Pantheon to combine share classes – Pantheon International plans to effect the consolidation of its ordinary and redeemable share capital into a single class of ordinary shares. The Proposals include the issue of an unlisted Asset Linked Note (the “ALN”) to the largest holder of Pantheon’s redeemable shares in exchange for part of its shareholding. The Board believes that the proposals benefit the company and all its shareholders, both in terms of improved investment prospects and increased share liquidity.
The key features of the Proposals are as follows:
- The consolidation will be effected through a reorganisation whereby redeemable shares will be converted into ordinary Shares on a one-for-one basis.
- Prior to the consolidation, the investor who is getting the ALNs will surrender the equivalent (on an NAV basis) of GBP200m worth of its redeemable shares in exchange for an ALN with an initial principal amount of GBP200m
- The ALN will be linked to the performance of a portfolio of more than 300 different fund interests in PIP’s oldest private equity funds (substantially comprising 2006 and earlier vintages). Historically, younger funds in PIP’s portfolio have outperformed those funds aged 10 years and older
- The Investor will convert the balance of its redeemable shares into new ordinary Shares, and is expected to be among the ten largest ordinary shareholders in the company following implementation of the proposals
- The proposals will require the approval of the shareholders and the separate approvals of both holders of redeemable shares and ordinary shares. The Investor will abstain from voting at the class meeting of the holders of redeemable shares
A circular is expected to be published in early October setting out full details of the Proposals and convening the shareholder meetings to vote on the Proposals.
Commenting on the Proposals, Sir Laurie Magnus, Chairman, said: “The Board has been seeking a way to simplify the dual share capital structure of PIP for some time and it is aware that many of the Company’s existing and potential shareholders share its belief in the benefits of consolidating the two share classes. It is the Board’s view that the proposed solution will benefit both the Company and all its shareholders by simplifying the capital structure, as well as reducing the Company’s exposure to its lower performing tail portfolio. In addition, shareholders should benefit from the increased secondary market liquidity of the enlarged Ordinary Share class and from the Company’s greater freedom to enhance shareholder returns over the long term through share buybacks.”
The ALN is expected to mature on 31 August 2027. As investments held against the ALN are realised, cash will be used to redeem the ALN on a quarterly basis.
The proposals are neutral in terms of their impact on current NAV per share, excluding the costs incurred in connection with the Proposals, which are expected to amount to less than 4p per share. The Investor will absorb its share of the costs and will continue to bear its proportionate share of the management costs in relation to the reference portfolio for the life of the ALN.
By simplifying the capital structure, the Board believes that the consolidation will improve secondary market liquidity in the ongoing enlarged single share class and better reflect the scale of the company’s operations, increasing the likelihood of Pantheon’s inclusion in the 250 Index and boosting its market profile. The Board will also have greater flexibility to conduct share buybacks for the benefit of shareholders as a whole.
The issue of the ALN is equivalent to an effective reduction of the weighted average fund age of PIP’s pro forma portfolio as at 31 May 2017 from 6.7 years to c.5.8 years and will de-emphasise the tail portfolio without a material negative initial impact on the NAV per share.
PIN / PINR : Pantheon to combine share classes