Activist Saba Capital has increased the pressure on Pantheon International (PIN) to do more to narrow its 29% share price discount by taking a 5% stake in the £1.5bn listed private equity fund.
A filing on Friday showed the hedge fund held 5.08% of voting rights in Pantheon Ventures’ flagship, most of it held through swap derivatives.
Boaz Weinstein, Saba’s founder and chief investment officer, said he had urged PIN to make a disposal to generate cash for more buybacks and demonstrate the validity of its valuations.
Speaking at an event in London reported by Citywire, Weinstein said he encouraged its board to “make a sale in the market of a private equity fund that people really want, at a 10% discount, at 15% discount, take that cash and buy back their stuff”.
Weinstein may be pushing on an open door. PIN, which invests around half its assets in third party private equity funds and half in direct co-investments in unquoted companies, announced in annual results in July that it would take a more “dynamic” approach to portfolio management. This would include “sales of investments into the secondary market”. None has been announced so far.
Despite buying back over £270m shares on buybacks, which it recently increased by £30m, it has continued to trade on a big gap to net asset value (NAV) with the market apparently not yet convinced that a planned advertising blitz will be sufficient.
The valuation gulf between the shares and the portfolio run by Charlotte Morris and Helen Steers means that shareholders have received a total return of 57% in the past five years, compared to the 70% underlying return from its investments.
PIN’s underlying valuations have been proved to be conservative, however. Although the distribution rate from fund managers selling investments remained below average in the year to 31 May, it gained an average uplift of 25% on company investments that were sold by its external managers, while only 0.4% of opening NAV was written off.
PIN is not Pantheon’s only listed investment company. It also runs the £487 Pantheon Infrastructure (PINT) whose shares stands on a 15% discount.
Saba, which burst on to the UK investment trust scene last December in an attempt to oust the boards of seven listed funds, holds stakes in dozens of investment companies. In the past three months it has expanded its interests beyond equity funds to take positions in other alternative asset funds, including SDCL Energy Efficiency (SEIT), Life Science Reit (LABS), Gore Street Energy Storage (GSF), Molten Ventures (GROW) and RTW Biotech (RTW).
