of over a turn to 17.3x, while the equivalent metric for the MSCI
increased more than half a turn to 20.1x. This trend was also observed in net
debt / EBITDA multiples, which fell since the interim report to 4.8x for
small/mid-market buyout and 5.2x for large/mega buyout. Small/mid-market
buyouts are a part of the buyout landscape that is core to PIP's strategy
(representing 46% of the portfolio) for good reason.
This segment of the market generally employs lower leverage, which has
served to limit the impact of high interest rates, which ultimately protects
margins. these factors, combined with our robust valuation processes
(summarised in the full Annual Report) should reassure shareholders of the
enhanced value being created for them.
Ultimately, the true endorsement of the value of a company is the exit price
achieved on sale. Over the year to 31 May 2024, PIP experienced a 20% average
uplift at exit. The distribution case studies in the full Annual Report
provide some examples of the value creation that our GPs have been able to
generate and the uplift at exit that reflected the transformation of those
companies, even in a challenging year. Overall, when considering the long term
performance of PIP, I believe that we are delivering on our goal to generate
consistent returns over the long term. Over various periods (and indeed since
inception), PIP continues to generate outperformance relative to public market
benchmarks as well as on an absolute basis. While the share price discount to
NAV remains at 34%, I am pleased with the 20% growth in share price over the
year to 31 May 2024 and am excited to continue our work on step three,
bringing colleagues in the sector together to increase demand for quoted
private equity with a view to narrowing the discount over time.
+20% Average uplift on exit realisations(3)
Governance
Underpinning all we do as a Board is the basic tenet of putting shareholders
first and building on the trust that has been invested in us. While some
Boards may rely on their managers, PIP's Board works with them as a team,
always respecting the red line and seeking to ensure the highest standards of
governance for the benefit of all stakeholders.
I am proud of this relationship and the working practices that we follow with
the Pantheon team. The solid Private Equity experience within the Board leads
to greater credibility and ease of working with the Executive Team in
governance terms, as does the marketing and PR experience of Directors.
Moreover, PIP benefits not only from the collaborative working with the
Management Team directly, but also from access to the banking, marketing, risk
and support services teams at Pantheon.
In summary, the depth of the Board's experience, and its style of working with
the Management Team, allow for a much more informed debate and challenge on
investment, corporate and leverage strategies. We are fully involved in all
three and not just a rubber stamp on Manager recommendations. One example of
the increasing oversight and governance is the presence of the Audit Chair
designate, Zoe Clements, at the Pantheon Valuation Committees, as well as the
semi-annual provision of a formal report from the Valuation Committee to the
Board.
As I reported in my Interim Statement, we have welcomed two new Directors to
the Board, both of whom were elected at the AGM last October. Zoe Clements and
Rahul Welde bring extensive experience and skills to the Board and Committees
with Rahul joining the Marketing Committee and Zoe the Finance Committee. As
we prepare with sadness and much gratitude to bid farewell to David Melvin at
the next AGM, with Zoe succeeding David in his role as Audit Chair, we are
appointing a search agency to identify additional Non-Executive Directors and
I look forward to updating you on our search.
After a year that was extremely busy for PIP with a multitude of corporate
actions completed, while still attending to the day-to-day operations, I would
like to thank my fellow Board members and the Pantheon Management Team for
their work, including Jie Gong for her input while she was working with PIP. I
would also like to take this opportunity to welcome Charlotte Morris to the
PIP team, who joins Helen Steers as Co-Lead Manager.
Our work on steps one and two was widely applauded by shareholders and
analysts. Indeed, the feedback I received directly from shareholders in my
series of investor meetings was a pleasing endorsement of our emphasis on the
"why" and "for whom" elements of what we do. We were delighted that the
Board's strong governance and leadership, listening to shareholders and
prioritising their needs, was recognised by the award of "Board of the Year"
at the Citywire awards.
For whom are we making this journey?
For all our stakeholders, most certainly! But also with an eye to attracting
more new shareholders - both retail and institutional - to join those who
became PIP shareholders for the first time during the buy back process.
For existing and new we will be relying on our integrated strategies set out
above, and our prudent investment pacing to ensure liquidity in a market
environment experiencing lower exit and distribution levels than historically.
And our nimbleness to modify investment strategy for PIP, will allow us to
continue to grow as a favoured route to long-term capital gains, despite
events such as the GFC in 2008 or the more recent post-Covid challenging
macroeconomic backdrop.
"A decades-long and solid track record of generating returns, overseen by an
independent and highly experienced Board, and managed by Pantheon."
It is the high returns/low risk results, decade by decade, that convinced me
and my colleagues at PIP to pursue the democratisation of PE. Individuals, as
well as institutions, should own this high performing asset class as an
element of their portfolios, enhanced by the liquidity offered by the quoted
investment trust vehicle, created and developed in the UK. It is very
encouraging to see that Defined Contribution pension providers are
increasingly keen now to include private markets asset classes in their
offerings, recognising the fact that PE provides outperformance, access to a
broader investment set, and diversification. Outperformance achieved at low
levels of risk - contrary to misunderstandings about the industry. Our
portfolio demonstrates this with a loss ratio of only 2.3% over 10 years - a
figure which includes not only realised losses but also often temporarily
impaired valuations which can be reversed at exit.
We will, therefore, continue to apply the three factors of strategic
proactivity, integrated strategies and further building on trust to provide PE
exposure for any investor (institutional or retail, small or large), including
those who do not have the size, access, management resources or desire to
build a direct portfolio of PE investments. Each share of PIP provides an
investment in a globally diversified, low-risk PE portfolio that would take
them many years and significant financial resources to develop, with a
decades-long and solid track record of generating returns, overseen by an
independent and highly experienced Board, and managed by Pantheon.
We will continue the journey described here in line with the principles that
have provided us with a very successful year in terms of making progress in
2024 on our overall strategic objectives, and very much hope to have you with
us on this exciting journey.
PIP's Strategic Report has been approved by the Board and should be read in
its entirety by shareholders.
JOHN SINGER CBE
Chair
31 July 2024
(1) Excluding costs and stamp duty.
(2) The sample buyout figures for the 12 months to 31 December 2023 were
calculated using all the information available to the Company. The figures are
based on unaudited data. MSCI data was sourced from Bloomberg. See the
Alternative Performance Measures section in the full Annual Report for sample
calculations and disclosures.
(3) Uplift on full exit compares the value received upon realisation against
the investment's carrying value 12 months prior to exit or if known, the
latest valuation unaffected by pricing effects arising from markets
participants becoming aware of the imminent sale of an asset.
KEY PERFORMANCE INDICATORS
What this is How PIP has performed Link to our strategic objectives Examples of related factors that we monitor
Performance
Five-Year cumulative total shareholder return Total shareholder return constitutes the return to investors, after taking 31 May 2022 • PIP's ordinary shares had a closing price of 326.0p at the year end (31 • Maximise shareholder returns through long-term capital growth. • Rate of NAV growth relative to listed markets.
46.5% into account share price movements (capital growth) and any share buybacks
64.8% May 2023: 272.0p). This was a 20% increase compared to the prior year.
• Promote better market liquidity and narrow the discount by building demand • Trading volumes for the Company's shares.
paid during the period.
for the Company's shares. • Share price discount to NAV.
31 May 2023 • Narrowing of share price discount following the implementation of PIP's
31.0% £200m share buyback programme during the financial year.
The Board's strategy is to deliver returns for shareholders through the growth • Share price discounts to NAV have remained wide in the listed private
in NAV and not through the payment of dividends.
equity sector. Despite the improvement in PIP's share price during the period,
31 May 2024 the discount on PIP's shares was 34% at the year end (31 May 2023: 41%). The
median discount for listed private equity peers(1) at the same date was 34%
46.5% (31 May 2023: 39%).
NAV per share growth(2) NAV per share reflects the attributable value of a shareholder's holding in 31 May 2022 • NAV per share increased by 28.1p during the period to 490.5p (31 May 2023: • Investing in high performing private companies alongside and through • Valuations provided by the underlying private equity managers.
PIP. The provision of consistent long-term NAV per share growth is central to
31.0% 462.4p). This was an increase of 6.1% compared with the prior financial year top-tier private equity managers globally, to maximise long-term capital
6.1% our strategy.
end. growth. • Fluctuations in currency exchange rates.
• NAV per share growth was primarily driven by • Containing costs and risks by constructing a well-diversified portfolio in • Tax efficiency of investments.
31 May 2023
a cost-efficient manner.
NAV per share growth in any period is shown net of foreign exchange movements
2.4% valuation gains of +5.0% and share buybacks of +4.7%
• Effect of financing (cash drag) on performance.
and all costs associated with running the Company.
and offset by foreign exchange movements and expenses and taxes. • Ongoing charges relative to NAV growth and listed private equity peer
group.
31 May 2024
The NAV is robustly calculated and the balance sheet is audited by PIP's
auditors. 6.1%
Portfolio investment return Portfolio investment return measures the total movement in the valuation of 31 May 2022 • Modest increase in underlying portfolio valuation against a backdrop of • Maximise shareholder returns through long term capital growth. • Performance relative to listed markets and listed private equity peer
the underlying companies and funds comprising PIP's portfolio, expressed as a
market volatility.
group.
4.9% percentage of the opening portfolio value, before taking foreign exchange 26.2%
effects and other expenses into account.
• PIP's portfolio is actively managed and focuses on resilient, high-growth • Valuations provided by the underlying private equity managers.
sectors.
31 May 2023 • PIP's portfolio return for the year was mainly driven by the buyout
segment, which accounts for 72% of the portfolio.
3.5%
31 May 2024
4.9%
Liquidity
Net portfolio cash flow(2) £36.9m Net portfolio cash flow is equal to fund distributions less capital calls to 31 May 2022 • PIP's portfolio generated £193m (31 May 2023: £223m) of distributions • Maximise long-term capital growth through ongoing portfolio renewal while • Relationship between outstanding commitments and NAV.
finance investments, and reflects the Company's capacity to finance calls from
versus £156m of calls (31 May 2023: £155m). controlling financing risk.
existing investment commitments. £232m
• Portfolio maturity and distribution rates by vintage.
• In addition, the Company made new commitments of £153m (31 May 2023:
£441m) during the year, £50m of which was drawn at the time of purchase (31 • Commitment rate to new investment opportunities.
May 2023: £190m).
PIP manages its maturity profile through a mix of primaries, secondaries and 31 May 2023
co-investments to ensure that its portfolio remains cash-generative at the
• As at 31 May 2024, PIP's portfolio had a weighted average age of 5.2
same time as maximising the potential for growth. £68m years(3) (31 May 2023: 4.8 years).
31 May 2024
£37M
Underdrawn coverage ratio(4) The undrawn coverage ratio is the ratio of available financing and 10% of 31 May 2022 • The current undrawn coverage ratio reflects lower cash balances and modest • Flexibility in portfolio construction, allowing the Company to select a • Relative weighting of primary, secondary and co-investments in the
private equity assets to undrawn commitments. The undrawn coverage ratio is an
usage of PIP's credit facility. mix of manager-led secondaries, co-investments and primaries, and vary portfolio.
89% indicator of the Company's ability to meet outstanding commitments, even in 108%
investment pace, to achieve long-term capital growth.
the event of a market downturn.
• The optimisation of PIP's balance sheet will enable the Company to further
• Level of undrawn commitments relative to gross assets.
enhance its performance, by allowing PIP to lean into attractive opportunities • The vintage diversification of unfunded commitments helps PIP manage
across market cycles and by reducing cash drag. future capital calls. • Trend in distribution rates.
31 May 2023
• PIP's undrawn coverage ratio remains healthy relative to what is required • Ability to access debt markets on favourable terms.
98% under existing loan covenants.
31 May 2024
89%
Gearing(5) Gearing relates to how much debt is utilised in 31 May 2022 • PIP's net debt as a percentage of the Company's NAV as at 31 May 2024 was • Measured use of leverage to reduce cash drag and enhance NAV growth. • Utilisation level of the revolving credit facility.
8.1% (31 May 2023: net cash to NAV ratio was 2.6%).
(8.1%) PIP's capital structure and is expressed as net debt (borrowings excluding the 9.4%
• Adopt a more efficient use of balance sheet capital to reduce cash drag. • Anticipated distribution levels and impact on liquidity position.
ALN less cash) as a percentage of NAV.
• As at 31 May 2024, PIP has utilised £83m of its £500m revolving credit
31 May 2023 facility, and has £118m of private placement loan notes outstanding. • Leverage relative to listed private equity peer group.
2.6% • PIP's net debt to NAV ratio is lower than the relevant peer group of
The Board appreciates that the measured use of debt can eliminate cash drag
11%(1).
and enhance investment returns. PIP's approach to gearing remains 31 May 2024
conservative. The Board does not currently expect net leverage to exceed 10%
of NAV under normal market conditions. (8.1%)
(1) Relevant peer group comprised: CT Private Equity Trust PLC, HarbourVest
Global Private Equity Ltd, ICG Enterprise Trust PLC and Patria Private Equity
Trust. Data as at 31 May 2024.
(2) Excludes valuation gains and/or cash flows associated with the ALN.
(3) Excludes the portion of the reference portfolio attributable to the ALN.
(4) Outstanding commitments relating to funds outside their investment period
(>13 years old) amounting to £41.7m as at 31 May 2024 (31 May 2023:
£48.2m) were excluded from the calculation as there is a low likelihood of
these being drawn.
(5) Net cash (debt) to net asset value.
OUR STRATEGY
A cohesive and holistic strategy to address shareholders' needs
The Board regularly reviews PIP's overall corporate strategy and this has
formed a key part of Board discussions throughout the year.
The Board and PIP's Manager, Pantheon, are in constant dialogue regarding
PIP's overall strategy and the Company's progress towards achieving its
strategic goals. This dialogue is informed by the Manager's assessment of any
changes in market conditions, for example in the M&A environment, and
through stakeholder engagement, including with shareholders and peers in the
market.
PIP's strategy encompasses its corporate, investment and financing strategy.
The Company's three-step corporate programme has already been outlined in the
Chair's Statement above, and the Capital Allocation Policy (step 2) is
highlighted in more detail below.
The Company's investment strategy is recommended to the Board by the Manager,
discussed at length and then amended as necessary. A similar process is
followed regarding PIP's financing strategy, which supports the Company's
corporate actions and investment programme.
While the Company's agreed investment strategy, which is described in detail
below, sets the overall parameters of the investment programme, for example
the tilt towards direct investments, small/mid buyouts and certain sectors,
the Board will review individual investments that exceed exposure limits,
which are set at appropriate level to reflect a diversified approach. At
times, the Manager may make recommendations to the Board and seek approval for
certain investments that fall outside of any limits expressed in the agreed
strategic approach, but which Pantheon believes to be a good investment
opportunity for PIP. The Board maintains its independence at all times and
robustly challenges such recommendations to ensure that they are in the best
interests of shareholders.
The Manager also reports regularly to the Board on PIP's marketing and
investor relations activities, considering new initiatives that could help to
increase PIP's profile, and to reach new potential shareholders of the
Company. Subsequent to the end of the financial year, a marketing agency was
appointed to assist PIP with this objective.
Culture and Purpose
It is a requirement for all companies to set out their culture and purpose.
The Company's defined purpose is relatively simple: it is to deliver our
investment strategy led by a Board that promotes strong governance and a
long-term investment approach that actively considers the interests of all
stakeholders.
The Directors agree that establishing and maintaining a healthy corporate
culture within the Board and in its interactions with the Manager,
shareholders and other stakeholders will support the delivery of its purpose,
values and strategy. The Board seeks to promote a culture of openness and
integrity through ongoing dialogue and engagement with its service providers,
principally the Manager.
Capital allocation policy
Capturing value for shareholders.
PIP's Capital Allocation Policy ("CAP") has been designed to capture on behalf
of shareholders the exceptional value available by investing in the Company's
own portfolio when its shares are trading at a significant discount to NAV.
From 1 June 2024, depending on the prevailing level of discount, the Board
intends to allocate a portion of Adjusted Net Portfolio Cash Flow ("aNPC") to
share repurchases.
The PIP Board remains committed to putting shareholders' interests first and
therefore intends to preserve flexibility in its ability to carry out share
repurchases. The CAP will be reviewed on a regular basis by the Board to
ensure that it remains appropriate for the Company and with consideration of
the prevailing market conditions.
The Capital Allocation Policy complements PIP's investment objective which is
to maximise returns for shareholders over the long term by investing in
high-growth private companies backed by many of the best private equity
managers in the world.
Since PIP primarily invests directly into the deals sourced for it by
Pantheon, and with a majority of its underlying portfolio invested directly
into companies rather than funds, the Company is able to substantially control
deployment to its advantage, manage liquidity, and actively shape its
portfolio through what it deems to be the best use of capital at any given
time.
PIP will continue to invest in exciting new private equity opportunities,
capable of generating market-beating returns over the long term, alongside
share buybacks.
Investment type
Focus on direct investments to boost performance.
The Board believes that its oversight of the Manager's activities, while at
the same time allowing Pantheon the flexibility that it needs to make the
appropriate investment decisions on the Company's behalf, ensures that PIP is
able to deliver on its strategic objectives for shareholders over the long
term.
Primaries, manager-led secondaries and co-investments all have attractive
characteristics, as highlighted in the Investment Model section below. PIP's
transparent and direct investment approach gives it the flexibility to take
advantage of prevailing market conditions and to maximise control over the
Company's financing risk, including its ability to generate positive cash
flows.
As the weighting towards co-investments has been increased over time, the
three different investment types have intentionally taken on more equal
weightings. These weightings do not represent hard caps; however, the Board
and the Manager believe that this is the optimal mix to benefit from the cash
generated by the more mature assets in PIP's portfolio while rejuvenating the
portfolio with the younger vintages offered by primaries and co-investments.
In addition, we have been steering PIP's secondary investment strategy towards
manager-led secondaries which form a fast-growing part of the secondary market
and are attractive for several reasons as highlighted below. These investments
also provide younger vintages to the portfolio.
With an increased weighting towards co-investments and manager-led
secondaries, we expect the number of underlying managers and portfolio
companies to which the Company is exposed to continue to reduce over time. As
a result, the potential for the Company's overall NAV to be driven by the
performance of individual assets should be increased while maintaining the
benefits of a portfolio that is well diversified by type, stage, geography and
sector.
The Board believes that there are several benefits to this investment
approach: risk is effectively managed through diversification while the
improved transparency of PIP's underlying portfolio and increased investment
flexibility, should create a clearer link between the strongest performing
companies in the portfolio and the potential to boost NAV growth in the
future. Also, Pantheon can remain highly selective and disciplined when
assessing deal flow, while at the same time reducing the risk of PIP being
excluded from exciting opportunities due to investment constraints.
Investment type(1)
Primaries 35%
Co-investments 34% 54% invested directly in companies
Manager-led secondaries 20%
Fund Secondaries 11%
(1) Fund investment type is based upon underlying fund valuations and accounts
for 100% of PIP's overall portfolio value. The data excludes the portion of
the reference portfolio attributable to the ALN.
Investment stage
Focus on mid-market and growth.
PIP's portfolio is diversified by stage. While the Company's strategy is to
maintain a healthy mix of all stages, Pantheon and PIP favour the buyout
segments, with a particular focus on the small and mid-market. The
small/mid-market buyout segment offers distinct characteristics, when compared
with large deals, such as:
- More attractively priced assets which tend to have lower
levels of leverage than the broader market average;
- Greater visibility of the value drivers and the levers to pull
to improve operational efficiency to better drive growth, both organically and
through buy-and-build strategies; and
- More routes to exit including strategic acquisitions, sales to
other private equity managers or IPOs. In PIP's case, it should be noted that
the majority of exits have consistently been to strategic buyers and other
private equity managers, with IPOs accounting for a smaller proportion of
exits during the year ended 31 May 2024.
Venture accounts for a very small proportion of PIP's portfolio and any
investment activity by PIP in early stage venture funds is focused on
investing with top-tier venture managers, mainly through primary fund
investments, who are able to identify innovative opportunities with the
potential to generate significant outperformance.
While special situations include assets with unique characteristics which can
offer potential for outperformance, it is the Board's intention that special
situations investments will only be a small minority of the overall portfolio.
Investment Stage(1)
Small/mid buyout 46%
Large/mega buyout 26%
Growth 19%
Special situations(2) 5%
Venture 4%
(1) Stage data is based upon underlying fund valuations and accounts for 100%
of PIP's overall portfolio value. The data excludes the portion of the
reference portfolio attributable to the ALN.
(2) Special situations investments can include distressed debt, mezzanine,
energy/utilities and turnarounds.
Sector and geographic exposure
Global with a focus on high-growth and niche areas.
The Board is committed to offering investors a global portfolio with
investments in North America, Europe and Asia. The weightings of those
geographies may change in response to market conditions but the Board supports
the majority of the Company's capital being invested in the USA and Europe
where the private equity markets are well established.
The Board relies on Pantheon's investment teams located around the world that
can take advantage of proprietary information flows and access to
opportunities through their extensive networks of relationships.
It is Pantheon's objective to identify managers globally that are able to take
a thematic approach and focus on high-growth sectors, many of which may not be
fully represented by the public markets. In addition, Pantheon has a
deliberate strategy of targeting sectors experiencing dislocation, as well as
niches where underlying growth is less correlated to GDP growth and they are
benefiting from long-term trends. As a result, the largest two sectors in
PIP's portfolio are information technology and healthcare. For more
information on the sectors in which PIP has invested, see the Portfolio
section below.
Region(1)
USA 54%
Europe 31%
Global 8%
Asia 7%
Company sectors(2)
Information Technology 33%
Healthcare 20%
Consumer 14%
Industrials 11%
Financials 10%
Communication services 7%
Energy 3%
Materials 2%
Others 1%
(1) Region is based upon underlying fund valuations and accounts for 100% of
PIP's overall portfolio value. The data excludes the portion of the reference
portfolio attributable to the ALN.
(2) The company sector table is based upon underlying company valuations as at
31 March 2024, adjusted for calls and distributions to 31 May 2024. These
account for 100% of PIP's overall portfolio value.
Financing Strategy
Flexible and diverse financing structure
Diversified sources of financing
PIP has built a long-term, sustainable, more flexible, and diverse capital
structure, further strengthening the Company's balance sheet.
In October 2023, PIP agreed a new £500m equivalent multi-tranche,
multi-currency revolving credit facility agreement (the "Credit Facility"),
which replaced the previous £500m equivalent credit facility and Credit
Suisse AG London Branch as a lender.
In addition, PIP completed a private placement of $150m of loan notes ("Loan
Notes") in January 2024. Proceeds from the issuance of the Loan Notes were
used to partially repay and convert Credit Facility drawings into longer term
funding at a blended coupon that is lower than the all-in interest cost
payable on the Credit Facility.
When considered alongside the existing Credit Facility, the issuance of the
Loan Notes means that PIP now has access to an even more diverse supply of
liquidity from high quality counterparties.
The Credit Facility and the Loan Notes are subject to market standard loan to
value and liquidity covenants. PIP's covenant package was structured to better
support the Company's long-term investment and capital allocation strategies.
Modest use of gearing
As per its Investment Policy, PIP may borrow to make investments and typically
uses its borrowing facilities to manage its cash flows flexibly, enabling the
Company to make investments as and when suitable opportunities arise, and to
meet calls in relation to existing investments without having to retain
significant cash balances for such purposes.
The Board currently does not expect net leverage to exceed 10% of NAV under
normal market conditions.
OUR BUSINESS MODEL
What sets us apart
Proven track record and focus on risk management
For over 37 years, PIP has been able to adapt quickly and effectively to
changing market conditions. This flexible and proactive approach means that
PIP is well placed to continue to deliver on its long-term strategic
objectives. PIP's NAV has outperformed its public market benchmark indices
over multiple periods and since the Company's inception in 1987.
We pay close attention to the management of risk. PIP provides a carefully
constructed and appropriately diversified portfolio for investors with a
particular emphasis on well-established companies in the buyout stage. This is
supported by a prudently managed balance sheet which has the strength to
continue to meet its outstanding commitments, even in more difficult economic
times. See below for more information on the balance sheet.
A global portfolio
Just over half of PIP's portfolio is invested in the USA, which is the
deepest, most developed private equity market in the world and is often
inaccessible to many investors in other regions. The next largest proportion
of the portfolio is invested in Europe, with an emphasis on Northern Europe,
while the remaining exposure is to faster-growing economies such as Asia.
The presence of Pantheon's teams in its 13 locations around the world means
that they are on the ground locally, working with their extensive networks of
relationships with private equity managers and taking advantage of proprietary
information flows and access to opportunities. These relationships enable
Pantheon to source and respond quickly to the best deal flow in those regions.
In addition, through its participation on over 642(1) advisory boards
globally, Pantheon actively engages with its private equity managers on
portfolio monitoring issues on a continuous basis.
Culture & Diversity
Pantheon has a strong culture of openness and inclusive teamwork and
encourages the exchange of ideas. PIP is supported by 457 people around the
world including a large team of 126 investment professionals(2). PIP also
benefits from a dedicated and experienced team that looks after it on a
day-to-day basis. In keeping with its collaborative culture, Pantheon avoids
investments in private equity managers with "star" individuals which would
give rise to a higher degree of key person risk.
From day one, Pantheon has understood that a diverse workforce creates a more
productive environment. Each year, Pantheon publishes statistics documenting
its global staff breakdowns according to gender identity, ethnic diversity,
LGBTQ+ and disability profiles. The firm has consistently exceeded industry
averages for gender diversity. Pantheon also supports a number of inclusion
and diversity initiatives and organisations around the world.
(1) As at 31 March 2024.
(2) As at 30 June 2024
PIP aims to deliver consistent returns over the long term.
Our investment process
1. Investment opportunities in companies and complementary funds are
originated via Pantheon's extensive and well-established platform.
2. We invest in many of the best private equity managers who are able to
identify and create value in their portfolio companies.
3. Cash generated from the sale of those companies is returned to PIP and
redeployed into new investment opportunities, including share buybacks in
accordance with the capital allocation policy.
What we do
PIP invests directly in private companies worldwide through co-investments
alongside selected private equity managers and through manager-led
opportunities, as well as in complementary private equity funds.
- An investment in PIP offers shareholders exposure to a growing
private market that is expected to exceed US$8.5tn by 2028(1), where the best
private equity opportunities might otherwise be inaccessible to most
investors.
We aim to deliver attractive and consistent returns to shareholders over the
long term, and at relatively low risk. The Board remains committed to its
policy of maximising capital growth and therefore, as in previous years, is
not proposing the payment of a dividend.
Why we do it
Through Pantheon, we have an opportunity to invest with and alongside many of
the best private equity managers globally based on the trust and experience
built up over the 40 years that Pantheon has been making investments.
- It is our aim to bring the attractive credentials of private equity
and its track record of outperforming public markets to a wider set of
investors.
It is our mission to generate sustainably high investment returns through an
actively managed, institutional grade portfolio of private companies and funds
built by investing with the best managers globally.
How we do it
PIP's Manager, Pantheon, has a well-established platform built on three
strategic pillars of investment: primary, secondary and co-investments, with
each offering their own merits.
We believe that by combining the three ways of accessing private equity
investments, we are able to:
- Build and maintain a well-balanced portfolio in a combination that
we monitor and manage with the aim of maximising capital growth;
- Manage the maturity profile of our assets so that PIP's portfolio
remains naturally cash-generative on a sustainable basis; and
- Ensure that the vehicle remains as cost-effective as possible for
our shareholders by reducing any potential drag on returns.
(1) Source: Preqin Global Report Private Equity 2024.
We have full control over portfolio construction
PIP has the opportunity to participate in all of the private equity
investments sourced for it by Pantheon.
This means that:
- We have control of investment strategy, overseen by the fully
independent Board
- We have the flexibility to tilt the portfolio towards where we see
the best fit for our long-term objectives.
- We can accept or decline deals without being "tied in" to other
Pantheon fund strategies.
- We can control PIP's investment pacing according to its financial
resources at the time.
- We have the flexibility to vary the size of its commitments as
appropriate and in line with any adjustments to its investment strategy.
- We avoid the additional costs that can occur when investing via
intermediate vehicles.
Our investment strategies:
Direct company investments: 54% of PIP's portfolio*
Co-investments
We invest in a company directly, alongside a private equity manager.
- Direct investment in individual companies, which have attractive
growth characteristics and have effectively passed through a "double quality
filter", alongside PIP's leading private equity managers.
- This boosts the performance potential because of asset selection,
and there are typically very low or no fees, making it a cost-effective way of
capitalising on the high value added by PIP's selected managers.
- Co-investments are through invitation only and are therefore not
accessible to most investors.
Manager - led Secondaries
We invest in a company directly, alongside a private equity manager, that the
manager has already owned for a period of time and therefore knows well.
- We partner with high-quality private equity managers to acquire, as
single transactions, their most attractive portfolio companies via a
continuation fund.
- Allows the private equity manager to hold onto a prized asset, which
they believe has potential for further growth, when the fund in which it is
held comes to the end of its life.
Funds: 46% of PIP's portfolio*
Primaries
We invest in a new private equity fund when it is established.
- Captures exposure to top-tier, well-recognised managers as well as
to smaller niche funds that are generally hard to access.
- Targets leading managers predominantly in the USA and Europe, with a
focus on funds which are unlikely to become available in the secondary market.
Fund Secondaries
We purchase the interests of an investor in a fund or funds typically late
into, or after, the investment period.
- Targets favoured companies and funds at a stage when the underlying
assets' performance is visible and the funds are realising investments,
returning cash to PIP more quickly.
- One of the advantages of investing in secondaries is that earlier
fees will have been borne by the seller so total expenses are lower.
* As at 31 May 2024
INVESTMENT POLICY
Our investment policy is to maximise capital growth with a carefully managed
risk profile.
The Company's policy is to make unquoted investments. It does so by
subscribing to investments in new private equity funds ("Primary Investment"),
buying secondary interests in existing private equity funds ("Secondary
Investment"), including manager-led secondaries, and acquiring direct holdings
in unquoted companies ("Co-investments"), usually either where a vendor is
seeking to sell a combined portfolio of fund interests and direct holdings or
where there is a private equity manager, well known to the Company's Manager,
investing on substantially the same terms.
The Company may, from time to time, hold quoted investments as a consequence
of such investments being distributed to the Company from its fund investments
as the result of an investment in an unquoted company becoming quoted. In
addition, the Company may invest in private equity funds which are quoted. The
Company will not otherwise normally invest in quoted securities, although it
reserves the right to do so should this be deemed to be in the interests of
the Company.
The Company may invest in any type of financial instrument, including equity
and non-equity shares, debt securities, subscription and conversion rights and
options in relation to such shares and securities, and interests in
partnerships and limited partnerships and other forms of collective investment
schemes. Investments in funds and companies may be made either directly or
indirectly, through one or more holding, special purpose or investment
vehicles in which one or more co-investors may also have an interest.
The Company employs a policy of over-commitment. This means that the Company
may commit more than its available uninvested assets to investments in private
equity funds on the basis that such commitments can be met from anticipated
future cash flows to the Company and through the use of borrowings and capital
raisings where necessary.
The Company's policy is to adopt a global investment approach. The Company's
strategy is to mitigate investment risk through diversification of its
underlying portfolio by geography, sector and investment stage. Since the
Company's assets are invested globally on the basis, primarily, of the merits
of individual investment opportunities, the Company does not adopt maximum or
minimum exposures to specific geographic regions, industry sectors or the
investment stage of underlying investments.
In addition, the Company adopts the following limitations for the purpose of
diversifying investment risk:
- No holding in a company will represent more than 15% by value of the
Company's investments at the time of investment (in accordance with the
requirement for approval as an investment trust which applied to the Company
in relation to its accounting periods ended on and before 30 June 2012).
- The aggregate of all the amounts invested by the Company (including
commitments to or in respect of) in funds managed by a single management group
may not, in consequence of any such investment being made, form more than 20%
of the aggregate of the most recently determined gross asset value of the
Company and the Company's aggregate outstanding commitments in respect of
investments at the time such investment is made.
- The Company will invest no more than 15% of its total assets in
other UK-listed closed-ended investment funds (including UK-listed investment
trusts).
The Company may invest in funds and other vehicles established and managed or
advised by Pantheon or any Pantheon affiliate. In determining the
diversification of its portfolio and applying the Manager's diversification
requirement referred to above, the Company looks through vehicles established
and managed or advised by Pantheon or any Pantheon affiliate.
The Company may enter into derivatives transactions for the purposes of
efficient portfolio management and hedging (for example, hedging interest
rate, currency or market exposures).
Surplus cash of the Company may be invested in fixed interest securities, bank
deposits or other similar securities.
The Company may borrow to make investments and typically uses its borrowing
facilities to manage its cash flows flexibly, enabling the Company to make
investments as and when suitable opportunities arise, and to meet calls in
relation to existing investments without having to retain significant cash
balances for such purposes. Under the Company's Articles of Association, the
Company's borrowings may not at any time exceed 100% of the Company's NAV.
Typically, the Company does not expect its gearing to exceed 30% of gross
assets. However, gearing may exceed this in the event that, for example, the
Company's future cash flows alter.
The Company may invest in private equity funds, unquoted companies or special
purpose or investment holding vehicles which are geared by loan facilities
that rank ahead of the Company's investment. The Company does not adopt
restrictions on the extent to which it is exposed to gearing in funds or
companies in which it invests.
Optimising PIP's Capital Structure
We aim to build a sustainable, diverse and flexible capital structure that can
support PIP's corporate and investment strategies.
During the period PIP agreed a new £500m equivalent multi-currency revolving
credit facility ("Credit Facility") provided by five relationship lenders,
replacing the previous credit facility and Credit Suisse as a lender. In
addition, PIP secured a private placement of US$150m of loan notes ("Loan
Notes"), structured over different maturities of five, seven and 10 years. The
transaction provides PIP with access to long-term funding at a blended US
dollar coupon of 6.49%, which is cheaper than the all-in interest cost
currently payable on the revolving credit facility.
As a result of these actions, PIP has successfully diversified its financing
counterparties, expanded its sources of liquidity and reduced refinancing
risk. New investments, calls on undrawn commitments and share buybacks will be
funded primarily by distributions and, where appropriate, short-term drawdowns
from the Credit Facility.
Minimal gearing level
As at 31 May 2024, PIP had £83m drawn down under the Credit Facility and
£118m of sterling-equivalent Loan Notes outstanding. Taken in conjunction
with PIP's net available cash of £16m, this results in a conservative net
debt(1) to NAV ratio of 8.1%. The Board currently does not expect net leverage
to exceed 10% of NAV under normal market conditions.
Undrawn commitments by vintage(2)
PIP's undrawn commitments were £789m as at 31 May 2024 (31 May 2023: £857m).
Of the £789m undrawn commitments as at the period end, £42m relate to funds
that are more than 13 years old, and therefore outside their investment
periods. Generally, when a fund is past its investment period, it cannot make
any new investments and only draws capital to fund follow-on investments or to
pay expenses. As a result, the rate of capital calls by these funds tends to
slow dramatically.
( )
2023 and later 33%
2022 26%
2021 14%
2020 3%
2019 4%
2018 4%
2017 3%
2016 2%
2015 3%
2014 and earlier 8%
(1) Net debt calculated as borrowings (excluding the outstanding balance of
the ALN) less net available cash. The ALN is not considered in the calculation
of gross borrowings or the loan-to-value ratio, as defined in PIP's Credit
Facility and Loan Notes agreements. If the ALN is included, net debt to NAV
was 9.4% as at 31 May 2024.
(2) Includes undrawn commitments attributable to the reference portfolio
related to the ALN.
Managing our financing cover
We regularly stress test PIP's balance sheet against a range of scenarios and
market conditions to ensure that it is well positioned for the long term. We
manage PIP to ensure that it has sufficient liquidity to finance its undrawn
commitments, which represent capital committed to funds but yet to be drawn by
the private equity managers, as well as to take advantage of new investment
opportunities. A critical part of this exercise is ensuring that the undrawn
commitments do not become excessive relative to PIP's private equity portfolio
and available financing. We achieve this by managing PIP's investment pacing
as well as constructing its portfolio to ensure the right balance of exposure
to primaries, manager-led secondaries and co-investments.
As at 31 May 2024, PIP had net available cash(3) balances of £16m (31 May
2023: £63m).
In addition to these cash balances, PIP also has access to a £500m equivalent
credit facility, split as follows:
- Facility A: £400m, expiring in October 2026 with an ongoing option
to extend, by agreement, the maturity date by 364 days at a time; and
- Facility B: £100m, expiring in October 2024.
Using exchange rates as at 31 May 2024, the credit facility amounted to a
sterling equivalent of £482m, of which £398m remained undrawn as at the year
end.
With £16m of net available cash and an undrawn credit facility of £398m, PIP
had £414m of available financing as at 31 May 2024 (31 May 2023: £554m)
which, along with the value of the private equity portfolio, provides
comfortable cover of 3.9 times (31 May 2023: 3.7 times) relative to undrawn
commitments for funds within their investment periods.
Another important measure is the undrawn coverage ratio, which is the ratio of
available financing and 10% of private equity assets to undrawn commitments.
The undrawn coverage ratio is a key indicator of the Company's ability to meet
outstanding commitments, even in the event of a market downturn, and was 89%
as at 31 May 2024 (31 May 2023: 98%)(4).
(3) The available cash and loan figure excludes the current portion payable
under the ALN, which amounted to £0.4m as at 31 May 2024.
(4) Excludes outstanding commitments relating to funds outside their
investment period (>13 years old), amounting to £41.7m as at 31 May 2024
(31 May 2023: £48.2m).
RISK MANAGEMENT AND PRINCIPAL RISKS
The Company is exposed to a variety of risks and uncertainties. The Board,
through delegation to the Audit Committee, has undertaken a robust assessment
and review of the principal risks facing PIP, together with a review of any
new and emerging risks that may have arisen during the year to 31 May 2024,
including those that would threaten its business model, future performance,
solvency or liquidity. A summary of the risk management and internal control
processes can be found in the Statement on Corporate Governance in the full
Annual Report.
Investment and strategy risk
Type and Description of Risk Potential Impact Risk Mitigation Outcome for the Year
Investment performance • Performance not comparable to benchmark/ industry average. Consistently • Pantheon has a long track record of investing alongside private equity Stable during the year
poor performance may lead to a fall in the quoted share price and impact share managers who have experience of navigating economic cycles. Diversification by
The Manager selects the investments for the Company's Portfolio. The price discount to NAV. geography, stage, vintage and sector, helps to mitigate the effect of public • PIP continues to adopt a diversified approach to portfolio construction.
origination, investment selection and management capabilities of both the
market movements on the Company's performance.
Manager and the third-party managers are key to the performance of the
• In historical periods of significant public market volatility, private
Company. equity market valuations have typically been less affected than public equity
market valuations.
• Portfolio investment return of +4.9% in the year to 31 May 2024.
Market and macroeconomic factors • Impact of general economic conditions on underlying fund and company • As part of its investment due diligence process, Pantheon assesses the Stable during the year
valuations, exit opportunities and the availability of credit. approach of its underlying managers to company illiquidity and macroeconomic
Inflation, interest rates and equity market performance can affect portfolio
factors as well as projected exit outcomes. • Inflation pressures have decreased during the year in the Global
investment returns. • Higher risk of market volatility, price shocks or a significant market
Economy. Interest rates remain at 10-year highs, but early indications are
correction. • Portfolio diversified across multiple countries and sectors to reduce the that central banks could start to reduce interest rates.
impact of market and macroeconomic factors.
• Resilient performance of the portfolio despite a challenging macro
environment. Underlying portfolio Revenue growth was 14% and EBITDA growth was
17% in the reporting period.
Valuations • Potential for inconsistency in the valuation methods adopted third-party • The valuation of investments is based on periodically audited valuations Stable during the year
managers and for valuations to be misstated. that are provided by the underlying private equity managers.
In valuing its investments in private equity funds and unquoted companies and
• No material misstatement concerning the valuations provided by underlying
publishing its NAV, the Company relies to a significant extent on the accuracy • Pantheon carries out a formal valuation process involving monthly reviews private equity managers and the existence of investments during the year.
of financial and other information provided by third-party managers. of valuations, the verification of audit reports and a review of any potential
adjustments required to ensure reasonable valuations in accordance to fair • No changes in valuation policy in the year or changes to US or
market value principles under Generally Accepted Accounting Principles International Valuation Standards.
("GAAP").
• Pantheon's Valuation Committee, which is independent of the investment and
investor relations teams, and comprised of senior team members, has ultimate
responsibility for approving valuations, ensuring that there are robust
governance, oversight and process frameworks in place, guaranteeing compliance
with standards and consistent application of policy. The Committee reports to
the Board on a Semi-Annual Basis or when there are any material matters
arising.
• A member of the Audit and Risk Committee and EY observe the Valuation
Committee on a semi-annual basis.
Level of Discount • Market sentiment on the listed private equity sector can affect the • Regular review of the level of discount or premium relative to the Stable during the year
Company's share price and widen discounts relative to NAV, causing shareholder sector.
A decline in the popularity of the listed private equity sector has dissatisfaction.
• Private equity continues to outperform public markets over the long term
contributed to a reduction in demand for the Company's shares.
• Consideration of ways in which share price performance may be enhanced and has proved to be an attractive asset class through various cycles.
including the effectiveness of marketing and policies such as share buybacks.
• The Company invested £196.7m* in share buy backs during the financial
•The Board regularly discusses the shareholder register with the Manager to year to 31 May 2024. From 1 June 2024, under the new Capital Allocation
monitor buying/selling activity and to identify potential new investors. Policy, the Board intends to dedicate a proportion of the Company's adjusted
net portfolio cashflow future share buybacks.
• Pantheon and the Company's brokers are in regular contact with existing
shareholders and prospective new investors. • The Company's share price discount to NAV decreased during the year but,
in line with the industry, still trades at a material discount.
Vehicle financing • Potential impact on performance and liquidity, especially in the event of • PIP's Articles of Association and investment policy impose limits on the Falling during the year
a market downturn. amount of gearing that the Company can take on.
Availability, level and cost of credit for the Company.
• The Company issued US$150m in a private placement of loan notes and
• The periodic review of principal covenants for the loan facility ensures refinanced its £500m credit facility.
that the Company complies with loan-to-value and liquidity ratios.
• Cash flow forecasts under normal and stress conditions were reviewed with
• The Board conducts regular reviews of the balance sheet and long-term the Board. Downside scenario modelling indicates that the Company has the
cash flow projections, including downside scenarios that reflect the potential available financing in place to meet investment commitments, even in an
effects of significant declines in NAV performance, adverse changes in environment characterised by large NAV declines and a material reduction in
call/distribution rates and restrained liquidity in a distressed distribution activity.
environment.
• The Board currently does not expect net leverage to exceed 10% of NAV
under normal market conditions.
• The Company-level leverage was 8.1% as at the end of the financial year.
Look-through gearing • Rising interest rates can impact the profitability and valuation of • As part of its investment process, the Manager undertakes a detailed Stable during the year
underlying portfolio companies. assessment of the impact of debt at the underlying fund level and underlying
Availability, level and cost of debt for underlying funds and portfolio
company level on the risk-return profile of a specific investment. • Debt multiples in PlP's buyout portfolio remain at reasonable levels as at
companies. • A deterioration in credit availability can
year end as interest rates have stabilised.
potentially reduce investment activity. • Rates of default or covenant breaches remain very low in the underlying
portfolio.
Liquidity management Insufficient liquid resources to meet outstanding • The Company has outstanding commitments that may be drawn down at any • PIP has a mature portfolio that is naturally cash generative. Stable during the year
commitments to private equity funds. time in excess of total liquidity to private equity funds. The ability to fund
this difference is dependent on receiving cash proceeds from investments (the • If cash balances and cash distributions are insufficient to cover capital • PIP has access to a £500m-equivalent loan facility split as follows:
timing of which are unpredictable) and the availability of financing calls, PIP has the ability to draw funds from a credit facility.
facilities.
- Facility A: £400m, expiring in October 2026 with an ongoing option to
• Pantheon manages the Company so that undrawn commitments remain at an extend, by agreement, the maturity date by 364 days at a time; and
acceptable level relative to its portfolio assets and available financing.
- Facility B: £100m, expiring in October 2024.
• The Board conducts a comprehensive review of the Company's cash flow
forecasts under different scenarios on a regular basis. • Overall finance has strengthened in the period including diversification
of the facility lenders and diversifying the maturity dates. However,
distribution levels remain significantly below long-term averages at 8% per
annum.
• Together with PlP's net available cash balances of £16m, total available
financing as at 31 May 2024 stood at £414m. Total available financing, along
with the private equity portfolio, was greater than outstanding commitments by
a factor of 3.9 times.
Investment rate • Change in risk profile because of manager, fund or company exposures that • Pantheon has put in place a dedicated investment management process Stable during the year
are materially different from the Company's intended strategy. designed to achieve the intended investment strategy agreed with the Board.
Lack of suitable investment opportunities to meet strategic objectives.
• During the year, PIP has invested within strategic limits for vintage
• The Board regularly reviews investment and financial reports to monitor year, geography and stage allocations, as well as within concentration limits
the effectiveness of the Manager's investment processes. for individual managers, funds and companies.
• PIP invested £197m in share buybacks during the last year.
Foreign exchange risk • Unhedged foreign exchange rate movements could impact NAV total returns. • Pantheon monitors underlying foreign currency exposure and, together with Stable during the year
the Board, reviews hedging strategies available to the Company.
PIP has continued to expand its geographic diversity by making investments in
• There was no material change in the Company's exposure to foreign exchange
different countries. Accordingly, a significant majority of PIP's investments • As part of its investment process, the Manager takes currency currency risk in the year.
are denominated in US dollars, euros and currencies other than sterling. denominations into account when assessing the risk/return profile of a
specific investment. • Foreign exchange had a negative impact on NAV performance during the year.
Despite this, it remains appropriate for the Company not to hedge its foreign
• The multi-currency credit facility is a natural hedge for currency exchange.
fluctuations.
* Excluding costs and stamp duty.
Operational risk
Type and Description of Risk Potential Impact Risk mitigation Outcome for the Year
Sustainability and climate change • The Company is exposed to the impact of a mismanagement or failure to • Pantheon has a responsible approach when making investments on behalf of Stable during the year
recognise potential sustainability issues at portfolio company level, industry PIP. Adherence to sound sustainability principles has been an integral part of
The risk that the Company or the Manager fails to respond appropriately to the level, service provider, and Board level, which could damage the reputation Pantheon's pre-and post-investment processes for several years. Pantheon • Pantheon has an established in-house sustainability
increasing global focus on sustainability issues. and standing of the Company and ultimately affect its investment performance. continues to play an influential role in promoting sustainability standards
and Inclusion and Diversity in private equity. committee comprising senior individuals from its investment, risk, legal and
investor relations teams.
• Pantheon has recently published the Company's Sustainability report.
• Pantheon analyses the annual Sustainability Survey responses and
individual GP ratings to produce the Private Markets Sustainability Index
("PMSI") which is publicly available on Pantheon's website.
• The Board has nominated Dame Susan Owen DCB, to lead engagement with
Pantheon on behalf of the Board.
• The Board of PIP has oversight of sustainability matters in PlP's
portfolio.
Tax Status • Failure to understand tax risks when investing or divesting could lead to • Pantheon's investment process incorporates an assessment of tax. Stable during the year
tax exposure or financial loss.
Changes in the Company's tax status or in tax legislation and practice.
• The Manager reviews the appropriateness of an investment's legal structure • Taxes had a minimal effect on overall NAV performance in the year.
to minimise the potential tax impact on the Company.
Service Providers • Business disruption should the services of Pantheon and other third-party • The Board keeps the services of the Manager and third-party suppliers Stable during the year
suppliers cease to be available to the Company. under continuous review.
The Company is dependent on third parties for the provision of services and
• The Board has approved the continuing appointment of the Manager and other
systems, especially those of the Manager, the Administrator and the • A failure of the Manager to retain or recruit appropriately qualified • The Management Agreement is subject to a notice period of two years, service providers following an assessment of their respective performance
Depositary. personnel may have a material adverse effect on the Company's overall giving the Board adequate time to make alternative arrangements in the event during the year.
performance. that the services of Pantheon cease to be available.
• Pantheon operates a hybrid working model and is confident of being able to
• The Manager regularly updates the Board on team developments and continue to meet PIP's needs through this model.
succession planning.
• The Board performs an ongoing review of the Manager's performance in
addition to a formal annual review.
Cyber Security • Significant disruption to information technology systems, including from a • Pantheon has a comprehensive set of policies, standards and procedures Stable during the year
potential cyber-attack, may result in financial losses, the inability to related to information technology and cybersecurity.
High dependency on effective information technology systems to support key perform business-critical functions, loss or theft of confidential data,
• Pantheon's systems, processes and technologies have been thoroughly tested
business functions and the safeguarding of sensitive information. regulatory censure, legal liability and reputational damage. • Ongoing investment and training to improve the reliability and resilience and are fully operational.
of Pantheon's information technology processes and systems.
• An imposter website which used PlP's branding and marketing material in
• Pantheon reviews all the service providers to ensure they have appropriate relation to a fictitious cryptocurrency investment continued to appear under
procedures in place. Service providers provide copies of cybersecurity new names.
policies, systems, procedures, certificates and relevant insurance
documentation. • Pantheon has implemented an expert vendor who can provide the service of
identifying new fraudulent sites and facilitate the subsequent take-down once
discovered.
Global geopolitical risks • Market and currency volatility may affect returns. • The Board and Pantheon continuously monitor geopolitical developments and Rising during the year
societal issues relevant to its business.
Geopolitical factors, including the Russia-Ukraine war and the conflict in the • New or increasing geopolitical risks including further conflict, supply
• Pantheon's established Risk, Legal and Tax functions have ensured
Middle East, and the resulting economic uncertainty may affect the Company. chain disruption, sanctions, new legislation, and investment restrictions • An assessment of geopolitical risk is embedded in Pantheon's investment compliance with local laws and regulations.
could have medium and long-term impact on global economies, including energy process.
prices and interest rates, and individual companies to which the Company has
• PIP's exposure to high-risk countries is minimal. Israel exposure accounts
exposure. for approximately 1% of portfolio NAV.
• Geopolitical undercurrents may disrupt long-term investment and capital
allocation decision-making.
Artificial Intelligence ("AI") • Failure to successfully implement market leading AI tools within • Pantheon continues to evaluate further opportunities to use AI within its Rising during the year
Pantheon's investment process could impact investment rates and long-term Investment Management Processes and wider business model.
Disruption to business model of the Manager and underlying portfolio companies performance.
• The use of AI throughout different sectors and companies continues to grow
may impact the long-term performance of the Company.
• Pantheon assesses the potential risks and opportunities of AI as part of year on year.
• Sectors and Individual Portfolio companies market position could be its due diligence process and in ongoing monitoring.
challenged by competition from companies using AI. Failure to respond to the • No material impact from AI on the overall portfolio during the year.
challenges could impacted long-term performance and attractiveness to
potential buyers.
* Excluding costs and stamp duty.
VIABILITY STATEMENT
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 May 2024. It has chosen this period
as it falls within the Board's strategic planning horizon.
The Company invests in a portfolio of private equity assets that is
diversified by geography, sector, stage, manager and vintage; it does so via
both fund investments and by co-investing directly into companies alongside
selected private equity managers. The Company invests significantly in the
private equity secondaries market as this allows the Company to maintain a
more mature portfolio profile that is naturally cash-generative in any
particular year.
The Company seeks to maximise long-term capital growth by investing with
top-tier private equity managers that are focused on generating outperformance
against the broader private equity market. As an investment trust, the
Company's permanent capital structure is well suited to investing in private
equity, a long-term asset class. The Company's Manager has a long-standing
culture that emphasises collaboration and accountability, facilitating open
dialogue with underlying private equity managers that help the Company to
anticipate market conditions and maintain a conservative approach to balance
sheet management. The resilience of the Company, positioning of the portfolio
and durability of the private equity market are detailed in the full Annual
Report and Accounts 2024.
In making this statement, the Directors have reviewed the reports of the
Manager in relation to the resilience of the Company, taking account of its
current position, the principal risks facing it in a low case scenario which
considers the potential further impact of the ongoing international conflicts
and election cycles which have brought about increased geopolitical
uncertainties including the disruption to the global supply chain and
increases in the cost of living as a result, persistent inflation, interest
rate rises and the impact of climate change on PIP's portfolio, the
effectiveness of any mitigating actions and the Company's risk appetite. The
assessment also considers the impact of the Company's Capital Allocation
Policy in regard to share buybacks.
As part of the assessment, this also included a combined reverse stress test
that analyses the factors that would have to simultaneously occur for the
Company to be forced into a wind-down scenario where the Company's business
model would no longer remain viable. These circumstances include a significant
peak in the outstanding commitments called within a 12-month period, combined
with a significant decline in the portfolio valuations and distributions.
Overall, the reverse stress tests are sufficiently improbable as to provide a
low likely risk of impact to the Company's viability and medium-term
resilience.
Commitments to new funds are controlled relative to the Company's assets, and
the Company's available liquid financial resources are managed to maintain a
reasonable expectation of being able to finance the calls, which arise from
such commitments, out of internally generated cash flow. In addition, the
Company has put in place a revolving credit facility to ensure that it is able
to finance such calls in the event that distributions received from
investments in the period are insufficient to finance calls. The Company
agreed a private placement of $150m of long-dated loan notes giving it access
to an even more diverse supply of liquidity. The Board reviews the Company's
financing arrangements at least quarterly to ensure that the Company is in a
strong position to finance all outstanding commitments on existing investments
as well as being able to finance new investments.
In reviewing the Company's viability, the Board has 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 in
the full Annual Report and Accounts 2024 and its present and expected
financial position. In addition, the Board has also considered the Company's
conservative approach to Balance Sheet management, which allows it to take
advantage of significant investment opportunities, and the appropriateness of
the Company's current investment objectives in the prevailing investment
market and environment.
The Board regularly reviews the prospects for the Company's portfolio and the
opportunities for new investment under a range of potential scenarios to
ensure it can expect to be able to continue to finance its activities for the
medium-term future. Based on its review, the Board has a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over a three year period ending on 31 May
2027.
On behalf of the Board
John Singer CBE
31 July 2024
MANAGER'S REVIEW
Our Market
Strength and resilience
Helen Steers and Charlotte Morris, Partners at Pantheon and Co-lead Managers
of PIP, discuss how the private equity market continues to successfully
navigate the challenging macroeconomic environment.
As we consider the significant challenges that have arisen during the last few
years, as a result of major macroeconomic and geopolitical events as well as
the aftermath of the COVID-19 pandemic, investors are increasingly looking for
stability, predictability and consistent returns. While not immune to what is
happening in the world, private equity offers an interesting proposition as
part of a diversified investment portfolio. With public markets becoming ever
more concentrated, and arguably covering only a small subset of the broader
range of investment opportunities, private markets are able to provide access
to exciting, fast growing and niche orientated businesses that are focused on
compelling sub-sectors such as enterprise software and healthtech.
Furthermore, numerous studies and sources have demonstrated that private
equity can outperform public markets over the medium and long term. In our
view, the best quality, most experienced private equity managers are
particularly well-suited to successfully navigate uncertainty and, with their
nimbleness and long-term investment horizon, take advantage of periodic market
dislocations by sourcing compelling deals, often at attractive valuations.
Also, they are able to develop innovative solutions for their investors: the
rise of manager-led deals in the secondary market is an example of this.
One of the fundamental characteristics of the private equity industry is its
ability to adapt, evolve and respond flexibly to prevailing market conditions.
For example, nowadays the best private equity managers are no longer the
"financial engineers" that were more common several decades ago at the dawn of
the industry, but now are sophisticated operators of businesses. They have
experts on staff who take a "hands-on" approach by getting to know their
portfolio companies inside out, working with well-aligned management teams and
hand-picked industry experts to implement operational improvements. In
addition to delivering organic revenue and profit growth, successful private
equity managers identify add-on acquisitions to fuel company growth
geographically or in complementary products and services.
Private equity managers are patient as well as active investors; they
typically hold their companies for an average of six years, away from the
glare and perhaps more short-term mindset of the public markets, making
strategic decisions that they believe will deliver in the medium and long term
even though they may not have an immediate impact on earnings in the short
term.
Investing in resilient, growing sectors
Although recent performance of the private equity industry has been impacted
by the unwinding of quantitative easing, interest rate hikes, high inflation
and lower valuation multiples, it has nevertheless demonstrated its
resilience, continuing to outperform public markets over the medium and long
term. We have seen this within PIP's own portfolio which, over the past couple
of years, has not experienced the valuation impairments that were perhaps
expected by public market commentators. One of the reasons for this is
because, on behalf of PIP, we are backing top quality managers who are sector
specialists, focusing on resilient, non-cyclical sectors that are benefitting
from long-term trends such as automation and digitalisation, ageing
demographics and sustainability. In addition, we are investing directly in the
most exciting sub-sectors of the market through co-investments and
single-asset, manager-led secondaries, deploying our "double filter" to
identify and access the most attractive company opportunities.
Many private equity managers, and Pantheon itself, use artificial intelligence
(AI) tools, which bring a number of benefits and efficiencies to the due
diligence process, monitoring and the management of the portfolio. From an
investment standpoint, private equity is actively targeting companies that
provide products and services enabling the adoption and implementation of
large-scale AI strategies. While the promise of AI has been around for years,
there has been a resurgence of interest due to the advent of more accessible
machine learning models, reusable large language models (LLMs), and the sheer
amount of data that enterprises have to manage dynamically. An example of one
of PIP's portfolio companies which is enabling its customers to solve AI data
strategy problems is Confluent, which is featured as a case study in the full
Annual Report.
We believe that these longer-term trends, including AI, are here to stay
regardless of what is happening in the broader macroeconomic environment, and
will continue to provide tailwinds to PIP's portfolio companies. As shown
below, PIP's portfolio gives investors exposure to exciting businesses in
niche sectors that are not typically available via the public markets and
which benefit from these secular trends.
Overall, profitable, growing technology and healthcare companies make up a
considerable proportion of PIP's exposure. Our preference is to "lean in" to
the dynamic parts of the global economy and this underpins our focus on
generating appropriate risk-adjusted returns over the long term. Many of the
companies in PIP's portfolio are able to pass their costs on to their
customers efficiently because of the differentiated must-have products and
services that they offer. For example, software-as-a-service (SaaS) providers
such as Visma, one of PIP's largest companies, have the advantage that their
clients often cannot do without these essential business tools, and price
increases can be implemented immediately. PIP's private equity managers are
also seeking to contain costs in their underlying companies, obtain better
terms from suppliers and drive through change. Notably, they are using
technology (including AI) for a variety of purposes, such as improving
productivity and making efficiency gains, and for better risk management.
The effects of these actions can be evidenced by the fact that the average
annual EBITDA growth of PIP's buyout portfolio in the last five years is a
robust +19%. In addition, when our portfolio companies are sold, they are
typically realised at an uplift to the carrying value of the company. In PIP's
portfolio, the weighted average uplift of the companies that were sold was
+20% during the financial year to 31 May 2024. This indicates that our
portfolio companies are valued conservatively, and continues the trend that we
have observed for many years; since 2012 the average uplift upon exit of PIP's
portfolio companies has been +30%. There is a broader explanation of this
phenomenon, which applies more generally to the private equity market;
managers "smooth" valuations and prefer to surprise their closed-end fund
investors on the upside. In addition, it is important to note that private
equity managers generally do not receive their performance fee until the
majority of the fund has been fully exited and the overall returns have
exceeded a challenging "high water" mark. Therefore, private equity managers
have little incentive to excessively write up the valuations of their
portfolio companies. These factors add further weight to our view that the
scepticism of public market commentators as to the validity of the valuations
in private equity, is unwarranted. Some of the case studies in this report
demonstrate how our managers have created value in their portfolio companies.
Deal activity and exit environment in private equity
As well as understanding the valuation methodologies of our underlying
managers, part of our detailed investment due diligence process also includes
analysing the investment rationale, the value creation levers available and
the expected exit routes for the target business. A majority of PIP's
portfolio is invested in buyouts, where the private equity manager (sometimes
alongside co-investors) is the majority owner and can therefore choose when
and how to exit a portfolio company. In other words, private equity managers
control their realisations and importantly, they are not forced sellers. As a
result of the current macroeconomic environment, many of our managers are
holding on to their companies for longer than usual while they wait for the
right time to commence a sales process. Indications are that the average
holding period has increased from around five years in 2019 to around six
years in 2023(1). More generally, the slowdown in M&A transactions over
the past two years means that private equity deal flow was lower in 2023,
compared to 2022 and 2021, although add-on acquisitions continued apace as
private equity managers executed on their "buy-and-build" strategies, snapping
up smaller, synergistic companies at attractive valuations to bolt on to their
platform companies.
We are hopeful that we will start to see increased deal activity as more
certainty returns to the inflation and interest rate environment, and the
opening of the initial public offering (IPO) market accelerates. Although PIP
is not dependent on its portfolio companies going public for exits, healthy
IPO markets boost overall market confidence and support both private equity
and strategic/ trade buyer activity. Both we and our managers are unable to
predict the timing of a resurgent M&A market, but there are very early
signs that the tide may be starting to turn, which means that several of PIP's
portfolio companies, which are already being prepared for exit, will be ready
for sale as the outlook improves. Indeed, deal activity does seem to be
picking up - for example recently released data shows that new transactions in
Europe increased markedly in Q2 2024, with newly recorded deals increasing by
5% by number, and by 73% by aggregate deal value(2).
In addition to more confidence returning to the overall M&A market, there
are record levels of dry powder (c.US$1.5tn(3)) in our industry, which is
capital that has been raised and is available to invest but has not yet been
deployed, however a majority of this is concentrated among the largest buyout
funds. This capital sitting above us at the mega end of the market is positive
for PIP as these managers can, and often do, buy our smaller portfolio
companies to take them onto their next stage of development. The most recent
European deal data appears to point to greater activity by the large and mega
buyout focused managers, who are under pressure to deploy capital.
Perhaps unsurprisingly in the current macroeconomic environment, private
equity fundraising remained challenging during 2023. However, we observed that
the highest quality private equity managers were not held back and were still
able to fundraise while those of lesser quality struggled. Fundraising is
taking longer on average and there are fewer first time funds than has been
the case in the past. Nevertheless, the buyout segment of the global private
equity market had its best year on record for fundraising and private equity
assets under management are expected to exceed US$8.5tn(4) by 2028. On behalf
of PIP, we focus on small-mid market buyouts as we believe that this part of
the market offers compelling characteristics and multiple opportunities for
value creation. See the "Unlocking value in the mid-market" commentary in the
full Annual report for more information.
Despite the difficult conditions, indications are that institutional investors
remain committed to private equity with the majority responding in surveys
that they plan to maintain or increase their allocations to the asset class
over the longer term(5).However, many of these investors are under pressure
because of diminished distributions over the past two years, and are keen to
see capital returned from their existing private equity funds, in order to be
able to commit to new funds. The so-called "denominator" effect, which occurs
when investors find that their investment portfolios are overallocated to
private equity versus their public equity exposure, has persisted, even though
public markets have rebounded since the end of 2023. This phenomenon, coupled
with the softer exit and distribution environment has led to an increase in
the number of manager-led secondary deals through 2023 as pressure for
liquidity generation from fund investors continued to mount. This
proliferation of secondary deals that are led by the private equity managers
themselves has provided attractive opportunities for a seasoned secondary
market investor such as Pantheon. See the interview with Charlotte Morris,
Pantheon Partner and Co-Lead Manager of PIP in the full Annual Report to find
out more about this fast-growing part of the private equity market.
Manager and deal selection is important
It should be noted that despite the many attractions of investing in the asset
class, there is a wide dispersion of returns in private equity, and the best
managers, who generate the most exciting investment opportunities, are
routinely access-constrained. Furthermore, co-investment and secondary deal
sourcing from the best managers requires a deep network and strong
relationships that can only be generated over decades of private markets
investment. Sourcing a large funnel of deals from a global platform of
relationships is only the beginning; successful co-investors and secondaries
investors require specialised deal analysis and execution skills, which are
built up over a long period of time.
Both manager and deal selection (the "double filter") are critical to
generating outperformance, and a detailed knowledge of the market is essential
to finding and executing the best investment opportunities. Pantheon has more
than 40 years of experience investing in private equity funds and companies,
and we believe that our positions on 642 advisory boards(6) give us an
information and relationship edge, allowing us to position ourselves well for
future deal flow. PIP benefits from being an integral part of Pantheon's
platform, having access to a broad set of global relationships, deal
opportunities and expertise.
We have managed and advised PIP since it was launched in 1987 and it has been
designed to provide an "all weather", high-quality, low risk portfolio that
can withstand macroeconomic volatility and market cycles. As we look back at
the last financial year and more broadly at PIP's history through several
economic cycles, we can see the evidence of this approach coming to fruition
and remain highly confident in the Company's prospects in the future.
(1) Source: Bain & Company, Global Private Equity Report 2024.
(2) Source: Preqin data, as at 11 July 2024.
(3) Source: Preqin data, as at 8 July 2024.
(4) Source: Preqin Global Report Private Equity 2024.
(5) Source: Preqin Institutional Allocation Survey 2024.
(6) As at 31 March 2024.
PORTFOLIO AS AT 31 MAY 2024
Since its inception, PIP has been able to generate positive returns while at
the same time structuring its portfolio to minimise the risks typically
associated with private equity investments. Our established portfolio of
assets has been carefully selected, based on the strengths of our appointed
private equity managers, actively monitored and diversified to reduce specific
timing, regional and sector risks; and managed to maximise growth and
liquidity over time.
Investment type(1)
Flexible approach to portfolio construction increases potential for
outperformance.
Primaries 35%
Co-investments 34%
Manager-led secondaries 20%
Fund secondaries 11%
54% invested directly in companies.
Region(1)
Weighted towards the more developed private equity markets in the USA and
Europe.
USA 54%
Europe 31%
Global(2) 8%
Asia 7%
Stage(1)
Well-diversified with an emphasis on the buyout stages.
Small/mid-buyout 46%
Large/mega-buyout 26%
Growth 19%
Special situations 5%
Venture 4%
Sector(3)
Focus on high-growth and resilient sectors.
Information technology 33%
Healthcare 20%
Consumer 14%
Industrials 11%
Financials 10%
Communication services 7%
Energy 2%
Materials 2%
Others 1%
Vintage profile(4)
PIP's portfolio has a weighted average age of 5.2 years.
2023 and later 6%
2022 18%
2021 14%
2020 8%
2019 13%
2018 11%
2017 9%
2016 8%
2015 6%
2014 and earlier 7%
(1)Investment type, region and stage data is based upon underlying fund and
company valuations. These exclude the portion of the reference portfolio
attributable to the Asset Linked Note (ALN).
(2) Global category contains funds with no target allocation to any particular
region equal to or exceeding 60%.
(3) The company sector data is based upon underlying company valuations as at
31 March 2024, adjusted for calls and distributions to 31 May 2024. These
account for 100% of PIP's overall portfolio value.
(4)The vintage profile data is based upon underlying fund and company
valuations and excludes the portion of the reference portfolio attributable to
the ALN.
PERFORMANCE
PIP's portfolio value has increased modestly over the period. Access to
top-performing managers and a tilt towards resilient and high-growth sectors
have helped PIP withstand the current macroeconomic environment.
Private equity portfolio movements
PIP's portfolio generated returns of +4.9% during the year(1).
Portfolio value 31 May 2023 £2,387m
Valuation gains £118m
Foreign exchange impact (£50m)
Distributions (£193m)
Calls £156m
New investments(2) (£50m)
Portfolio value 31 May 2024 £2,468m
( )
Valuation movement by type(3)
Resilient portfolio performance despite the current challenging macroeconomic
environment. The return on manager-led secondaries reflects the relative
immaturity of this segment of the portfolio.
Return Closing portfolio NAV
Co-investments 7.4% 34%
Fund secondaries 4.6% 11%
Primaries 3.5% 35%
Manager-led secondaries 1.9% 20%
Valuation movement by stage(3)
Positive performance across the whole of PIP's portfolio.
Return Closing portfolio NAV
Large/mega buyout 6.2% 26%
Small/mid buyout 4.3% 46%
Growth 3.9% 19%
Special situations 3.6% 5%
Venture 2.0% 4%
Valuation movement by region(3)
PIP's portfolio is weighted towards investments in the USA and Europe, which
generated positive returns during the period.
The performance of Global and Asia were affected by a handful of
company-specific writedowns.
Return Closing portfolio NAV
Europe 6.2% 31%
USA 5.4% 54%
Global (0.5%) 8%
Asia (0.7%) 7%
(1) Excluding returns attributable to the ALN share of the portfolio.
(2)Amount drawn down at the time of commitment.
(3) Portfolio returns include income, exclude gains and losses from foreign
exchange movements, and look-through underlying vehicle structures to the
underlying funds. Portfolio returns exclude returns generated by the portion
of the reference portfolio attributable to the ALN, and are calculated by
dividing valuation gains by opening portfolio values.
Realisations
PIP's mature portfolio continued to generate distributions despite a subdued
exit environment. Distributions have been incremental to returns, with many
reflecting realisations at significant uplifts to carrying value. There have
been c.400 distributions from PIP's portfolio during the period.
Uplifts on exit realisations(1)
The value-weighted average uplift on exit realisations in the year was 20%,
consistent with our view that realisations can be incremental to returns.
The method used to calculate the average uplift is to compare the value at
exit with the value of the investment 12 months prior to exit, or if known,
the latest valuation unaffected by pricing effects arising from market
participants becoming aware of the imminent sale of an asset. Since 2012, the
weighted average uplift on exit is 30%.
Value-weighted average uplift= +20%
Cost multiples on exit realisations(1)
The average cost multiple on exit realisations of the sample was 3.2 times for
the year ended 31 May 2024. The cost multiple for this financial year was
above the 3.0 times average annual cost multiple achieved on exit since 2021.
This demonstrates value creation over the course of PIP's investments.
Average cost multiple on exit = 3.2x
(1)See the Alternative Performance Measures section in the full Annual Report
for sample calculations and disclosures
Exit realisations by sector and type
Realisation activity was strongest in the communication services and
financials sectors. Strategic sales and secondary buyouts represented the most
significant sources of exit activity during the year.
Exit realisations by sector(2) Exit realisations by type(2)
For the year to 31 May 2024 For the year to 31 May 2024
Communication services 35% Strategic sale 41%
Financials 31% Secondary buyout 41%
Information technology 10% IPO(1) and secondary share sale 15%
Industrials 9% Refinancing and recapitalisation 3%
Healthcare 8%
Consumer 4%
Energy 3%
( )
(1)Initial Public Offering
(2)The data in the sample provides coverage for 100% (for exit realisations by
sector) and 96% (for exit realisations by type) of proceeds from exit
realisations received during the period.
Net Portfolio Cash Flow
Net portfolio cash flow equals distributions less capital calls.
A continued focus on the portfolio's maturity profile means that PIP is
well-positioned to generate positive cash flows.
With an average distribution rate of 22% since 2012, PIP's portfolio has been
cash flow positive since 2010.
During the year, PIP's net portfolio cash flow was £37m. PIP has generated
£1.6bn of net cash over the last 10 years.
Net positive cash flow generation has continued despite lower levels of exit
and new deal activity. Refer to the Market review section above for more
details on how the private markets have performed.
Distributions
With a weighted average fund maturity of 5.2 years at 31 May 2024 (31 May
2023: 4.8 years), PIP's portfolio continued to generate positive net cash.
PIP received £193m in proceeds from PIP's portfolio in the year to 31 May
2024 (year to 31 May 2023: £223m), equivalent to an annualised
distribution(1) rate of 8% of opening portfolio value (31 May 2023:10%).
Quarterly Distribution Rates(1)
Despite a slowdown in distributions during the period, in line with the wider
private equity market, PIP's portfolio has continued to generate cash.
(1) Distribution rate equals distributions in the period (annualised) divided
by opening portfolio value.
Calls
PIP paid £156m to finance calls on undrawn commitments during the year (year
to 31 May 2023: £155m).
Quarterly Call Rate(1)
The annualised call rate(1) for the year to 31 May 2024 was equivalent to 18%
of opening undrawn commitments (31 May 2023: 21%).
The observed call rate is below historical average levels and is a reflection
of the subdued Mergers & Acquisitions ("M&A") market.
( )
(1) Call rate equals calls in the period (annualised) divided by opening
undrawn commitments. All call figures exclude the acquisition cost of new
secondary and co-investment transactions.
New Commitments
The Company intentionally managed investment pacing to ensure liquidity was
preserved in a market environment experiencing lower exit levels than
historically.
PIP made 16 new investments during the year to 31 May 2024, amounting to
£153m in new commitments. These commitments were to nine primary funds
(£99m), six co-investments (£42m) and one manager-led secondary (£12m).
In addition, PIP was able to deploy a significant amount of capital despite
low levels of deal flow, and capture value for its shareholders, by acquiring
its own shares at a significant discount to NAV. During the financial year,
the Company invested £197m* in share buybacks at an average discount of 35%.
Our investment process:
1. Investment opportunities in companies and funds are originated via
Pantheon's extensive and well-established platform.
2. We invest with many of the best private equity managers who are able to
identify and create value in their portfolio companies.
3. Cash generated from the sale of those companies is returned to PIP and
redeployed into new investment opportunities, including buybacks in accordance
with the new CAP.
New commitments by region
Europe 53%
USA 35%
Global 12%
New commitments by stage
Growth 46%
Small/mid buyout 21%
Venture 20%
Large/mega buyout 13%
New commitments by type
Primaries 64%
Co-investments 28%
Manager-led secondaries 8%
* Excluding costs and stamp duty.
Buyout Analysis(1)
Revenue and EBITDA growth
Over the past 12 months, the weighted-average revenue and EBITDA growth for
PIP's buyout portfolio was 14% and 17% respectively. PIP's five year average
revenue and for EBITDA growth have exceeded growth rates seen among companies
that constitute the MSCI World Index. Strong top-line performance, disciplined
cost control, operational expertise and good earnings growth, together with an
efficient use of capital, underpin the investment thesis of our private equity
managers.
Valuation multiple
Accounting standards require private equity managers to value their portfolios
at fair value. Public market movements can be reflected in valuations.
PIP's sample-weighted average Enterprise Value (EV)/EBITDA was 17.3 times
compared to 20.1 times for the MSCI World index.
PIP invests proportionately more in high-growth sectors such as
mission-critical B2B information technology and healthcare, and these sectors
tend to trade at a premium to other sectors.
PIP buyout sample MSCI World(3)
17.3x 20.1x
Buyout portfolio(4) MSCI World(5)
Information technology 27% Information technology 23%
Healthcare 21% Consumer 18%
Consumer 17% Financials 15%
Industrials 14% Healthcare 12%
Financials 12% Industrials 12%
Communication services 5% Others 9%
Materials 3% Communication services 7%
Others 1% Materials 4%
(1)The sample buyout figures for the 12 months to 31 December 2023 were
calculated using all the information available to the Company. The figures are
based on unaudited data. MSCI data was sourced from Bloomberg. See the
Alternative Performance Measures section in the full Annual Reportfor sample
calculations and disclosures.
(2) The MSCI World, 2023 and 2022 aggregate market-weighed revenue and EBITDA
growth data is derived from constituent companies compared on a year-on-year
basis for the financial years ending 31 December 2023 and 2022.
(3) The MSCI World valuation multiple is derived from weighted valuation
multiples data of the constituent companies as at 31 December 2023.
(4) 100% coverage of buyout portfolio.
(5) As at 31 May 2024.
Debt multiples
Venture, growth and buyout investments have differing leverage
characteristics.
Average debt multiples for small/mid buyout investments, which represent the
largest segment of PIP's buyout portfolio, are typically lower than debt
levels in the large/mega-buyout segment.
The venture and growth portfolios have little or no reliance on leverage.
Debt multiples % of PIP's
portfolio
Small/mid buyout 4.8x 46%
Large/mega buyout 5.2x 26%
Largest 50 Companies by Value(1)
Company Country Sector Investment type Description % of PIP portfolio
1 Action Netherlands Consumer Manager-led Secondary General merchandise discount stores 1.2%
2 Kaseya Switzerland Information Technology Co-Investment; Secondary Provider of IT management and monitoring software services 1.2%
3 Visma Norway Information Technology Primary; Co-investment Provider of software solutions for finance and HR departments 1.1%
4 Smile Doctors USA Healthcare Manager-led Secondary Orthodontic treatments and services provider 0.9%
5 Shiftkey USA Healthcare Manager-led Secondary Recruitment platform for nurses 0.8%
6 Valantic Germany Information Technology Manager-led Secondary Digital consulting and software company 0.8%
7 MRO USA Healthcare Co-investment; Primary Provider of disclosure management services 0.8%
8 Froneri United Kingdom Consumer Manager-led Secondary Ice cream and frozen food manufacturer 0.8%
9 OMNI USA Healthcare Manager-led Secondary Specialist eye treatment provider 0.8%
10 Anaplan USA Information Technology Co-investment; Primary Developer of a cloud-based modelling and planning platform 0.7%
11 Asurion USA Financials Manager-led Secondary Mobile phone insurance company 0.7%
12 SunMedia Spain Communication Services Co-investment Digital advertising company 0.7%
13 Lifepoint Health USA Healthcare Co-investment; Manager-led Secondary Healthcare provider 0.7%
14 JSI USA Industrials Manager-led Secondary Consultant to telecommunication service providers 0.7%
15 Millennium Trust Company USA Financials Co-investment; Primary Provider of technology-enabled retirement and investment services 0.7%
16 Eversana USA Healthcare Manager-led Secondary Commercial services platform for the life sciences sector 0.7%
17 Doit USA Information Technology Co-investment Provider of cloud consulting and engineering services 0.7%
18 Recorded Future USA Information Technology Primary; Co-Investment; Fund Secondary Cybersecurity software company 0.7%
19 Nord Anglia Education Hong Kong Consumer Primary; Co-Investment Operator of educational institutions 0.7%
20 Ascent Resources USA Energy Fund Secondary Natural gas and oil producer 0.6%
21 Confie USA Financials Co-Investment Commercial insurance broker 0.6%
22 Cotiviti USA Healthcare Co-Investment A provider of healthcare payment integrity and analytical solutions 0.6%
23 Kaspi.kz Kazakhstan Financials Primary Banking products and services provider 0.6%
24 RLDATIX USA Healthcare Manager-led Secondary Developer of cloud-based patient safety and risk management software 0.6%
25 SailPoint USA Information Technology Co-Investment; Primary Provider of enterprise identity governance solutions 0.6%
26 Tag Israel Healthcare Manager-led Secondary Provider of medical equipment and implants 0.5%
27 Krispy Krunchy Chicken USA Consumer Co-Investment ; Primary Operator of fast food chain stores 0.5%
28 24 Seven USA Industrials Manager-led Secondary Digital marketing and recruitment services provider 0.5%
29 Access United Kingdom Information Technology Co-Investment Provider of business management software solutions to SMEs 0.5%
30 101 USA Industrials Co-Investment Provider of food waste recycling services 0.5%
31 Opt Connect USA Information Technology Manager-led Secondary Provider of wireless internet connectivity solutions 0.5%
32 IFS Sweden Information Technology Co-investment; Primary Developer of enterprise resource planning software 0.5%
33 Kilcoy Global Foods Australia Consumer Manager-led Secondary Producer of beef and other animal protein products 0.5%
34 Satlink Spain Information Technology Co-investment Satellite communication equipment provider for the maritime industry 0.5%
35 Perspecta USA Information Technology Co-investment IT services management company 0.5%
36 Tanium USA Information Technology Co-investment Cybersecurity services provider 0.5%
37 Logic Monitor USA Information Technology Primary; Co-Investment; Fund Secondary Managed IT service provider 0.5%
38 Flynn USA Consumer Co-investment Restaurant franchise company 0.5%
39 Inspire Brands USA Consumer Manager-led Secondary Restaurant franchise company 0.5%
40 Imagine360 USA Healthcare Manager-led Secondary Provider of solutions to mitigate health insurance costs for mid-size 0.5%
employers
41 Shawbrook United Kingdom Financials Co-investment Provides lending and savings financial products 0.4%
42 Trimech USA Information Technology Co-investment Provider of 3D design, engineering and manufacturing solutions 0.4%
43 Medica United Kingdom Healthcare Co-investment Provides teleradiology reporting services to public and private health 0.4%
organisations
44 SVT Germany Industrials Manager-led Secondary Manufacturer of fire protection products and systems 0.4%
45 Sonar Switzerland Information Technology Primary; Fund Secondary Developer of coding software 0.4%
46 KD Pharma Germany Healthcare Manager-led Secondary Contract Development and Manufacturing Organisation 0.4%
47 Olink Sweden Healthcare Co-investment Develops products and services for human protein biomarker discovery 0.4%
48 Arnott USA Consumer Co-investment; Fund Secondary Manufactures air suspension products and accessories for trucks and vehicles 0.4%
49 Vizrt Norway Information Technology Primary; Manager-led Secondary Developer of content production tools for the digital media industry 0.4%
50 Regina Maria Romania Healthcare Manager-led Secondary Provides private healthcare services 0.4%
Coverage of PIP's private equity asset value 30.5%
(1) The largest 50 companies table is based upon underlying company valuations
at 31 March 2024 adjusted for known call and distributions to 31 May 2024, and
includes the portion of the reference portfolio attributable to the ALN.
The Largest 50 Managers by Value
Rank Manager Region(1) Stage % of total private equity asset value(2)
1 Insight Partners USA Growth 7.1%
2 Index Ventures Global Venture, Growth 3.6%
3 Hg Europe Buyout 3.6%
4 Providence Equity Partners USA Buyout 3.1%
5 Parthenon Capital USA Buyout 2.5%
6 Water Street USA Buyout 2.4%
7 IK Partners Europe Buyout 2.4%
8 Advent International Global Buyout 2.4%
9 ABRY Partners USA Buyout 2.0%
10 Thomabravo USA Buyout 1.9%
11 MidEuropa Europe Buyout 1.5%
12 Seven2 (previously Apax Partners SAS) Europe Buyout 1.5%
13 Charlesbank USA Buyout 1.4%
14 Altamont Capital Partners USA Buyout 1.4%
15 3i Group Europe Buyout 1.3%
16 Searchlight Capital Partners Global Special Situations 1.3%
17 LYFE Capital Asia Growth 1.3%
18 Veritas Capital USA Buyout 1.3%
19 Deutsche Private Equity Europe Buyout 1.2%
20 Baring Private Equity Asia Global Growth 1.2%
21 Heilman & Friedman Capital Global Buyout 1.2%
22 Altor Capital Europe Buyout 1.1%
23 HIG Capital USA Buyout 1.1%
24 Main Post Partners USA Buyout 1.1%
25 Apollo Advisors Global Buyout 1.1%
26 Oak HC/FT Associates USA Growth 1.1%
27 Linden Capital Partners USA Buyout 1.0%
28 Apheon (Previously Ergon Capital) Europe Buyout 1.0%
29 Growth fund(3) USA Growth 1.0%
30 ECI Partners Europe Buyout 1.0%
31 Five Arrows Europe Buyout 1.0%
32 Morgan Stanley Capital Partners USA Buyout 0.9%
33 Lorient Capital USA Buyout 0.9%
34 PAI Partners Europe Buyout 0.9%
35 ONEX USA Buyout 0.9%
36 The Energy & Minerals Group USA Special Situations 0.9%
37 NMS Management USA Buyout 0.8%
38 Balderton Capital Europe Growth 0.8%
39 Calera Capital USA Buyout 0.8%
40 Shamrock Capital USA Growth 0.8%
41 Francisco Partners USA Buyout 0.8%
42 Alpine Investors USA Buyout 0.8%
43 Chequers Capital. Europe Buyout 0.8%
44 BC Partners Global Buyout 0.8%
45 Magnum Industrial Partners Europe Buyout 0.8%
46 Sentinel Capital Partners USA Buyout 0.7%
47 Knox Lane USA Buyout 0.7%
48 Stone Goff Partners USA Buyout 0.7%
49 Roark Capital Group USA Buyout 0.6%
50 Tene Capital Europe Growth 0.6%
Coverage of PIP's private equity asset value 71.1%
(1) Refers to the regional exposure of funds.
(2) Percentages look through underlying vehicle structures and exclude the
portion of the reference portfolio attributable to the ALN.
(3) The private equity manager does not permit the Company to disclose this
information.
THE DIRECTORS
The Directors in office at the date of this report are:
John Singer CBE* (Chairman)
Mary Ann Sieghart* (Senior Independent Director)
David Melvin* (Audit Committee Chairman)
John Burgess*
Dame Susan Owen DCB*
Zoe Clements*
Rahul Welde*
* Independent of the Manager
EXTRACTS FROM THE DIRECTORS' REPORT
Share capital
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 17 of the
financial statements.
Authorities given to the Directors at the AGM on 19 October 2023 to allot
shares, disapply statutory pre-emption rights and buy back shares will expire
at the forthcoming AGM. In order to take advantage of the investment
opportunity offered by the discount to NAV on the shares, during the year to
31 May 2024, 64,279,846 shares, representing 12.1% of the called-up share
capital and a nominal value of £4,306,749.68, were bought back for an
aggregate amount of £169,702,929 (excluding costs and stamp duty) and
subsequently cancelled. As at 31 May 2024, authority to buy back a further
67,002,984 shares remained.
As at 31 May 2024, the Company had shares in issue as shown in the table
below, all of which were listed on the official list maintained by the
Financial Conduct Authority ("FCA") and admitted to trading on the London
Stock Exchange. No shares were held in Treasury at the year end or as at the
date of this Report. The number of shares in issue and the voting rights as at
the date of this report are 464,321,308 .
As at the date of this Report As at 31 May 2024 As at 31 May 2023
Number of ordinary shares of 6.7p each in issue 464,321,308 465,613,611 529,893,457
Voting rights attached to each share 1 1 1
Number of shares held in Treasury - - -
Total voting rights 464,321,308 465,613,611 529,893,457
Going Concern
The Company's business activities, together with the factors likely to affect
its future development, performance and financial position, are set out in the
Strategic Report and Manager's Review.
The Directors have made an assessment of going concern, taking into account
the Company's current performance and financial position as at 31 May 2024. In
addition, the Directors have assessed the outlook, which considers the
potential further impact of ongoing international conflicts and election
cycles which have brought about increased geopolitical uncertainties including
the disruption to the global supply chain and increases in the cost of living
as a result, persistent inflation, high interest rates and the impact of
climate change on PIP's portfolio using the information available as at the
date of issue of these financial statements.
The Directors have 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 in the full Annual Report
and its present and projected financial position. The Directors have
considered the impact of the Company's Capital Allocation Policy in regards to
share buybacks. As part of the overall assessment, the Directors have taken
into account the Manager's culture, which emphasises collaboration and
accountability, the Manager's conservative approach to balance sheet
management, and its emphasis on investing with underlying private equity
managers that are focused on market outperformance.
At each Board meeting, the Directors review the Company's latest management
accounts and other financial information. The Company's commitments to private
equity investments are reviewed, together with its financial resources,
including cash held and its borrowing capability. One-year cash flow scenarios
are also presented and discussed at each meeting.
PIP's Balance Sheet is managed to ensure that the Company can finance its
undrawn commitments, which are carefully controlled relative to its assets and
available liquidity. This disciplined approach enables the Company to
withstand periods of volatility such as those experienced as a result of the
ongoing international conflicts and periods of historically low exit and
distribution levels.
The Directors have considered downside liquidity modelling scenarios with
varying degrees of decline in investment valuations, decreased investment
distributions, and increased call rates, with the worst being an extreme
downside scenario representing an impact to the portfolio that is worse than
that experienced during the 2008-2009 global financial crisis.
In the event of a downside scenario, PIP can take steps to limit or mitigate
the impact on the Balance Sheet, namely drawing on the credit facility and
pausing new commitments. In addition, subject to the prevailing market
environment, it could raise additional credit or capital, and sell assets to
increase liquidity and reduce outstanding commitments.
After due consideration of the Balance Sheet, activities of the Company, its
assets, liabilities, commitments and financial resources, the Directors have
concluded that the Company has adequate resources to continue in operation for
at least 12 months from the approval of the financial statements for the year
ended 31 May 2024. For this reason, they consider 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 in
accordance with FRS102. 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 (UK 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 United
Kingdom GAAP 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 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 Manager for the maintenance and
integrity of the Company's corporate and financial information included on the
Company's website (www.piplc.com (http://www.piplc.com) ). Legislation in the
UK governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Each of the Directors, whose names are listed above, confirms that to the best
of their 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 Directors'
Report and Strategic 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 Committee advises on whether it considers that the Annual Report and
financial statements fulfil these requirements. The process by which the Audit
Committee has reached these conclusions is set in the full Annual Report. As a
result, the Board has concluded that the Annual Report and financial
statements for the year ended 31 May 2024, taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to
assess the Company's position and performance, business model and strategy.
Signed on behalf of the Board by
John Singer CBE
Chair
31 July 2024
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's
statutory accounts for the year ended 31 May 2024 and period ended 31 May 2023
but is derived from those accounts. Statutory accounts for 2023 have been
delivered to the Registrar of Companies, and those for 2024 will be delivered
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 financial statements at www.piplc.com
(http://www.piplc.com) .
INCOME STATEMENT
Year ended 31 May 2024
Year ended 31 May 2024 Year ended 31 May 2023
Note Revenue Capital Total(1) Revenue Capital Total(1)
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments at fair value through profit or loss 9b - 60,234 60,324 - 50,885 50,885
(Losses)/gains on financial instruments (675) (2,745) (3,420) (856) 4,240 3,384
at fair value through profit or loss - ALN
Currency gains on cash and cash equivalents 18 - 5,491 5,491 - 9,179 9,179
Investment income 2 16,534 - 16,534 18,084 - 18,084
Investment management fees 3 (25,674) - (25,674) (27,707) - (27,707)
Other expenses 4 (2,148) (3,374) (5,522) (2,059) (1,625) (3,684)
Return before financing and taxation (11,963) 59,696 47,733 (12,538) 62,679 50,141
Interest payable and similar expenses 6 (13,051) - (13,051) (6,366) - (6,366)
Return before taxation (25,014) 59,696 34,682 (18,904) 62,679 43,775
Taxation paid 7 (3,033) - (3,033) (1,494) - (1,494)
Return for the year, being total comprehensive income for the year (28,047) 59,696 31,649 (20,398) 62,679 42,281
Return per ordinary share 8 (5.68)p 12.08p 6.40p (3.83)p 11.77p 7.94p
(1) The Company does not have any income or expenses that are 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").
All revenue and capital items in the above statement relate to continuing
operations. No operations were acquired or discounted during the period.
The Notes below form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
Year ended 31 May 2024
Note Share Share Capital Other Capital Revenue Total
capital premium redemption capital reserve on reserve £'000
£'000 £'000 reserve reserve investments £'000
£'000 £'000 held
£'000
Movement for the year ended 31 May 2024
Opening equity shareholders' funds 35,503 269,535 4,062 1,620,532 653,695 (133,255) 2,450,072
Return for the year - - - 70,382 (10,686) (28,047) 31,649
Ordinary shares bought back for cancellation in the market* 17 (1,012) - 1,012 (47,030) - - (47,030)
Ordinary shares bought back for cancellation via Tender Offer* 17 (3,295) - 3,295 (151,050) - - (151,050)
Closing equity shareholders' funds 31,196 269,535 8,369 1,492,834 643,009 (161,302) 2,283,641
Movement for the year ended 31 May 2023
Opening equity shareholders' funds 36,012 269,535 3,553 1,556,346 674,875 (112,857) 2,427,464
Return for the year - - - 83,859 (21,180) (20,398) 42,281
Ordinary shares bought back for cancellation in the market* 17 (509) - 509 (19,673) - - (19,673)
Closing equity shareholders' funds 35,503 269,535 4,062 1,620,532 653,695 (133,255) 2,450,072
* The value of ordinary shares bought back include any associated fees and
stamp duty.
The Notes below form part of these financial statements.
BALANCE SHEET
As at 31 May 2024
Note 31 May 2024 31 May 2023
£'000 £'000
Fixed assets
Investments at fair value 9a/b 2,498,505 2,417,620
Current assets
Debtors 11 2,487 2,347
Cash and cash equivalents 12 21,863 66,043
24,350 68,390
Creditors: Amounts falling due within one year
Bank loan (expiry October 2024) 14 (83,261) -
Other creditors 13 (7,752) (4,617)
(91,013) (4,617)
Net current (liabilities)/assets (66,663) 63,773
Total assets less current liabilities 2,431,842 2,481,393
Creditors: Amounts falling due after one year
Asset Linked Loan 15 (30,378) (31,321)
Private Placement loan notes 16 (117,823) -
(148,201) (31,321)
Net assets 2,283,641 2,450,072
Capital and reserves
Called-up share capital 17 31,196 35,503
Share premium 18 269,535 269,535
Capital redemption reserve 18 8,369 4,062
Other capital reserve 18 1,492,834 1,620,532
Capital reserve on investments held 18 643,009 653,695
Revenue reserve 18 (161,302) (133,255)
Total equity shareholders' funds 2,283,641 2,450,072
Net asset value per ordinary share 19 490.46p 462.37p
The financial statements were approved by the Board of Pantheon International
Plc on 31 July 2024 and were authorised for issue by
John Singer CBE
Chair
Company No. 214798
CASH FLOW STATEMENT
Year ended 31 May 2024
Year ended Year ended
31 May 2024 31 May 2023
Note £'000 £'000
Cash flow from operating activities
Investment income received - comprising:
- Dividend income 12,975 12,325
- Interest income 2,815 4,756
- Other investment income 86 211
Deposit and other interest received 669 780
Investment management fees paid (25,639) (27,586)
Secretarial fees paid (464) (354)
Depositary fees paid (236) (284)
Directors' fees paid (343) (303)
Legal and professional fees paid (1,208) (1,996)
Capitalised project related legal costs (2,497) -
Other cash payments(1) (1,079) (1,036)
Withholding tax deducted (2,933) (1,502)
Net cash outflow from operating activities 21 (17,854) (14,989)
Cash flows from investing activities
Purchases of investments(2) (152,960) (289,020)
Disposals of investments(2) 131,544 161,168
Net cash (outflow) from investing activities (21,416) (127,852)
Cash flows from financing activities
ALN repayments (4,650) (5,035)
Ordinary shares bought back for (46,140) (19,678)
cancellation*
Ordinary shares bought back for cancellation via Tender Offer* (151,050) -
Drawdown of loan 200,375 -
Repayment of loan (111,903) -
Loan commitment and arrangement fees paid (5,642) (7,071)
Loan interest paid (4,018) -
Private placement loan note funding 118,274 -
Net cash outflow from financing activities (4,754) (31,784)
Decrease in cash in the year (44,024) (174,625)
Cash and cash equivalents at the beginning of the year 66,043 231,458
Foreign exchange gains on ash accounts (156) 9,210
Cash and cash equivalents at the end of the year 21,863 66,043
(1) Includes interest paid during the year of £nil (2023: £22,000).
(2) Purchases and disposals do not include investments actioned by Pantheon
International Holdings LP.
* The value of ordinary shares bought back include any associated fees and
stamp duty.
The Notes below form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
PIP is a listed public limited company incorporated in England and Wales. The
registered office is detailed in the full Annual Report. A summary of the
principal accounting policies and measurement bases, all of which have been
applied consistently throughout the year, is set out below.
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 May 2024. They have also been prepared on the assumption that
approval as an investment trust will continue to be granted. The Company's
financial statements are presented in sterling and all values are rounded to
the nearest thousand pounds (£'000) except when indicated otherwise. The
investments in the subsidiaries are financial assets, and held at fair value
through profit or loss.
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, other than where restrictions are imposed on the
Company which prohibit specific disclosures.
B. Going Concern
The financial statements have been prepared on a going concern basis and under
the historical cost basis of accounting, modified to include the revaluation
of certain assets at fair value.
The Directors have made an assessment of going concern, taking into account
the Company's current performance and financial position as at 31 May 2024. In
addition, the Directors have assessed the outlook, which considers the
potential further impact of the ongoing international conflicts and election
cycles which have brought about increased geopolitical uncertainties including
the disruption to the global supply chain and increases in the cost of living
as a result, persistent inflation, high interest rates and the impact of
climate change on PIP's portfolio using the information available as at the
date of issue of these financial statements. As part of this assessment the
Directors considered:
· Various downside liquidity modelling scenarios with varying
degrees of decline in investment valuations and decreased investment
distributions, and increased call rates, with the worst being a downside case
downside scenario representing an impact to the portfolio that is worse than
that experienced during the Global Financial Crisis.
· The Company manages and monitors liquidity regularly ensuring it
is adequate and sufficient and is underpinned by its monitoring of
investments, distributions, capital calls and outstanding commitments. Total
available financing as at 31 May 2024 stood at £414m (31 May 2023: £554m),
comprising £16m (31 May 2023: £63m) in available cash balances and £398m
(31 May 2023: £491m) in undrawn, sterling equivalent, bank facilities.
· PIP's 31 May 2024 valuation is primarily based on reported GP
valuations with a reference date of 31 March 2024, updated for capital
movements and foreign exchange impacts.
· Unfunded commitments - PIP's unfunded commitments at 31 May 2024
were £789m (31 May 2023: £857m). The Directors have considered the maximum
level of unfunded commitments which could theoretically be drawn in a 12-month
period, the ageing of commitments and available financing to fulfil these
commitments. In these scenarios PIP can take steps to limit or mitigate the
impact on the Balance Sheet, namely drawing on the credit facility, pausing on
new commitments, selling assets to increase liquidity and reducing outstanding
commitments if necessary. In addition, subject to market conditions, the
Company could also seek to raise additional debt or equity capital.
· The impact of share buybacks and the Company's Capital Allocation
Policy on available liquidity.
· Tenure of credit facilities - A £100m equivalent tranche of the
facility expires in October 2024 and will be repaid with cash or drawings from
the other existing loan.
· The Directors also considered the impact of climate change on
PIP's portfolio and concluded that there was no significant impact on the
Company as a result of climate change.
Having performed the assessment on going concern, 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 12 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 an investment business. Consequently, no business
segmental analysis is provided.
D. Valuation of Investments
Given the nature of the Company's assets which comprise predominantly unlisted
fund investments, while the Company operates a robust and consistent valuation
process, there is significant estimation uncertainty in the underlying fund
valuations which are estimated at a point in time. Accordingly, while the
Company considers circumstances where it might be appropriate to apply an
override, for instance in response to a market crash, this will be exercised
only where it is judged necessary to reflect fair value.
Similarly, 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". As
the Company's business is investing in financial assets with a view to
profiting from their total return in the form of interest, dividends or
increases in fair value, investments are recognised at fair value on initial
recognition.
The Company manages and evaluates the performance of these investments on a
fair value basis in accordance with its investment strategy. For investments
actively traded in organised financial markets, fair value is generally
determined by reference to stock exchange quoted market bid prices at the
close of business at the Balance Sheet date. For investments that are not
actively traded in organised financial markets, fair value is determined using
reliable valuation techniques as described below:
i Unquoted fixed asset investments are stated at the estimated fair value.
In the case of investments in private equity funds, this is based on the net
asset value of those funds ascertained from periodic valuations provided by
the managers of the funds and recorded up to the measurement date. Such
valuations are necessarily dependent upon the reasonableness of the valuations
by the fund managers of the underlying investments. In the absence of contrary
information, the values are assumed to be reliable. These valuations are
reviewed periodically for reasonableness and recorded up to the measurement
date. If a class of assets were sold post-period end, management would
consider the effect, if any, on the investment portfolio.
The Company may acquire secondary interests at either a premium or a discount
to the fund manager's valuation. Within the Company's portfolio, those fund
holdings are normally revalued to their stated net asset values at the next
reporting date unless an adjustment against a specific investment is
considered appropriate.
The fair value of each investment is derived at each reporting date. In the
case of direct investments in unquoted companies, the initial valuation is
based on the transaction price. Where further indications of fair value become
available, such as through subsequent issues of capital or dealings between
third parties, the valuation is adjusted to reflect the new evidence, at each
reporting date. This information may include the valuations provided by
private equity managers who are also invested in the Company.
The Company holds an investment in its subsidiary, Pantheon International
Holdings LP ("PIH LP"), which itself holds a basket of investments held at
fair value. The fair value of PIH LP is based on its latest net asset value.
ii Quoted investments are valued at the bid price on the relevant stock
exchange.
Private equity funds may contain a proportion of quoted shares from time to
time; for example where the underlying company investments have been taken
public but the holdings have not yet been sold. The quoted market holdings at
the date of the latest fund accounts are reviewed and adjusted to the
published prices of those holdings at the period end.
E. Asset Linked Note
As part of the share consolidation effected on 31 October 2017, the Company
issued an ALN with an initial principal amount of £200m to the Investor.
Payments under the ALN are made quarterly in arrears and are linked to the ALN
share (c.75%) of the net cash flows from a reference portfolio which consists
of interests held by the Company in over 300 of its oldest private equity
funds, substantially 2006 and earlier vintages. The Company retains the net
cash flows relating to the remaining c.25% of the reference portfolio.
The ALN is held at fair value through profit or loss and therefore movements
in fair value are reflected in the Income Statement. Fair value is calculated
as the sum of the ALN share of fair value of the reference portfolio plus the
ALN share of undistributed net cash flow. The fair value movement is allocated
between revenue and capital pro rata to the fair value gains and
income-generated movements in the reference portfolio.
A pro rata share of the Company's total ongoing charges is allocated to the
ALN, reducing each quarterly payment ("the Expense Charge") and deducted from
Other Expenses through the revenue account in the Income Statement.
The ALN's share of net cash flow is calculated after withholding taxation
suffered. These amounts are deducted from taxation through the revenue account
in the Income Statement.
See Note 15 for further information.
F. Income
Dividends receivable on quoted equity shares are brought into account on the
ex-dividend date.
Dividends receivable on equity shares where no ex-dividend date is quoted are
brought into account when the Company's right to receive payment is
established. The fixed return on a debt security is recognised on a time
apportionment basis.
Income distributions from funds are recognised when the right to distributions
is established.
G. Taxation
Corporation tax payable is based on the taxable profit for the period. The
charge for taxation takes into account taxation deferred or accelerated
because of timing differences between the treatment of certain items for
accounting and taxation purposes. Full provision for deferred taxation is made
under the liability method, without discounting, on all timing differences
that have arisen but not reversed by the Balance Sheet date.
The tax effect of different items of income/gain and expenditure/loss is
allocated between capital and revenue on the same basis as the particular item
to which it relates, using the marginal method.
Dividends receivable are recognised at an amount that may include withholding
tax (but excludes other taxes, such as attributable tax credits). Any
withholding tax suffered is shown as part of the revenue account tax charge.
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.
H. Expenses
All expenses are accounted for on an accruals basis. Expenses, including
investment management fees, are charged through the revenue account except as
follows:
- Expenses which are incidental to the acquisition or disposal of an
investment are treated as capital costs and separately identified and
disclosed in Note 4;
- Expenses of a capital nature are accounted for through the capital
account; and
- Investment performance fees.
I. Foreign Currency
The functional and presentational currency of the Company is pounds sterling
("sterling") because it is the primary currency in the economic environment in
which the Company operates. Transactions denominated in foreign currencies are
recorded in the local currency at actual 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 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 an 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 covered by fair value adjustments. For details of
transactions included in the capital column of the Income Statement please see
(J) and (K) below.
J. Other Capital Reserve
The following are accounted for in this reserve:
- Investment performance fees;
- Gains and losses on the realisation of investments;
- Realised exchange difference of a capital nature;
- Expenses of a capital nature; and
- Costs of share buybacks.
Capital distributions received from investments are accounted for by firstly
reducing any cost of that investment, with any gains being recognised as
realised only when the cost has been reduced to nil.
K. Capital Reserve on Investments Held
The following are accounted for in this reserve:
- Increases and decreases in the value of investments held at the year
end and the ALN.
L. Investment Performance Fee
The Manager is entitled to a performance fee from the Company in respect of
each 12 calendar month period ending on 31 May in each year. The performance
fee payable in respect of each such calculation period is 5% of the amount by
which the net asset value at the end of such period exceeds 110% of the
applicable "high-water mark", i.e. the net asset value at the end of the
previous calculation period in respect of which a performance fee was payable,
compounded annually at 10% for each subsequent completed calculation period up
to the start of the calculation period for which the fee is being calculated.
For the calculation period ended 31 May 2024, the notional performance fee
hurdle is a net asset value per share of 594.9p.
The performance fee is calculated using the adjusted net asset value. The net
asset value per share at 31 May 2024 is 490.5p.
The performance fee is calculated so as to ignore the effect on performance of
any performance fee payable in respect of the period for which the fee is
being calculated or of any increase or decrease in the net assets of the
Company resulting from any issue, redemption or purchase of any shares or
other securities, the sale of any treasury shares or the issue or cancellation
of any subscription or conversion rights for any shares or other securities
and any other reduction in the Company's share capital or any distribution to
shareholders.
M. Significant Judgements and Estimates
The preparation of financial statements requires the 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. Actual results may differ
from these estimates. Details of how the fair values of unlisted investments
are estimated and any associated judgements applied are provided in Section
(D) of this Note and also within the Market Price Risk section in Note 23.
N. Derecognition/Recognition of Assets and Liabilities
Financial assets and financial liabilities are recognised on the Company's
Balance Sheet when the Company becomes a party to the contractual provisions
of the instrument. In accordance with FRS102, financial assets are
derecognised when the contractual rights to the cash flows from the instrument
expire or the asset is transferred, and the transfer qualifies for
derecognition. Financial liabilities are derecognised when the obligation is
discharged, extinguished, or expired.
O. Cash and Cash Equivalents
Cash and cash equivalents include cash deposits held with banks and money
market funds, together with 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. The Manager uses money
market funds for cash management purposes.
2. Income
31 May 2024 31 May 2023
£'000 £'000
Income from investments
Investment income (comprising dividend income, interest income and other 15,882 17,292
investment income)
15,882 17,292
Other income
Interest 643 784
Expense rebate 11 -
Exchange difference on income (2) 8
652 792
Total income 16,534 18,084
Total income comprises
Dividend income 12,981 12,325
Interest income 2,815 4,756
Other investment income 86 211
Bank interest 172 767
Money market fund interest 471 17
Money market fund expense rebate 11 -
Exchange difference on income (2) 8
Total income 16,534 18,084
Analysis of income from investments
Unlisted 15,882 17,292
15,882 17,292
Geographical analysis
UK 359 1,055
US 12,035 9,243
Other overseas 3,488 6,994
15,882 17,292
3. Investment Management Fees
31 May 2024 31 May 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees 25,674 - 25,674 27,707 - 27,707
25,674 - 25,674 27,707 - 27,707
The investment management fee is payable monthly in arrears at the rate set
out in the Directors' Report within the full Annual Report.
During the year, investment management services with a total value of
£28,501,000 (period to 31 May 2023: £29,010,000), being £25,674,000
(period to 31 May 2023: £27,707,000) directly from Pantheon Ventures (UK)
LLP and £2,827,000 (period to 31 May 2023:£1,303,000) via Pantheon managed
fund investments were purchased by the Company.
The value of investments, in and outstanding commitments to, investment funds
managed or advised by the Pantheon Group ("Pantheon Funds") are excluded in
calculating the monthly management fee and the commitment fee. The value of
holdings in investments managed by the Pantheon Group totalled £1,235,005,000
as at 31 May 2024 (31 May 2023: £1,131,118,000), including £1,082,057,000
from the Pantheon managed Pantheon International Holdings subsidiaries (31
May 2023: £995,669,000). Please see Note 20 below for further details.
In addition, the Manager has agreed that the total fees (including performance
fees) payable by Pantheon Funds to members of the Pantheon Group and
attributable to the Company's investments in Pantheon Funds shall be less than
the total fees (excluding the performance fee) that the Company would have
been charged under the Management Agreement had it invested directly in all of
the underlying investments of the relevant Pantheon Funds instead of the
relevant Pantheon Funds instead of through the relevant Pantheon Funds.
At 31 May 2024, £2,280,000 (31 May 2023: £2,245,000) was owed for
investment management fees. No performance fee is payable in respect of the
year to 31 May 2024 (31 May 2023: £nil). The basis upon which the performance
fee is calculated is explained in Note 1 (L) and in the Directors' Report
within the full Annual Report.
4. Other Expenses
31 May 2024 31 May 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Secretarial and accountancy services 474 - 474 353 - 353
Depositary fees 258 - 258 280 - 280
Custodian 20 - 20 16 - 16
Fees payable to the Company's Auditor for the
- audit of the annual financial statements 149 - 149 146 - 146
Fees payable to the Company's Auditor for
- audit-related assurance services -Half-Yearly report 46 - 46 44 - 44
Directors' remuneration (see Note 5) 360 - 360 291 - 291
Employer's National Insurance 27 27 42 - 42
Irrecoverable VAT - - - (5) - (5)
Legal and professional fees(1) 404 877 1281 547 1,625 2,172
Project related costs - 2,497 2,497 -
Other(2) 872 - 872 831 - 831
ALN Expense Charge (see Note 1 (E))(3) (462) - (462) (486) - (486)
2,148 3,374 5,552 2,059 1,625 3,684
(1) Legal fees incidental to the acquisition of investments and project
related costs are charged to the Capital column of the Income Statement since
they are capital in nature. Project related costs consist of legal expenses
incurred in relation to the Share buyback tender offer and the loan note
financing.
(2) Other expenses predominantly comprise fees and expenses relating to
printing, public relations, Stock Exchange listing, FCA fees, AIC Levy and
share price publications.
(3) A pro rata share of the Company's total ongoing charges is allocated to
the ALN, reducing each quarterly payment.
The Directors do not consider that the provision of non-audit work to the
Company affects the independence of the Auditors due to the half year review
being an assurance service.
5. Directors' Remuneration
Directors' emoluments comprise Directors' fees. A breakdown is provided in the
Directors' Remuneration Report in the full Annual Report.
6. Interest Payable and Similar Expenses
31 May 2024 31 May 2023
£'000 £'000
Negative bank interest -. 22
Loan commitment and arrangement fees 6,346 6.344
Loan Interest 4,154 -
Loan commitment and arrangement fees 2,551 -
13,051 6,366
On 19 October 2023, the Company announced that it has agreed a new £500m
equivalent multi-tranche, multi-currency revolving credit facility agreement
(the "Loan Facility"), which on 20 October 2023, replaced the existing £500m
equivalent credit facility and Credit Suisse AG London Branch as a Lender.
There are five Lenders of the new facility being Lloyds Bank plc, Mizuho, RBC
Europe, Royal Bank of Scotland and State Street. Further details of the Loan
Facility are disclosed in Note 14.
On 12 January 2024, the Company agreed a Private Placement of US$150m in loan
notes with proceeds being received on 1 February 2024. The loan notes have
been structured over different maturities of five, seven and ten years with
varying coupon rates, further details are disclosed in Note 16.
7. Taxation
31 May 2024 31 May 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Withholding tax deducted from distributions 3,033 - 3,033 1,494 - 1,494
Tax charge
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 ended 31 May
2024 of 25% (year ended 31 May 2023: 20%).
The differences are explained below:
Net return before tax (25,014) 59,696 34,682 (18,904) 62,679 43,775
Theoretical tax at UK corporation tax rate of 25% (31 May 2023: 20%) (6,254) 14,924 8,670 (3,781) 12,536 8,755
Non-taxable investment, derivative and currency gains - (15,143) (15,143) - (12,845) (12,845)
Effect of expenses in excess of taxable income - 219 219 - 309 309
Carry forward management expenses 6,254 - 6,254 3,781 - 3,781
Withholding tax deducted from distributions 3,033 - 3,033 1,494 - 1,494
3.033 - 3,033 1,494 - 1,494
The tax charge for the year ended 31 May 2024 is £3.0m (31 May 2023: £1.5m).
The tax charge is wholly comprised of irrecoverable withholding tax suffered.
Investment gains are exempt from capital gains tax owing to the Company's
status as an investment trust.
Investment gains are exempt from capital gains tax owing to the Company's
status as an investment trust.
Factors That May Affect Future Tax Charges
The Company is an investment trust and therefore is 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 company.
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 May 2024, excess management expenses are estimated to be in excess of
£359m (31 May 2023: £330m).
At 31 May 2024, the Company had no unprovided deferred tax liabilities (31 May
2023: £nil).
8. Return per Ordinary Share
31 May 2024 31 May 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Return for the financial period in £'000 (28,047) 59,696 31,649 (20,398) 62,679 42,281
Weighted average ordinary shares 494,296,359 532,707,383
Return per ordinary share (5.68)p 12.08p 6.40p (3.83)p 11.77p 7.94p
There are no dilutive or potentially dilutive shares in issue.
9a. Movements on Investments
31 May 2024 31 May 2023
£'000 £'000
Book cost brought forward 1,734,850 1,530,419
Opening unrealised appreciation on investments held
-Unlisted investments 682,437 706,707
-Listed investments 333 1,482
Valuation of investments brought forward 2,417,620 2,238,608
Movements in year:
Acquisitions at cost 152,960 289,020
Capital distributions - proceeds (132,396) (160,891)(1)
Capital distributions - realised gains on sales 68,262 76,302(1)
Increase in appreciation on investments held (7,941) (25,419)
Valuation of investments at year end 2,498,505 2,417,620
Book cost at year end 1,823,676 1,734,850
Closing unrealised appreciation on investments held
-Unlisted investments 673,924 682,437
-Listed investments 905 333
Valuation of investments at year end 2,498,505 2,417,620
Fair value of investments:
Unlisted investments 2,495,920 2,415,800
Listed investments 2,585 1,820
Valuation of investments at year end 2,498,505 2,417,620
(1) On 1 October 2022, the Company transferred one investment, at a fair value
of £3.10m, to its wholly-owned subsidiary Pantheon International Holdings LP,
in return for a 99% investment in Pantheon International Holdings LP, being
£3.07m and the remaining 1% in Pantheon International Holdings GPLP, being
£0.03m
Further details in relation to the subsidiaries are included in Note 20.
9b. Analysis of Investments
Further analysis of the investment portfolio is provided in the Manager's
Review in the full Annual Report.
The Company received £132,396,000 (2023: £160,891,000) from investments
sold during the year. The book cost of these investments when they were
purchased was £64,134,000 (2023: £84,589,000). These investments have been
revalued over time until such time they were sold and up until that point, any
unrealised gains or losses were included in the fair value of the investments.
Transaction costs (incurred at the point of the transaction) incidental to the
acquisition of investments totalled £nil (31 May 2023: £nil) and to the
disposals of investments totalled £5,000 (31 May 2023: £7,000) for the
period. In addition, legal fees incidental to the acquisition of investments
totalled £877,000 (31 May 2023: £1,625,000), as disclosed in Note 4, have
been taken to the Capital column in the Income Statement since they are
capital in nature.
Included in investment are also investments that the Company holds in its
subsidiaries. Please see Note 20 below for further details.
Gains on investment per income statement 31 May 2024 31 May 2023
£'000 £'000
Realised gains on sales 68,262 76,302
Amounts previously recognised as unrealised appreciation on those sales 333 1,482
Decrease in unrealised appreciation (8,274) (26,902)
Revaluation of amounts owed in respect of transactions 3 3
Gains on investments 60,324 50,885
Currency analysis of investment valuation 31 May 2023
£'000
Sterling
Unlisted investments 1,126,722 1,042,249
1,126,722 1,042,249
US dollar
Unlisted investments 1,102,043 1,116,006
Listed investments 2,246 1,820
1,104,289 1,117,826
Euro
Unlisted investments 244,243 230,424
244,243 230,424
Other
Unlisted investments 22,912 27,121
Listed investments 339 -
23,251 27,121
Total valuation of investments 2,498,505 2,417,620
9c. Material Investment
At the year end, the Company held no material holdings in any underlying
company which exceeded 3% and funds which exceeded 10% of any class of
capital.
10. Fair Value Hierarchy
The fair value hierarchy consists of the following three levels:
Level 1 - The unadjusted quoted price in an active market for identical assets
or liabilities that the entity can access at the measurement date. The Level 1
holdings include publicly listed holdings held directly by the Company from in
specie distributions received from underlying investments, but do not include
listed holdings held indirectly through the Company's underlying private
equity managers which are classified under Level 3 holdings;
Level 2 - Inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - Inputs are unobservable (i.e. for which market data is unavailable)
for the asset or liability.
Financial Assets at Fair Value Through Profit or Loss at 31 May 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Unlisted holdings - - 2,495.920 2,495.920
Listed holdings 2,585 - - 2,585
2,495,920 2,498,505
Financial Assets at Fair Value Through Profit or Loss at 31 May 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Unlisted holdings - - 2,415,800 2,415,800
Listed holdings 1,820 - - 1,820
1,820 - 2,415,800 2,417,620
Financial Liabilities at Fair Value Through Profit or Loss at 31 May 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Asset Linked Note - - 30,815 30,815
- - 30,815 30,815
Financial Liabilities at Fair Value Through Profit or Loss at 31 May 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Asset Linked Note - - 32,520 32,520
- - 32,520 32,520
11. Debtors
31 May 2024 31 May 2023
£'000 £'000
Amounts receivable from investment funds 1,131 290
Accrued interest - 17
Prepayments 1,356 2,040
2,487 2,347
12. Cash and Cash Equivalents
31 May 2024 31 May 2023
£'000 £'000
Cash at bank 21,863 49,906
Cash equivalents - 16,137
21,863 66,043
As at 31 May 2024, Cash equivalents of £nil were held in a USD money market
fund (2023: £16,137,000).
13. Creditors Amounts Falling Due Within One Year
31 May 2024 31 May 2023
£'000 £'000
Investment management fees 2,280 2,245
Amounts owed in respect of share buybacks and trades 1,003 -
ALN repayment to the Investor 437 1,199
Private Placement loan note coupon interest 2,551 -
Other creditors and accruals 1,481 1,173
7,752 4,617
14. Bank Loan
31 May 2024 31 May 2023
£'000 £'000
Short term 83,261 -
Tranche B (USD) $122,000,000 (£100,000,000) Expiry October 2024
Long term
Tranche A1 (USD) $365,700,000 (£300,000,000) Expiry October 2026 - -
Tranche A2 (EUR) Eur115,700,000 (£100,000,000) Expiry October 2026 - -
83,261 -
On 19 October 2023, the Company announced that it has agreed a new £500m
equivalent multi-tranche, multi-currency revolving credit facility agreement
(the "Loan Facility"), which on 20 October 2023, replaced the existing £500m
equivalent credit facility and Credit Suisse AG London Branch as a Lender.
There are five Lenders of the new facility being Lloyds Bank plc, Mizuho, RBC
Europe, Royal Bank of Scotland and State Street. The new Loan Facility, which
is secured by certain assets of the Company and is split as follows:
- Facility A: £400m, expiring in October 2026 with an ongoing option to
extend, by agreement, the maturity date by 364 days at a time; and
- Facility B: £100m, expiring in October 2024.
The Company has sought to build a long-term, sustainable, more flexible, and
diverse capital structure as part of this process, further strengthening the
Company's balance sheet. The structure permits Facility A to be increased from
£400m to £700m via an uncommitted accordion option, subject to the consent
of the participating Lenders, with a covenant package that better supports
utilisation under the Loan Facility, the announced tender offer and the
ongoing share buyback programme.
Depending on the utilisation of the Loan Facility, PIP will pay a commitment
fee of between 0.70% and 1.15% per annum on the undrawn portion of the Loan
Facility. The rate of interest payable on the drawn portion is the aggregate
of the relevant benchmark rate plus 2.95% or 2.25% depending on whether
Facility A or B is utilised respectively. See note 23 for details regarding
loan covenants.
As at 31 May 2024, the Loan Facility had a sterling equivalent value of
£83.3m, all drawn from the short term facility (Facility B).
15. Creditors Amounts Falling Due After One Year - Asset Linked Note
31 May 2024 31 May 2023
£'000 £'000
Opening value of ALN 32,520 41,374
Repayment of net cashflows received (4,650) (5,035)
Fair value movement through profit or loss 3,420 (3,384)
Expense charge and ALN share of withholding taxes (475) (435)
Closing value of ALN (see Note 1(E)) 30,815 32,520
Transfer to creditors due within one year (437) (1,199)
30,378 31,321
16. Private Placement Loan Notes
On 12 January 2024, the Company agreed a private placement of US$150m in loan
notes with proceeds being received on 1 February 2024. The loan notes have
been structured over different maturities of five, seven and 10 years with
varying coupon rates, as follows:
31 May 2024 31 May 2023
£'000 £'000
Tranche A (USD) 6.36%.1 February 2029 41,238 -
Tranche B (USD) 6.53%. 1 February 2031 53,020 -
Tranche C (USD) 6.65%. 1 February 2034 23,565 -
117,823 -
17. Called-up Share Capital
31 May 2024 31 May 2023
Shares £'000 Shares £'000
Allotted, called up and fully paid:
Ordinary Shares of 6.7p each
Opening position 529,893,457 35,503 537,493,640 36,012
Ordinary shares bought back for cancellation in the market (15,099,519) (1,012) (7,600,183) (509)
Ordinary shares bought back for cancellation via Tender Offer (49,180,327) (3,295) - -
Closing position 465,613,611 31,196 529,893,457 35,503
Total shares in issue 465,613,611 31,196 529,893,457 35,503
On 3 August 2023, upon publication of its annual results for the year ending
31 May 2023, the Company announced its intention to invest up to £200,000,000
in the Company's portfolio by buying back its own ordinary shares during the
financial year to 31 May 2024. On 25 September 2023, the Company announced it
would undertake a "Tender Offer", conducted as a reverse auction, for up to
£150,000,000 in value (at the Strike Price, excluding costs and stamp duty)
of ordinary shares with settlement taking place on 26 October 2023.
Shareholders on the Register on the Record Date of 17 October 2023 were
invited to tender for sale some or all (subject to the overall size limit of
the Tender Offer) of their ordinary shares.
On 19 October 2023, the result of the Tender Offer was announced, being that
the Company had acquired 49,180,327 of the Company's ordinary shares. All
shares repurchased by the Company have been cancelled. Each share acquired by
the Company in the Tender Offer was purchased at the Strike Price of 305 pence
per ordinary share.
During the year ended 31 May 2024, in addition to the Tender Offer, 15,099,519
ordinary shares were bought back in the market, for cancellation at a total
cost, including stamp duty, of £47.0m. During the year ended 31 May 2023,
7,600,183 ordinary shares were bought back for cancellation at a total cost,
including stamp duty, of £19.7m.
As a result, there were 465,613,611 ordinary shares in issue as at 31 May 2024
(of which none are held in Treasury; year to 31 May 2023: 529,893,457 ordinary
shares and no Treasury shares).
Each holder of ordinary shares is entitled, on a show of hands, to one vote
and, on a poll, to one vote for each ordinary share held.
18. Reserves
Movement for the year ended 31 May 2024 Share Capital Other Capital Revenue
premium redemption capital reserve on Reserve(1)
£'000 reserve reserve investments £'000
£'000 £'000 held
£'000
Beginning of year 269,535 4,062 1,620,532 653,695 (133,255)
Net gain on realisation of investments - - 68,262 - -
Decrease in unrealised appreciation - - - (10,686) -
Revaluation of amounts owed in respect of transactions - - 3 - -
Exchange differences on currency - - 5,505 - -
Exchange differences on other capital items - - (14) - -
Legal and professional expenses charged to capital - - (1,851) - -
Other expenses charged to capital - - (1,523) - -
Share buybacks* - 4,307 (198,080) - -
Revenue return for the year - - - - (28,047)
End of year 269,535 8,369 1,492,834 643,009 (161,302)
Movement for the year ended 31 May 2023 Share Capital Other Capital Revenue
premium redemption capital reserve on Reserve(1)
£'000 reserve reserve investments £'000
£'000 £'000 held
£'000
Beginning of year 269,535 3,553 1,556,346 674,875 (112,857)
Net gain on realisation of investments - - 76,302 - -
Decrease in unrealised appreciation - - - (21,180) -
Revaluation of amounts owed in respect of transactions - - 3 - -
Exchange differences on currency - - 9,210 - -
Exchange differences on other capital items - - (31) - -
Legal and professional expenses charged to capital - - (1,625) - -
Share buybacks* - 509 (19,673) - -
Revenue return for the year - - - - (20,398)
End of year 269,535 4,062 1,620,532 653,695 (133,255)
(1) Reserves that are distributable by way of dividends. In addition, the
Other Capital Reserve can be used for share buybacks.
* The value of ordinary shares bought back include any associated fees and
stamp duty.
19. Net Asset Value per Share
31 May 2024 31 May 2023
Net assets attributable in £'000 2,283,641 2,450,072
Ordinary shares 465,613,611 529,893,457
Net asset value per ordinary share 490.46p 462.37p
20. Subsidiaries
The Company has formed three wholly-owned subsidiaries, to provide security
for future financial lending arrangements.
Pantheon International Holdings LP ("PIH LP") was incorporated on 29 March
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, which itself holds a basket of
investments, rather than to carry out business on the Company's behalf.
Investments held within PIH LP are based on the fair value of the investments
held in those entities.
On 31 December 2021, the Company transferred several investments, at a fair
value of £627.1m, to its wholly-owned subsidiary Pantheon International
Holdings LP in order to provide security for the £500m multi-currency
facility. On 1 October 2022, the Company transferred one further investment,
at a fair value of £3.1m. The investments that were transferred are in
addition to PIH LP making its own investments.
The aggregate amount of its capital and reserves as at 31 May 2024 is
£1,082,132,000 (2023: £995,928,000) and the profit or loss for the year
ended 31 May 2024 is £3,168,000 (2023: £3,491,000).
The General Partner for PIH LP is Pantheon International Holdings GP ("PIH
GP") Limited. Incorporated on 17 March 2021 with a registered address c/o
Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman,
KY1-1104, Cayman Islands, and is wholly owned by the Company.
The aggregate amount of its capital and reserves as at 31 May 2024 is £1
(2023: £1) and the profit or loss for the year ended 31 May 2024 is £nil
(2023: £nil).
The General Partner and the Limited Partner, formed an exempted limited
partnership, named Pantheon International Holdings GP LP ("PIH GP LP"),
incorporated on 17 March 2021 with a registered address c/o Maples Corporate
Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman
Islands. The Company holds an investment in PIH GP LP.
Any investments made by the Company into PIH LP, generally invest at 99%
directly into PIH LP, with the remaining 1% investing into PIH GP LP. PIH GP
LP will then, in turn, wholly invest those funds into PIH LP, so no funds
remain in PIH GP LP.
In accordance with FRS 102, the Company is exempted from the requirement to
prepare consolidated financial statements on the grounds that its subsidiary
PIH LP is held exclusively with a view to a subsequent resale as it is
considered part of an investment portfolio and the Company meets the
definition of an Investment Entity under FRS. PIH GP LP and PIH GP are not
material. Therefore, the Company has no requirement to prepare consolidated
accounts, and therefore the subsidiaries noted above are held as investments
recognised at fair value through profit or loss.
21. Reconciliation of Return Before Financing Costs and Taxation to Net Cash
Flow from Operating Activities
31 May 2024 31 May 2023
£'000 £'000
Return before finance costs and taxation 47,733 50,141
Withholding tax deducted (3,033) (1,494)
Gains on investments (60,324) (50,885)
Currency gains on cash and borrowings (5,491) (9,179)
Increase in creditors 205 394
Decrease/(increase) in other debtors 111 (147)
Gain/(reduction) of financial liabilities at fair value through profit or loss 3,420 (3,384)
(ALN)
Expenses and taxation associated with the ALN (475) (435)
Net cash outflow from operating activities (17,854) (14,989)
Reconciliation net cash/(debt)
31 May 2024
Reconciliation of net cash flow to movement in net debt £'000
Decrease in cash (44,024)
Net cash inflow from loans (88,471)
Cash inflow from private placement loan notes (118,274)
Change in net debt resulting from cash flows (250,769)
Foreign exchange movements 5,505
Movement in net debt (245,264)
Net cash at 1 June 2023 66,043
Net debt at 31 May 2024 (179,221)
Analysis in changes in net cash/(debt)
1 June 2023 Cash flows Foreign exchange movements £'000 31 May 2024
£'000 £'000 £'000
Cash and cash equivalents 66,043 (44,024) (156) 21,863
Debt due within one year
- Bank loan - (88,471) 5,210 (83,261)
Debt due after more than one year
- Private placement loan notes - (118,274) 451 (117,823)
Net cash/(debt) 66,043 (250,769) 5,505 (179,221)
22. Contingencies, Guarantees and Financial Commitments
At 31 May 2024, there were financial commitments outstanding of £789m (31 May
2023: £857m) in respect of investments in partly paid shares and interests in
private equity funds.
We expect 18% of the financial commitments outstanding to be called within the
next 12 months.
Further detail of the available finance cover is provided in Note 23.
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 funds
specialising in unquoted investments, acquiring unquoted portfolios and
participating directly in private placements. 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/marketability risk;
- interest rate risk;
- market price risk; and
- foreign currency risk.
The Manager only holds cash at banks with high credit ratings, therefore the
Company has little exposure to credit risk. The 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 shown
further on in this Note.
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 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.
There are times when opportunities for the Company to acquire secondary
unquoted portfolios of interests or co-investments may be limited due to the
cyclical nature of their occurrence. As a result, at times of low investment
opportunity, some funds may be held on deposit or invested in gilts and other
fixed interest government bonds. It is the nature of investment in private
equity that a commitment (see Note 22 for outstanding commitments as at 31 May
2024) to invest will be made and that calls for payments will then be received
from the unlisted investee entity. These payments are usually on an ad-hoc
basis and may be called at any instance over a number of years. The Company's
ability to meet these commitments is dependent on it receiving cash
distributions from its private equity investments and, to the extent these are
insufficient, on the availability of financing facilities.
On 19 October 2023, the Company agreed a new £500m equivalent multi-tranche,
multi-currency revolving credit facility agreement (the "Loan Facility"),
which on 20 October 2023, replaced the previous £500m equivalent credit
facility and Credit Suisse AG London Branch as a Lender. There are five
Lenders of the new facility, being Lloyds Bank plc, Mizuho, RBC Europe, Royal
Bank of Scotland and State Street.
The new Loan Facility, which is secured by certain assets of the Company,
is split as follows:
- Facility A: £400m expiring in October 2026 with an ongoing option to
extend, by agreement, the maturity date by 364 days at a time; and
- Facility B £100m expiring in October 2024.
The Company has sought to build a long-term sustainable more flexible and
diverse capital structure as part of this process, further strengthening the
Company's balance sheet.
The structure permits Facility A to be increased from £400m to £700m via an
uncommitted accordion option, subject to the consent of the participating
Lenders, with a covenant package that better supports utilisation under the
Loan Facility, the announced Tender Offer and the ongoing share buyback
programme.
For details of commitment fees and rates of interest, refer to Note 14. The
Loan Facility is subject to market standard loan to value and liquidity
covenants.
The principal covenants that apply to the loan facility require:
(i) that gross borrowings do not exceed 35% of the adjusted borrowing base*;
and
(ii) the liquidity ratio** does not exceed 4.1x undrawn commitment.
Total available financing as at 31 May 2024 stood at £414m (31 May 2023:
£554m), comprising £16m (31 May 2023: £63m) in cash balances and £398m (31
May 2023: £491m) (sterling equivalent) in undrawn bank facilities. The
available financing along with the private equity portfolio exceeded the
outstanding commitments by 3.9 times (31 May 2023: 3.7 times) (which excludes
any outstanding commitments relating to funds outside their investment period
(>13 years old) as there is a low likelihood of these being drawn).
* The adjusted borrowing base is the total collaterised proportion of assets
adjusted for loan agreement specific restrictions.
** Liquidity Ratio is computed as: (10% of PE portfolio + Cash + Undrawn
facility)/(Undrawn commitments).
Interest Rate Risk
The Company may use gearing to achieve its investment objectives and manage
cash flows and uses a multi-currency revolving credit facility for this
purpose.
Interest on the revolving credit facility is payable at variable rates
determined subject to drawdown. Variable rates are defined as relevant
benchmark rates plus 2.95% to 2.25%, depending on whether Facility A or B is
utilised respectively. The interest rate is then fixed for the duration that
the loan is drawn down. At 31 May 2024, there was a sterling equivalent of
£83.3m funds drawn down on the loan facilities (31 May 2023: £nil). A
blended commitment fee of 0.95% per annum is payable in respect of the amounts
available for drawdown in each facility.
Interest rate movements may affect:
- the level of interest receivable on cash deposits; and
- the interest payable on loan borrowings.
A 1% increase in market interest rates would be expected to decrease net
assets, by approximately £0.8m (31 May 2023: nil), with all other factors
being equal.
A 1% decrease would increase net assets by the same amount.
The loan notes issued by the Company pay a fixed rate of interest and
therefore movements in interest rates will not affect net assets.
The possible effects on fair value and cash flows that could arise as a result
of changes in interest rates are taken into account when making investment
decisions.
Non-interest Rate Exposure
The remainder of the Company's portfolio and current assets are not subject to
interest rate risks.
The interest rate and maturity profile of the Company's financial assets as at
31 May 2024 was as follows:
31 May 2024 Total No Matures Matures Fixed interest
£'000 maturity within after average interest rate
date 1 year 1 year %
£'000 £'000 £'000
Fair value no interest rate risk financial assets
Sterling 1,128,658 1,128,658 - - -
US dollar 1,123,644 1,123,644 - - -
Euro 246,409 246,409 - - -
Other 23,907 23,907 - - -
2,522,618 2,522,618 - - -
The interest rate and maturity profile of the Company's financial assets as at
31 May 2023 was as follows:
31 May 2023 Total No Matures Matures Fixed interest
£'000 Maturity within after average interest
Date 1 year 1 year rate
£'000 £'000 £'000 %
Fair value of no interest rate risk financial assets
Sterling 1,043,630 1,043,630 - - -
US dollar 1,171,627 1,171,627 - - -
Euro 240,745 240,745 - - -
Other 29,362 29,362 - - -
2,485,364 2,485,364 - - -
Financial Liabilities
At 31 May 2024, the Company had drawn the sterling equivalent of £83.3m (31
May 2023: £nil) of its new £500m multi-currency credit facility, £400m of
which expires in October 2026 and £100m expires in October 2024. Interest is
incurred at a variable rate as agreed at the time of drawdown and is payable
at the maturity date of each advance. At the year end, interest of £0.1m (31
May 2023: £nil) was accrued.
During the year ended 31 May 2024, the Company received US$150m through
private placement loan notes, that have been structured over different
maturities of five, seven and 10 years. At 31 May 2024, the sterling
equivalent was £117.8m (31 May 2023: £nil). At the year end, coupon interest
of £2.6m (31 May 2023: £nil) was accrued.
At 31 May 2024 and 31 May 2023, other than the ALN and the private placement
debt, all financial liabilities were due within one year and comprised drawn
loans payable within one year together with short-term creditors.
The ALN is repayable by no later than 31 August 2027
Market Price Risk
The method of valuation of the fixed asset investments is described in Note
1(D). The nature of the Company's fixed asset investments, with a high
proportion of the portfolio invested in unquoted securities, means that the
investments are valued by the Directors after due consideration of the most
recent available information from the underlying investments.
PIP's portfolio is well diversified by the sectors in which the underlying
companies operate. This sectoral diversification helps to minimise the effects
of cyclical trends within particular industry segments.
If the investment portfolio fell by 20% from the 31 May 2024 valuation, with
all other variables held constant, there would have been a reduction of
£499,701,000 (31 May 2023: £483,524,000) in the return before taxation. An
increase of 20% would have increased the return before taxation by an equal
and opposite amount.
Foreign Currency Risk
Since it is the Company's policy to invest in a diverse portfolio of
investments based in a number of countries, the Company is exposed to the risk
of movement in a number of foreign exchange rates. A geographical analysis of
the portfolio and hence its exposure to currency risk is given above and in
Note 9b. Although it is permitted to do so, the Company did not hedge the
portfolio against the movement in exchange rates during the financial period.
The investment approach and the Manager's consideration of the associated risk
are discussed in further detail in the Strategic Report and the Manager's
Review above.
The Company settles its transactions from its bank accounts at an agreed rate
of exchange at the date on which the bargain was made. As at 31 May 2024,
realised exchange losses of £14,000 (31 May 2023: £31,000) and realised
gains relating to currency of £5,505,000 (31 May 2023: realised gains of
£9,210,000) have been taken to the capital reserve.
The Company's exposure to foreign currency excluding private equity
investments is shown below. In relation to this exposure, if the
sterling/dollar and sterling/euro exchange rate had reduced by 10% from that
obtained at 31 May 2024, it would have the effect, with all other variables
held constant, of decreasing shareholders' funds by £20,343,000 (31 May 2023:
increasing shareholder funds by £7,065,000). If there had been an increase in
the sterling/dollar and sterling/euro exchange rate of 10% it would have the
effect of increasing equity shareholders' funds by £16,645,000 (31 May 2023:
decreasing shareholder funds by £5,780,000). The calculations are based on
the financial assets and liabilities and the exchange rate as at 31 May 2024
of 1.2731 (31 May 2023: 1.2394) sterling/dollar and 1.1727 (31 May 2023:
1.16265) sterling/euro.
An analysis of the Company's exposure to foreign currency (excluding
Investments) is given below:
31 May 31 May 31 May 31 May
2024 2024 2023 2023
Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000
US dollar 19,355 204,488 53,801 478
Canadian dollar 276 - 32 -
Euro 2,166 123 10,321 59
Swedish krone 226 - 768 -
Norwegian krone 22 - - -
Australian dollar 132 - 1,441 -
22,177 204,611 66,363 537
Fair Value of Financial Assets and Financial Liabilities
The Investments of the Company are held at fair value. All other financial
assets are held at cost, which is an approximation of fair value. Other than
the ALN, the financial liabilities are held at amortised cost, which is not
materially different from fair value.
Managing Capital
The Company's equity comprises ordinary shares as described in Note 17.
Capital which the Company considers to be its equity, is managed so as to
maximise the return to shareholders while maintaining a capital base that
allows the Company to operate effectively in the marketplace and sustain
future development of the business.
As at 31 May 2024 and 31 May 2023, the Company had bank debt facilities to
increase the Company's liquidity. Details of actual and available borrowings
at the period end can be found earlier
in this Note and in Note 14.
The Company's assets and borrowing levels are reviewed regularly by the Board
of Directors with reference to the loan covenants.
The Company's capital requirement is reviewed regularly by the Board of
Directors
24. Transactions with the Manager and Related Parties
The amounts paid to the Manager, together with the details of the Investment
Management Agreement, are disclosed in Note 3.
The fees paid to the Company's Board are disclosed in the Directors'
Remuneration Report in the full Annual Report. The Company's National
Insurance contribution in relation to Directors' remuneration is disclosed in
Note 4.
Amounts outstanding for Directors' Fees as at 31 May 2024 amount to £62,000
(2023: £45,000).
The Company also has three wholly-owned subsidiaries. Please see Note 20 for
further details.
There are no other identifiable related parties at the year end.
25. Post Balance Sheet Events
There are no post balance sheet events to report.
ENDS
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