REG - Pantheon Intl PLC - Half-year Report
28/02/2025 07:15
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RNS Number : 7942Y Pantheon International PLC 28 February 2025
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PANTHEON INTERNATIONAL PLC
HALF YEAR REPORT FOR THE SIX MONTHS ENDED 30 NOVEMBER 2024
The full Half Year 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 1932.
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 Half Year Report and Accounts for
the six months ended 30 November 2024.
A busy period implementing Step 3 of our corporate strategy that aims to
stimulate demand for PIP's shares.
· Assessing stakeholder needs and consistently listening to their
changing views and needs. This is helping us to guide our corporate and
marketing plans, putting shareholder interests first.
· Focus on governance. Recruitment of three highly experienced new
NEDs from the private equity sector - Tim Farazmand, Candida Morley and Tony
Morgan. Zoe Clements formally took over as Audit Chair during the period. This
is part of our continuing build of corporate proactivity at the Board.
· Ongoing performance and strategic evaluation. A Strategic
Sub-Committee has been set up and we are expecting the update to be largely in
place before the AGM. This includes continuing to refine PIP's corporate,
leverage and investment strategy, and the construction of PIP's portfolio
which continues to perform well over the long term.
· Marketing activities. We have engaged external partners to work
alongside us to deliver a marketing plan, alongside our strategic objectives,
which includes an educational programme designed to help to remove obstacles
to increasing market demand for PIP's shares. The discovery phase has been
completed.
· Capturing value for shareholders. Capital allocation policy
implemented during the period, following the large buyback programme in the
previous financial year. During the period, PIP invested £12.7m in share
buybacks which have been accretive to the NAV.
Performance update
· NAV per share grew by 2.3% (net of fees) during the half year.
Valuation gains across the 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.
· As a result of the ongoing macroeconomic challenges, PIP's NAV
performance, in line with the broader listed private equity sector, was muted
during the six-month period. It should be noted that private equity is a
long-term asset class and performance should be viewed through that lens.
· PIP's share price was flat (+0.2%) during the period.
Annualised performance as at 30 november
2024
1 yr 3 yrs 5 yrs 10 yrs Since inception(1)
NAV per share (stated net of fees) 5.3% 6.0% 12.4% 12.8% 11.8%
Ordinary share price 11.1% 0.7% 7.0% 10.1% 10.7%
FTSE All-Share, Total Return 15.7% 7.9% 5.7% 6.1% 7.5%
MSCI World, Total Return (Sterling) 27.9% 10.8% 13.4% 13.0% 8.8%
(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 -10.4% -1.9% +6.7% +6.7% +4.3%
Versus MSCI World, Total Return (Sterling) -22.6% -4.8% -1.0% -0.2% +3.0%
Share price vs. market performance
1 yr 3 yrs 5 yrs 10 yrs Since inception
Versus FTSE All-Share, Total Return -4.6% -7.2% +1.3% +4.0% +3.2%
Versus MSCI World, Total Return (Sterling) -16.8% -10.1% -6.4% -2.9% +1.9%
Portfolio update
· Direct investments account for the majority of the portfolio with
55% of PIP's portfolio invested in co-investments and single-asset
secondaries, which are complemented by hard-to-access funds.
· PIP had over c.300 full exit events during the half year. The
weighted average uplift from these fully realised exits was 26% and the
weighted average uplift in the last 10 years has been 30%.
· The average cost multiple on exit realisations was 3.1 times
during the half year, and that figure since 2014 has been 3.0 times.
· PIP's portfolio has remained cash-generative during the period
with net cash inflow from the portfolio of £45m. PIP has generated £1.7bn of
net cash over the last 10 years.
· PIP's portfolio is well-positioned to navigate economic cycles.
Our confidence is underpinned by the annualised revenue and EBITDA growth in
PIP's buyout portfolio that has continued to exceed the EBITDA and revenue
growth of companies in the MSCI World index. 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.
· Minimising risk: PIP's loss ratio for all investments, realised
and unrealised, made over the last 10 years is low at 2.6%(1).
Financial position update
· During the period, PIP's credit facility was right-sized to a
£400m equivalent with the flexibility for this to be increased to £700m
under the existing structure.
· As at 30 November 2024, PIP had net available cash of £21m while
£116m was drawn down under the credit facility and £118m of sterling
equivalent loan notes were outstanding.
· Therefore as at 30 November 2024, PIP's net debt to NAV,
excluding the Asset Linked Note, was conservative at 9.2%. The Board currently
does not expect net leverage to exceed 10% of NAV under normal market
conditions.
· As at 30 November 2024, PIP's financing cover was 4.0x and its
undrawn coverage ratio was comfortable at 79%, relative to the 25% minimum
required under existing loan covenants.
Commenting on the half year, John Singer CBE, Chair of PIP, said: "We have had
a very busy six-month period during which we have continued to implement Step
Three of our three-step programme, building on the success of the large share
buyback and the implementation of the capital allocation policy in the
previous financial year. While our journey began years ago with the shift
towards direct investments in PIP's portfolio, the last two years have seen
huge developments across our corporate and leverage strategy, and the
integration of our investment, corporate and leverage strategies so that each
supports the other. All driven by our firm belief that Investment Trust
Boards need to be proactive, and go beyond stewardship. The market environment
continues to evolve, requiring us to respond nimbly and to ensure that we
continue to put shareholders first and to build trust. The Board is excited
about the work that still lies ahead of us and this excitement stems from the
increasing interest in private equity and the opportunity that we have to
reach a widening range of investors. We will continue to work hard to
deliver value for shareholders over the long term."
Commenting, Charlotte Morris, Partner at Pantheon and Co-Lead Manager of PIP,
said: "Although it will not be immediate, we anticipate an increase in deals
and exits over the next couple of years starting with a gradual increase in
activity in 2025. We are encouraged to see that, as confidence returns to the
M&A market, an increasing number of companies in PIP's portfolio are
already on the exit ramp. When our managers have sold their portfolio
companies, they have realised their investments at a substantial uplift to
their holding values. We believe that this not only demonstrates the
conservative nature of our underlying private equity managers when valuing
their portfolio companies but also the embedded value and high-quality assets
in PIP's portfolio."
Commenting, Helen Steers MBE, Partner at Pantheon and Co-Lead Manager of PIP,
said: "We believe that private equity offers unique benefits, and that private
market investments should be accessible to all investors. An investment in a
company like PIP democratises this opportunity. 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 ahead, we believe that PIP has the
track record and credentials to continue to perform well and create value over
the long term."
A video of the Pantheon team discussing PIP's half-year results is available
on PIP's website at www.piplc.com (http://www.piplc.com) .
(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.
LEI: 2138001B3CE5S5PEE928
For more information please contact:
Pantheon
Helen Steers MBE / 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)7857 119 895
Gay Collins / Charlotte Merlin-Jones / 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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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.
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 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.
As at 30 November 2024
£2.3bn Net asset value ("NAV")
+2.3% NAV per share growth in the period (net of fees)
+11.8% Annualised NAV per share growth since 1987 (net of fees)
£1.5bn Market capitalisation
+0.2% Share price change in the period
+10.7% Annualised share price return since 1987
+26%(1) Weighted average uplift at exit
2.6%(2) Ten-year loss ratio
1.35%(3) Association of Investment Companies ("AIC") ongoing charges
(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 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.
(3) Ongoing charges are calculated based on the AIC definition. Including
financing costs, PIP's total ongoing charges would be 2.25%. See the
Alternative Performance Measures section in the full Half Year Report for
calculations and disclosures.
CHAIR'S STATEMENT
Addressing today our shareholders' needs for tomorrow
I am discussing PIP's interim results in the context of the longer-term third
step of our strategic journey aimed at reinforcing PIP's trusted attraction
and relevance for accessing private equity.
As I sit here writing to you to report on the first six months of Step Three
of our strategy, as set out in my first Statement to you in 2023, I feel very
positively about overall progress made in this period. Step Three is where we
shift from removing obstacles that might restrict the growth in demand for our
shares to actively focusing even more than previously on stimulating demand to
help reduce our discount.
However, at times I have been less confident about the macro environment
within which we have had to operate. Those who were confidently talking up the
green shoots of mergers and acquisitions ("M&A") and business activity a
year ago will no doubt share our disappointment that this six-month period
still suffered from the macro headwinds of inflation, higher interest rates,
and politics at home and abroad; and, indeed, from micro ones, such as a more
challenging environment for private equity exits, a misleading cost disclosure
environment and investor preferences for passive investing. Towards the end of
the period, though, I am happy to report that interest rates have fallen,
private equity exits have risen, and the US election result has brought to an
end some of the uncertainties caused by a string of political elections.
Turning to our own performance during this period, in line with most of our
peers in the quoted private equity sector, this has seen muted results of 2.3%
NAV per share growth, reflecting the macro and micro elements referred to
above. This contrasts with the three-year period when the MSCI World index has
pulled away from the listed private equity sector's returns, partly as a
result of the "Magnificent Seven"(1) shares' impact.
From a Board perspective, PIP having a long-term investment strategy, we look
beyond this six-month "snapshot" to key performance indicators ("KPIs") that
give us a view on longer-term performance, with the aim of at least
maintaining, and hopefully improving on, the 11.8% annualised NAV per share
growth since 1987 (net of fees). And in this regard, there has been positive
news in this period.
The first measure for us in assessing the strength of the portfolio is the
growth of profits at EBITDA level of the companies we invested in. Our
confidence in our portfolio valuations is underpinned by the 19% five-year
annualised EBITDA growth in PIP's buyout portfolio that has continued to
exceed the 8% growth of companies in the MSCI World index. The second measure
is the uplift on exit realisations, which, even in this difficult period,
showed an average uplift of 26%, demonstrating the embedded value within our
portfolio.
Turning from value to cash flow, we continued to see positive cash generation
during the six-month period of £45m, which includes £118m of distributions,
and £73m of calls. This reflects a 15% upturn in global M&A(2), while
private equity, with an estimated dry powder for buyouts now up to $1.5tn(3),
began a return to active buying. Within PIP's portfolio, private equity buyers
accounted for 46% of exit realisations against 43% acquired by strategic
buyers. This gentle but welcome increase in cash flow for PIP (50% up on the
same period to November 2023) allowed us to commit £88m to new investments,
of which £33m was immediately drawn down. In line with our portfolio strategy
guidelines, 47% was invested in our core area of small and medium-sized
businesses ("SMEs"); 53% in our favoured sectors of information technology and
healthcare. As a result, the portion of our portfolio in co-investments and
manager-led secondaries, where our highly developed "double filter" for due
diligence differentiates us, ticked up to 55%. Finally, regarding cash flow,
we ended the period with cash at an efficient level of £21m, after making
buybacks of £12m at an average 34% discount to NAV.
All of this investment activity has been carried out strictly within the
leverage strategy guidelines set out in the last Annual Report. Our 9.2%
gearing as a percentage of NAV is below the relevant peer group average of
12.9%, and leaves £293m of our revolving credit facility available for
drawdown when needed. With our end of period cash balance of £21m this
provides a very comfortable cover of 4.0 times relative to undrawn commitments
for funds within their investment periods.
In summary, the increase in our portfolio's NAV during this period has been
held back by the continuing low level of exits and distributions, which has
persisted for the sector over the last couple of years. These in turn limit
the NAV impact of exit uplifts, and also of a higher level of buybacks that we
have achieved in past years. But our integrated investment and leverage
strategies have continued to show the "all-weather" qualities of the portfolio
designed for such short-term periods for the benefit of long-term investors
seeking the consistency of NAV performance which releases the built-in growing
value over cycles. Our capital reallocation programme has allowed our
investors to benefit from this built-in value through buybacks while also
taking advantage of new investment opportunities at this time in the cycle.
Moving on from these six-month results, on the downside, however, our discount
remains in the mid-30s - even if improved from the 43% figure when our Board
announced the Step One £200m buyback programme. But we have retained great
momentum in our progress to Step Three of our strategy during this period.
While long-term capital growth remains the main target, this step sees our
focus increasing heavily on the medium-term goal of closing this discount -
which could only be achieved once Steps One and Two had been successfully
concluded.
During this period there has been much discussion by those closely involved
with our quoted private equity sector as to how these discount issues need to
be addressed, and what lessons the investment trust sector as a whole need to
take to heart now. Beyond the "sine qua non" of good performance, market
commentators continue to be vocal about the need for significant changes in
fundamental structure and behaviour.
Taking the warnings of two of the brokers closest to our listed private equity
sector, and synthesising these somewhat crudely, they centre on four key
areas: proactive engagement; demonstrating relevance; stimulating demand; and
putting shareholders first. Last year I started my Chair's Statement by
stressing our own Board's concerns for our sector with similar messages,
noting that "beyond stewardship; greater use of proactive and integrated
strategies, and putting shareholders first" remained among our key priorities
at PIP.
And so I would like to set out our Board's review of the last six months in
the context of these four areas, and then summarise the most important actions
and events during this first six months of Step Three of our strategy designed
to improve our relevance, increase demand for our shares and, hopefully,
working with colleagues in the sector, reduce the discount for both Pantheon
International and the sector. "Ten Key Actions and Events towards Step Three
in This Period " below.
Proactive engagement
When I took over the Chair in October 2022, our Board agreed that to provide a
successful future for NAV and share price performance, we would have to go
beyond traditional IT Board governance, administration and monitoring. We had
to proactively challenge, and take tactical actions as any successful
corporate Board would - namely, in an integrated fashion within an integrated
corporate, investment and funding PIP strategy that would deliver those
performance objectives. These steps should be defined clearly and shared with
all stakeholders transparently as soon as they could be made public. Each
genuinely would move PIP forward, each building on the one before, providing a
continuum as they worked together, and converting a short-term mindset to
medium- and long-term achieved objectives across the integrated strategies.
Summarising briefly these steps described in detail in previous Chair letters,
our investment strategy involved a move several years ago to direct
investments, now representing 55% of our portfolio, allowing a more
proactively chosen and monitored product mix.
Ten key actions and events towards Step Three in this Period
1. Assessing stakeholder needs and consistently listening to the changing views 4. Ongoing performance and strategic evaluation. We continue to review 7. Highlight the full spectrum of PIP's strengths. We have been spending time
of investors, brokers, investment bankers and other relevant parties regarding performance and the relative strengths of the different investment types PIP with both actual and potential investors, brokers and other third parties who
the changing needs of all stakeholders involved in the strategic and accesses on behalf of investors through its portfolio construction. The know us, to understand what, from their point of view, we need to ensure is
competitive movements taking place at this cross-roads moment for quoted portfolio continues to perform well on a longer-term basis, which has been not lost in any changes we make in our strategic or marketing planning.
private equity. This will help to guide our corporate and marketing plans, designed to meet the objectives of lower risk/higher return seeking investors.
putting shareholder interests first.
2. Changes on the Board. Recruitment of three highly experienced new 5. Marketing activities. We have engaged external partners to work alongside the 8. Investment strategy. Continuing the move to direct investment started several
Non-Executive Directors from the private equity sector - Tim Farazmand, Marketing Sub-Committee and Board to deliver a marketing plan to support and years ago to take advantage of our own proactive selection and monitoring
Candida Morley and Tony Morgan. The quality and quantity of applications deliver the objectives of the strategic plan - including its full integration capabilities and the resulting strong EBITDA portfolio company performance
received showed a shared belief for our strategic direction, values and with it - within the same pre-AGM timetable. Discovery phase has been which has continued despite the difficult environment of the last couple of
understanding of where quoted private equity is heading. Zoe Clements formally completed, with very thorough segmentation work and testing done. years. Achieving careful balance at this time between new investments,
took over as Audit Committee Chair during the period. buybacks/capital reallocation and funding strategies.
3. Strategic plan preparations. With the help of Pantheon and other parties a 6. Removing obstacles to increasing market demand for shares. An education and 9. Governance. Continuing to strengthen the Board and Manager, and the way they
huge amount of data has been pulled together and shared with the Board in the sharing of knowledge programme has been started. This includes the advantage
work together as a close team. Shareholder interests continue to be put first
last quarter of the calendar year. A Strategic Sub-Committee has been set up, of IT's in a changing market place. We are continuing to see how we can by the team as demonstrated by the large buyback programme which was agreed to
and a timetable established for planning work to have largely been put in supplement our own efforts by working together across the sector and engaging be the priority.
place before the AGM. with Chairs of other quoted private equity trusts who have been updating their
own strategies.
10. Board of the Year award. During the period, we won our second Board of the
Year award from Quoted Data, after the Citywire one we were awarded in 2023.
Both acknowledge our passion and commitment for democratisation, and that
shareholders are paramount and above all.
Moving to corporate policy and share buybacks, in August 2023, the Board took
the bold decisions to embark on a £200m share buyback programme, followed in
May 2024 by the announcement of our capital allocation policy, which set out
our intention to continue share buybacks during the periods where the discount
remains wide. These two measures were supported by a new leverage strategy
which included a $150m private placement - a first in the quoted private
equity sector. These market-leading actions, facilitated by the reverse
auction tender offer, succeeded in capturing value for remaining shareholders
at a time when the discount had widened meaningfully. Meanwhile, the capital
allocation policy has resulted in a further £9m from net cash flows being
invested in share buybacks in the six-month period to 30 November 2024. The
buyback programme also removed the overhang of legacy shareholdings and other
potential obstacles to increasing market demand in Step Three. Step Three
itself, which will be further described below, consists of an integrated and
strategic approach to increasing demand for PIP shares, and thereby our
sector, sustainably over the medium term.
Relevance of investment trusts and their strategies
Our Board discusses relevance frequently, and we try to apply the word to
various aspects of what we do - the IT vehicle itself, its strategies, the
Board and Manager, and also who we are and what we stand for.
Relevance to our investors is crucial to our strategies and their overall
objectives (our North Star). We are now updating our strategic plan, and will
be testing and reshaping our North Star to capture the demands of a
private-equity investing audience interested in transparency, trust,
shareholder-leading, and prudent risk-return management.
The Board and Manager must be relevant in terms of understanding the changing
needs of all stakeholders in the private equity investing world. This explains
the very high priority we made in this first half of the year to attract three
new Non-Executive Directors with the highest credibility, reputation and
experience in today's private equity world.
And in my continuing meetings with investors, the question of relevance is
often applied to ITs in comparison with more recent vehicles like LTAFs,
SICAVs, ELTIFs(4) and other evergreen funds. These structures certainly solve
many of the challenges of investing in traditional drawdown funds - such as
instant diversification, J-curve mitigation; and instant target allocations
without future capital calls. However, while these vehicles may reduce some of
the discount uncertainty of ITs, they do not provide the ability for investors
to achieve unrestricted daily liquidity. Closed-end ITs provide that liquidity
with greater simplicity and certainty; managers are not forced to sell
investments to fund redemptions. They have the additional advantages of being
able to use gearing, of having independent Boards for strategy as well as
governance, and of providing greater accessibility for small shareholders.
A final point on this topic to note is that while these issues arise in many
of the conversations I have with investors, it is remarkable how many of those
meetings end with a plea to PIP to do all we can to ensure the sustainability
and survival of the IT model.
Stimulating market demand
This is truly the heart and soul of Step Three - creating sustainable drivers
of lower discounts in the medium term. It is led by our conviction that
investment trusts in general, and PIP in particular, offer a superior way for
investors to access private equity, and therefore our long-standing commitment
to broadening the reach and relevance of PIP. The marketing element of the
overall strategic plan will therefore centre on sharing this conviction with a
wider range of potential investors, expanding our reach to engage with more
individuals and their advisors across the UK.
I described in the 2024 Annual Report the work being done to produce an
integrated corporate, investment and funding strategy for PIP aligned with the
shifts in the market and competitive environments taking place. We continue
its implementation, holding onto our core qualities and values, and
fundamental approach - listening to investors, nurturing trust and fostering
transparency to produce outstanding investment performance. But since we came
together as a Board at the end of 2022, a number of elements have had to be
put in place to carry out this update successfully:
- An enhancement of the Board to include new members who both fully understand
those changes and can challenge each other to come up with solutions that deal
with them. We were delighted to welcome at the start of 2025 three highly
experienced and respected senior private equity Directors - namely, Tim
Farazmand, Candida Morley and Tony Morgan - doubling the number of
private-equity experienced Directors, alongside our Board colleagues who also
bring marketing, media, accounting and general management skills. A strategy
sub-committee of the Board has been established to lead the discussion on the
changing market landscape.
- We have continued to listen to the evolving opinions of investors, brokers
and investment bankers - including my continuing meetings with 25-30 of our
investors. These will continue to help guide our strategy and ensure that we
continue to put shareholder interests first in a relevant and appropriate
vehicle.
- Over those two years we have tried to identify as many perceived obstacles
as possible which could hold back demand for quoted private equity through
ITs. We understand the need to educate the wider investor audience - including
individuals, wealth advisors and other institutions - on the attraction of
private equity for long-term, risk-adjusted returns. As I have said in
previous Chair letters, a sector approach is much more powerful here, and we
will continue to work towards achieving this with some of our colleagues who,
happily, have been busy updating their own strategies.
Alongside this preparatory work, the success of implementation will involve a
heavily targeted marketing input. An enormous amount of work has been done
over the last six months by our Marketing Committee to prepare our marketing
plan.
I would like to thank both our Committee (headed from the Board by Mary Ann
Sieghart) and our external partners, who have made significant progress in
identifying key segments of the investor universe where we believe private
equity investment trusts will be of particular interest, and in understanding
the core elements of PIP's proposition that should appeal to these potential
investors.
Our research shows that investors are becoming increasingly sophisticated and
are looking to invest in new asset classes. Meanwhile, wealth advisors are
seeking to diversify their clients' portfolios. Our aim is to participate in
this growth and to increase the size of our market share by targeting
investors whose objectives align with PIP's.
We understand from our work to date that clear, simple, relevant and
human-focused branding will help us target new individual investors, as well
as wealth managers and independent financial advisors.
Our intention is to have this coordinated strategic and marketing planning
work largely in place by the AGM, and I very much look forward to updating you
on the progress of both in the Annual Report.
Putting shareholders first
Our focus remains steadfast on putting shareholders first, going beyond
stewardship of shareholder capital, and I hope that this message has got
through clearly in all the sections above. Our North Star must reflect who we
are, what we stand for, and the strong culture and values shared throughout
Pantheon and the Board. At the heart of that is listening to shareholder
interests and needs, maintaining trust that long-term shareholder interests,
both individual and institutional, come first. And the strongest endorsement
of our belief in PIP is our alignment alongside shareholders as shareholders
ourselves. Across the Directors and Pantheon Partners, our skin in the game
has increased over this half year by 0.9m shares, representing 6.2m of total
shares held at 27 February 2025 at a value at that date of £20m.
On the all-important issue of governance, as I mentioned above, we have
further strengthened the Board in recent months, and that Board works
extremely closely as a team with Pantheon, respecting the executive role of
the Manager, but with a mix of continuing challenge on the one hand, and
support from experience and networks on the other. Just one example of how
shareholder interests are put above those of the Manager is the capital
reallocation programme through buybacks, which has in total to date increased
NAV by approximately 30 basis points.
In terms of other Board developments, Zoe Clements has formally taken over as
Audit Committee Chair during the period, following David Melvin's stepping
down from the Board, as reported in the 2024 Annual Report.
During the half year, the Board was gratified to receive a second Board of the
Year award, this time from Quoted Data, following the Board of the Year award
we received from Citywire in 2023. Both acknowledged our passion and
commitment for democratisation within the private equity sector, and both
commented on the fact that, for PIP, shareholders are paramount.
Conclusion
Despite the many successes and areas of progress that I have been able to
report on at this interim stage, there is no room for complacency, and the
Board continues to work hard in these exciting but challenging times to
deliver value for shareholders. The excitement stems from the increasing
investor interest in private equity assets, and the fact that the range of
actual and potential investors is broadening. The challenge comes from the
ever-broadening range of options for investors to access private equity. While
the journey began years ago with our shift towards direct investments, the
last two years have seen huge developments across our corporate and leverage
strategy, and the integration of our investment, corporate and leverage
strategies so that each supports the other. The articulation of our North Star
will bring all these elements together and offer a renewed sense of purpose in
our traditional transparent manner.
The market environment continues to evolve, requiring us to respond nimbly to
ensure that we continue to offer a relevant and attractive means of accessing
private equity, to put shareholders first and continue building trust. I would
just like to finish by thanking everybody - including my very special and
hard-working Board colleagues - who have been involved thus far on our
journey, and I look forward to reporting further on progress when we next
meet.
JOHN SINGER CBE
Chair
27 February 2025
(1) Magnificent 7" stocks: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta
Platforms and Tesla.
(2) S&P Global Market Intelligence as at 31 December 2024. Data compiled
30 January 2025.
(3) PitchBook as at 31 December 2024.
(4) Refer to glossary for full description and definition.
PIP's objective is to maximise capital growth over the long term
As a result of the ongoing macroeconomic challenges, PIP's NAV performance,
which was broadly in line with the listed private equity sector average, was
muted during the six month period. The performance of the MSCI World index was
skewed by a small number of companies (the "Magnificent 7(1)"). Private equity
is a long-term asset class and PIP's NAV per share growth since inception
continues to outperform both public benchmark indices.
Annualised performance as at 30 November 2024
1 yr 3 yrs 5 yrs 10 yrs Since inception*
NAV per share 5.3% 6.0% 12.4% 12.8% 11.8%
Ordinary share price 11.1% 0.7% 7.0% 10.1% 10.7%
FTSE All-Share Total Return 15.7% 7.9% 5.7% 6.1% 7.5%
MSCI World Total Return (sterling) 27.9% 10.8% 13.4% 13.0% 8.8%
NAV per share relative performance
1 yr 3 yrs 5 yrs 10 yrs Since inception*
Versus FTSE All-Share Total Return -10.4% -1.9% +6.7% +6.7% +4.3%
Versus MSCI World Total Return (sterling) -22.6% -4.8% -1.0% -0.2% +3.0%
Share price relative performance
1 yr 3 yrs 5 yrs 10 yrs Since inception*
Versus FTSE All-Share Total Return -4.6% -7.2% +1.3% +4.0% +3.2%
Versus MSCI World Total Return (sterling) -16.8% -10.1% -6.4% -2.9% +1.9%
* Inception in September 1987.
(1 ")Magnificent 7" stocks: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta
Platforms and Tesla.
Key Performance Indicators
PIP regularly reports against six Key Performance Indicators ("KPIs"). During
the six month period, NAV per share growth, which was in line with the listed
private equity sector, was muted due to the ongoing macroeconomic challenges.
Nevertheless, total shareholder return was maintained and the returns from
PIP's actively-managed portfolio are on an upward trend. Net portfolio cash
flow has remained positive during the period and the Company's active
liquidity management ensures a high coverage of PIP's undrawn commitments. We
believe that a prudent gearing strategy can enhance future returns.
What this is How PIP has performed Link to our strategic objectives Examples of related factors that we monitor
Performance
NAV per share growth(1) 2.3% NAV per share reflects the attributable value of a shareholder's holding in 6M to Nov 2022 • NAV per share increased by 11.1p during the period to 501.6p (31 May 2024: • 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
4.0% 490.5p). This was an increase of +2.3% compared with the prior financial year top-tier private equity managers globally, to maximise long-term capital
our strategy.
end. growth.
• Fluctuations in currency exchange rates.
6M to Nov 2023
NAV per share growth in any period is shown net of foreign exchange movements
• NAV per share growth was primarily driven by valuation gains, investment • Containing costs and risks by constructing a well-diversified portfolio in
and all costs associated with running the Company. 3.1% income and share buybacks and partially offset by foreign exchange movements a cost-efficient manner.
and expenses and taxes.
• Tax efficiency of investments.
The NAV is robustly calculated and the balance sheet is reviewed by PIP's 6M to Nov 2024
auditors.
• Prevailing share price discount to NAV per share.
2.3%
• Effect of financing (cash drag) on performance.
• Ongoing charges relative to NAV growth and listed private equity peer
group.
Five-year cumulative total shareholder return Total shareholder return constitutes the return to investors, after taking 30 Nov 2022 • PIP's ordinary shares had a closing price of 326.5p at the half year end • Maximise shareholder returns through long-term capital growth. • Rate of NAV growth relative to listed markets.
into account share price movements (capital growth) and any share buybacks
44.7% (31 May 2024: 326.0p). This was a 0.2% increase over the six month period.
40.4% during the period.
30 Nov 2023
43.4%
• Promote better market liquidity and narrow the discount by building demand • Trading volumes for the Company's shares.
• Share price discounts to NAV have remained wide in the listed private for the Company's shares.
The Board's strategy is to deliver returns for shareholders through the growth equity sector. The discount on PIP's shares was 35% at the half-year end (31
in NAV and not through the payment of dividends.
May 2024:34%).
30 Nov 2024 • Share price discount to NAV.
40.4%
Portfolio investment return Portfolio investment return measures the total movement in the valuation of 6M to Nov 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 private equity peer group.
the underlying companies and funds comprising PIP's portfolio, expressed as a
market volatility.
3.2%(1) percentage of the opening portfolio value, before taking foreign exchange 0.9%
effects and other expenses into account.
• Valuations provided by private equity managers.
• PIP's portfolio is actively managed and focuses on resilient, high-growth
6M to Nov 2023 sectors.
1.5%
• PIP's portfolio return for the half year was mainly driven by the buyout
segment, which accounts for 73% of the portfolio.
6M to Nov 2024
3.2%
Liquidity
Net portfolio cash flow(1) Net portfolio cash flow is equal to distributions less capital calls to 6M to Nov 2022 • PIP's portfolio generated £118m (six months to 30 November 2023: £112m) • 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
of distributions versus £73m of calls (six months to 30 November 2023: controlling financing risk.
£45m existing investment commitments. £34m £82m).
• Portfolio maturity and distribution rates by vintage.
PIP manages its maturity profile through a mix of primaries, secondaries and 6M to Nov 2023 • In addition, the Company made new commitments of £88m (six months to 30
co-investments to ensure that its portfolio remains cash-generative at the
November 2023: £15m) during the half year, £33m of which was drawn at the
same time as maximising the potential for growth. £30m time of purchase (30 November 2023: £15m). • Commitment rate to new investment opportunities.
6M to Nov 2024 • As at 30 November 2024, PIP's portfolio had a weighted average age of 5.4
years(2) (30 November 2023: 5.0 years).
£45m
Gearing(3) Gearing relates to how much debt is utilised in PIP's capital structure and is 30 Nov 2022 • PIP's net debt as a percentage of the Company's NAV as at 30 November 2024 • Measured use of leverage to reduce cash drag and enhance NAV growth. • Utilisation level of the revolving credit facility.
expressed as net debt
was 9.2% (30 November 2023: net debt to NAV ratio was 4.3%).
(9.2%)
2.1%
(borrowings excluding the ALN less cash) as a percentage of NAV.
• Adopt a more efficient use of balance sheet capital to reduce cash drag. • Anticipated distribution levels and impact on liquidity position.
• As at 30 November 2024, PIP has utilised £116m of its £400m revolving
30 Nov 2023 credit facility, and has £118m of private placement loan notes outstanding.
The Board appreciates gearing is a differentiator of the investment trust
structures, and that a measured use of debt can eliminate cash drag and (4.3%) • Leverage relative to listed private equity peer group.
enhance investment returns. PIP's approach to gearing remains conservative.
The Board does not currently expect net leverage to exceed 10% of NAV under • PIP's net debt to NAV ratio is lower than the relevant peer group average
normal market conditions.
of 12.9%(4).
30 Nov 2024
(9.2%)
Undrawn coverage ratio(5) The undrawn coverage ratio is the ratio of available financing and 10% of 30 Nov 2022 • The current undrawn coverage ratio reflects modest use of leverage and the • 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
right-sizing of the credit facility. mix of manager-led secondaries, co-investments and primaries, and vary portfolio.
79% indicator of the Company's ability to meet outstanding commitments, even in 102%
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.
30 Nov 2023 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.
88%
• Trend in distribution rates.
• PIP's undrawn coverage ratio is prudent as we expect outstanding
30 Nov 2024 commitments to be drawn over a number of years as evidenced by PIP's 10-year
average call rate (23% of opening undrawn commitments). • Ability to access debt markets on favourable terms.
79%
• A 79% undrawn coverage ratio is comfortable relative to the 25% minimum
required under existing loan covenants.
(1) Excludes valuation gains and/or cash flows associated with the Asset
Linked Note ("ALN").
(2) Excludes the portion of the reference portfolio attributable to the ALN.
(3) Net cash (debt) to NAV.
(4) Relevant peer group comprised: CT Private Equity Trust, HarbourVest Global
Private Equity, ICG Enterprise Trust and Patria Private Equity Trust. Data as
at 30 November 2024.
(5) Outstanding commitments relating to funds outside their investment period
(>13 years old), amounting to £42m as at 30 November 2024 (30 November
2023: £45m), were excluded from the calculation as there is a low likelihood
of these being drawn.
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.
PIP has a resilient, long-term and sustainable capital structure, with access
to both traditional lenders in the form of a £400m revolving credit facility
("credit facility") as well as institutional investors via USD$150m of private
placement loan notes ("loan notes"). As a result of its proactive approach to
managing vehicle financing, 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 30 November 2024, PIP had £116m drawn down under the credit facility
and £118m of sterling-equivalent loan notes outstanding. Taken in conjunction
with PIP's net available cash of £21m, this results in a conservative net
debt(1) to NAV ratio of 9.2%. The Board currently does not expect net leverage
to exceed 10.0% of NAV under normal market conditions.
Undrawn commitments by vintage(2)
PIP's undrawn commitments were £759m as at 30 November 2024 (31 May 2024:
£789m). Of the £759m undrawn commitments as at the period end, £42m (31 May
2024: £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.
2024 and later 23% 2018 4%
2023 16% 2017 3%
2022 22% 2016 2%
2021 13% 2015 3%
2020 3% 2014 and earlier 7%
2019 4%
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 30 November 2024, PIP had net available cash(3) balances of £21m (31
May 2024: £16m).
In addition to these cash balances, PIP also has access to a multi-currency
revolving credit facility. The Company's credit facility was right-sized to a
£400m equivalent commitment (from a £500m equivalent commitment) in October
2024, with the flexibility for this to be increased to £700m under the
existing structure, subject to the consent of the participating lenders. The
credit facility will expire in October 2028 with an ongoing option to extend,
by agreement, the maturity date by 364 days at a time.
Using exchange rates as at 30 November 2024, the credit facility amounted to a
sterling equivalent of £409m, of which £293m remained undrawn as at the half
year.
With £21m of net available cash and an undrawn credit facility of £293m, PIP
had £314m of available financing as at 30 November 2024 (31 May 2024: £414m)
which, along with the value of the private equity portfolio, provides
comfortable cover of 4.0 times (31 May 2024: 3.9 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 79%
as at 30 November 2024 (31 May 2024: 89%)(4) against a bank loan requirement
of maintaining this covenant above 25%.
(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 10.3% as at 30 November 2024.
(2)Includes undrawn commitments attributable to the reference portfolio
related to the ALN.
(3) The available cash and loan figure excludes the current portion payable
under the ALN, which amounted to £26m as at 30 November 2024.
(4)Excludes outstanding commitments relating to funds outside their investment
period (>13 years old), amounting to £42m as at 30 November 2024 (31 May
2024: £42m).
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.
MANAGER'S REVIEW
OUR MARKET
An improved outlook for deal activity
Helen Steers MBE and Charlotte Morris, Partners at Pantheon and Co-Lead
Managers of PIP, discuss how in 2025, following a challenging period, the
stage is set for increased investment and exit activity in the private equity
market.
The macroeconomic environment in 2024 was marked by a gradual easing of
inflation and initial reductions in interest rates from their recent highs,
amid persistent geopolitical tensions. Central banks, having raised interest
rates significantly since the inflation peaks of 2022, began to cut rates as
inflation in both the USA and Europe moderated by the end of 2024, although
still above target levels.
In 2024, public and private markets benefitted from a stabilising
macroeconomic environment and increasing business confidence although
challenges have remained. However, public market performance was concentrated,
driven by the so-called "Magnificent 7" stocks(1) which account for a large
and growing slice of the market.
Furthermore, the ongoing shrinkage in the number of public companies globally,
as the number of private equity-backed companies increases, presents
additional challenges for investors. Over the past 20 years, the number of
publicly traded companies in the USA has reduced by 13% while the number of US
private equity-backed companies has increased by over 270%(2), and this
phenomenon has been repeated all over the world. With public markets becoming
increasingly concentrated and inaccessible or unattractive to smaller,
fast-growing businesses, having exposure to the private company opportunity
set could become increasingly important for investors.
Deal activity is starting to pick up in the private equity market
The last two years have been characterised by a prolonged period of lower deal
activity, which has led to subdued exit activity and low distribution rates
across the private equity industry. We have seen this reflected in PIP's own
portfolio both during the six-month period and during the financial year
before that. However, the reduction of interest rates from recent highs, and
the gradual return of business confidence has started to positively impact the
mergers and acquisitions ("M&A") market, creating a more conducive
environment for deals. In 2024, global M&A deal value increased by 15%
year-on-year(3), while private equity deal volume in 2024 exceeded USD$1.5tn,
an 11% increase from 2023, though still below the 2021 peak(4). Sentiment has
improved as the interest rate environment has improved and inflation has
stabilised. Further cuts in interest rates are likely to stimulate more
dealmaking.
In 2024, business confidence and M&A activity was also impacted by a
number of government elections being held around the world, and was delayed in
particular by the US elections. Many PE managers waited for more certainty
about what a change in administration might mean for policy decisions, and
therefore the impact on targeted investment opportunities. At the period end,
just over half of PIP's portfolio was invested in the USA. It is too early to
predict what might happen under the new Trump administration, and the
potential imposition of tariffs could result in a range of outcomes that
affect portfolio companies in different ways. Nevertheless, the indications
are that this administration is in favour of deregulation and the potential
expansion of tax cuts for corporations, both of which should be beneficial for
private equity managers and their portfolio companies in the region,
especially those with domestic activities.
Although it will not be immediate, we anticipate an increase in deals and
exits over the next couple of years. We expect to see a gradual increase in
activity in 2025, with further growth next year rather than a sudden surge of
deals hitting the market. Sales processes in private markets can be lengthy,
since deal negotiations and legal processes take time to complete, but we are
encouraged to see that, as confidence returns to the overall M&A market,
an increasing number of companies within PIP's portfolio are already on the
exit ramp.
As a result of the ongoing macroeconomic challenges, PIP's NAV performance, in
line with the broader listed private equity sector, was muted during the
six-month period. However it should be noted that private equity is a
long-term asset class and performance should be viewed through that lens. In
addition, PIP's track record of weathering different market cycles over the
past 37 years gives us confidence in PIP's prospects once the M&A market
recovers with more pace.
Exits are still being achieved at substantial uplifts
We believe that good-quality and scarce assets will continue to attract buyers
at compelling valuations. Corporate buyers, many of which are sitting on cash,
do not want to miss out on an interesting acquisition opportunity and risk the
target being purchased by a competitor or by a private equity manager and then
having to wait a further five or six years before having another chance to
acquire the company. In addition, when our managers have sold their portfolio
companies, they have realised their investments at a substantial uplift on
exits in PIP's portfolio to their holding values. For example, during the
period the weighted average uplift on exits in PIP's portfolio was 26%. We
believe that this demonstrates the embedded value and high-quality assets in
PIP's portfolio. This is not a phenomenon specific to this period but is a
trend that we have observed for many years. Over the last ten years, the
average uplift upon exit of PIP's portfolio companies has been 30%.
Fundraising in private equity expected to increase in the year ahead
Despite the challenging macroeconomic environment, institutional investors
have been clear about their intentions to allocate more to private equity in
2025(5). Investors are attracted to private equity primarily because of the
return potential. An inherent characteristic of private equity managers is
their flexibility and ability to respond nimbly to changing market conditions.
Private equity-backed businesses benefit not only from capital investment, but
also from having access to operational expertise, ranging from specialist
consultants to former CEOs acting as advisers or board members. Private
equity's long-term investment horizon, coupled with direct control through
which private equity managers can bring operational skill to bear, means that
private equity managers are afforded the time to effectively execute their
value-add theses without being burdened by mark-to-market volatility, or the
pressure to hit short-term profitability targets. Given investment returns
have remained strong and the asset class continues to be compelling, there is
likely to be a notable uptick in fundraising activity across private equity
this year.
Focusing on mid-market opportunities in resilient sectors
We see opportunities across the private equity landscape and continue to focus
on businesses with strong fundamentals. On behalf of PIP, we are backing
top-quality managers who are sector specialists, focusing on resilient,
non-cyclical sectors that are benefiting from long-term trends, such as
automation and digitalisation and ageing demographics. We believe that as a
result of PIP's sector exposure and the hands-on approach of the underlying
private equity manager when managing their portfolio companies, as described
already, PIP's portfolio is well positioned to navigate economic cycles. Our
confidence is underpinned by the annualised revenue and EBITDA growth in PIP's
buyout portfolio, which has continued to exceed the revenue and EBITDA growth
of companies that constitute the MSCI World index over the last five years
(see table below).
Annualised revenue and EBITDA growth in PIP's portfolio (2020 to 2024)(6)
5-year annualised revenue growth(7) 5-year annualised EBITDA growth(7)
PIP 17% 19%
MSCI World Total Return 9% 8%
Looking ahead, business services are also becoming increasingly appealing as
companies are aiming to streamline their operations by outsourcing non-core
functions. In the realm of professional services, there is a notable roll-up
opportunity, especially in accounting and legal firms. Industrial services
also present a promising area for investment. While PIP is not investing
directly in companies that develop artificial intelligence ("AI"), AI tools
continue to be used extensively by our private equity managers, and Pantheon
itself, to efficiently monitor and manage portfolios. In addition, a number of
companies in PIP's portfolio use AI to capture data and to take advantage of
the benefits that it can offer to improve products and services. We expect to
see AI used increasingly by portfolio companies where relevant as the
application of it becomes more sophisticated.
The majority of PIP's portfolio is invested in buyouts, which are
well-established businesses where institutional investors have control of the
company alongside suitably aligned management teams. PIP focuses on
small/mid-market buyouts in the developed markets of the USA and Europe. We
favour this part of the market as we believe that it offers a number of
benefits and favourable deal dynamics as the target companies are often
founder or family-led and may be receiving institutional capital for the first
time. As a result, there are many pathways for value creation as the companies
achieve operational improvements, increase their scale, expand geographically
and complete add-on acquisitions, all with the help (as well as the capital
provided) of the private equity manager and their operational experts. Also,
small /mid-cap private equity managers typically use more moderate levels of
debt compared with those at the large/mega end of the industry, and rely more
on operational improvement than financial engineering to create value.
The availability of several exit routes is another important factor. Private
equity-backed, mid-market companies are prime targets for strategic (or trade)
buyers as well as for large/mega buyout private equity managers, who can take
the companies through their next stage of growth. Dry powder, which is capital
that has been raised and is available to invest but has not yet been deployed,
has grown from USD$1.2tn to USD$1.5tn in five years, creating a significant
buildup(8). Interestingly, this is concentrated among the larger buyout
private equity managers, which means that this capital is available to
purchase assets from small/mid-market managers. Therefore, mid-market private
equity managers are less dependent on initial public offerings ("IPO") to exit
their portfolio companies. During the half year to 30 November 2024, 46% of
the exits in PIP's portfolio were to private equity buyers, 43% were to
strategic buyers, and only 9% to IPO and public share sales. We expect the
mid-market to remain of particular interest in 2025 and the current
macroeconomic environment has set the stage favourably for this segment.
Strong and sustained growth in the secondaries market
The secondaries market has seen significant growth in recent years and last
year secondaries volume hit a new record of USD$160bn(9). In 2025, the
continuing demand for liquidity and exits is expected to drive expansion even
further. Factors such as low distributions, ageing portfolios, and a
recovering exit market position the secondaries market for continued success.
In this market, PIP focuses on manager-led secondaries and at the end of the
period, they accounted for 21% of PIP's portfolio. Manager-led secondaries are
when the private equity managers themselves instigate deals and they can
consist of either multi-asset portfolios or single-asset secondaries. A
single-asset secondary is an investment into an individual company owned by an
existing private equity fund. The private equity manager may see further
growth opportunities for the company in the near-term but be restricted by the
fund term. Another common situation is where the manager may be looking to
secure further capital to support growth which may not be available in the
current structure. However, the company in question could
be a highly prized asset that the manager believes has significant further
potential for growth and as such wants to continue to hold on to it.
These competing priorities can be resolved by bringing in new investment,
typically from specialised secondary firms, and carving the company out into a
new structure which is often termed a "continuation fund". Existing investors
are able to sell and take the liquidity on offer, should they wish, or they
can choose to roll their interests into the new vehicle that houses the
company and continue to participate in the value creation phase of the
investment. These transactions allow the fund managers to remain invested and
keep control of the asset, which they would otherwise have been required to
sell.
Continuation vehicles are becoming a standard liquidity tool in the secondary
market. In a persistently illiquid environment, investors are increasingly
open to new solutions, and this is one that has gained acceptance among both
investors and private equity managers. In 2024, these kinds of deals accounted
for 44%(9) of secondary deal flow and we expect to see further growth in this
part of the market as it continues to mature and evolve in the years ahead.
This is a specialised area of the market and our deep and experienced
secondaries team at Pantheon remains highly selective when making investments
of this type on behalf of PIP.
Co-investing in high-quality private companies alongside our selected managers
As well as accessing direct company investments through single-asset
secondaries, PIP also co-invests directly into private companies alongside our
carefully selected managers. At the period end, co-investments accounted for
34% of PIP's portfolio. When PIP invests in a co-investment, it is typically
when the private equity manager is also investing in the company for the first
time, unlike a single-asset secondary where the manager has already owned the
company for some time. All of our co-investment opportunities pass through a
"double quality filter", since each opportunity has first been evaluated by a
private equity manager, who themselves have passed our rigorous manager
selection hurdles. The opportunity is then subjected to our own detailed due
diligence process, carried out by our dedicated co-investment team, who will
confirm, among other things, that the deal is a good fit for the manager.
Co-investment deals are typically free of fees, which makes them economically
very attractive as well. Our stringent process means that our approval rate
for the co-investment deals that we reviewed in 2024 was just 14%, which is in
line with our long-term average.
Conclusion
The private equity market is growing and assets under management globally are
expected to reach c.USD$12tn by 2029(10). We believe that private equity
offers unique benefits, and that private market investments should be
accessible to all investors. An investment in a company like PIP democratises
this opportunity, providing individuals and small institutions with the same
advantages as larger investors who have traditionally committed large pools of
capital to private equity and are able to lock up their investments for a long
period of time.
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. Although NAV
performance has been subdued during the period, as we look ahead, we believe
that PIP has the track record and credentials to continue to perform well and
create value over the long term.
(1) "Magnificent 7" stocks: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta
Platforms and Tesla.
(2) Source: PitchBook and World Federation of Exchanges.
(3) S&P Global Market Intelligence as at 31 December 2024. Data compiled
30 January 2025.
(4) PitchBook as at 31 December 2024.
(5) Source: Preqin investor surveys as at November 2024.
(6) Source: Bloomberg. Five-year annualised figures are derived from
underlying annual performance growth data.
(7) The underlying revenue and EBITDA growth buyout figures for the 12 months
to 30 June 2024 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 Half
Year Report for data calculations and disclosures.
(8) Source: Preqin as at 31 December 2024. Excludes fund of funds and
secondaries to avoid double-counting.
(9) Source: Evercore as at January 2025. "FY 2024 Secondary Market Review".
(10) Source: Preqin 2025 Global Report, Private Equity. ( )
PORTFOLIO AS AT 30 NOVEMBER 2024
Since its inception, PIP has been able to generate market-beating 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.
Type, region, stage and sector
More than half of the portfolio is in direct company investments, which
increases PIP's flexibility over portfolio construction and investment
deployment.
Investment type(1)
Primaries 35%
Co-investments 34%
Manager-led secondaries 21%
Fund secondaries 10%
55% invested directly in companies.
Weighted towards the more developed private equity markets in the USA and
Europe.
Region(1)
USA 54%
Europe 31%
Global(2) 8%
Asia 7%
Well-diversified with an emphasis on the buyout stages which have delivered
resilient returns through cycles.
Stage(1)
Small/mid buyout 47%
Large/mega buyout 26%
Growth 19%
Special situations 4%
Venture 4%
Focus on high-growth and resilient sectors.
Sector(3)
Information technology 33%
Healthcare 20%
Consumer 13%
Industrials 11%
Financials 11%
Communication services 7%
Energy 2%
Materials 2%
Others 1%
(1) Investment type, region and stage data is based upon underlying fund and
company valuations. The data excludes 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 chart is based upon underlying company valuations as at
30 September 2024, adjusted for calls and distributions to 30 November 2024.
These account for 100% of PIP's overall portfolio value.
Vintage profile(1)
PIP's portfolio is carefully constructed to balance performance and liquidity
requirements
PIP's portfolio has a weighted average age of 5.4 years which we believe
optimises the potential for outperformance and cash flow generation.
2024 and later 4%
2023 5%
2022 19%
2021 14%
2020 8%
2019 12%
2018 11%
2017 8%
2016 7%
2015 and earlier 12%
(1) The vintage profile data is based upon underlying fund and company
valuations. The data excludes the portion of the reference portfolio
attributable to the ALN.
PERFORMANCE
PIP's portfolio value has increased modestly over the period. Buyout continues
to deliver consistent returns while venture, although it can be more volatile,
has outperformed other stages. 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 registered positive growth
PIP's portfolio generated returns of +3.2% during the six-month period(1)
against a challenging backdrop for private equity.
Portfolio value 31 May 2024 £2,468m
Valuation gains(1) £80m
Foreign exchange impact(1) (£8m)
Distributions(1) (£118m)
Calls(1) £73m
New investments(2) £33m
Portfolio value 30 November 2024 £2,528m
( )
(1) Excluding returns attributable to the ALN share of the portfolio.
(2) Amount drawn down at the time of commitment.
Valuation movement by type(1)
Positive returns across all investment stages
The outperformance of fund secondaries in the half year was driven primarily
by a portfolio company exit, Arnott Industries, that generated above-average
uplifts over its holding value.
( ) Closing portfolio NAV% Return
Fund secondaries 10% 5.2%
Primaries 35% 3.8%
Manager-led Secondaries 21% 3.1%
Co-investments 34% 2.6%
Valuation movement by stage(1)
Positive performance across all stages in PIP's portfolio
Venture outperformed in the six-month period but only accounts for a small
proportion of the overall portfolio. Buyout returns have been stable and
consistently positive over the last five years.
( ) Closing portfolio NAV% Return
Venture 4% 12.0%
Large/mega buyout 26% 4.6%
Small/ mid buyout 47% 2.9%
Special situations 4% 2.2%
Growth 19% 1.4%
Valuation movement by region(1)
Positive performance across all regions
PIP's globally positioned portfolio registered positive portfolio valuation
gains across all the geographies.
( ) Closing portfolio NAV% Return
Europe 31% 3.8%
USA 54% 3.4%
Global 8% 2.9%
Asia 7% 2.3%
(1) 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.300 distributions from PIP's portfolio during the period.
Uplifts on exit realisations(1)
Over the last ten years, the weighted average uplift on exit was +30%
The value-weighted average uplift on exit realisations in the half year was
+26%, 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.
( )
Cost multiples on exit realisations(1)
Over the last ten years, the average cost multiple on exit was 3.0 times
The average cost multiple on exit realisations(1) was 3.1 times for the
six-month period to 30 November 2024. This demonstrates value creation over
the course of PIP's investment.
The cost multiple data covers approximately 56% by value of proceeds from exit
realisations for the half year to 30 November 2024. The data covers primary
investments, manager-led secondaries and co-investments. It is based upon all
gross cost multiples available at the time of the distribution.
Exit realisations by sector and type
The majority of exits were in the Consumer sector and through secondary
buyouts and strategic sales
Realisation activity was strongest in the consumer and information technology
sectors. Secondary buyouts and strategic sales represented the most
significant sources of exit activity during the year.
Exit realisations by sector(2)
For the half year to 30 November 2024
Consumer 38%
Information Technology 21%
Healthcare 19%
Financials 13%
Industries 7%
Other 2%
Exit realisations by type(2)
For the half year to 30 November 2024
Secondary buyouts 46%
Strategic sales 43%
IPO(3) and public share sale 9%
Refinancing and recapitalisation 2%
(1) See the Alternative Performance Measures section in the Full Half Year
Report for weighted average uplift and weighted average cost multiple
calculations and disclosures.
(2) The data coverage is 100% (for exit realisations by sector) and 99% (for
exit realisations by type) of proceeds from exit realisations received during
the period.
(3) Initial Public Offering.
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 21%, PIP's portfolio has been cash flow
positive over the last ten years.
During the period, PIP's net portfolio cash flow was £45m. PIP has generated
£1.7bn of net cash over the last ten years.
Net positive cash flow generation has continued despite lower levels of exit
activity.
We have observed a notable improvement in the volume of exit realisations. The
net portfolio cash flow generated in the half year to 30 November 2024
exceeded the net portfolio cash flow generated for the full financial year to
31 May 2024. Refer to the section called Our Market above for more details on
the private markets.
DISTRIBUTIONS
With a weighted average fund maturity of 5.4 years at 30 November 2024 (31 May
2024: 5.2 years), PIP's portfolio continued to generate positive net cash.
PIP received £118m in proceeds from PIP's portfolio in the six month period
to 30 November 2024 (six-month period to 30 November 2023: £112m) equivalent
to an annualised distribution(1) rate of 10% of opening portfolio value (31
May 2024: 8%).
Quarterly distribution rates(1)
A robust cash-generative portfolio
PIP has continued to generate cash despite a slowdown in distributions in the
wider private equity market.
(1) Distribution rate equals distributions in the period (annualised) divided
by opening portfolio value.
CALLS
PIP paid £73m to finance calls on undrawn commitments during the six-month
period to 30 November 2024 (six-month period to 30 November 2023: £82m).
Quarterly call rate(1)
The observed call rate is below historical average levels and is a reflection
of the subdued M&A market
The annualised call rate(1) for the six-month period to 30 November 2024 was
equivalent to 19% of opening undrawn commitments (31 May 2024: 18%).
(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 its investment pacing for direct company
investments to ensure liquidity was preserved in a market environment
experiencing lower exit levels than historically. Co-investments and
manager-led secondaries tend to be highly funded at deal completion. The
timing of primary commitments is linked to the fundraising cycles of a
targeted buy list of private equity managers.
PIP made ten new investments during the half year to 30 November 2024,
amounting to £88m in new commitments. These commitments were to five primary
funds (£51m), two co-investments (£21m) and three manager-led secondaries
(£16m).
In addition, PIP was able to deploy capital to capture value for its
shareholders, by acquiring its own shares at a significant discount to NAV.
During the financial year, the Company invested £12.7m (excluding costs and
stamp duty) in share buybacks at an average discount of 34%.
Our investment process
Investment opportunities in companies and complementary funds are originated
via Pantheon's extensive and well-established platform.
We invest with many of the best private equity managers who are able to
identify and create value in their portfolio companies.
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.
New commitments by region
USA 64%
Europe 36%
New commitments by stage
Small/mid buyout 80%
Growth 20%
New commitments by type
Primaries 58%
Co-investments 24%
Manager-led secondaries 18%
BUYOUT ANALYSIS
Over the past 12 months, the weighted average revenue and EBITDA growth for
PIP's buyout portfolio was 11% and 16% respectively. PIP's five-year average
revenue and 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.
Revenue and EBITDA growth
Growth in PIP's buyout portfolio companies have, on average, outperformed the
MSCI
The underlying portfolio company buyout data for the 12 months to 30 June 2024
includes all the information available to the Company. The data coverage for
Revenue and EBITDA growth figures was 61% and 64% of PIP's buyout portfolio
NAV, respectively. The figures are based on unaudited data. MSCI World index
data was sourced from Bloomberg. See the Alternative Performance Measures
section in the full Half Year Report for data calculations and disclosures.
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 NAV-weighted average Enterprise Value ("EV")/EBITDA was 16.9x times
compared with 22.5x 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 relative to other sectors.
PIP's valuation multiple reflects a heavier weighting towards the Information
Technology and Healthcare sectors
The valuation multiple data covers approximately 47% (30 November 2023: 58%)
of PIP's buyout portfolio. The underlying portfolio company buyout data
includes all the information available to the Company.
Buyout portfolio*
Information technology 29%
Healthcare 20%
Consumer 16%
Industrials 14%
Financials 12%
Communication services 6%
Materials 2%
Others 1%
MSCI World**
Information technology 26%
Consumer 16%
Financials 15%
Healthcare 12%
Industrials 11%
Others 8%
Communication services 8%
Materials 4%
* 100% coverage of buyout portfolio.
** As at 30 June 2024.
Debt multiples
Venture, growth and buyout investments have differing leverage
characteristics.
PIP's buyout debt multiples are broadly in line with what we observed in the
wider market.
The venture and growth portfolios have little or no leverage.
Prudent gearing in PIP's buyout portfolio companies
The buyout figures for the 12 months to 30 June 2024 were calculated using all
the information available to the Company. The figures are based on unaudited
data. The debt multiple data covers approximately 45% (30 November 2023: 60%)
of PIP's buyout portfolio. See the Alternative Performance Measures section in
the Full Half Year Report for data calculations and disclosures.
% of PIP's portfolio Debt multiple
Small/mid buyout 47% 5.1x
Large/mega buyout 26% 5.2x
LARGEST 50 COMPANIES BY VALUE(1)
488 companies (31 May 2024: 513) comprise 80% of PIP's NAV as at 30 November % of PIP
2024.
Rank Company Country(2) Sector Investment type Description portfolio
1 Kaseya Switzerland Information technology Co-investment; Fund secondary Provider of IT management and monitoring software services 1.3%
2 Visma Norway Information technology Primary; Co-investment Provider of software solutions for finance and HR departments 1.2%
3 Action Netherlands Consumer Manager-led secondary Non-food discount stores 1.2%
4 Smile Doctors USA Healthcare Manager-led secondary Orthodontic treatments and services provider 0.9%
5 JSI USA Industrials Manager-led secondary Consultant to telecommunication service providers 0.9%
6 Froneri UK Consumer Manager-led secondary Ice cream and frozen food manufacturer 0.9%
7 MRO USA Healthcare Co-investment; primary Provider of disclosure management services 0.8%
8 Valantic Germany Information technology Manager-led secondary Digital consulting and software company 0.8%
9 Shiftkey USA Healthcare Manager-led secondary Recruitment platform for nurses 0.8%
10 Omni Eye Services USA Healthcare Manager-led secondary Specialist eye treatment provider 0.8%
11 doit USA Information technology Co-investment Provider of cloud consulting and engineering services 0.7%
12 Anaplan USA Information technology Co-investment; primary Developer of a cloud-based modelling and planning platform 0.7%
13 Lifepoint Health USA Healthcare Co-investment;Manager-led secondary Healthcare provider 0.7%
14 Asurion USA Financials Primary; Fund secondary, Manager-led secondary Mobile phone insurance company 0.7%
15 Nord Anglia Education Hong Kong Consumer Primary; Co-investment Operator of educational institutions 0.7%
16 Eversana USA Healthcare Manager-led secondary Commercial services platform for the life sciences sector 0.7%
17 Millenium Trust Company USA Financials Co-investment; primary Provider of technology-enabled retirement and investment services 0.7%
18 Sun Media Spain Communication services Co-investment Digital advertising company 0.7%
19 SailPoint USA Information technology Co-investment; primary Provider of enterprise identity governance solutions 0.6%
20 Revolut UK Information technology Primary; Fund secondary A fintech app which provides various financial services 0.6%
21 Ascent Resources Plc USA Energy Fund secondary Natural gas and oil producer 0.6%
22 RLDatix USA Healthcare Manager-led secondary Developer of cloud-based patient safety and risk management software 0.6%
23 101 USA Industrials Co-investment Provider of food waste recycling services 0.5%
24 Tag Israel Healthcare Manager-led secondary Provider of medical and dental equipment and implants 0.5%
25 OptConnect USA Information technology Manager-led secondary Provider of wireless internet connectivity solutions 0.5%
26 Kilcoy Global Foods Australia Consumer Manager-led secondary Producer of beef and other animal protein products 0.5%
27 Kaspi.kz Kazakhstan Financials Primary Banking products and services provider 0.5%
28 24 Seven USA Industrials Manager-led secondary Digital marketing and recruitment services provider 0.5%
29 IFS Sweden Information technology Co-investment; primary Developer of enterprise resource planning software 0.5%
30 Access UK Information technology Co-investment Provider of business management software solutions to SMEs 0.5%
31 imagine 360 USA Healthcare Fund secondary Provider of solutions to mitigate health insurance costs for mid-size 0.5%
employers
32 Tanium USA Information technology Co-investment Cybersecurity services provider 0.5%
33 Perspecta USA Information technology Co-investment IT services management company 0.5%
34 KD Pharma Germany Healthcare Manager-led secondary Specialist pharmaceutical company 0.5%
35 Logic Monitor USA Information technology Primary; Co-investment; fund secondary Managed IT service provider 0.5%
36 Trimech USA Information technology Co-investment Provider of 3D design, engineering and manufacturing solutions 0.4%
37 Arby's USA Consumer Manager-led secondary Restaurant franchise 0.4%
38 Flynn USA Consumer Co-investment Restaurant franchise 0.4%
39 Medica UK Healthcare Co-investment Provides teleradiology reporting services to public and private health 0.4%
organisations
40 Shawbrook UK Financials Co-investment Provides lending and savings financial products 0.4%
41 Elevation USA Healthcare Co-investment Provides cosmetic lab services 0.4%
42 Zelis USA Healthcare Primary Offers DOCS, a software-as-a-service platform for communication 0.4%
43 Krispy Krunchy Chicken USA Consumer Co-investment; primary Operator of fast food chain restaurants 0.4%
44 VIZRT Norway Information technology Primary; Manager-led secondary Developer of content production tools for the digital media industry 0.4%
45 Satlink Spain Information technology Co-investment Satellite communication equipment provider for the maritime industry 0.4%
46 London & Capital UK Financials Co-Investment An independent wealth management firm 0.4%
47 SVT Germany Industrials Fund secondary Manufacturer of fire protection products and systems 0.4%
48 WIZ USA Information technology Primary Provides a cloud security platform 0.4%
49 Regina Maria Romania Healthcare Fund secondary Provides private healthcare services 0.4%
50 Sonar Switzerland Information technology Primary; Fund secondary Developer of coding software 0.4%
Coverage of PIP's private equity asset value 30.1%
(1) The largest 50 companies table is based upon underlying company valuations
as at 30 September 2024 adjusted for known calls and distributions to 30
November 2024, and includes the portion of the reference portfolio
attributable to the ALN.
OTHER INFORMATION - LARGEST 50 MANAGERS BY VALUE
Top 50 Managers account for 72% of NAV as at the half year end (71% as at 31
May 2024).
% of total private equity
Rank Manager Region(1) Stage asset value(2)
1 Insight Partners USA Growth 6.9%
2 Index Ventures Global Venture; Growth 4.0%
3 Hg Europe Buyout 3.8%
4 Providence Equity Partners USA Buyout 3.2%
5 Parthenon Capital USA Buyout 2.6%
6 Advent International Global Buyout 2.5%
7 Water Street USA Buyout 2.4%
8 IK Partners Europe Buyout 2.2%
9 Thomabravo USA Buyout 2.0%
10 Altamont USA Buyout 1.8%
11 Abry Partners USA Buyout 1.7%
12 Charlesbank USA Buyout 1.5%
13 MidEuropa Europe Buyout 1.4%
14 Seven 2 (Previously Apax Partners SAS) Europe Buyout 1.4%
15 Search Light Global Special situations 1.4%
16 Deutsche Private Equity Europe Buyout 1.3%
17 Veritas Capital USA Buyout 1.3%
18 3i Europe Buyout 1.2%
19 Lyfe Asia Growth 1.2%
20 Hellman & Friedman Global Buyout 1.2%
21 Eci Europe Buyout 1.2%
22 EQT Asia Growth 1.2%
23 Altor Europe Buyout 1.2%
24 Growth Fund(3) USA Growth 1.1%
25 Apollo Global Buyout 1.1%
26 Oak HC/FT USA Growth 1.1%
27 Linden USA Buyout 1.0%
28 Apheon (Previously Ergon Capital) Europe Buyout 1.0%
29 Five Arrows Europe Buyout 1.0%
30 Balderton Europe Growth 1.0%
31 Main Post Partners USA Buyout 0.9%
32 LMP Europe Buyout 0.9%
33 Stone Goff USA Buyout 0.9%
34 PAI Partners Europe Buyout 0.9%
35 Lorient Capital USA Buyout 0.9%
36 Shamrock Capital USA Growth 0.9%
37 HIG Capital USA Buyout 0.9%
38 ONEX USA Buyout 0.8%
39 The Energy & Minerals Group USA Special situations 0.8%
40 Sentinel Capital Partners USA Buyout 0.8%
41 Morgan Stanley Capital Partners USA Buyout 0.8%
42 NMS USA Buyout 0.8%
43 Chequers Capital Europe Buyout 0.8%
44 Francisco Partners USA Buyout 0.8%
45 Knox Lane USA Buyout 0.7%
46 Magnum Europe Buyout 0.7%
47 BC Partners USA Buyout 0.7%
48 Alpine USA Buyout 0.7%
49 Roark Capital Group USA Buyout 0.7%
50 KKR Europe Buyout 0.6%
Coverage of PIP's private equity asset value 72.0%
(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.
.
INTERIM MANGEMENT REPORT AND RESPONSIBILITY STATEMENT OF THE DIRECTORS IN
RESPECT OF THE INTERIM REPORT
Interim management report
The important events that have occurred during the period under review, the
key factors influencing the financial statements and the principal
uncertainties for the remaining six months of the financial year are set out
in the Chair's Statement and the Manager's Review.
The principal risks facing the Company are substantially unchanged since the
date of the Annual Report for the financial period ended 31 May 2024 and
continue to be as set out in that report on pages 44 to 48.
Risks faced by the Company include, but are not limited to, funding of
investment commitments and default risk, risks relating to investment
opportunities, financial risk of private equity, long-term nature of private
equity investments, valuation uncertainty, gearing, foreign currency risk,
counterparty risk, taxation, the risks associated with the engagement of the
Manager or other third-party advisers, cybersecurity and geopolitical risks.
Responsibility statement
Each Director confirms that, to the best of their knowledge:
- The condensed set of financial statements has been prepared in accordance
with FRS 104 "Interim Financial Reporting"; and gives a true and fair view of
the assets, liabilities, financial position and return of the Company.
- This Interim Financial Report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the first
six months of the financial year and their impact on the set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the financial
position or performance of the Company during that period; and any changes in
the related party transactions described in the last Annual Report that could
do so.
This Interim Financial Report was approved by the Board on 27 February 2025
and was signed on its behalf by John Singer CBE, Chair.
INDEPENDENT REVIEW REPORT TO PANTHEON INTERNATIONAL PLC
Conclusion
We have been engaged by Pantheon International Plc ('the Company') to review
the condensed set of financial statements in the Interim Report and Accounts
for the six months ended 30 November 2024 which comprises the Condensed Income
Statement, the Condensed Statement of Changes in Equity, the Condensed Balance
Sheet, the Condensed Cash Flow Statement, and the Related Notes 1 to 13
(together the 'condensed financial statements'). We have read the other
information contained in the Interim Report and Accounts and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Interim Report
and Accounts for the six months ended 30 November 2024 is not prepared, in all
material respects, in accordance with FRS 104 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ('ISRE') issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in Note 1 Basis of Preparation, the annual financial statements
of the Company are prepared in accordance with United Kingdom Generally
Accepted Accounting Practice. The condensed set of financial statements
included in this Interim Report and Accounts has been prepared in accordance
with the Financial Reporting Standard FRS 104 'Interim Financial Reporting'
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the Interim Report and Accounts in
accordance with the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
In preparing the Interim Report and Accounts, the Directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibility for the review of the financial information
In reviewing the Interim Report and Accounts, we are responsible for
expressing to the Company a conclusion on the condensed set of financial
statements in the Interim Report and Accounts. Our conclusion, including our
Conclusions Relating to Going Concern, is based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London, United Kingdom
27 February 2025
CONDENSED INCOME STATEMENT (UNAUDITED) FOR THE SIX MONTHS TO 30 NOVEMBER 2024
Six months ended Six months ended Year ended
30 November 2024 30 November 2023 31 May 2024
Revenue Capital Total* Revenue Capital Total* Revenue Capital Total*
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments at fair value through profit or loss - 61,629 61,629 - (4,848) (4,848) - 60,324 60,324
(Losses)/gains on financial liabilities at fair value through profit or loss - (350) 3,124 2,774 (320) (519) (839) (675) (2,745) (3,420)
ALN
Currency (losses)/ gains on cash and borrowings - (1,104) (1,104) - 4,229 4,229 - 5,491 5,491
Investment income 8,812 - 8,812 9,430 - 9,430 16,534 - 16,534
Investment management fees (13,451) - (13,451) (12,573) - (12,573) (25,674) - (25,674)
Other expenses (1,346) (349) (1,695) (1,236) (1,406) (2,642) (2,148) (3,374) (5,522)
Return/(loss) before financing costs and taxation (6,335) 63,300 56,965 (4,699) (2,544) (7,243) (11,963) 59,696 47,733
Interest payable and similar expenses (10,289) - (10,289) (4,860) - (4,860) (13,051) - (13,051)
Return/(loss) before taxation (16,624) 63,300 46,676 (9,559) (2,544) (12,103) (25,014) 59,696 34,682
Taxation paid 2 (1,854) - (1,854) (1,702) - (1,702) (3,033) - (3,033)
Return/(loss) for the period/year, being total comprehensive income for the 9 (18,478) 63,300 44,822 (11,261) (2,544) (13,805) (28,047) 59,696 31,649
period/year
Return per ordinary share 9 (3.98)p 13.65p 9.67p (2.18)p (0.49)p (2.67)p (5.68)p 12.08p 6.40p
* The Company does not have any income or expenses that are not included in
the return for the period, therefore the return for the period is also the
total comprehensive income for the period. 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.
The Notes below form part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE SIX MONTHS TO 30
NOVEMBER 2024
Capital
Capital Other reserve on
Share Share redemption capital investments Revenue
capital premium reserve reserve held reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Movement for the six months ended 30 November 2024
Opening equity shareholders' funds 31,196 269,535 8,369 1,492,834 643,009 (161,302) 2,283,641
Return for the period - - - 58,517 4,783 (18,478) 44,822
Ordinary shares bought back for cancellation in the market (267) - 267 (12,783) - - (12,783)
Closing equity shareholders' funds 30,929 269,535 8,636 1,538,568 647,792 (179,780) 2,315,680
Movement for the six months ended 30 November 2023
Opening equity shareholders' funds 35,503 269,535 4,062 1,620,532 653,695 (133,255) 2,450,072
Return for the period - - - 50,554 (53,098) (11,261) (13,805)
Ordinary shares bought back for cancellation via Tender Offer (3,295) - 3,295 (151,050) - - (151,050)
Ordinary shares bought back for cancellation in the market (179) - 179 (7,397) - - (7,397)
Closing equity shareholders' funds 32,029 269,535 7,536 1,512,639 600,597 (144,516) 2,277,820
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 via Tender Offer (3,295) - 3,295 (151,050) - - (151,050)
Ordinary shares bought back for cancellation in the market (1,012) - 1,012 (47,030) - - (47,030)
Closing equity shareholders' funds 31,196 269,535 8,369 1,492,834 643,009 (161,302) 2,283,641
The Notes below form part of these financial statements.
CONDENSED BALANCE SHEET (UNAUDITED) AS AT 30 NOVEMBER 2024
30 November 30 November 31 May
2024 2023 2024
Note £'000 £'000 £'000
Fixed assets
Investments at fair value 2,554,586 2,404,240 2,498,505
Current assets
Debtors 3,597 1,965 2,487
Cash at bank 23,355 28,579 21,863
26,952 30,544 24,350
Creditors: Amounts falling due within one year
Bank loan - (96,389) (83,261)
Other creditors (6,002) (6,697) (7,752)
(6,002) (103,086) (91,013)
Net current assets/(liabilities) 20,950 (72,542) (66,663)
Total assets less current liabilities 2,575,536 2,331,698 2,431,842
Creditors: Amounts falling due after one year
Bank Loan 5 (115,670) (24,200) -
Asset Linked Loan ("ALN") 6 (26,155) (29,678) (30,378)
Private placement loan notes 7 (118,031) - (117,823)
(259,856) (53,878) (148,201)
Net assets 2,315,680 2,277,820 2,283,641
Capital and reserves
Called-up share capital 8 30,929 32,029 31,196
Share premium 269,535 269,535 269,535
Capital redemption reserve 8,636 7,536 8,369
Other capital reserve 1,538,568 1,512,639 1,492,834
Capital reserve on investments held 647,792 600,597 643,009
Revenue reserve (179,780) (144,516) (161,302)
Total equity shareholders' funds 2,315,680 2,277,820 2,283,641
Net asset value ("NAV") per share - ordinary 10 501.64p 476.49p 490.46p
Total ordinary shares for NAV calculation 8 461,625,319 478,041,656 465,613,611
The Notes below form part of these financial statements.
CONDENSED CASH FLOW STATEMENT (UNAUDITED) FOR THE SIX MONTHS TO 30 NOVEMBER
2024
Six months ended Six months ended Year Ended
Note 30 November 2024 30 November 2023 31 May 2024
£'000 £'000 £'000
Cash flow from operating activities
Investment income received - comprising:
- Dividend income 8,304 7,414 12,975
- Interest income 428 1,424 2,815
- Other investment income 79 30 86
Deposit and other interest received - 560 669
Investment management fees paid (13,421) (10,687) (25,639)
Secretarial fees paid (247) (224) (464)
Depositary fees paid (165) (128) (236)
Directors' fees paid (189) (158) (343)
Legal and professional fees paid (420) (772) (1,208)
Capitalised project-related legal costs - - (2,497)
Other cash payments(1) (1,129) (1,661) (1,079)
Withholding tax deducted (1,969) (1,721) (2,933)
Net cash outflow from operating activities 11 (8,729) (5,923) (17,854)
Cash flows from investing activities
Purchases of investments (76,873) (75,330) (152,960)
Disposals of investments 83,546 84,078 131,544
Net cash inflow/(outflow) from investing activities 6,673 8,748 (21,416)
Cash flows from financing activities
ALN repayments (846) (2,122) (4,650)
Ordinary shares bought back for cancellation (13,672) (7,397) (46,140)
Ordinary shares bought back for cancellation via Tender Offer - (151,050) (151,050)
Drawdown of loan 136,520 125,000 200,375
Repayment of loan (105,394) - (111,903)
Loan commitment and arrangement fees paid (5,167) (3,285) (5,642)
Loan interest paid (3,928) (1,259) (4,018)
Private placement loan note funding - - 118,274
Private placement loan note interest (4,324) - -
Net cash inflow/(outflow) from financing activities 3,189 (40,113) (4,754)
Increase/(decrease) in cash in the period/year 1,133 (37,288) (44,024)
Cash and cash equivalents at beginning of the period/year 21,863 66,043 66,043
Foreign exchange gains/(losses) 359 (176) (156)
Cash and cash equivalents at the end of the period/year 23,355 28,579 21,863
The Notes below form part of these financial statements.
NOTES TO THE HALF-YEARLY FINANCIAL STATEMENTS (UNAUDITED)
1. ACCOUNTING POLICIES
A. Basis of preparation
PIP is a listed public limited company incorporated in England and Wales.
The Company applied United Kingdom Accounting Standards, including FRS 102
'The standard applicable in the United Kingdom and Ireland' ("FRS 102") and
the Association of Investment Companies ("AIC") Statement of Recommended
Practice ("SORP") for its financial period ended 31 May 2024 in its Financial
Statements. The financial statements for the six months to 30 November 2024
have therefore been prepared in accordance with FRS 104 "Interim Financial
Reporting". The condensed financial statements have been prepared on the same
basis as the accounting policies set out in the statutory accounts for the
period 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 financial information contained in this report has been prepared in
accordance with the SORP for the financial statements of investment trust
companies and venture capital trusts issued by the AIC (issued in April 2021),
other than where restrictions are imposed on the Company which prohibit
specific disclosures.
The financial information contained in this Interim Report and Accounts and
the comparative figures for the financial year ended 31 May 2024 are not the
Company's statutory accounts for the financial period as defined in the
Companies Act 2006. The financial information for the half-year periods ended
30 November 2024 and 30 November 2023 are not for a financial year and have
not been audited but have been reviewed by the Company's auditors and their
report can be found above. The Annual Report and Financial Statements for the
financial period ended 31 May 2024 have been delivered to the Registrar of
Companies. The report of the auditors was: (i) unqualified; (ii) did not
include a reference to any matters which the auditors drew attention by way of
emphasis without qualifying the report; and (iii) did not contain statements
under section 498 (2) and (3) of the Companies Act 2006.
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 30 November
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, decreased
investment distributions, and increased call rates, the worst being a downside
case 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 30 November 2024 stood at £314m (30 November 2023:
£389m; 31 May 2024: £414m), comprising £21m (30 November 2023: £24m; 31
May 2024: £16m) in available cash balances and £293m (30 November 2023:
£365m; 31 May 2024: £398m) in undrawn, sterling equivalent, bank facilities.
· PIP's 30 November 2024 valuation is primarily based on reported
general partner ("GP") valuations with a reference date of 30 September 2024,
updated for capital movements and foreign exchange impacts.
· The Directors considered the level of unfunded commitments, PIP's
unfunded commitments at 30 November 2024 were £759m (30 November 2023:
£761m; 31 May 2024: £789m). 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 Directors considered the impact of share buybacks and the
Company's Capital Allocation Policy on available liquidity.
· 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 investment business. Consequently, no business
segmental analysis is provided.
2.Tax on ordinary activities
The tax charge for the six months to 30 November 2024 is £1.9m (six months to
30 November 2023: £1.7m; year to 31 May 2024: £3.0m). The tax charge wholly
comprises irrecoverable withholding tax suffered.
Investment gains are exempt from capital gains tax owing to the Company's
status as an investment trust.
3. Transactions with the Manager and related parties
During the six-month period ended 30 November 2024, services with a total
value of £13,880,000, being £13,451,000 directly from Pantheon Ventures (UK)
LLP and £429,000 (30 November 2023: £14,419,000; £12,573,000; and
£1,846,000; year to 31 May 2024: £28,501,000; £25,674,000 and £2,827,000
respectively) via Pantheon managed fund investments were purchased by the
Company.
At 30 November 2024, the amount due to Pantheon Ventures (UK) LLP in
management fees and performance fees disclosed under creditors was £2,310,000
and £nil respectively (30 November 2023: £4,130,000 and £nil respectively;
31 May 2024: £2,280,000 and £nil respectively).
Fees paid to the Company's Board of Directors for the six months to 30
November 2024 totalled £184,000 (six months to 30 November 2023: £175,000;
year to 31 May 2024: £360,000). At 30 November 2024, the amount payable in
Directors' fees disclosed under creditors was £57,000 (30 November 2023:
£62,000; 31 May 2024: £62,000).
There are no other identifiable related parties at the period end.
4. Performance fee
The Manager is entitled to a performance fee from the Company in respect of
each 12-month month period ending on 31 May in each year and, prior to 31 May
2017, the period of 12 calendar months ending 30 June 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 ("NAV") at the end of such period
exceeds 110% of the applicable "high-water mark", i.e. the NAV 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 six-month calculation period ended 30 November 2024, the
notional performance fee hurdle is a NAV per share of 627.30p. The performance
fee is calculated using the adjusted NAV.
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 of the following:
· 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
· Any other reduction in the Company's share capital or any
distribution to shareholders
No performance fee has been paid or accrued during the period.
5. Bank Loan
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. The facility structure was:
· Facility A: £400m expiring in October 2026; and
· Facility B: £100m expiring in October 2024.
On 28 October 2024, the Company announced that it had agreed to extend the
Loan Facility which was due to expire in October 2026, by a further two years.
Following the extension, the Loan Facility has a four-year tenor and a new
maturity date of October 2028. The Loan Facility is now a £400m equivalent
commitment, with the flexibility to be increased to £700m under the existing
structure. Facility B expired in October 2024.
The facility structure is as follows:
· Facility A1: £300m, expiring in October 2028; and
· Facility A2: £100m, expiring in October 2028.
Both A1 and A2 have an ongoing option to extend, by agreement, the maturity
date by 364 days at a time. 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%. The
Loan Facility is subject to market standard loan-to-value and liquidity
covenants.
The Loan Facility had a sterling equivalent value of £409.0m as at 30
November 2024, at which point the Company had drawn down £115.7m split
£85.8m through Facility A1 and £29.9m through Facility A2.
6. Asset Linked Note ("ALN")
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 flow from a reference portfolio which comprises
interests held by PIP in over 300 of its oldest private equity funds,
substantially 2006 and earlier vintages. PIP retains the net cash flow
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. The Directors do not
believe there to be a material own credit risk, due to the fact that
repayments are only due when net cash flow is received from the reference
portfolio. 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
which is equivalent to the amount which would be required to be repaid had the
ALN matured on 30 November 2024. Therefore no fair value movement has occurred
during the period as a result of changes to credit risk.
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 in the Income Statement.
The ALN's share of net cash flow is calculated after withholding taxation
suffered. These amounts are deducted from Taxation in the Income Statement.
During the six months to 30 November 2024, the Company made repayments
totalling £0.8m, representing the ALN share of the net cash flow for the
three-month period to 31 May 2024 and three-month period to 31 August 2024.
The fair value of the ALN at 30 November 2024 was £26.9m, of which £0.8m
represents the net cash flow for the three months to 30 November 2024, due for
repayment on 28 February 2025.
During the six months to 30 November 2023, the Company made repayments
totalling £2.1m, representing the ALN share of the net cash flow for the
three-month period to 31 May 2023 and three-month period to 31 August 2023.
The fair value of the ALN at 30 November 2023 was £31.0m, of which £1.3m
represents the net cash flow for the three months to 30 November 2023, due for
repayment on 29 February 2024.
During the year to 31 May 2024, the Company made repayments totalling £4.7m,
representing the ALN share of the net cash flow for the year to 28 February
2024. The fair value of the ALN at 31 May 2024 was £30.8m, of which £0.4m
represents cash flows for the three months to 31 May 2024, due for repayment
on 31 August 2024.
7. Private Placement Loan Notes
The Company has Private Placement debt, in the form of loan notes totalling
USD$150m, which were placed on 1 February 2024, with interest payable to the
loan note holders on a six-monthly basis. The loan notes have been structured
over different maturities of five, seven and ten years with varying coupon
rates, revalued as follows:
USD$'000 30 November 2024 30 November 2023 31 May 2024
£'000 £'000 £'000
Tranche A (USD) 6.36%. 52,500 41,311 - 41,238
1 February 2029
Tranche B (USD) 6.53%. 67,500 53,114 - 53,020
1 February 2031
Tranche C (USD) 6.65%. 30,000 23,606 - 23,565
1 February 2034
150,000 118,031 - 117,823
8. Called-up share capital
30 November 2024 30 November 2023 31 May 2024
Allocated, called up and fully paid: Shares £'000 Shares £'000 Shares £'000
Ordinary shares of 67p each
Opening position 465,613,611 31,196 529,893,457 35,503 529,893,457 35,503
Ordinary shares bought back for cancellation in the market (3,988,292) (267) (2,671,474) (179) (15,099,519) (1,012)
Ordinary shares bought back for cancellation via Tender Offer - - (49,180,327) (3,295) (49,180,327) (3,295)
Closing position in issue 461,625,319 30,929 478,041,656 32,029 465,613,611 31,196
Total shares in issue 461,625,319 30,929 478,041,656 32,029 465,613,611 31,196
On 3 August 2023, upon publication of its annual results for the year ended 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) 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 period to 30 November 2024, 3,988,292 ordinary shares were bought
back by the Company for cancellation at a total cost, including stamp duty, of
£12.8m.
During the period to 30 November 2023 and in addition to the Tender Offer,
2,671,474 ordinary shares were bought back by the Company for cancellation at
a total cost, including stamp duty, of £7.4m. In total, during the period to
30 November 2023, the Company acquired, for cancellation, 51,851,801 shares.
During the period to 31 May 2024 and in addition to the Tender Offer,
15,099,519 ordinary shares were bought back by the Company for cancellation at
a total cost, including stamp duty, of £47.0m.
As at 30 November 2024, there were 461,625,319 ordinary shares in issue (30
November 2023: 478,041,656 ordinary shares; year to 31 May 2024: 465,613,611
Ordinary Shares).
9. Return per share
Six months to 30 November 2024 Six months to 30 November 2023 Year to 31 May 2024
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Return for the financial period £'000 (18,478) 63,300 44,822 (11,261) (2,544) (13,805) (28,047) 59,696 31,649
Weighted average number of ordinary shares 463,573,364 516,456,314 494,296,359
Return per share (3.98)p 13.65p 9.67p (2.18)p (0.49)p (2.67)p (5.68)p 12.08p 6.40p
There are no dilutive shares in issue in any period.
10. Net asset value (NAV) per share
30 November 2024 30 November 2023 31 May 2024
Net assets attributable in £'000 2,315,680 2,277,820 2,283,641
Ordinary shares in issue 461,625,319 478,041,656 465,613,611
NAV per share 501.64p 476.49p 490.46p
11. Reconciliation of return before financing costs and taxation to net cash
flow from operating activities
Six months to Six months to Period to
30 November 2024 30 November 2023 31 May 2024
£'000 £'000 £'000
Return/(loss) before finance costs and taxation 56,965 (7,243) 47,733
Withholding tax deducted (1,854) (1,702) (3,033)
Gains/(losses) on investments (61,629) 4,848 (60,324)
Currency losses/(gains) on cash and borrowings 1,104 (4,229) (5,491)
(Decrease)/increase in creditors (203) 1,851 205
(Increase)/decrease in other debtors (71) (33) 111
(Reductions)/gains on financial liabilities at fair value through profit or (2,774) 839 3,420
loss - ALN
Expenses and taxation associated with ALN (267) (254) (475)
Net cash outflow from operating activities (8,729) (5,923) (17,854)
Reconciliation of net cash/(debt) Six months to Six months to Year to
30 November 2024 30 November 2023 31 May 2024
£'000 £'000 £'000
Reconciliation of net cash flow
to movement in net debt
Increase/(decrease) in cash 1,133 (37,288) (44,024)
Net cash inflow from loans (31,126) (125,000) (88,471)
Cash inflow from private placement - - (118,274)
loan notes
Change in net debt resulting from cash flows (29,993) (162,288) (250,769)
Foreign exchange movements (1,132) 4,229 5,505
Movement in net debt (31,125) (158,059) (245,264)
Net (debt)/cash at start of period/year (179,221) 66,043 66,043
Net (debt)/cash at end of period/year (210,346) (92,016) (179,221)
Analysis in changes in net debt Foreign exchange 30 November
1 June 2024 Cashflows movements 2024
£'000 £'000 £'000 £'000
Cash and cash equivalents 21,863 1,133 359 23,355
Debt due within one year
- Bank loan (83,261) 81,034 2,227 -
Debt due after more than
one year
- Bank loan - (112,160) (3,510) (115,670)
- Private placement (117,823) - (208) (118,031)
loan notes
(201,084) (31,126) (1,491) (233,701)
Net debt (179,221) (29,993) (1,132) (210,346)
12. Fair Value Hierarchy
(i) Unquoted fixed asset investments are stated at the estimated fair value
Unquoted investments are valued in accordance with the International Private
Equity and Venture Capital Valuation ("IPEV") Guidelines. In the case of
investments in private equity funds, this is based on the NAV 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 NAV 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 better 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.
(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 compared with the value
of those holdings at the period end.
All investments are initially recognised and subsequently measured at fair
value. Changes in fair value are recognised in the Income Statement.
(iii) 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
· 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)
· Level 3 - Inputs are unobservable (i.e., for which market data is
unavailable) for the asset or liability
In accordance with FRS 104, the Company must disclose the fair value hierarchy
of financial instruments.
Financial assets at fair value through profit or loss at 30 November 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Unlisted holdings - - 2,551,834 2,551,834
Listed holdings 2,752 - - 2,752
Total 2,752 - 2,551,834 2,554,586
Financial liabilities at fair value through profit or loss at 30 November 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Asset Linked Note - - 26,929 26,929
Total - - 26,929 26,929
Financial assets at fair value through profit or loss at 30 November 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Unlisted holdings - - 2,400,933 2,400,933
Listed holdings 3,307 - - 3,307
Total 3,307 - 2,400,933 2,404,240
Financial liabilities at fair value through profit or loss at 30 November 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Asset Linked Note - - 30,984 30,984
Total - - 30,984 30,984
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
Total 2,585 - 2,495,920 2,498,505
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
Total - - 30,815 30,815
13. Post balance sheet event
There are no Post Balance sheet events to report.
NATIONAL STORAGE MECHANISM
A copy of the Half-Yearly Financial Report 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) .
Ends
LEI: 2138001B3CE5S5PEE928
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