Pantheon International’s results for its financial year ended 31 May 2022 are very good. The NAV total return for the period was 31.0%, well ahead of the 7.8% return posted by the MSCI World Index. However, discount widening left shareholders with a return of 8.6%.
The trust’s returns were boosted by weak sterling. However, even in local currency terms, the portfolio returned 26%.
The weighted average uplift from fully realised exits was 42% – demonstrating the conservative nature of the NAV – and the average ratio of exit price to cost 3.1 times.
The gains were driven by the highest ever level of distributions of £419m during the financial year, equivalent to a distribution rate of 25% of the opening attributable portfolio, resulting from realisations primarily to strategic buyers and to other private equity managers. After funding £187m of calls, this resulted in record net cash inflow from the portfolio of £232m.
During the year, the trust made commitments to 70 investments for a total of £496m, comprising £262m to 25 primary funds, £123m to 30 co-investments and £111m to 15 secondaries with the latter including a £55.6m (US$ 75.0m) top-up commitment to the Pantheon Secondary Opportunity Fund, which is focused on manager-led single-asset secondaries, a sub-segment of the secondaries market that typically comprises prized businesses in private equity funds portfolios which the managers know well and believe have excellent potential to grow in value beyond the life of their fund. Nine such investments were completed during the period.
Following a deliberate effort to increase the concentration of the portfolio, by increasing its allocations to co-investments and single-asset secondaries, approximately 45% of the trust’s portfolio was invested directly in companies at the end of the period.
Cash on hand of £227m plus available credit facilities which are now £500m is set against undrawn commitments of £755m.
The unlisted Asset Linked Note is now just £39m. While it is due to mature on 31 August 2027, it is continuing to be repaid from cash distributions received as a portfolio of older investments matures.
Tackling the discount
The board says that it remains disappointed with the discount and considers the current elevated level relative to the value and prospects of its portfolio to be unwarranted. Accordingly, it intends to buy back shares actively to enhance shareholder returns, while optimising long-term capital growth within a balanced portfolio in line with its investment policy.
In addition, the board has initiated with Pantheon a concerted marketing effort to promote the contribution that the trust can provide to an investor’s portfolio and thereby attract new investors. This has included the recent appointment of a new PR agency, a refresh of the website and capital markets events planned for the autumn. The board believes that private equity is under-owned in many investors’ portfolios and that the trust is an ideal solution for shareholders who thereby benefit from the liquidity available through a listed company.
PIN : Pantheon will battle discount with buybacks