TIDMPINT
RNS Number : 7527N
Pantheon Infrastructure PLC
27 September 2023
27 September 2023
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PANTHEON INFRASTRUCTURE PLC
Results for the period ended 30 June 2023
The Directors of the Company are pleased to announce the
Company's half year results for the period ended 30 June 2023. The
full unaudited annual report and unaudited condensed financial
statements can be accessed via the Company's website at
www.pantheoninfrastructure.com or by contacting the Company
Secretary by telephone on +44 (0)1392 477 500.
HIGHLIGHTS:
-- Net Asset Value (NAV) of GBP484 million, 101.0p per share as
at 30 June 2023 (98.9p as at 31 December 2022), representing a NAV
total return of 3.1% since 31 December 2022, accounting for the
dividend of 1 pence per share paid in the period to 30 June
2023.
-- By the end of the period to 30 June 2023, the Company had
invested or committed GBP423 million across 12 investments, in line
with deployment timetable outlined at IPO
-- Two investments were made during the period: GBP42 million
was committed to the European telecoms towers operator GD Towers,
and GBP20 million was committed to pan-Nordic fibre operator
GlobalConnect
-- After the period end a further GBP35 million was committed to
Zenobe, a UK-based battery storage and electric vehicle fleet
specialist, adding to PINT's renewables & energy efficiency
allocation
-- Interim dividend of 2 pence per share declared in respect of
the period covering H1 of 2023, in line with guidance. The dividend
will be paid on 27 October 2023
-- Target of 4 pence per share in respect of the financial year
ending 2023 with a progressive dividend policy thereafter
-- On 31 March 2023, the Board announced the commencement of a
programme to buy back shares up to a total consideration of GBP10
million. As at 30 June 2023, the Company had repurchased 1,185,000
shares for a total consideration of GBP979,000
-- The Company's revolving credit facility was extended by a
further GBP52.5 million, through the addition of Royal Bank of
Scotland International Limited, to provide additional working
capital liquidity and support further investment
-- PINT's portfolio of high-quality infrastructure assets has
been further diversified through its low-cost, co-investment model,
which provides access to opportunities not normally available to
public market investors
-- The Company continues to review a robust pipeline of opportunities
-- PINT published its inaugural Sustainability Report, covering
the period up to 31 December 2022, in September 2023
The portfolio comprises assets in the following sectors:
Digital; including data centres, fibre networks and telecom towers;
Power & Utilities, including electricity generation, gas
transmission and district heating; Renewables & Energy
Efficiency, including critical electricity infrastructure and
metering alongside battery storage and e-mobility; and Transport
& Logistics, specifically in the cold storage logistics
sector.
Vagn Sørensen, Chair, Pantheon Infrastructure Plc, said: "
I am pleased to present the interim report for Pantheon
Infrastructure Plc for the six-month period to 30 June 2023. This
is the second
interim report since the Company's launch, and it is pleasing to
see the progress of the Company in deploying its funds into a
diversified
portfolio of high-quality infrastructure assets, generating
dividends in line with its pre-IPO target and positive NAV total
returns. I would like to thank shareholders for their continued
support."
Richard Sem, Partner at Pantheon Ventures, PINT's investment
manager, said:
"PINT continues to build out its strong, diversified portfolio
and we remain optimistic about the future growth potential of our
assets. The portfolio's focus on sub-sectors which benefit from
long-term tailwinds - such as the path to net zero and the
increased global requirement for digital infrastructure - provides
a solid backdrop for PINT's investments going forward. As an asset
class, infrastructure continues to benefit from downside protection
and inflation-linkage, which is especially important in uncertain
times. The team remains excited about PINT's investment prospects
and believe we are well positioned to help deliver the for our
investors."
Ends
For further information, contact:
Pantheon Ventures (UK) LLP +44 (0) 20 3356 1800
Investment Manager pint@pantheon.com
Richard Sem, Partner
Ben Perkins, Principal
Harriet Alexander, Vice President
Investec Bank plc
Corporate Broker
Tom Skinner (Corporate Broking)
Lucy Lewis, Denis Flanagan (Corporate
Finance) +44 (0) 20 7597 4000
TB Cardew +44 (0) 20 7930 0777
Public relations advisor pint@tbcardew.com
Ed Orlebar +44 (0)7738 724 630
Tania Wild +44 (0)7425 536 903
Henry Crane +44 (0)7918 207157
Notes to editors
Pantheon Infrastructure PLC (PINT)
Pantheon Infrastructure PLC is a closed-ended investment company
and an approved UK Investment Trust, listed on the Premium Segment
of the London Stock Exchange's Main Market. Its Ordinary Shares
trade under the ticker 'PINT'. The independent Board of Directors
of PINT have appointed Pantheon, one of the leading private markets
investment managers globally, as investment manager. PINT aims to
provide exposure to a global, diversified portfolio of high-quality
infrastructure assets through building a portfolio of direct
co-investments in infrastructure assets with strong defensive
characteristics, typically benefitting from contracted cash flows,
inflation protection and conservative leverage profiles.
Further details can be found at
www.pantheoninfrastructure.com
LEI 213800CKJXQX64XMRK69
Pantheon
Pantheon is a leading global private markets specialist with
dedicated strategies across private equity, real assets and private
credit, with 40 years' experience sourcing and executing investment
opportunities on behalf of clients. Pantheon manages or advises on
US$93.4 billion of assets (as at 31 March 2023) and employs more
than 460 staff, including around 140 investment professionals,
across offices in London, San Francisco, New York, Chicago, Hong
Kong, Seoul, Bogotá, Tokyo, Dublin, Berlin and a presence in Tel
Aviv.
Further details can be found at www.pantheon.com .
PANTHEON INFRASTRUCTURE PLC
Access to high-quality global infrastructure assets
Interim report
30 June 2023
Purpose
Our purpose is to provide investors of all types with easy and
immediate access to a diversified portfolio of high-quality
infrastructure assets via a single vehicle, offering both a regular
dividend payment and targeting capital growth.
This portfolio, which is diversified by sector and geography, is
designed to generate sustainable attractive returns over the long
term. We achieve this by targeting assets which have strong
environmental, social and governance (ESG) credentials, and
underpin the transition to a low -- carbon economy. We invest in
private assets which we believe will benefit from strong downside
protection through inflation linkage and other defensive
characteristics.
About us
Pantheon Infrastructure Plc (the 'Company' or 'PINT') is a
closed-ended investment company and an approved UK investment
trust, listed on the Premium Segment of the London Stock Exchange's
Main Market.
PINT provides exposure to an international, diversified
portfolio (the 'Portfolio') through direct co -- investments in
high -- quality infrastructure assets with strong defensive
characteristics, typically benefiting from contracted cash flows,
inflation protection and conservative leverage profiles. PINT
targets assets which have strong ESG credentials, which includes
projects that support the transition to a low -- carbon economy.
The Portfolio focuses on assets benefiting from long -- term
secular tailwinds. The Company is overseen by an independent Board
of non -- executive Directors and managed by Pantheon Ventures (UK)
LLP ('Pantheon'), a leading multi-strategy Investment Manager in
infrastructure and real assets, private equity, private debt and
real estate.
Highlights
At a glance as at 30 June 2023
Invested capital:
GBP458m(1)
Net asset value (NAV):
GBP484m
Interim dividend per share:
2p
Market cap:
GBP383m
NAV per share:
101.0p
1. This refers to the capital committed to assets which, at 30
June 2023, were invested, committed or in legal closing. Invested
assets represent the fair value of those that had reached financial
close and had been, or were in the process of being, funded, and
includes small amounts reserved for follow -- on investments;
committed assets represent those which were announced but remained
subject to final financial close; and in legal closing assets
represent those which were not yet announced but were in the final
stages of legal closing. There is no guarantee that commitments
subject to legal closing will be closed. As at 30 June 2023, GBP423
million of capital was committed to assets, with a further GBP35
million in legal closing.
Why invest in PINT
The Company is building an international portfolio of
investments with blended risk/return profiles, in line with targets
across deal types, sectors and geographies for diversification.
1. Unique access to private infrastructure co -- investment assets
Pantheon, PINT's Investment Manager, has a large and global
infrastructure network
The Company is building an international portfolio of
investments in line with targets across deal types, sectors and
geographies to achieve diversification. PINT invests in
infrastructure assets via co -- investments alongside highly
experienced general partners ('Sponsors'), typically on a
management fee and carried interest free basis.
This is attractive for several reasons, including:
Unique opportunities
PINT provides investors with the opportunity to access
Pantheon's substantial deal flow from its extensive network of blue
-- chip infrastructure investors. These opportunities arise because
Pantheon's wider Infrastructure platform invests directly into
Sponsors' funds and secondary transactions. As a trusted investor
of scale, Pantheon then gains access to Sponsors' co-investment
deal flow.
Liquid access to illiquid markets
There are fewer public market infrastructure opportunities to
access private infrastructure assets, as infrastructure companies
often remain private for long periods of time and are structured in
longer-tenured vehicles which are aimed at institutional investors
only. Investing in PINT provides immediate access to high --
quality co -- investment infrastructure assets not normally
accessible to public market investors more broadly, both
institutional and retail.
Portfolio construction
Pantheon uses co -- investments to select individual assets to
gain exposure to, and tilt the Portfolio towards, sectors based on
the Investment Manager's view on relative value. This leads to the
creation of a global and diversified portfolio, with the ability to
focus on major investment and economic tailwinds.
Cost-effective access
The use of co -- investments can reduce the overall expense
ratio and gross -- to -- net performance spread of a portfolio, as
most deals are offered with no ongoing management fee or carried
interest charged by the Sponsor.
Sponsor specialisation
Pantheon, on behalf of PINT, is able to choose deals alongside a
Sponsor with a distinct edge who may be best placed to create value
in that particular sub -- strategy.
ESG
Through the Manager, PINT looks to partner with Sponsors that
have demonstrated strong capabilities in managing ESG risks and
will actively engage with the Manager where it identifies areas of
concern. Pantheon has developed a bespoke ESG due diligence
process, which utilises an in-house tool (an ESG scorecard) in
addition to consultation with an external ESG specialist, which
utilises a range of different data ESG sources. For more
information, please refer to the ESG section on p 38 to 42 of the
Interim Report to 30 June 2023.
2. Favourable defensive long -- term characteristics
Infrastructure assets can offer reliable income streams with
inflation protection
Infrastructure assets combine a range of attractive
characteristics for long -- term investors. Distinctively,
infrastructure may mitigate the adverse effects of rising inflation
and may provide an income -- generating investment outside
traditional fixed income. Infrastructure assets may also provide
embedded value and downside protection across market cycles given
the regulated and contracted nature of many of the underlying cash
flows.
Infrastructure assets may provide a range of attractive
investment attributes, including the following:
Stable cash flow profile
Infrastructure may provide a compelling, stable distribution
profile similar to traditional fixed income, but backed by tangible
assets. These infrastructure assets often offer reliable income
streams governed by regulation, hedges or long -- term contracts
with reputable counterparties.
Inflation hedge
Infrastructure investments can provide a natural hedge to rising
inflation, as many sub -- sectors have contracts with explicit
inflation -- linkage or implicit protection through regulation or
market position. The majority of PINT's assets have explicit
inflation-linkage or implicit protection through regulation or
market position.
Embedded downside protection
The vital role that many infrastructure sub -- sectors play in
our daily lives can make them an innately defensive investment. The
tangible nature of infrastructure investments can provide a basis
for liquidation and recovery value in downside cases. Furthermore,
infrastructure investing is generally focused on gaining exposure
to assets in a monopolistic or duopolistic market which, with high
upfront costs, can be a barrier to entry for new participants.
Investments typically have long-term contracts with price
escalators or inflation-linkage with high -- quality
counterparties, which offers further downside protection. Finally,
high friction costs tend to discourage customers from switching
providers, which can provide a stable and long-term customer
base.
Diversification
Infrastructure can be a valuable portfolio diversifier alongside
traditional and alternative investments. Historically, listed
infrastructure returns have been only moderately correlated to
traditional asset classes. The sub -- sectors within the
infrastructure universe and the drivers of such sub -- sector
returns tend not to be correlated with one another.
3. Access to secular trends
PINT continues to develop its diversified Portfolio across
sectors that benefit from secular trends
Pantheon has taken and continues to take a disciplined approach
to PINT's strategy to construct an internationally diversified
portfolio with exposure across sub -- sectors and geographies,
while maintaining the flexibility to tilt exposures based on
opportunities which may present compelling relative value. The
Company has built an international portfolio of investments with
blended risk/return profiles, in line with targets across deal
types, sectors and geographies for diversification. Please refer to
page 30 of the Interim Report to 30 June 2023 for more detail
Digital Infrastructure
44%(1)
Data centres, fibre networks and towers
Power & Utilities
25%(1)
Energy utilities, water and conventional power
Renewables & Energy Efficiency
16%(1)
Wind, solar, sustainable waste and smart infrastructure
Transport & Logistics
9%(1)
Ports, rail and road, airports and e-mobility
1. Proportion of gross assets of GBP485.6 million at 30 June
2023. Includes assets which, at 30 June 2023, were invested,
committed or in legal closing. Figures do not total to 100% because
of uncommitted cash totalling 6% of gross assets.
4. PINT seeks to generate attractive risk -- adjusted returns
Targeting capital growth and dividend returns
The Company seeks to generate attractive risk -- adjusted total
returns for shareholders over the longer term. This comprises
capital growth with a progressive dividend, through the acquisition
of equity or equity -- related investments in a diversified
portfolio of infrastructure assets with a primary focus on
developed OECD markets.
The Company is targeting a NAV Total Return per share of 8 --
10% per annum.
8 -- 10% p.a.(1)
Target NAV Total Return per share
2p per share(2)
Interim 2023 dividend
4p per share(3)
Target 2023 dividend, progressive thereafter
1. NAV Total Return per share is defined as the growth in NAV
per share, together with all distributions (of an income or capital
nature) paid in respect of such share.
2. Interim dividend of 2 pence per share declared in relation to H1 2023.
3. The Company is targeting a dividend of 4 pence per share for
the year ending 31 December 2023 and, thereafter, a progressive
dividend.
PINT at a glance
Thirteen infrastructure co -- investment assets(1)
Geographic diversification(1)
Europe | 41%
North America | 37%
UK | 16%
Uncommitted | 6%
Sector diversification(1)
Digital Infrastructure | 44%
Power & Utilities | 25%
Renewables & Energy Efficiency | 16%
Transport & Logistics | 9%
Uncommitted | 6%
1. Based on assets invested, committed and in legal closing at 30 June 2023.
North America
CyrusOne
Cartier Energy
Calpine
Vantage Data Centers
Vertical Bridge
United Kingdom
National Gas
Zenobe(2)
Nordic
GlobalConnect(1)
Netherlands
Delta Fiber
Fudura
Ireland
National Broadband Ireland
Spain
Primafrio
Germany/Austria
GD Towers
1. Committed but not funded at 30 June 2023
2. In legal closing at 30 June 2023
Chair's statement
Introduction
I am pleased to present the interim report for Pantheon
Infrastructure Plc for the six-month period to 30 June 2023. This
is the second interim report since the Company's launch, and it is
pleasing to see the progress of the Company in deploying its funds
into a diversified portfolio of high-quality infrastructure assets,
generating dividends in line with its pre-IPO target and positive
NAV total returns.
During the first half of the year, the Company's NAV per share
grew 2.1p to 101.0p. Accounting for dividends of 2p per share paid
in the period to 30 June 2023, this represents a NAV total return
of 3.1% since 31 December 2022. I am also pleased to declare an
interim dividend payment of 2p per share for the half year ended 30
June 2023, payable on 27 October 2023.
Economic environment
The reporting period and subsequent months have been
characterised by further economic uncertainty. Most of the
developed economies in which we invest have so far avoided
recessions that were widely expected in the first half of this
year. Market sentiment appears to foresee a soft rather than hard
landing. However, inflation has proved stickier than many central
banks, perhaps most notably the Bank of England, had anticipated,
with ensuing interest rate rises bringing additional challenges to
the market.
The relative resilience of the global economy can be attributed
to several supply and demand-side drivers to growth (such as excess
savings from the pandemic and low unemployment), and because the
full effect of monetary tightening to combat inflation is taking
its time to feed through where either mortgage rates are fixed or
mortgage penetration is low. From a macroeconomic perspective,
there are still risks to the downside although the pace of interest
rate hikes, led by the US Federal Reserve, is slowing. We can now
say with relative confidence that the era of lower-for-longer
interest rates and easy money policy has come to an end.
Investor sentiment and discount management
Rising interest rates, bond and gilt yields have led to a
reassessment and rebalancing of investment portfolios by many
investors. With an increased risk-free rate and lacklustre
performance by equity markets (beyond the largest US tech --
focused names), some investors have sought to de-risk their
portfolios with a move to the perceived safety of fixed income.
Retail flows have been particularly affected by the increased cost
of living resulting from high inflation and significantly higher
mortgage servicing costs. As a result, individuals and families
have felt the squeeze and witnessed a reduction in surplus cash
that was previously available for savings and investment.
In this environment, demand for the shares of listed investment
trusts including the infrastructure sector and PINT has been
subdued. As at 30 June 2023, PINT's shares traded at a discount of
20.8% to NAV despite the performance of the underlying assets being
robust.
We believe that the current share price discount to NAV is
unjustified, as an investment in PINT offers a meaningful asset --
backed yield as well as capital growth and inflation protection
that cannot be achieved by an investment in bonds or gilts. A full
sensitivity analysis of the Portfolio to various economic factors,
including inflation, interest rates and valuation discount rates,
is set out in the Investment Manager's report on page 29 of the
Interim Report to 30 June 2023.
I would like to assure shareholders that the Board is not
complacent about the current level of discount and the impact on
your reported returns. Having set out our views relating to
discounts prior to the launch of the Company, we were quick to
react as the discount widened. On 31 March 2023, the Board
announced the commencement of a programme to buy back shares up to
a total consideration of GBP10 million.
The Board continues to believe that share buybacks completed
within the limits of this programme represent an attractive use of
shareholders' capital, whilst also retaining sufficient resources
to access the exciting pipeline of investment opportunities
available to the Company, and also ensuring its ongoing ability to
pay its target dividend and working capital costs.
As at 30 June 2023, the Company had repurchased 1,185,000 shares
for a total consideration of GBP979k, resulting in a NAV increase
of 0.04p per share. Since that date, the Company has repurchased a
further 3,650,000 shares for a consideration of GBP2.9 million,
resulting in a NAV increase of 0.18p per share. In total, the
Company has now repurchased 4,835,000 shares for GBP3.8 million
since the buyback programme was announced.
Portfolio deployment and diversification
As at 30 June 2023, the Company had invested in or committed to
twelve assets totalling GBP423 million, including GBP20 million
committed to the pan-Nordic data centre and fibre business
GlobalConnect, announced on 22 June 2023. A further commitment of
GBP35m was announced after the end of the reporting period on 7
September 2023 to invest in the grid scale battery storage and
electric vehicle (EV) fleet specialist Zenobe.
The addition of Zenobe further diversifies our Portfolio with
its focus on energy storage and EV mobility. The Portfolio
continues to be focused on diversification by geography, Sponsor
and across its key sectors: Power & Utilities; Digital
infrastructure (Fibre, Towers and Data Centres); Renewables &
Energy Efficiency; and Transport & Logistics.
The Company is substantially fully invested, after allowing for
required working capital and cash retentions, and an investment
into PINT gives an immediate exposure to a high-quality,
established and diversified Portfolio. Further details of the
Portfolio Companies and their diversification can be found in the
Investment Manager's report on page 30 of the Interim Report to 30
June 2023.
Revolving credit facility
In light of the progress deploying the Company's funds into its
Portfolio, the Board was pleased to announce on 7 June 2023 a
GBP52.5 million increase to its existing GBP62.5 million
multi-currency revolving credit facility ("RCF"), bringing the
total to GBP115 million. The increase in the RCF provides the
Company with an efficient and flexible way to cover its risk
buffers and working capital needs. It also gives us additional
liquidity to increase diversification through further investment in
high -- quality infrastructure assets from PINT's near-term
investment pipeline, where we continue to see compelling
opportunities. Such investment will only be considered where it is
materially accretive to shareholders in light of the current cost
of such borrowings and the Company is not expected to become highly
levered or the facility to be fully drawn.
Oversight of the investment process
Investment management is delegated to Pantheon by the Board.
Pantheon is responsible for reviewing, selecting and executing
investment opportunities for the Company. However, it is a vital
part of the Board's responsibilities to oversee these activities,
to ensure the investment process is robust, and that the
investments made are consistent with the aims and objectives of the
Company.
To that end, the Board was delighted to join members of
Pantheon's team on a site visit to Primafrio's Head Office and
major distribution centre in Murcia, Spain during the period.
Primafrio was the Company's first investment commitment, announced
a few months after our launch, and it was very pleasing to see the
progress that it continues to make in the development of existing
and new distribution centres and logistics infrastructure.
The Board, the Manager and our corporate brokers, Investec, met
with senior representatives from both Primafrio and Apollo, the
Sponsor partner on the transaction. The visit provided the Board
with valuable insight into and assurance regarding the Manager's
robust investment and underwriting processes, the strength of
relationships with Sponsors, and an example of the access to the
management teams of the Company's underlying assets accorded to the
Manager.
Through our oversight, such as this visit and regular meetings
with the Manager, the Board maintains comfort in the investment
process and the quality of the Company's Portfolio. As evidenced by
the continued NAV growth, these businesses are in aggregate
operating solidly and executing in line with the business plans on
which our investments were based.
Strategy
As it has done since launch, the Company seeks to generate
attractive risk-adjusted returns by constructing a diversified
portfolio of high-quality assets across the global infrastructure
investment universe. The Company focuses on assets that offer
downside and inflation protection, which is particularly relevant
in the current market environment. Leveraging Pantheon's extensive
14-year experience in infrastructure investing and its c.$21
billion infrastructure platform, PINT targets specific transactions
that Pantheon deems to be most attractive, notably opportunities in
businesses with strong operations and growth potential, in
sub-sectors benefiting from long-term positive trends and managed
by high-quality Sponsors.
Both the Board and Manager, however, remain alert to the
challenges in the current environment and there are several key
themes that we continue to believe are important in the current
environment:
Inflation: Despite policy intervention, inflation remains
elevated in many jurisdictions, albeit with some modest easing
recently. PINT's Portfolio is positively correlated against
inflation as many of its underlying cash flows are contractually
index-linked, or capture inflationary benefits through regulation
or market position. We believe that this inflation linkage makes
PINT attractive in comparison with asset classes such as gilts or
bonds.
Interest rates: Rates have risen to levels not seen since before
the Global Financial Crisis of 2008, with bond yields driving up
risk-free rates; however, transactional evidence is showing only
limited to modest increases in the discount rates used to value
privately held infrastructure assets. Financing in place for the
Portfolio Companies has generally been executed on favourable
terms, which mitigates this risk.
Global economic slowdown: Real GDP growth expectations have been
cut sharply, with global demand expected to weaken throughout 2023
as central bank intervention continues. GDP correlation and
leverage continue to be areas of key diligence focus when making
investments for PINT.
Governance and sustainability
The Board takes its responsibilities to its shareholders, in
accordance with good governance standards, very seriously, and we
continually strive to improve our oversight of the Company and its
transparency. During the period, we have had a particular focus on
ESG matters and sustainability.
To ensure sufficient focus on these matters, we have formally
created a new ESG and Sustainability Committee, which is chaired by
Andrea Finegan. Andrea has been a non-executive Director of the
Company since its launch and is an experienced infrastructure asset
management professional with over 30 years of sector experience,
performing a number of other board and advisory roles with an
emphasis on ESG outcomes.
PINT's ESG and Sustainability Committee has responsibility for:
agreeing, overseeing and monitoring the Company's ESG strategy; its
ESG reporting and disclosure; its ESG risk management (alongside
the Audit and Risk Committee); and ensuring effective stakeholder
engagement.
Under the oversight of this committee, the Company published its
inaugural Sustainability Report on 19 September 2023, providing
(among other things) further insight into the sustainability
characteristics of PINT's Portfolio and relevant emissions data.
The full report can be found on the Company's website
www.pantheoninfrastructure.com and a summary of the information can
be found on page 43 of the Interim Report to 30 June 2023.
Shareholder engagement
A major part of the Board's purpose is to represent the
interests, needs and wishes of the Company's shareholders. We are
committed to maintaining open channels of communication and to
engaging with shareholders in a manner which they find most
meaningful, in order to gain an understanding of their views.
Shareholder meetings take place throughout the year with the
Investment Manager, but as Chair I believe it is vitally important
for the Board and I to hear views first hand. Earlier this year,
the Chair of the Audit and Risk Committee and I offered meetings to
a significant number of shareholders representing a majority of the
share register by issued share capital. Several of them accepted
our offer and we met with investors representing more than
one-fifth of the register.
Feedback from these meetings was overall very positive, and the
engagement from the Board was well received. Naturally,
shareholders were keen to see continued improvement and we have
endeavoured to respond to many of the issues raised, such as: the
increasing discount (we have announced a programme of buybacks);
providing confidence in valuations (we have continued to disclose
valuation sensitivities); and improved ESG and climate disclosures
(we have since published our Sustainability Report).
The Board always welcomes contact with shareholders, so if there
are matters you wish to raise with us or if you would like a
meeting, please feel free to contact us at the registered office or
via the Company Secretary using the details on page 65 of the
Interim Report to 30 June 2023.
Outlook
Infrastructure remains a key driver of economic growth, and
therefore the need for investment into new infrastructure is
arguably stronger than ever. Indeed, in the current environment,
private investment is especially needed, and we believe will be
ultimately rewarded, at a time where governments are facing
significant budget deficits and rising debt levels.
The last few months have seen an even greater international
focus on decarbonisation. According to the World Meteorological
Organization, both June and July of this year exceeded prior record
average global temperatures for the month by close to 0.2degC and
0.3degC, respectively. 2023 now looks set to be the warmest year on
record and the world, as a whole, has warmed by approximately 1degC
since 1970. The road to net zero globally will require sustained
and extraordinary investment in new infrastructure. Private
infrastructure has demonstrated a necessary role in filling that
gap, and we believe it will continue to play an important part in
funding global infrastructure investments.
The market for infrastructure investments remains competitive
and fundraising in private markets has been challenging so far in
2022/2023. PINT's strategy continues to be to identify and target
companies that are set to benefit from key sectoral tailwinds
whilst exhibiting defensive characteristics, delivering growth in
real terms across the economic cycle. Pantheon's wide capability to
source new investments through its vast network and established
partnerships, as demonstrated since PINT's launch, is all the more
crucial in current market conditions. The Board remains optimistic
about PINT's future investment opportunities and value creation
potential.
With this in mind, and as already stated, we believe that the
current level of discount is unjustified, and represents a
compelling value opportunity for those seeking to invest into a
fully deployed and diversified portfolio of high-quality
infrastructure assets. Currently, it appears that much of the
market is focusing purely on yield from gilts and bonds without
considering prospects for capital appreciation. We continue to
believe that PINT's strategy means it is well positioned for when
investors again start to recognise the importance of growth
potential in a well-balanced investment strategy. The Board is
confident of the Manager's ability to continue to source new assets
and to manage the existing portfolio to deliver that growth. We
also believe that infrastructure assets will provide much-needed
resilience in the current uncertain world.
Vagn Sørensen
Chair
26 September 2023
PINT investments
Existing portfolio
Transport & Logistics
Primafrio
Specialised temperature -- controlled transportation and
logistics company in Europe primarily focused on the export of
fresh fruit and vegetables from Iberia to Northern Europe.
Sector: Transport & Logistics
---------------------- ---------------------
Geography: Europe
---------------------- ---------------------
Sponsor: Apollo
---------------------- ---------------------
Website: www.primafrio.com
---------------------- ---------------------
Date of commitment: 21.03.2022
---------------------- ---------------------
PINT NAV 30 June 2023: GBP43m
---------------------- ---------------------
Investment thesis and value creation strategy(1)
-- Niche market leader providing an essential service to
resilient end markets. The company has demonstrated strong organic
growth over a 15+ year operating history, including during major
economic dislocations (2008 -- 2009 global financial crisis and
2020 -- 2021 Covid-19). The defensive qualities of Primafrio's
market and its operations provide strong downside protection.
-- Value creation opportunities include inorganic growth,
strategic M&A, and continued investment in Primafrio's cold
storage logistics infrastructure footprint.
Digital Infrastructure
CyrusOne
Operates more than 50 high -- performance data centres
representing more than four million sq ft of capacity across North
America and Europe.
Sector: Digital: Data Centre
---------------------- --------------------
Geography: North America
---------------------- --------------------
Sponsor: KKR
---------------------- --------------------
Website: www.cyrusone.com
---------------------- --------------------
Date of commitment: 28.03.2022
---------------------- --------------------
PINT NAV 30 June 2023: GBP24m
---------------------- --------------------
Investment thesis and value creation strategy(1)
-- Growth in data usage continues to drive data centre demand .
In particular, the hyperscale segment represents a strong growth
opportunity due to increasing cloud adoption and increasingly data
-- heavy technologies (5G, AI, gaming, video streaming).
-- Benefits from defensive characteristics such as long -- term
contracts with a largely investment grade credit quality customer
base, price escalators, and limited historical customer churn.
Power & Utilities
National Gas
The owner and operator of the UK's sole gas transmission
network, regulated by Ofgem, and an independent, highly contracted
metering business.
Sector: Power & Utilities: Gas utility and
metering
---------------------- ----------------------------------
Geography: UK
---------------------- ----------------------------------
Sponsor: Macquarie
---------------------- ----------------------------------
Website: www.nationalgas.com
---------------------- ----------------------------------
Date of commitment: 28.03.2022
---------------------- ----------------------------------
PINT NAV 30 June 2023: GBP41m
---------------------- ----------------------------------
Investment thesis and value creation strategy(1)
-- Highly stable inflation -- linked cash flows and high
yielding returns are positively correlated with higher inflation,
supported by tailwinds of the current macroeconomic
environment.
-- Strong downside protection; regulatory framework allows for
the recovery of costs and guarantees a minimum return on capital.
The company also holds a monopolistic position through sole
ownership of the UK's backbone gas transmission network.
-- Significant growth opportunity. The transmission system
should play a leading role in making the network ready for the
transition from natural gas to hydrogen. It will support the
expansion of hydrogen's role in the energy mix while working
closely with the government and Ofgem to maintain security of
supply.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion.
Past performance is not indicative of future results. Future
results are not guaranteed, and loss of principal may occur. Please
refer to 'Disclosure 1 - Investments' towards the back of this
report.
Digital Infrastructure
Vertical Bridge
The largest private owner and operator of towers and other
wireless infrastructure in the US, with more than 7,000 owned
towers across the country.
Sector: Digital: Towers
---------------------- ----------------------
Geography: North America
---------------------- ----------------------
Sponsor: DigitalBridge
---------------------- ----------------------
Website: www.verticalbridge.com
---------------------- ----------------------
Date of commitment: 04.04.2022
---------------------- ----------------------
PINT NAV 30 June 2023: GBP27m
---------------------- ----------------------
Investment thesis and value creation strategy(1)
-- Track record of organic and inorganic growth : since its
founding in 2014, Vertical Bridge has been one of the most active
acquirers and 'build -- to -- suit' developers amongst tower
companies, and expects to further accelerate these activities.
-- 5G build-out supporting continued growth : US carrier annual
capex is forecast to increase over 30% by 2025, prioritising macro
towers in the 5G rollout.
-- Top -- tier management team and Sponsor : key members of
Vertical Bridge and DigitalBridge (including both CEOs) have worked
together since 2003, and have exceeded the original Vertical Bridge
business plan.
Digital Infrastructure
Delta Fiber
Owner and operator of fixed telecom infrastructure in the
Netherlands, providing broadband, TV, telephone and mobile services
to retail and wholesale customers over a predominantly fibre
network.
Sector: Digital: Fibre
---------------------- --------------------------
Geography: Europe
---------------------- --------------------------
Sponsor: Stonepeak
---------------------- --------------------------
Website: www.deltafibernederland.nl
---------------------- --------------------------
Date of commitment: 26.04.2022
---------------------- --------------------------
PINT NAV 30 June 2023: GBP23m
---------------------- --------------------------
Investment thesis and value creation strategy(1)
-- Opportunity to invest in high-quality fibre network with high
barriers to entry as a regional leader in its core footprint of
suburban and rural areas with historically high penetration and low
churn rates.
-- Well positioned to capitalise on extensive rollout programme
via first mover advantage in its core markets, exhibited through
its track record of fast build rates and ramp up of construction
capacity.
Power & Utilities
Cartier Energy
Platform of eight district energy systems located across the
Northeast, Mid -- Atlantic and Midwest of the US.
Sector: Power & Utilities: District Heating
---------------------- -----------------------------------
Geography: North America
---------------------- -----------------------------------
Sponsor: Vauban
---------------------- -----------------------------------
Website: To be created
---------------------- -----------------------------------
Date of commitment: 23.05.2022
---------------------- -----------------------------------
PINT NAV 30 June 2023: GBP33m
---------------------- -----------------------------------
Investment thesis and value creation strategy(1)
-- Gross margin structure underpinned by availability -- based
fixed capacity payments and consumption charges, and pass --
through pricing mechanism limits commodity price exposure providing
robust downside protection.
-- 'Sticky' customer base with an average relationship tenure of
15 -- 20 years and 10 -- 12 year average remaining contractual
life.
-- Provides customers with a path to decarbonisation and increased thermal efficiency.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion.
Past performance is not indicative of future results. Future
results are not guaranteed, and loss of principal may occur. Please
refer to 'Disclosure 1 - Investments' towards the back of this
report.
Power & Utilities
Calpine
Independent power producer with a c.26GW fleet of principally
gas-fired generating capacity, including c.770MW of operational
renewables.
Sector: Power & Utilities: Electricity Generation
---------------------- -----------------------------------------
Geography: North America
---------------------- -----------------------------------------
Sponsor: ECP
---------------------- -----------------------------------------
Website: www.calpine.com
---------------------- -----------------------------------------
Date of commitment: 27.06.2022
---------------------- -----------------------------------------
PINT NAV 30 June 2023: GBP48m
---------------------- -----------------------------------------
Investment thesis and value creation strategy(1)
-- Vital supplier to the US electricity grid, providing reliable
power generation capacity and playing an important role in the
energy transition as the US targets net zero carbon by 2050.
Calpine benefits from highly predictable diversified cash flows
underpinned by contracts supported by a robust hedging
programme.
-- Strong renewables development pipeline of solar and battery
projects, financeable through the cash flows generated by existing
assets, which are projected to nearly triple its renewables power
generation capacity over the next five to six years.
Digital Infrastructure
Vantage Data Centers
Leading provider of wholesale data centre infrastructure to
large enterprises and hyperscale cloud providers.
Sector: Digital: Data Centre
---------------------- ---------------------
Geography: North America
---------------------- ---------------------
Sponsor: DigitalBridge
---------------------- ---------------------
Website: www.vantage -- dc.com
---------------------- ---------------------
Date of commitment: 01.07.2022
---------------------- ---------------------
PINT NAV 30 June 2023: GBP27m
---------------------- ---------------------
Investment thesis and value creation strategy(1)
-- Secular data usage growth through increasing cloud adoption
and increasing data -- heavy technologies continues to drive data
centre demand.
-- Strong growth pipeline from favourable existing relationships with hyperscale customers.
-- Downside protection from strong position in supply --
constrained core geographies, long -- term contracts with
investment -- grade counterparties, and low churn due to high
switching costs and barriers to entry.
Renewables & Energy Efficiency
Fudura
Dutch market-leading owner and provider of medium -- voltage
electricity infrastructure to business customers, with a focus on
transformers, metering devices and related data services.
Sector: Renewables & Energy Efficiency
---------------------- ------------------------------
Geography: Europe
---------------------- ------------------------------
Sponsor: DIF
---------------------- ------------------------------
Website: www.fudura.nl
---------------------- ------------------------------
Date of commitment: 25.07.2022
---------------------- ------------------------------
PINT NAV 30 June 2023: GBP43m
---------------------- ------------------------------
Investment thesis and value creation strategy(1)
-- Highly stable inflation -- linked cash flows from large and
diversified locked -- in customer base with long-term contracts,
low churn and inflation protection.
-- Strong downside protection with a quasi -- monopoly positioning in its core regional markets characterised by high barriers to entry.
-- Energy efficiency and decarbonisation tailwinds driving
growth opportunities to broaden service offering to customers
including EV charging, solar panels, heat pumps and battery
storage.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion.
Past performance is not indicative of future results. Future
results are not guaranteed, and loss of principal may occur. Please
refer to 'Disclosure 1 - Investments' towards the back of this
report.
Digital Infrastructure
National Broadband Ireland
Fibre-to-the-premises network developer and operator working
with the Irish government to support the rollout of the National
Broadband Plan, targeting connection to 560,000 rural homes.
Sector: Digital: Fibre
---------------------- --------------
Geography: Ireland
---------------------- --------------
Sponsor: Asterion
---------------------- --------------
Website: www.nbi.ie
---------------------- --------------
Date of commitment: 09.11.2022
---------------------- --------------
PINT NAV 30 June 2023: GBP44m
---------------------- --------------
Investment thesis and value creation strategy(1)
-- Stable cash flows with inflation protection expected through
the terms of the project agreement and the prices NBI can charge to
internet service providers for access.
-- Downside protection through a unique positioning in the
intervention area (the franchise area granted by the Irish
government) and a flexible government subsidy regime.
-- Attractive macro trends including increased working from
home, demographics and growth in fibre broadband take -- up to date
underpin the long -- term commercial viability of the network.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion.
Past performance is not indicative of future results. Future
results are not guaranteed, and loss of principal may occur. Please
refer to 'Disclosure 1 - Investments' towards the back of this
report.
New investments during the period
Digital Infrastructure
GD Towers
Largest tower and telecom infrastructure networks in Western
Europe with c.40,000 tower sites across Germany and Austria.
Sector: Digital: Towers
---------------------- ---------------
Geography: Europe
---------------------- ---------------
Sponsor: DigitalBridge
---------------------- ---------------
Website: To be created
---------------------- ---------------
Date of announcement: 31.01.2023
---------------------- ---------------
PINT NAV 30 June 2023: GBP38m
---------------------- ---------------
Transaction/company overview
-- In July 2022, DigitalBridge, alongside Brookfield Asset
Management, agreed to buy 51% of GD Towers from Deutsche Telekom
for a total enterprise value of EUR17.5 billion.
-- GD Towers has one of the largest tower and telecom
infrastructure networks in Western Europe with c.40,000 tower sites
across Germany and Austria, making it the market leader in Germany
and second largest in Austria.
-- GD Towers' high-quality portfolio is supported by an anchor
tenancy agreement with Deutsche Telekom, which has retained a 49%
ownership stake in GD Towers.
Investment thesis and value creation strategy(1)
-- Majority of cash flows are contracted and index-linked,
offering strong downside protection in challenging macroeconomic
conditions.
-- Favourable market tailwinds from regulatory -- driven 5G
coverage requirements with significant growth opportunities.
-- Organic and inorganic growth opportunities arising from other
market participants, and numerous consolidation opportunities in
Europe.
ESG(2)
-- Deutsche Telekom AG has a net zero carbon strategy that is
aligned with the Science Based Targets initiative and has been
highly rated by the Carbon Disclosure Project.
-- The majority of power for the tower sites now comes from
renewable sources, with carbon offsetting arrangements in place for
any fossil fuel power consumption.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion.
2. Source: ERM. While DigitalBridge may consider ESG factors when making an investment decision, DigitalBridge does not pursue an ESG-based investment strategy or limit its investments to those that meet specific ESG criteria or standards. Any reference herein to environmental or social considerations is not intended to qualify DigitalBridge's duty to maximise risk-adjusted returns.
Past performance is not indicative of future results. Future
results are not guaranteed, and loss of principal may occur. Please
refer to 'Disclosure 1 - Investments' towards the back of this
report.
Digital Infrastructure
GlobalConnect
Sector: Digital: Fibre
----------------------------- ---------------------
Geography: Europe
----------------------------- ---------------------
Sponsor: EQT
----------------------------- ---------------------
Website: www.globalconnect.com
----------------------------- ---------------------
Date of commitment: 22.06.2023
----------------------------- ---------------------
PINT commitment 30 June 2023: GBP20m
----------------------------- ---------------------
Transaction/company overview
-- In Q4 2022, EQT Infrastructure III announced the sale of a
minority stake (15%) of its shareholding in GlobalConnect ("GC") to
Mubadala. PINT invested alongside other co-investors following this
transaction, while EQT retained a majority (controlling) stake.
-- GC is a pan-Nordic digital infrastructure platform with a
155,000 km fibre network and 17 (35,000 m(2)) data centres.
-- GC is a leading challenger and is well positioned to increase
its market share across verticals and geographies given its
blue-chip customer base, one-stop-shop solution and high barriers
to entry.
Investment thesis and value creation strategy(1)
-- Majority of cash flows are contracted and index-linked,
offering downside protection in challenging macroeconomic
conditions.
-- Favourable market tailwinds from regulatory-driven 5G
coverage requirements with significant growth opportunities and
long-term secured revenues, protecting its market position.
-- Organic and inorganic growth opportunities arising from rural
fibre rollout, growing demand for larger bandwidth and numerous
consolidation opportunities.
ESG
-- In June 2023, GC was approved by the Science Based Targets
initiative (SBTi), committing to reducing its absolute carbon
emissions by 42% by 2030.
-- In 2022, GC raised EUR1 billion in ESG-linked financing and recently won an award for the sustainability-linked loan of the year in Europe.
-- Its sustainable data centres powered by 100% green energy are
achieving 25% lower power usage than the European average.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion.
Past performance is not indicative of future results. Future
results are not guaranteed, and loss of principal may occur. Please
refer to 'Disclosure 1 - Investments' towards the back of this
report.
Portfolio in numbers (1)
Exposure to operational infrastructure assets
26GW
of electric generation capacity, including 725MW of renewables,
generating 111TWh annually
343,000 km
of fibre cable, passing 2.5 million homes
1,331,000
homes connected to high speed fibre
87
data centres providing 1,094MW of power capacity
7,630 km
of pressurised gas transmission pipes, 71 gas compressors, and 9
gas and LNG terminals
8
district heating networks, with 96 km of piping serving 190
buildings
17,200
medium and high voltage transformers
65,900
smart meters reducing domestic energy bills
2,100
temperature controlled trucks and 40,000 m(2) of temperature
controlled warehouse capacity
51,000
telecom towers
1,000
electric buses saving 66,000 tonnes of CO(2) annually
1,017MW
of battery energy storage capacity, supporting the transition to
net zero
1. Figures represent the total infrastructure assets across PINT's Portfolio Companies.
Business model
Approach
The Company is building an international portfolio of
investments with blended risk and return profiles, in line with set
targets across deal types, sectors and geographies for
diversification.
Our co-investment strategy differentiates us in the listed
infrastructure market.
What sets us apart
1. Deal selectivity:
Sponsor relationships drive strong deal flow, allowing for
highly selective investment process.
2. Diversification:
Access to investments across sourcing Sponsors, sectors and
geographies.
3. Sponsor specialisation:
Ability for investors to choose deals alongside a Sponsor with a
distinct edge who may be best placed to create value.
4. Fee efficient:
Co-investments typically offered with no ongoing management
fee/carried interest.
Capturing secular growth
Digital Infrastructure
-- Growth in mobile data traffic
-- Growth in 5G connected devices
Renewables & Energy Efficiency
-- Average cost reduction for solar/wind
-- Increasing global installed wind/solar capacity
Power & Utilities
-- US/Europe transitioning grid to renewables
-- US coal power plant retirements
Transport & Logistics
-- Increased global trade
-- Higher e -- commerce penetration
How we create value
Investors
Shareholders
Investors in PINT can participate in an internationally
diversified portfolio of core infrastructure assets alongside other
leading private asset managers and institutional investors.
PINT's business model creates value by allowing Pantheon, the
Investment Manager, to allocate capital and invest on its behalf
alongside Sponsors that it believes have a distinct edge in a
particular infrastructure sector.
Vehicle
PINT (public)
PINT has access to Pantheon's deal sourcing platform. Since PINT
is publicly listed, any retail or institutional investor is able to
benefit from any value it creates.
Other Pantheon funds (private)
Pantheon provides a broad sourcing network with leading private
asset investment managers and has strong relationships with
Sponsors it can leverage on behalf of PINT.
Refer to the Investment Manager's report for more details.
Portfolio
Infrastructure assets
High -- quality infrastructure assets typically benefit from
long -- term contractual cash flows, positive correlation to
inflation and exposure to secular changes in society.
Value creation
8-10% p.a.
target NAV Total Return per share
4p per share(1)
second year dividend, progressive thereafter
1. The Company is targeting a dividend of 4 pence per share for
the year ending 31 December 2023, and, thereafter, a progressive
dividend.
Investment strategy
The Company seeks to generate attractive risk -- adjusted total
returns for shareholders over the long term, comprising both
capital growth and a progressive dividend. Through the acquisition
of equity or equity -- related investments, PINT offers a
diversified portfolio of infrastructure assets with a primary focus
on developed OECD markets.
Diversification
International portfolio with exposure to regions, sectors and
sourcing partners and the ability to tilt the Portfolio over time
to the best risk/return opportunities.
Resilient cash flow assets
Emphasis on direct infrastructure assets with substantially
contracted cash flows and conservative leverage creates a portfolio
with downside protection.
Inflation protection
Natural hedge against rising inflation with certain assets
benefiting from inflation protection.
Capturing long -- term growth
Exposure to growth dynamics within infrastructure sub -- sectors
including the transition to a net zero carbon economy and the
digitalisation of social and economic activity.
Value creation opportunities
Assets where added value can be created through operational
optimisation, and increased profitability, through incremental
expansion of a platform or industry consolidation, utilising the
skill -- set and track record of Sponsors.
Strong ESG characteristics
Robust asset and Sponsor ESG risk assessment through due
diligence, ongoing asset monitoring and exclusion of high -- risk
ESG sectors from the strategy, including coal, oil, gas (upstream),
mining and nuclear.
Alternative Performance Measures (APMs)
PINT assesses its performance using a variety of measures that
are not specifically defined under FRS 102 and are therefore termed
APMs. The APMs used may not be directly comparable with those used
by other companies. These APMs provide additional information as to
how the Company has performed over the period and allow the Board,
management and stakeholders to compare its performance.
APM Details Calculation Reconciliation
to FRS 102
------------------- -------------------------- ------------------------- -------------------------
NAV Total Return Total return comprises It is calculated The calculation
the investment return as the total return uses FRS 102 measures.
from the Portfolio of GBP14.9 million
and income from for the six months
any cash balances, ended 30 June 2023,
net of management as shown in the
and operating and Income Statement,
finance costs. It as a percentage
also includes foreign of the opening NAV
exchange movement for the period of
and movement in GBP474.8 million
the fair value of as of 31 December
derivatives and 2022.
taxes.
------------------- -------------------------- ------------------------- -------------------------
Net asset value A measure of the It is calculated The calculation
per share NAV per share in as the NAV divided uses FRS 102 measures
the Company. by the total number and is set out in
of shares in issue, Note 16 to the accounts.
both at the balance
sheet date.
------------------- -------------------------- ------------------------- -------------------------
Annual distribution This measure reflects The dividend is The calculation
the dividends distributed measured on a pence uses FRS 102 measures.
to shareholders per share basis.
in respect of each
year.
------------------- -------------------------- ------------------------- -------------------------
Investment value A measure of the It is calculated The Portfolio asset
and outstanding size of the investment as the Portfolio value uses the FRS
commitments portfolio including asset value plus 102 measure Investments
the value of further the amount of contracted at fair value, set
contracted future commitments. out in Note 1 to
investments committed the accounts. The
by the Company. value of future
commitments is set
out in Note 21.
------------------- -------------------------- ------------------------- -------------------------
Investment Manager's report
Pantheon platform
134
Investment professionals
$93.4bn(1)
Funds under management
>1,000
Institutional investors globally
13
Global offices
Pantheon private infrastructure
$20.9bn(1)
AUM
194
Investments
31
Investment professionals
21 years
Average experience
Pantheon private infrastructure co -- investments
$4.3bn
Total commitments
52
Total investments
50+
Asset sourcing partners
14.1%
Notional net IRR(2)
Pantheon primary funds strategy
$9.8bn
AUM in primary companies since 2009(1)
-- Pantheon develops long -- term relationships with top tier
Sponsors by investing in their underlying flagship funds.
-- Sponsors consider Pantheon to be a strategic partner, rather than a direct competitor.
Sponsors require co -- investment partner
$78bn
Co -- investment opportunities screened since 2015(3)
Sponsors may offer co -- investments for the following reasons:
size of transaction, manage concentration limits, raise follow --
on capital and strengthen investor relationships.
Pantheon co -- investment strategy
$4.3bn
Committed across 52 co -- investment assets(4)
-- Access to co -- investment assets, typically on a no-fee, no -- carry basis.
-- Proven track record as a valuable partner by providing
experience in complex deals; speed and certainty of deal execution
within short time frames.
-- Co-investment track record has produced notional net IRR of 14.1%(5) .
1. As at 31 March 2023. This figure includes assets subject to
discretionary or non-discretionary management or advice.
Infrastructure AUM includes all infrastructure and real asset
programmes which have an allocation to natural resources.
2. Performance data as of 31 March 2023. Past performance is not
indicative of future results. Future performance is not guaranteed
and a loss of principal may occur. Performance data includes all
infrastructure co-investments approved by Pantheon's Global
Infrastructure and Real Assets Committee (GIRAC) since 2015, when
Pantheon established its infrastructure co-investment strategy.
Notional net performance is based on an average forecast annualised
fee of 1.5% of NAV.
3. Pantheon internal data from 2015 to 30 June 2023. Screened
deal flow is based on total value of transactions ($).
4. Total infrastructure co-investment count and committed amount
as of 31 March 2023, includes all Pantheon infrastructure
co-investments closed or in legal closing.
5. Performance data as of 31 March 2023. Performance data
includes all consummated infrastructure co-investments approved by
GIRAC since 2015, when Pantheon established its infrastructure
co-investment strategy.
Investment activity
PINT continued to deploy selectively during the first half of
the year. In addition to c.GBP61.6 million of capital committed
during the period to GD Towers and GlobalConnect, after the period
end the Company further announced a GBP35 million commitment to
Zenobe, a UK renewables and energy efficiency transaction. Cash
amounts invested across the Portfolio during the period were
GBP86.1 million with a total undrawn amount at the period end of
GBP32.9 million of which GBP19.8 million was invested shortly after
the period end in GlobalConnect.
Pantheon continues to see significant co-investment
opportunities across all sectors, and maintains a disciplined
approach to assessing the suitability of investments for PINT.
Several further deals were screened, and ultimately declined, in
addition to those closed during the period. Additionally, in one
instance an investment, for a North American renewable energy
platform, was declined during legal closing - the period subsequent
to GIRAC approval but prior to legally binding commitment - due to
the Sponsor declining to provide PINT with the necessary
information disclosure permissions. Whilst this was naturally
disappointing, it demonstrates Pantheon's commitment to ensure that
PINT can disclose fundamental investment characteristics to
investors. Further details around deal screening and selection are
set out in the 'Co-investment approach' later on in the report.
Performance
Portfolio movement (period to 30 June 2023)
During the period, PINT invested GBP39.2 million into one new
asset, GD Towers (GlobalConnect closed on 22 June 2023 but was not
funded until after the period end) and a further GBP46.9 million
into existing Portfolio commitments (principally into National
Gas). Underlying fair value movements on the eleven investments
held during the period totalled GBP21.3 million and the
strengthening of GBP resulted in a Portfolio foreign exchange loss
of GBP15.3 million, before considering the impact of the hedging
programme, which is discussed on page 29 of the Interim Report to
30 June 2023. Distributions of GBP3.0 million were received during
the period, resulting in a closing Portfolio value of GBP390.5
million at 30 June 2023.
Much of the Portfolio movement can be attributable to the impact
of rolling forward DCF valuations, and aside from updated future
borrowing costs in line with increasing base rates, no material
amendments to the underlying Portfolio Companies' business plans
were reported by Sponsors. Only one completed investment, GD
Towers, which closed during the period, was valued at cost.
Portfolio update
From an operating perspective, the Portfolio continued to
perform well during the period with no material underperformance
across any of the Portfolio Companies. Operational developments of
note included:
-- Delta Fiber and TMobile Netherlands entered into a long-term
network sharing agreement, which broadens both parties' coverage
and represents a key milestone for the open access business model
that targets a greater degree of wholesale business.
-- Calpine commenced construction on the 680MW Nova battery
storage project, which is expected to be the largest standalone
battery storage project in North America.
-- Vertical Bridge entered into a joint venture agreement with
Verizon to build cell towers across the US to serve Verizon's
expansion of 4G and 5G Ultra Wideband services. The towers will be
constructed on a 'build-to-suit' basis which further supports
Vertical Bridge's long-term growth expectations in this business
segment.
-- National Broadband Ireland passed a further 23,400 homes,
bringing its total homes passed to 154,400 out of a total
intervention area of over 560,000 homes. 9,100 additional homes
were connected in the period, bringing the total to 45,200.
-- GlobalConnect became the first data centre provider in Europe
to offer submerged cooling - submerging servers in a special
developed cooling liquid - after introducing the technology in its
Copenhagen data centre following a research programme with
technology provider GRC. The technology is expected to be rolled
out at other locations and has the potential to dramatically reduce
cooling space and power requirements.
Sector diversification(1) (as at 30 June 2023)
Digital Infrastructure | 44%
Invested | 37% Committed | 7%
Power & Utilities | 25%
Invested | 25% Committed | -
Renewables & Energy Efficiency | 16%
Invested | 9% Committed | 7%
Transport & Logistics | 9%
Invested | 9% Committed | -
Uncommitted(4) | 6%
Geographic diversification(1) (as at 30 June 2023)
Europe | 41%
Invested | 39% Committed | 2%
North America | 37%
Invested | 32% Committed | 5%
UK | 16%
Invested | 9% Committed | 7%
Uncommitted(4) | 6%
1. Based on gross assets of GBP485.6 million at 30 June 2023.
2. Invested amounts at 30 June 2023 totalled GBP390.5 million,
representing the fair value of the Company's funded investments in
those sectors or geographies.
3. Committed amounts at 30 June 2023 totalled GBP67.9 million,
representing cash held in respect of as yet undrawn commitments
and/or deals in legal closing in those sectors or geographies.
Undrawn commitments are a feature of the Company's investments and
occur when completions are deferred due to commercial or regulatory
approval processes, or where capital calls are intentionally
staggered over time for follow-on purposes, for example for capex
or M&A requirements.
4. Remaining working capital at 30 June 2023, net of amounts
reserved for committed investments or investments in legal closing,
totalled GBP27.2 million.
Discount rates
At the period end, the weighted average discount rate ("WADR")
of the Portfolio was 14%. This is significantly higher than
observed elsewhere in the listed infrastructure universe, which
Pantheon believes provides significant valuation headroom in a
higher interest rate environment. This outlook is supported by
limited evidence of downward valuation movements in core plus and
value-add private market infrastructure assets over the last 12
months, as private capital continues to specifically seek out
high-quality assets with significant growth potential from key
societal tailwinds.
More generally, the higher entry IRRs and ongoing discount rates
of the Company's investments partly reflect the long-term objective
of PINT to focus on underlying investments that deliver capital
growth. This growth is expected to be achieved by Portfolio
Companies' increasing their long-term earnings through a mixture of
organic growth, accretive capital investment, M&A activity, and
improved business efficiencies, and ultimately from divesting in
the future at a premium to the entry valuation. All of these
factors feed into a Sponsor's ongoing business plan, which
introduces additional execution risk and therefore higher required
returns, when considered relative to assets valued entirely on the
basis of cash flows arising from existing operational assets with
finite asset lives. However, to the extent that individual
Portfolio Companies successfully execute on their growth
initiatives and de-risk business plans over time, Pantheon would
expect discount rates to fall commensurately with increased future
earnings certainty.
RCF increase
During the period, the Company increased its RCF by GBP52.5
million through the addition of Royal Bank of Scotland
International as a lender. The total available RCF is now GBP115
million, which remains fully undrawn, with a remaining term of just
over two years until December 2025.
Buybacks
Following the Company's announcement in March to allocate up to
GBP10 million of capital for share buybacks, c.GBP1 million of
buybacks were made during the period, contributing 0.04p per share
in NAV uplifts. Further buybacks after the period end, totalling
GBP2.9 million, have contributed a further 0.18p per share in NAV
uplifts.
Capital allocation
Pantheon continues to see a significant pipeline of executable
transactions for PINT through the depth of its Sponsor
relationships. It is, however, mindful of the continuing
macroeconomic environment and its associated impact on sentiment
towards listed infrastructure as an asset class, and the resulting
sustained discounts to NAV that have emerged. Accordingly, Pantheon
gives regular consideration to the appropriateness of making
further investments relative to the alternative options for
allocating capital, including share buybacks, or retaining
increased liquidity, as well as the associated cost of any capital
that is allocated for these purposes.
Pantheon continues to see good reason for PINT making new
investments alongside its buyback programme. Aside from where the
economics of a proposed transaction are significantly attractive to
the Company, further investment also increases the benefit of
diversification - by sector, geography and vintage - that is not
possible through further share buybacks.
As detailed below, following the recent completion of the Zenobe
transaction, PINT has now largely committed its available cash
resources, which means any further investment activity or increased
buyback allocation will eventually require some form of utilisation
of the RCF. Pantheon considers this to be a beneficial position for
PINT to be in, as the Company can approach any such activity
mindful of the incremental cost of doing so, given the backdrop of
the increased interest rate environment.
Pantheon expects that further investment by PINT will be
carefully considered relative to potential investment returns,
current cost of drawn debt and the returns available through share
buybacks. In any event, the Company's approach to capital
allocation will be continuously reviewed in the context of the
investment opportunities that Pantheon has access to.
Liquidity and leverage
At the period end, the Company benefited from significant
available liquidity of GBP205.8 million through its remaining cash
and cash equivalents of GBP90.8 million and its undrawn RCF of
GBP115 million.
The Company continues to maintain a policy to hold liquidity
sufficient to cover all investment commitments, amounts in legal
closing and the remaining allocation to its share buyback programme
due in the next twelve months. At the period end, this amount
totalled GBP76.9 million, which includes the GlobalConnect (GBP19.8
million) and Zenobe (GBP35 million) transactions.
The Company holds specific cash buffers in respect of potential
further liquidity requirements over the next twelve months. These
buffers include forecast operating costs, dividend payments, FX
hedge settlements due (based on mark -- to -- market valuations),
an allowance for emergency co-investment capital across the
Portfolio, allowances for FX movements on undrawn non -- GBP
commitments, and amounts held against the Company's FX hedging
positions (calculated relative to notional amounts and contractual
maturity). At the period end, these amounts totalled GBP78.3
million.
Deducting all these considerations represents the surplus funds
available to the Company for further investment, which at the
period end stood at GBP50.6 million. Any material changes to each
investment's liquidity horizon, such as underlying distributions or
an accelerated exit relative to the underlying Sponsor base case,
will improve the Company's liquidity position and accordingly
increase this amount.
Sources GBP'm
--------------------------------------------------- -----
Cash and cash equivalents 90.8
RCF 115.0
Total (A) 205.8
--------------------------------------------------- -----
Commitments
Undrawn investment commitments 32.9
Investments in legal closing 35.0
Remaining allocation under share buyback programme 9.0
--------------------------------------------------- -----
Total (B) 76.9
--------------------------------------------------- -----
Buffers
Operating costs 8.5
FX mark-to-market 0.6
Dividends 14.4
Co-investment buffers 19.2
FX buffers on undrawn investment commitments 6.4
FX hedging buffers 24.2
--------------------------------------------------- -----
Total (C) 78.3
--------------------------------------------------- -----
Available funds (= A - B - C) 50.6
--------------------------------------------------- -----
As noted above, Pantheon continuously assesses the optimal use
of remaining funds when presented with new investment
opportunities, noting that utilising this surplus in full for any
purpose would involve a full utilisation of the Company's existing
cash balances and partial utilisation of its RCF, up to an amount
representing c.10% of NAV. Pantheon considers such a level of
gearing in current conditions to be appropriate relative to the
established parameters of investing either through additional share
buybacks, at a material discount to NAV, or carefully selected new
investments with demonstrable returns in excess of the drawn cost
of the RCF=
NAV performance
NAV pence per share movement (period to 30 June 2023)
NAV per share over the period increased by 2.1p per share, or
3.1p per share after adjusting for the interim dividend for H2 2022
of 1.0p per share, paid in March 2023. This movement is broadly in
line with Pantheon's expectations given the timing of investment
completions, remaining undrawn cash and the holding at cost of GD
Towers.
The movement in the period was principally driven by fair value
gains of 4.7p per share, offset by negative foreign exchange
movement of (3.1p) per share caused by the strengthening of the GBP
in the period, which was partially offset by a 2.0p per share
movement from the foreign exchange hedging programme. Interest from
cash deposits contributed 0.4p per share, offset by (0.9p) per
share related to fund operating expenses, resulting in a closing
NAV of 101.0p per share. The impact of transactions undertaken in
line with the Company's share buyback programme contributed 0.04p
per share during the period.
Dividend
The Company remains committed to its IPO target to pay a
dividend of 4p per share for the year ending 31 December 2023 and
then move to a progressive dividend policy. Based on the effective
NAV per share increase during the period of 3.1p per share and the
interim dividend of 2p per share, the Company's dividend for H1
2023 is covered by earnings 1.6 times.
From a cash perspective, the Company does not expect its
dividend to be covered on a cash receipts basis in the short-term.
The main reason for this is that the co-investment model means the
Company does not have direct control of underlying distributions,
and many of the Portfolio Companies consider the re-deployment of
free cash flow into growth capex or M&A activity to be a more
effective use of cash flow than making distributions in the current
interest rate environment, and the relative immaturity of the
Portfolio means that no investment exits are envisaged in the
short-term.
Foreign exchange impact
PINT aims to deliver steady NAV growth and, as outlined in the
IPO Prospectus, the Company may enter into foreign exchange hedging
transactions for the purposes of efficient portfolio
management.
In order to limit the potential impact on the NAV from material
movements in major foreign exchange rates, the Company has
implemented a structured foreign exchange hedging programme. This
aims to reduce (rather than eliminate) the impact of movements in
major foreign exchange rates on the GBP net asset value.
The appreciation of GBP resulted in a negative portfolio foreign
exchange movement of (GBP15.3) million in the period to 30 June
2023, which was partially offset by a gain in the hedging programme
of GBP9.7 million. The resulting net downward impact of (GBP5.6)
million, or (1.2p) per share, is attributable to a combination of
the Company's unhedged foreign currency investments along with
movements in the long-term forward rates used in derivative
mark-to-market valuations, arising from higher long-term interest
GBP rate expectations compared to EUR and USD. All other things
being equal, negative movements attributable to these long-term
forward rates will unwind in the Company's favour as it approaches
contract maturities.
Sensitivity
In line with their information reporting obligations, Sponsors
are required to perform a number of valuation sensitivities on the
Company's behalf against key inputs including inflation, interest
rates and discount rates. The aggregated results of these
sensitivities across the Portfolio are shown in the chart below.
Owing to the nature of the underlying revenues across the
Portfolio, the Company benefits from a net positive correlation
with inflation. Conversely, the Portfolio is negatively correlated
to interest rate movements, where rises would result in reduced
free cash flows. The impact of this across the Portfolio is
mitigated by substantially hedged or fixed rate debt at investment
level.
1. Based on assets invested at 30 June 2023. Sensitivity results
are provided by Sponsors based on adjustments to the relevant
underlying assumptions in base case financial models across the
expected life of each investment.
Portfolio summary
Asset Status Commitment Sector Region Sponsor Portfolio Undrawn
date NAV
30 June commitments
2023
(GBPm) (GBPm)
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Portfolio assets 30 June 2023
----------------------------------------------------------------------------------------------------------------------
Transport
Primafrio Invested March 2022 & Logistics Europe Apollo 43.0 0.5
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Digital
CyrusOne Invested March 2022 Infrastructure North America KKR 23.7 3.8
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
National Gas Invested March 2022 Power & Utilities UK Macquarie 41.2 0.0
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Digital
Vertical Bridge Invested April 2022 Infrastructure North America DigitalBridge 26.6 -
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Digital
Delta Fiber Invested April 2022 Infrastructure Europe Stonepeak 22.6 1.5
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Cartier Energy Invested May 2022 Power & Utilities North America Vauban 33.2 -
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Calpine Invested June 2022 Power & Utilities North America ECP 47.9 -
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Renewables
Vantage Data & Energy
Centers Invested July 2022 Efficiency North America DigitalBridge 27.2 -
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Renewables
& Energy
Fudura Invested July 2022 Efficiency Europe DIF 43.4 1.6
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
National
Broadband November Digital
Ireland Invested 2022 Infrastructure Europe Asterion 43.6 3.2
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
Digital
GD Towers Invested January 2023 Infrastructure Europe DigitalBridge 37.9 2.5
----------------- --------- ------------- ----------------- -------------- -------------- --------- -----------
390.5 13.1
----------------------------------------------------------------------------------------- --------- -----------
Assets committed and in legal closing at 30 June 2023
----------------------------------------------------------------------------------------------------
GlobalConnect Committed June 2023 Digital Infrastructure Europe EQT - 19.8
-------------- ---------- ---------- ----------------------- ------- ------------- ----- ----
Renewables
In-legal September & Energy
Zenobe closing 2023 Efficiency UK Infracapital - 35.0
-------------- ---------- ---------- ----------------------- ------- ------------- ----- ----
- 54.8
---------------------------------------------------------------------------------- ----- ----
TOTAL 390.5 67.9
--------------------------------------------------------------------------------------- ----- ----
Key:
Digital Infrastructure
Renewables & Energy Efficiency
Power & Utilities
Transport & Logistics
Investment policy
Digital Infrastructure
(including wireless towers, data centres and fibre-optic
networks)
Power & Utilities
(including transmission and distribution networks, regulated
utility companies and efficient conventional power assets)
Renewables & Energy Efficiency
(including smart infrastructure, wind, solar and sustainable
waste)
Transport & Logistics
(including ports, rail, roads, airports and logistics
assets)
Social & Other Infrastructure
(including education, healthcare, government and community
buildings)
The Company invests in a diversified portfolio of high-quality
operational infrastructure assets which provide essential physical
structures, systems and/or services to allow economies and
communities to function effectively. The Company invests in both
yielding and growth infrastructure assets which the Investment
Manager believes will offer strong downside protection and
typically offer strong inflation protection.
The Company invests internationally, with a primary focus on
developed OECD markets, with the majority of its investments in
Europe and North America.
The Company's Portfolio is diversified across infrastructure
sectors, which includes (but are not limited to) the sectors
opposite, in each case where the Investment Manager believes it can
generate the most attractive risk-adjusted returns.
The Company focuses on gaining exposure to infrastructure assets
via co-investments alongside leading third-party private direct
infrastructure asset investment managers who are acting as general
partner or manager of a fund in which Pantheon, or any investment
scheme, pooled investment vehicle or Portfolio Company managed by
Pantheon, has invested or may invest. In doing so, the Company may
invest on its own or alongside other institutional clients of the
Investment Manager. The Company may also invest in other direct or
single asset investment opportunities originated by the Investment
Manager or by other third-party asset sourcing partners. The
Company does not invest in private funds targeting a diversified
portfolio of infrastructure investments.
Co-investment approach
Features of co-investment
Whilst the precise structure varies from deal to deal, there are
a number of standard characteristics of PINT's co-investments,
including:
Price
The entry price for a co-investment is set by the Sponsor, often
as a result of a bidding or auction process, and for single asset
secondaries will usually be linked to the Sponsor's current holding
valuation, in some cases with a modest entry discount. It is then
for Pantheon to determine whether the valuation represents an
appropriate entry point, which is usually done through a
combination of benchmarking and sensitivity analysis. This includes
the preparation of a 'Pantheon Case' scenario which may have
long-term assumptions that diverge from those of a Sponsor, and may
lead to a different forecast return.
Due diligence
Pantheon is provided with all the due diligence materials
available to the Sponsor as part of any underwriting process, and
in some cases, access is also granted to certain advisers to
address any concerns over discrete company risks. A series of
reference calls with other key external stakeholders in the
relevant sector is usually undertaken as the final stage of the due
diligence phase.
Control
A co-investor will not usually be able to exert any material
control over a co-investment, as operating autonomy around critical
business decisions is considered essential for Sponsors to grow
Portfolio Companies. This means that in practice key decisions
around growth strategy, capital structure, treasury management,
distribution policy and exit economics/timing are not directly
determined by PINT. The critical protections around this lack of
control are to ensure sufficient contractual mechanisms are in
place to provide alignment with the lead Sponsor, as well as
performing appropriately targeted due diligence around key company
risks.
Alignment
Co-investments are typically structured to include reciprocal
drag and tag rights, which exist to protect both the co-investor
and Sponsor and form a key component of aligning the economic
outcomes amongst parties. A drag -- along right enables a Sponsor
to force co-investors to consent to a sale, and a tag-along right
offers reciprocal protection for co -- investors if a Sponsor
decides to sell its stake. Other areas of alignment may include
lock-in periods, minimum Sponsor carry commitments and minimum MOIC
thresholds.
Valuations
Under IPEV guidance, PINT uses valuations that are prepared by
the Sponsor or their external valuation agent, using their
methodology and inputs, including business forecasts and discount
rates. They are then reviewed by Pantheon's valuation committee for
appropriateness. Valuations are commonly performed on a DCF basis
but may sometimes be a combination of other methods including
benchmarking to market comparisons or transactional evidence. Owing
to their inherent complexity and the Sponsor's familiarity with
companies, it is not usually possible for co-investors to
reconstruct valuations on a bottom-up basis.
Reporting
Beyond the underwriting stage, enhanced information and
reporting rights are typically guided by a co-investor's specific
requirements, but are usually governed by strict disclosure and
confidentiality provisions to prevent publication of commercially
sensitive information.
Pantheon approach
PINT's investment policy is to seek exposure to single companies
through co-investments or single asset secondary transactions
alongside the leading Sponsors that Pantheon works with. Its
extensive network of Sponsors means Pantheon is granted access to a
significant deal flow of opportunities on which PINT can transact
and accordingly must be selective around those that it pursues.
Specific considerations on this selective approach to screening
target deals include:
Size
Specific appetite for an opportunity is considered relative to
PINT's long-term target sector and geography allocations.
Tailwinds
PINT targets companies operating in sectors that are suitably
positioned to benefit from the growth potential in future secular
tailwinds.
Downside protection
Analysis of the relative weighting of a company's contracted
revenues is the starting point in screening a transaction, however
uncontracted exposure will be considered if there is sufficient
conviction around a company's existing competitive advantage or
that there will remain barriers to entry in the sector.
Fees
Deals are typically presented to Pantheon on a fee-free and
carry-free basis, however in some instances transactions with fees
and carry may be considered if the opportunity is considered
attractive enough to justify the economic leakage.
Gearing
Capital structures are considered relative to what is typical
for a sector, with a preference for longer-term fixed rate or
hedged debt structures. A company's access to incremental financing
and the Sponsor's track record in delivering such financing are
also considered critical for ensuring future business plans are
sufficiently funded in capital-intensive sectors such as data
centres and fibre.
Inflation protection
Explicit inflation linkage of a company's revenues is preferred,
typically through contractual or regulation-based escalators, but
implicit inflation linkage is also acceptable when real returns are
not significantly diluted under downside scenarios and can be
protected in instances of high capex inflation.
Exit timing and assumptions
Exits are generally assumed to occur within a five to seven-year
time frame, normally in line with the Sponsors' underlying fund
lives, but 'buy and hold' base case scenarios are considered where
there are sufficient contractual mechanisms for PINT to seek a
unilateral exit. Exit economics (e.g. secondary buyer IRRs or
EBITDA multiples) are typically determined relative to existing
current market comparable transactions, and material upside from
sector 're-rating' is not considered as part of an investment base
case
Our market
Infrastructure market indicators
Strong upward trends in deal activity, fundraising and investor
sentiment provide a positive backdrop for future growth.
The way in which societies and economies function over time is
changing, which creates new long-term tailwinds for the sectors
that serve them. PINT continues to construct a portfolio in these
growing markets with favourable tailwinds which should provide
sustainable returns to shareholders.
Global changes
Urbanisation
Digitalisation
Smart cities
Telecommunications
Work from home
Decarbonisation
Population growth
Supply chain realignment
Key sector themes
Utilities
-- The role of hydrogen is expected by some to be significant in
energy transition, which impacts utilities such as gas transmission
and distribution companies.
-- Revenues tend to be inflation-linked, which is highly
beneficial in the current market environment.
-- High demand for assets and lack of supply has driven asset prices up.
Energy transition
-- Governments and supranational organisations globally are
prioritising climate change issues and clean energy, leading to
tangible and publicly stated targets for many organisations.
-- Infrastructure supporting the development of energy
transition is still under-developed in areas such as the electric
grid/EVs; further investment in this sector is in high demand.
-- However, the process to build/transition relevant assets is comparatively slow.
Transportation
-- Increased demand for cleaner modes of transport in line with aforementioned global trends.
-- Travel volumes continue to recover after Covid-19, although
air travel now recovered to c.96% of 2019 levels.(1)
-- After significant increases in 2021, freight prices fell
during 2022 due to softening global demand.(2)
Digital
-- Significant increase in demand due to global trends (working
from home gaming, AI, streaming, videos etc.) requiring major
increase in data/connectivity.
-- Labour and supply chain shortages/issues are impacting
certain build-out and development projects.
Social & healthcare
-- Increased demand for childcare facilities and population growth.
-- Growth in life sciences, medical services and research, and
an ageing population are driving demand for infrastructure in this
sector.
Pantheon opinion. There is no guarantee that these trends will
persist.
1. Source: IATA, July 2023.
2. Source: Freightos, February 2023.
Sector spotlight
Battery Energy Storage Systems
Overview
Battery Energy Storage Systems (or "BESS") are devices connected
to electricity distribution or transmission networks that are
capable of storing energy and releasing it at a later time.
Algorithms and software are used to co-ordinate energy production
and when to store and release that energy.
As the pursuit of decarbonisation continues to see an increase
in renewable energy generation, these systems provide a way to
modulate fluctuations in energy production at times when supply
does not match energy demand. This, paired with the decreasing cost
of battery technology, has led to the rise of BESS solutions as a
key part of the energy transition.
BESS sites require capital-intensive infrastructure, including
the battery systems themselves, connections to distribution or
transmission networks, enclosures with thermal management, power
conversion systems (inverters), energy management systems
(monitoring and controlling energy flow within the system), and
battery management systems (ensuring the safety of the system).
Grid infrastructure has not kept up with the pace of renewables
deployment, with demand for BESS determined by multiple factors,
such as:
-- The variability of electricity demand.
-- The current and expected future split of power generation sources.
-- The flexibility and variability of these power generation sources.
-- Cost and effectiveness of the energy storage technology.
-- Connection availability to the grid.
Technology
There are multiple types of battery technology available, with
common types including Lithium-ion batteries ("Li-ion"), lead-acid
batteries, sodium sulphur batteries, zinc bromine batteries, and
flow batteries.
The dominant and most widely used technology today is the Li-ion
battery - a versatile technology developed in the 1970s, used in
devices such as mobile phones, laptops and electric cars. They
offer an efficient and high-density solution, with a long cycle and
quick charge and discharge potential. The batteries are charged
during periods of low demand, by converting excess electricity into
chemical energy within the batteries.
There are other types of energy storage systems which are mostly
in developmental stages, but for now BESS form the majority of the
required pipeline for additional energy storage units - examples of
other technologies are compressed air energy storage, mechanical
gravity energy storage, pumped hydropower storage, and hydrogen
energy storage and fuel cells.
Balancing the grid
The use of BESS provides a range of benefits to the electricity
grid, including frequency regulation, peak load shifting, power
management, and the integration of renewable energy sources.
Conventional renewable energy generation relies on unreliable
inputs, making the electricity output unreliable in turn - the wind
does not always blow and the sun does not always shine. When supply
is higher than demand this results in wasted energy and lost
revenue, or power outages when demand is higher than supply.
Stabilisation of the distribution network is a core requirement
to accompany the increase in renewable energy generation, to allow
more flexibility to meet electricity demands. Current system
flexibility in the grid system tends to be provided by an increase
or decrease in the provision of coal, gas-fired or nuclear power
generation.
BESS provides a way to make the variable renewable resource
consistent, dependable and predictable so that the electricity
network needs can be met. It will also help reduce the dependency
on non-renewable energy sources, whilst optimising returns and
maximising energy efficiency.
Market
More energy storage systems are required as a higher proportion
of energy is generated from renewable sources, with the need for
BESS growing more quickly at higher levels of renewables
penetration given the increased variability in the overall
supply.
The cost of Li-ion batteries has been on a strong downward trend
over the last few decades, which has largely assisted in their
becoming a viable solution for energy storage, and a potentially
profitable investment.
Applications of utility scale energy storage systems
include:
-- Energy arbitrage - wholesale market trading, purchasing and
storing of electricity during periods of low demand at low cost,
and selling and discharging it at a higher price during periods of
high demand. Revenue is generated from the volatility in energy
prices.
-- Frequency response (ancillary services) - providing fast
responses to unpredictable variations in electricity demand and
generation. These are usually short-term contracts that are awarded
by energy grid operators with pricing mechanisms based on
availability and pricing.
-- Capacity provision - long-term commercial contracts, usually
with creditworthy parties including energy system operators, such
as National Grid in the UK, that agree to pay a fixed price for a
project's capacity. These help to ensure a reliable energy
provision to the grid, or alternatively supply energy to specific
customers (for example EVs).
Through provision of a combination of these services, BESS
owners can maximise their revenue through value stacking.
Business case
BESS projects are attractive to investors for a number of
reasons, including the sector growth anticipated as the energy
transition continues, and the potential for long-term contracts
with predictable cash flows.
Energy transition - BESS projects are essential to help realise
governmental targets of net zero by 2050 as energy systems move
towards a higher proportion of renewable energy generation.
Long-term contracts - many of the BESS projects will have a
capacity provision contract in place that will secure a proportion
of cash flows, with the potential for these to be inflation linked.
Further upside can be seen through value stacking.
Regulation - given the growth seen in the sector over the past
few years, regulation has fallen behind. BESS are now an area of
focus for governments and regulators, which will help to lift
barriers and may also see financial incentives or subsidies for the
projects.
Supplier warranty - the battery units will typically benefit
from a supplier warranty that guarantees minimum performance levels
under specific operating parameters, reducing technology risk.
PINT approach
PINT has exposure to a number of BESS projects through its
investments in the Power & Utilities and Renewables &
Energy Efficiency sectors. These include Calpine, which has in
excess of 500MW of operational and development phase projects,
notably Santa Ana and Nova in California, and Fudura, through its
product offering of small to medium-sized behind-the-meter
batteries to commercial customers. Furthermore, battery storage
projects form a key part of the investment thesis of the recently
announced Zenobe investment, which boasts c.500MW of contracted
operational battery storage projects in the UK as well as a
significant global development pipeline.
The development of BESS projects is expected to represent a key
growth opportunity for infrastructure developers that PINT aims to
invest in. Accordingly, the Company's exposure to this significant
decarbonisation sector is expected to grow over time.
ESG in infrastructure investing
Introduction
The Board of PINT believes that sound ESG practices and
operating sustainably are integral to building a resilient
infrastructure business and creating long-term value for our
shareholders and other stakeholders. Investing responsibly in
infrastructure is central to PINT's business model.
PINT's Board is ultimately responsible for its sustainability,
and established its ESG and Sustainability Committee in July 2023
to oversee and review its ESG and Sustainability policy, which can
be found on PINT's website (www.pantheoninfrastructure.com). The
Committee is chaired by Andrea Finegan, an independent
non-executive Director, and consists of PINT's Board members and
Pantheon's Global Head of ESG.
The Board has appointed Pantheon as its Investment Manager who,
amongst other responsibilities, is tasked with delivering this ESG
and Sustainability policy day-to-day.
In turn, Pantheon (the "Investment Manager") maintains its own
group-wide ESG Policy, the objective of which is to ensure that,
wherever possible, ESG considerations are appropriately reflected
in Pantheon's investment process.
Pantheon believes this is crucial to harnessing the potential
for value creation, as well as in protecting the interests and
reputations of its firm and clients. ESG due diligence findings are
formally documented in investment recommendations, with potential
concerns flagged for consideration by Pantheon investment
committees. Following the closing of an investment, Pantheon
actively monitors ESG and climate change risk, and proactively
engages with its highly experienced general partners and Sponsors
to advocate for improvement in the event of any negative
incidents.
Pantheon is rigorous in assessing and managing
sustainability-related risks in its managed portfolio and
identifying opportunities. Equally, Pantheon actively seeks
opportunities arising from the development of solutions to global
sustainability challenges. These long-term trends are aligned with
PINT's strategy and investment mandate.
PINT is classified as Article 8 under the European Union's
Sustainable Finance Disclosure Regulation ("SFDR"), and as such
PINT must make available annual periodic reports, as detailed in
the next paragraph. To support its promoted environmental / social
characteristic, PINT has adopted an investment policy which
restricts investments in specific excluded sectors. PINT will not
invest in infrastructure assets whose principal operations are in
any of the following sectors:
-- coal (including coal-fired generation, transportation and mining);
-- oil (including upstream, midstream and storage);
-- upstream gas;
-- nuclear energy; and
-- mining.
H1 highlights
During 2023, the following was achieved:
PINT established an ESG & Sustainability Committee
Pantheon published its inaugural sustainability report for
2022
PINT adopted a Company ESG and sustainability policy, which
complements and builds on the Investment Manager's ESG policy
Looking ahead, the Company is aiming to improve data collection,
resulting in better disclosures and also improved ESG performance
of investments. We acknowledge that as an investment company
without control of the underlying investee companies, we are
heavily reliant on Pantheon and the Sponsors for the collection of
data and delivery of any ESG objectives. The focus over the next
year will be very much on engagement with suppliers and Sponsors to
develop the communication, data collection and disclosure.
PINT and Pantheon's enhanced approach to ESG
Integrating ESG considerations into the selection and monitoring
of its infrastructure assets is central to PINT's business
model.
PINT recognises that its level of control of investments is
limited, however where possible it will seek, through its
Investment Manager and the management teams of the investments, to
work with investee companies to improve their ESG performance.
The sustainability of a new potential investment into a
Portfolio Company is assessed during the due diligence phase of the
investment process, prior to any investment decision being
made.
Pantheon's approach to assessing ESG opportunities and risk, on
behalf of PINT is multi-faceted and includes a robust assessment of
both Sponsor-level and asset-level factors. The investment team
conducts extensive diligence at the Sponsor level using several ESG
key performance indicators ("KPIs"). Pantheon's ESG analysis of
potential infrastructure co-investments also involves assessment of
ESG risk at the Portfolio Company level.
Pantheon's approach is based around four key aspects:
1. Transparency
Enhanced transparency through improved ESG practices
2. Integration
Integration of ESG screening, due diligence and monitoring
3. Engagement
Consistent Sponsor, industry and investor engagement leads to
improved ESG reporting
4. Solutions
Developing Sponsor capabilities to offer solutions that meet
investors' ESG and sustainability requirements
Sustainable Development Goals (SDGs)
As part of its integrated ESG analysis in investment due
diligence, Pantheon considers the alignment of each UN Sustainable
Development Goal (SDG) applicable to PINT's assets.
Overview
The UN defines SDGs as: 'as a universal call to action to end
poverty, protect the planet, and ensure that by 2030 all people
enjoy peace and prosperity. Pantheon believes that private sector
investment is essential to achieving SDGs. Annual investment
requirements across all sectors have been estimated at around $5-7
trillion to achieve the SDGs and therefore mobilising private
capital at scale is critical.
Against this backdrop, Pantheon engaged an external ESG
consultancy firm to support it, through enhancing its investment
screening and due diligence. Pantheon has also developed a bespoke
and comprehensive ESG scorecards to support manager and Portfolio
Company ESG assessments. Pantheon's ESG scorecard utilises various
ESG data sources and leading ESG indicators - such as climate
change performance index, World Bank carbon pricing benchmark to
assess managers and Portfolio Companies.
These utilise various industry data sources and leading ESG
indicators - such as the Climate Change Performance Index and the
World Bank Carbon Pricing Benchmark.
These are completed by the investment team before taking a deal
to Pantheon's investment committee.
For further details on Pantheon's SDG mapping methodology,
please refer to PINT's sustainability report, available on PINT's
website.
Pantheon's ESG scorecard for single-company investments includes
a tool which enables a high-level assessment of which SDGs the
investment might contribute to (and can be found on page 42 of the
Interim Report to 30 June 2023).
Voluntary climate-related disclosures
In order to improve and increase reporting on climate-related
financial information, the Financial Stability Board (FSB) - an
international body formed by the G20 that monitors and makes
recommendations about the global financial system - established the
Task Force on Climate-Related Financial Disclosures ("TCFD"). This
was driven by concerns that the risks associated with the
transition to a low-carbon economy were being mispriced by market
participants. For 2022, there is no mandatory requirement for PINT
to make disclosures under the Task Force on Climate-Related
Financial Disclosures TCFD; however, the Company is making progress
towards reporting fully against the TCFD categories of Governance,
Strategy, Risk Management, and Metrics and Targets.
This section of the report sets out how PINT incorporates
climate-related risks and opportunities into its governance,
strategy, risk management, metrics and targets and is guided by,
but is not intended to comply with, the recommendations of the
TCFD.
Governance
PINT's Audit and Risk Committee ("ARC") monitors the integrity
of the financial statements of the Company, including its annual
and interim reports, including checking the sources of information
relating to ESG and climate disclosures included therein. PINT is
committed to sustainability throughout its supply chain. The
appointment of third parties is overseen by the Manager and
reviewed annually at the Management Engagement Committee. PINT is
classified as Article 8 under the European Union's Sustainable
Finance Disclosure Regulation, and as such has enhanced reporting
requirements and an investment policy which restricts investments
in specific exclusion sectors.
Strategy
As set out in the Company's launch prospectus and ESG and
sustainability policy, the Company intends to be diversified across
sectors that support the Company's promoted environmental
characteristics including climate change mitigation.
PINT will not invest in infrastructure assets whose principal
operations are in any of the excluded sectors mentioned on page 38
of the Interim Report 30 June 2023.
Risk management
As set out in its annual report and accounts for 2022, the
Company has a comprehensive risk and governance framework to ensure
all risks, including ESG and climate-related risks, are monitored
and managed with due care and diligence. The Board exercises
oversight of this framework, through its Audit and Risk Committee,
and ESG risks and opportunities are additionally considered by the
ESG and Sustainability Committee.
The Company is ultimately reliant on the risk management
frameworks of the Investment Manager, investment Sponsors and other
key service providers, as well as on the risk management operations
of each Portfolio Company.
Metrics and targets
As set out in its strategy, PINT restricts investments in
certain sectors; however, as it invests in a diversified portfolio,
it does not have an overarching portfolio emissions target.
PINT reports against the following climate-related ESG key
performance indicators:
-- CO(2) emissions data (tCo(2) e);
-- year of emissions;
-- carbon intensity per asset (tCo(2) e/GBPm revenue); and
-- carbon footprint (tCO(2) e/GBPm NAV).
CO(2) : Scope 1 and 2 disclosures - PINT's portfolio
-- Scope 1 (direct emissions): emissions generated from
activities directly controlled by Portfolio Companies (i.e.
combustion of fuel and operation of facilities).
-- Scope 2 (indirect emissions): emissions generated from
Portfolio Companies' consumption of power (i.e. purchased
electricity/heat).
The top three CO(2) -emitting Portfolio Companies (tCO(2) e)
contribute 99% of PINT's Scope 1 & 2 emissions.
Scope 1 Scope 2 Scope 1+2
GHG emissions (tCO(2) e) 439,519 6,406 445,926
Year of emissions 2022 2022 2022
Carbon intensity (tCO(2) e/GBPm revenues) 4,578 84 4,662
Carbon footprint (tCO(2) e/GBPm NAV) 1,457 21 1,478
Coverage (% of NAV reported) 100% 100% 100%
------------------------------------------ ------- ------- ---------
Notes: Coverage refers to the % of NAV for which the Sponsors
provided the GHG emissions value. All figures are actual data
provided by Sponsors. None of the figures were estimated by
Pantheon. Carbon intensity shown as a weighted average by NAV.
Revenue figures are latest available as at 31 December 2022.
Emissions and NAV figures are as at 31 December 2022.
PINT's Portfolio Companies: Policies and diversity
The data below provide a summary of the proportion of PINT's
Portfolio Companies with Health & Safety and Diversity &
Inclusion policies in place, and of the gender diversity of their
boards and full-time employees.
Policies: Percentage of Portfolio Companies with Health &
Safety and Diversity & Inclusion policies in place
Going forward, PINT and Pantheon will endeavour to work with
Sponsors to ensure that Portfolio Companies which do not have the
aforementioned policies work towards putting them in place.
Pantheon is relying on Sponsor's confirmation of Health &
Safety and Diversity & Inclusion policies and has not received
or reviewed the policies. Number of women FTEs not provided for one
Portfolio Company.
% of assets with an H&S / D&I policy in place:
H&S | 89%
D&I | 67%
% of women board members:
30-40% | 4
20-30% | 1
10-20% | 2
<10% | 2
% of women FTEs:
>50% | 1
40-50% | 1
30-40% | 1
20-30% | 4
<10% | 1
Note: Number of women FTEs not provided for one Portfolio
Company.
Looking ahead
Going forward, PINT is aiming to develop data collection,
resulting in better disclosures and also improved ESG performance
of investments.
As an investment company without control of underlying investee
companies, the Board is heavily reliant on Pantheon and Sponsors
for the collection of data and delivery of any ESG objectives. The
focus over the next year will be very much on engagement with
suppliers to improve the communication, data collection and
disclosure.
Further details of Pantheon's approach to climate change
analysis in investing, investment examples, third-party
relationships and Pantheon's own diversity and inclusion metrics
can be found in the full 2022 sustainability report on PINT's
website.
Board of Directors
Vagn Sørensen
Chair and Nomination Committee Chair
Appointed to the Board 4 October 2021
Mr Vagn Sørensen is an experienced non -- executive chair and
director of listed and private companies.
After attending Aarhus Business School and graduating with a MSc
degree in Economics and Business Administration, Mr Sørensen began
his career at Scandinavian Airlines Systems in Sweden, rising
through numerous positions in a 17 -- year career before becoming
Deputy CEO with special responsibility for Denmark. Between 2001
and 2006, Mr Sørensen was President and Chief Executive Officer for
Austrian Airlines Group in Austria, a business with approximately
EUR2.5 billion of turnover, 8,000 employees and listed on the
Vienna Stock Exchange. Mr Sørensen also served as Chair of the
Association of European Airlines in 2004. Since 1999, Mr Sørensen
has been a Tier 1 senior industrial adviser to EQT, a private
equity sponsor, and has been a non -- executive director or Chair
of a number of their Portfolio Companies. Since 2008, Mr Sørensen
has been a senior adviser to Morgan Stanley Investment Bank.
Mr Sørensen is currently Chair of Air Canada (since 2017) and a
non -- executive director of CNH Industrial and Royal Caribbean
Cruises. Notable previous non -- executive appointments have
included Chair of SSP Group (2006 to February 2020), Chair of
Scandic Hotels AB (2007 -- 2018), Chair of TDC A/S (2006 -- 2017)
and Chair of FLSmidth & Co (2009 -- 2022).
Anne Baldock
Senior Independent Director and Chair of the Remuneration
Committee
Appointed to the Board 4 October 2021
Ms Anne Baldock is an experienced board member and lawyer with
over 30 years' experience in the infrastructure sector.
Ms Baldock graduated in law from the London School of Economics
and was a qualified Solicitor in England and Wales from 1984 to
2012. Ms Baldock was a Partner at Allen & Overy LLP between
1990 and 2012, during which time she was Managing Partner, Projects
Group London (1995 -- 2007), member of the firm's Global/Main
Strategic Board (2000 -- 2006) and Global Head of Projects, Energy
and Infrastructure (2007 -- 2012). Notable transactions included
the Second Severn Crossing, Eurostar, the securitisation of a major
UK water utility and several major PPP projects in the UK and
abroad.
Ms Baldock's current roles include Senior Independent Director
for the Restoration and Renewal Delivery Authority Limited (the
delivery body created by parliament to deal with the restoration of
the Houses of Parliament), Senior Independent Director and Chair of
Audit and Risk Committee for East West Railway Company Limited (the
Government -- owned company constructing the new Oxford to
Cambridge railway) and non -- executive director of Electricity
North West Limited. Amongst previous roles, Ms Baldock was non --
executive director of Thames Tideway Tunnel, non -- executive
director of Hydrogen Group (AIM -- listed) and Trustee of Cancer
Research UK.
Patrick O'Donnell Bourke
Audit and Risk Committee Chair
Appointed to the Board 4 October 2021
Mr Patrick O'Donnell Bourke is an experienced board member with
more than 28 years of experience in energy and infrastructure.
After graduating from Cambridge University, Mr O'Donnell Bourke
started his career at Peat Marwick, Chartered Accountants (now
KPMG) and qualified as a Chartered Accountant. After that he held a
variety of investment banking positions at Hill Samuel and Barclays
de Zoete Wedd. In 1995, he joined Powergen Plc, where he was
responsible for mergers and acquisitions before becoming Group
Treasurer. In 2000, Mr O'Donnell Bourke joined Viridian Group Plc
as Group Finance Director and later became Chief Executive,
appointed by the private equity shareholder following take -- over
in 2006. In 2011, he joined John Laing Group, a specialist
international investor in, and manager of, greenfield
infrastructure assets where he served as CFO until his retirement
in 2019. While at John Laing, he was part of the team which
launched the John Laing Environmental Assets Fund on the London
Stock Exchange in 2014.
Mr O'Donnell Bourke currently serves as Chair of Ecofin US
Renewables Infrastructure Trust Plc and as Chair of the Audit
Committee of Harworth Group Plc (a leading UK regenerator of land
and property for development and investment). Mr O'Donnell Bourke
was previously Chair of the Audit and Risk Committee at Calisen Plc
(an owner and operator of smart meters in the UK) and Chair of the
Audit Committee at Affinity Water.
Andrea Finegan
Management Engagement Committee Chair and ESG &
Sustainability Committee Chair
Appointed to the Board 4 October 2021
Ms Andrea Finegan is an experienced infrastructure asset
management professional with over 30 years of sector
experience.
After graduating from Loughborough University, Ms Finegan held
investment banking roles at Deutsche Bank and Barclays Capital,
before joining Hyder Investments as Head of the Deal Closing Team.
Between 1999 and 2007, Ms Finegan worked at Innisfree Limited, the
investment manager of an GBP8 billion infrastructure asset
portfolio, latterly as Board Director and Head of Asset Management.
Ms Finegan was subsequently Chief Operating Officer, ING
Infrastructure Funds and Fund Consultant to Climate Change
Capital.
In 2012, Ms Finegan joined Greencoat Capital LLP for the set up
and launch of Greencoat UK Wind Plc, the renewable infrastructure
investment trust, in 2013, then became Chief Operating Officer
until 2018, a position that included structuring and launching
another renewable energy infrastructure fund listed on the London
Stock Exchange and Euronext Dublin (Greencoat Renewables Plc) and a
number of private markets solar energy funds.
Ms Finegan is currently Chair of the Valuation Committee of
Schroders Greencoat LLP, a role she has held since 2015, and
independent consultant to the board of Sequoia Economic
Infrastructure Income Fund Limited, working closely with the ESG
& Stakeholder Committee and the Risk Committee.
Interim management 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
Investment Manager's report. The principal risks facing the Company
are substantially unchanged since the date of the annual report for
the financial period ended 31 December 2022 and continue to be as
set out in that report on pages 72 to 76. Risks faced by the
Company include, but are not limited to market conditions,
political and regulatory changes, falls in demand, returns target,
investor sentiment, lack of suitable investment opportunities,
portfolio concentration risk, over-reliance on the Investment
Manager, tax status and legislation, third -- party providers,
cyber security, geopolitical turbulence and climate change
risk.
Each Director confirms that, to the best of his or her
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; and
-- the 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
for the six months to 30 June 2023 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 six months to 30 June 2023 and that have materially affected
the financial position or performance of the Company during that
period.
This interim financial report was approved by the Board on 26
September 2023 and was signed on its behalf by:
Vagn Sørensen
Chair
26 September 2023
Independent review report
to Pantheon Infrastructure Plc
Conclusion
We have been engaged by Pantheon Infrastructure Plc ('the
Company') to review the condensed set of financial statements in
the half-yearly financial report for the six months ended 30 June
2023 which comprises the Income statement, Statement of changes in
equity, Balance sheet, Cash flow statement, and Notes 1 to 21. We
have read the other information contained in the half yearly
financial report 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 half-yearly financial report for the six months ended 30
June 2023 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, 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 half-yearly financial report 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 half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, 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 half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. 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
26 September 2023
Condensed income statement (unaudited)
For the six months to 30 June 2023
Six months ended Period 9 September Period 9 September
30 June 2022 2021 to 2021 to 31 December
30 June 2023 2022
-------------------------- ---- ------------------------- ------------------------- -------------------------
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---- ------- ------- ------- ------- ------- ------- ------- ------- -------
Gain on investments
at fair value through
profit or loss(1) 9 - 7,193 7,193 - 5,711 5,711 - 19,592 19,592
Gains/(losses) on
financial instruments
at fair value through
profit or loss 12 - 9,724 9,724 - (4,994) (4,994) - (8,520) (8,520)
Foreign exchange gains
on cash and non --
portfolio assets - 116 116 - 19 19 - 5 5
Investment management
fees 2 (2,386) - (2,386) (790) - (790) (3,194) - (3,194)
Other expenses 3 (942) (9) (951) (786) (122) (908) (1,360) (555) (1,915)
-------------------------- ---- ------- ------- ------- ------- ------- ------- ------- ------- -------
(Loss)/profit before
financing and taxation (3,328) 17,024 13,696 (1,576) 614 (962) (4,554) 10,522 5,968
Finance income 4 1,762 - 1,762 405 - 405 2,096 - 2,096
Interest payable and
similar expenses 5 (560) - (560) (1) - (1) (36) - (36)
-------------------------- ---- ------- ------- ------- ------- ------- ------- ------- ------- -------
(Loss)/profit before
taxation (2,126) 17,024 14,898 (1,172) 614 (558) (2,494) 10,522 8,028
Taxation recovered/(paid) 6 - - - - - - - - -
-------------------------- ---- ------- ------- ------- ------- ------- ------- ------- ------- -------
(Loss)/profit for
the period, being
total comprehensive
income for the period (2,126) 17,024 14,898 (1,172) 614 (558) (2,494) 10,522 8,028
-------------------------- ---- ------- ------- ------- ------- ------- ------- ------- ------- -------
Earnings per share
- Basic 7 (0.44)p 3.55p 3.11p (0.29)p 0.15p (0.14)p (0.58)p 2.45p 1.87p
-------------------------- ---- ------- ------- ------- ------- ------- ------- ------- ------- -------
Earnings per share
- Diluted 7 (0.44)p 3.55p 3.11p (0.24)p 0.13p (0.11)p (0.58)p 2.45p 1.87p
-------------------------- ---- ------- ------- ------- ------- ------- ------- ------- ------- -------
1. Includes foreign exchange movements on investments.
The Company does not have any income or expense that is 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). The total
column of the statement represents the Company's statement of total
comprehensive income prepared in accordance with FRS 104.
All revenue and capital items in the above statement relate to
continuing operations.
No operations were acquired or discontinued during the
period.
The Notes on pages 51 to 62 form part of the financial
statements in the Interim Report to 30 June 2023.
Condensed statement of changes in equity (unaudited)
For the six months to 30 June 2023
Note Share capital Share premium Capital Other capital Revenue Total
reserve(1)
GBP'000 GBP'000 redemption reserve(1) GBP'000 GBP'000
reserve(1) GBP'000
GBP'000
----------------------------- ---- ------------- ------------- ---------- ------------- ----------- --------
Movement for the
six months ended 30
June 2023
Opening equity shareholders'
funds 4,800 79,449 382,484 10,522 (2,494) 474,761
Share issue costs - (187) - - - (187)
Ordinary Shares bought
back - - (979) - - (979)
Dividends paid 8 - - (4,800) - -- (4,800)
Profit/(loss) for
the period - - - 17,024 (2,126) 14,898
----------------------------- ---- ------------- ------------- ---------- ------------- ----------- --------
Closing equity shareholders'
funds 4,800 79,262 376,705 27,546 (4,620) 483,693
----------------------------- ---- ------------- ------------- ---------- ------------- ----------- --------
Movement for the
period 9 September
2021 to 30 June 2022
Balance at 9 September - - - - - -
2021
Share issue costs - (7,916) - - - (7,916)
Ordinary Shares issued 4,800 395,200 - - - 400,000
Cancellation of share
premium - (387,284) 387,284 - - -
Profit/(loss) for
the period - - - 614 (1,172) (558)
----------------------------- ---- ------------- ------------- ---------- ------------- ----------- --------
Closing equity shareholders'
funds 4,800 - 387,284 614 (1,172) 391,526
----------------------------- ---- ------------- ------------- ---------- ------------- ----------- --------
Movement for the
period 9 September
2021 to 31 December
2022
Balance at 9 September - - - - - -
2021
Share issue costs - (9,267) - - - (9,267)
Ordinary Shares issued 4,800 395,200 - - - 400,000
Subscription shares
issued (subsequently
converted to Ordinary
Shares) - 80,800 - - - 80,800
Cancellation of share
premium - (387,284) 387,284 - - --
Dividends paid 8 - - (4,800) - - (4,800)
Profit/(loss) for
the period - - - 10,522 (2,494) 8,028
----------------------------- ---- ------------- ------------- ---------- ------------- ----------- --------
Closing equity shareholders'
funds 4,800 79,449 382,484 10,522 (2,494) 474,761
----------------------------- ---- ------------- ------------- ---------- ------------- ----------- --------
1. The capital redemption reserve, capital reserve and revenue
reserve are all the Company's distributable reserves. The capital
redemption reserve has arisen from the cancellation of the
Company's share premium account and is a distributable reserve.
Condensed balance sheet (unaudited)
As at 30 June 2023
Note 30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
----------------------------------------------- ---- -------- -------- -----------
Non-current assets
Investments at fair value 9 391,616 145,360 301,382
Debtors 10 815 - 740
Current assets
Derivative financial instruments 12 2,048 - -
Debtors 10 1,182 597 959
Cash and cash equivalents 11 90,816 251,674 182,937
----------------------------------------------- ---- -------- -------- -----------
94,046 252,271 183,896
Creditors: Amounts falling due within one year
Other creditors 13 (1,940) (1,111) (2,737)
----------------------------------------------- ---- -------- -------- -----------
(1,940) (1,111) (2,737)
Net current assets 92,106 251,160 181,159
----------------------------------------------- ---- -------- -------- -----------
Total assets less current liabilities 484,537 396,520 483,281
----------------------------------------------- ---- -------- -------- -----------
Creditors: Amounts falling due after one year
Derivative financial instruments 12 (844) (4,994) (8,520)
----------------------------------------------- ---- -------- -------- -----------
Net assets 483,693 391,526 474,761
----------------------------------------------- ---- -------- -------- -----------
Capital and reserves
Called-up share capital 15 4,800 4,800 4,800
Share premium 79,262 - 79,449
Capital redemption reserve 376,705 387,284 382,484
Capital reserve 27,546 614 10,522
Revenue reserve (4,620) (1,172) (2,494)
----------------------------------------------- ---- -------- -------- -----------
Total equity shareholders' funds 483,693 391,526 474,761
----------------------------------------------- ---- -------- -------- -----------
NAV per Ordinary Share 16 101.0p 97.9p 98.9p
----------------------------------------------- ---- -------- -------- -----------
The financial statements were approved by the Board of Pantheon
Infrastructure Plc on 26 September 2023 and were authorised for
issue by:
Vagn Sørensen, Chair
Company Number: 13611678.
Condensed cash flow statement
For the six months to 30 June 2023
Six months Period Period
ended
30 June 9 September 9 September
2023 2021 to 2021 to
GBP'000 30 June 31 December
2022 2022
GBP'000 GBP'000
---------------------------------------------------- ---------- ----------- -----------
Cash flow from operating activities
Investment management fees paid (2,368) (240) (1,994)
Operating fees paid (748) (605) (1,581)
Other cash payments (101) (346) (110)
---------------------------------------------------- ---------- ----------- -----------
Net cash outflow from operating activities (3,217) (1,191) (3,685)
Cash flow from investing activities
Purchase of investments (83,041) (139,649) (281,790)
---------------------------------------------------- ---------- ----------- -----------
Net cash outflow from investing activities (83,041) (139,649) (281,790)
Cash flow from financing activities
Share issue proceeds - 400,000 480,800
Share issue costs - (7,916) (9,267)
Share buyback costs (976) - -
Dividends paid (4,800) - (4,800)
Loan arrangement facility fee paid (1,816) - -
Finance costs paid (290) - (1)
Finance income 1,903 405 1,675
---------------------------------------------------- ---------- ----------- -----------
Net cash (outflow)/inflow from financing activities (5,979) 392,489 468,407
(Decrease)/increase in cash and cash equivalents
in the period (92,237) 251,649 182,932
Cash and cash equivalents at the beginning of the 182,937 - -
period
Foreign exchange gains 116 25 5
---------------------------------------------------- ---------- ----------- -----------
Cash and cash equivalents at the end of the period 90,816 251,674 182,937
---------------------------------------------------- ---------- ----------- -----------
.
Notes to the interim financial statements (unaudited)
1. Accounting policies
Pantheon Infrastructure Plc (the 'Company') is a listed
closed-ended investment company incorporated in England and Wales
on 9 September 2021, with registered 'company number' 13611678. The
Company began trading on 15 November 2021 when the Company's shares
were admitted to trading on the London Stock Exchange. The
registered office of the Company is Link Company Matters Limited,
6th Floor, 65 Gresham Street, London EC2V 7NQ.
A. Basis of preparation
The Company applied FRS 102 and the SORP for the period 9
September 2021 to 31 December 2022 in its financial statements. The
financial statements for the six months to 30 June 2023 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 statutory accounts for the period
ended 31 December 2022. They have also been prepared on the
assumption that approval as an investment trust will continue to be
granted. The Company's condensed financial statements are presented
in GBP and all values are rounded to the nearest thousand pounds
(GBP'000) except when indicated otherwise.
The financial statements have been prepared in accordance with
the SORP for the financial statements of investment trust companies
and venture capital trusts issued by the AIC in July 2022.
The financial information contained in this interim report, the
comparative figures for the financial period ended 30 June 2022 and
the comparative information for the period 9 September 2021 to 31
December 2022 do not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006. The financial
information for the six months ended 30 June 2023, and the period 9
September 2021 to 30 June 2022, have not been audited but have been
reviewed by the Company's Auditor and their report can be found on
page 46 of the Interim Report 30 June 2023. The annual report and
financial statements for the financial period ended 31 December
2022 have been delivered to the Registrar of Companies. The report
of the Auditor was: (i) unqualified; (ii) did not include a
reference to any matters which the Auditor 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.
The financial statements comprise the results of the Company
only. The Company has control over a number of subsidiaries. Where
the Company owns a subsidiary that is held as part of the
investment portfolio and its value to the Company is through the
fair value rather than as the medium through which the group
carries out business, the Company excludes it from consolidation.
The subsidiaries have not been consolidated in the financial
statements under FRS 102, but are included at fair value within
investments in accordance with 9.9C(a) of FRS 102.
B. Going concern
The financial statements have been prepared on the going concern
basis and under the historical cost basis of accounting, modified
to include the revaluation of certain investments 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 June 2023.
In addition, the Directors have assessed the outlook, which
considers the potential further impact of ongoing geopolitical
uncertainties as a result of the Russia-Ukraine conflict including
the disruption to the global supply chain, and increases in the
cost of living as a result of this conflict, persistent inflation,
interest rate rises and the impact of climate change on the
Company's Portfolio, using the information available up to the date
of issue of the financial statements
In reaching this conclusion, the Board considered budgeted and
projected results of the business, including projected cash flows,
various downside modelling scenarios and the risks that could
impact the Company's liquidity.
Having performed their assessment, 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 twelve 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 in infrastructure to
generate investment returns while preserving capital. The financial
information used by the Directors and Investment Manager to
allocate resources and manage the Company presents the business as
a single segment comprising a homogeneous portfolio.
D. Significant judgements, estimates and assumptions
The preparation of financial statements requires the Company and
Investment Manager to make judgements, estimates and assumptions
that affect the reported amounts of investments at fair value at
the financial reporting date and the reported fair value movements
during the reporting period. However, uncertainty about these
assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of the investments at
fair value in future years.
The fair values for the Company's investments are established by
the Directors after discussion with the Investment Manager using
valuation techniques in accordance with the International Private
Equity and Venture Capital (IPEV) guidelines. Valuations are based
on periodic valuations provided by the Sponsors of the investments
and recorded up to the measurement date. Such valuations are
necessarily dependent upon the reasonableness of the valuations by
the Sponsor of the underlying assets. In the absence of contrary
information, the valuations are assumed to be reliable. These
valuations are reviewed periodically for reasonableness and
recorded up to the measurement date. The Sponsor is usually the
best placed party to determine the appropriate valuation. The
annual and quarterly reports received from the Sponsors are
reviewed by the Investment Manager to ensure consistency and
appropriateness of approach to reported valuations. The investments
are approved by Pantheon's Valuation Committee.
2. Investment management fees
Period 9 September
Six months ended Period ended 2021 to 31 December
30 June 2023 30 June 2022 2022
--------------------------- ------------------------- ------------------------- -------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Investment management fees 2,386 - 2,386 790 - 790 3,194 - 3,194
--------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
2,386 - 2,386 790 - 790 3,194 - 3,194
--------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
The Investment Manager is entitled to a quarterly management fee
at an annual rate of:
-- 1.0% of the part of the Company's Net Asset Value up to and including GBP750 million; and
-- 0.9% of the part of such Net Asset Value in excess of GBP750 million.
As at 30 June 2023, GBP1,218,000 was owed for investment
management fees (30 June 2022: GBP550,000, 31 December 2022:
GBP1,200,000).
The Investment Manager does not charge a performance fee.
3. Other expenses
Six months ended Period ended Period 9 September
30 June 2023 30 June 2022 2021 to 31 December
2022
------------------------------- ------------------------- ------------------------- -------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Secretarial and accountancy
services 110 - 110 111 - 111 201 - 201
Depositary services 41 - 41 44 - 44 74 - 74
Fees payable to the Company's
Auditor for audit-related
assurance services - - - 25 - 25 160 - 160
Fees payable to the Company's
Auditor for non -- audit
-- related assurance services 35 - 35 35 - 35 35 - 35
Directors' remuneration 90 - 90 130 - 130 220 - 220
Employer's National Insurance 8 - 8 15 - 15 24 - 24
Legal and professional fees 13 9 22 90 122 212 186 534 720
Other fees(1) 645 -- 645 336 - 336 460 21 481
------------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
942 9 951 786 122 908 1,360 555 1,915
------------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
1. Other fees consist of items such as advertising and marketing
fees, irrecoverable VAT, broker, valuation and registrar fees and
other operating costs.
4. Finance income
Period
9 September
Six months Period ended 2021 to
ended
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------- ---------- ------------ -----------
Interest income 1,762 405 2,096
---------------- ---------- ------------ -----------
1,762 405 2,096
---------------- ---------- ------------ -----------
5. Interest payable and similar expenses
Six months Period ended Period
ended
30 June 30 June 9 September
2023 2022 2021 to
GBP'000 GBP'000 31 December
2022
GBP'000
-------------------------------------- ---------- ------------ -----------
Commitment fees payable on borrowings 340 - 22
Amortisation of loan arrangement fee 219 - 13
Bank interest expense 1 1 1
-------------------------------------- ---------- ------------ -----------
560 1 36
-------------------------------------- ---------- ------------ -----------
6. Taxation
Tax charge
The tax credit/(charge) for the period differs from the standard
rate of corporation tax in the UK of 19% to 31 March 2023 rising to
25% from 1 April 2023, giving a weighted average for the six months
of 22%. The differences are explained below:
Six months ended Period ended Period 9 September
30 June 2023 30 June 2022 2021 to 31 December
2022
----------------------------- ------------------------- ------------------------- -------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net return before tax (2,126) 17,024 14,898 (1,172) 614 (558) (2,494) 10,522 8,028
----------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Tax at UK corporation tax
rate of 22% (30 June 2022:
19%, 31 December 2022: 19%) (468) 3,745 3,277 (223) 117 (106) (474) 1,999 1,525
Non-taxable investment,
derivative and currency
gains - (3,745) (3,745) - (117) (117) - (1,999) (1,999)
Carry forward management
expenses 468 - 468 223 - 223 474 - 474
----------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
- - - - - - - - -
----------------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Factors that may affect future tax charges
The Company is an investment trust and is therefore not subject
to tax on capital gains. Deferred tax is not provided on capital
gains and losses arising on the revaluation or disposal of
investments because the Company meets (and intends to meet for the
foreseeable future) the conditions for approval as an investment
trust company. No deferred tax asset has been recognised in respect
of management and other expenses in excess of taxable income as
they will only be recoverable to the extent that there is
sufficient future taxable revenue.
As at 30 June 2023, the Company had no unprovided deferred tax
liabilities.
For the six months ended 30 June 2023, excess management
expenses were GBP5.0 million.
7. Earnings per share
Earnings per share (EPS) are calculated by dividing profit for
the period attributable to ordinary equity holders of the Company
by the weighted average number of Ordinary Shares in issue during
the period. As there were no dilutive instruments outstanding for
the six months ended 30 June 2023, there is no difference between
basic and diluted earnings per share as shown below:
Six months ended Period ended Period 9 September
30 June 2023 30 June 2022 2021 to
31 December 2022
---------------------- ------------------------------ ------------------------------ ------------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
---------------------- ------- ------- ------------ ------- ------- ------------ ------- ------- ------------
Earnings for the
financial
period (GBP'000) (2,126) 17,024 14,898 (1,172) 614 (558) (2,494) 10,522 8,028
Weighted average
Ordinary
Shares (number) 479,786,326 400,000,000 428,272,575
---------------------- ------- ------- ------------ ------- ------- ------------ ------- ------- ------------
Basic earnings per
share (0.44)p 3.55p 3.11p (0.29)p 0.15p (0.14)p (0.58)p 2.45p 1.87p
---------------------- ------- ------- ------------ ------- ------- ------------ ------- ------- ------------
Earnings for the
financial
period (GBP'000) (2,126) 17,024 14,898 (1,172) 614 (558) (2,494) 10,522 8,028
Weighted average
Ordinary
Shares (number) 479,786,326 400,000,000 428,272,575
Dilutive shares in
respect
of Subscription
Shares - 80,000,000 -
---------------------- ------- ------- ------------ ------- ------- ------------ ------- ------- ------------
Diluted earnings per
share (0.44)p 3.55p 3.11p (0.24)p 0.13p (0.11)p (0.58)p 2.45p 1.87p
---------------------- ------- ------- ------------ ------- ------- ------------ ------- ------- ------------
There were no meaningful shareholders or corporate activity
between incorporation of the Company on 9 September 2021 and 16
November 2021, the IPO date, and therefore this period has not been
included for the purpose of calculating the weighted average number
of shares.
8. Dividends paid
Six months Period ended Period
ended
30 June 30 June 9 September
2023 2022 2021 to
GBP'000 GBP'000 31 December
2022
GBP'000
--------------------------------- ---------- ------------ -----------
Dividends paid during the period 4,800 - 4,800
--------------------------------- ---------- ------------ -----------
4,800 - 4,800
--------------------------------- ---------- ------------ -----------
9. Investments
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Cost brought forward 281,790 - -
Opening unrealised appreciation on investments held
- Unlisted investments 19,592 - -
- Listed investments - - -
---------------------------------------------------- -------- -------- -----------
Valuation of investments brought forward 301,382 - -
Movement in period:
Acquisitions at cost 83,041 139,649 281,790
Appreciation on investments held 7,193 5,711 19,592
---------------------------------------------------- -------- -------- -----------
Valuation of investments at period end 391,616 145,360 301,382
Cost at year end 364,831 139,649 281,790
Closing unrealised appreciation on investments held
- Unlisted investments 26,785 5,711 19,592
- Listed investments -- - -
---------------------------------------------------- -------- -------- -----------
Valuation of investments at period end 391,616 145,360 301,382
---------------------------------------------------- -------- -------- -----------
10. Debtors
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------- ------- ------- -----------
Other debtors - non-current(1) 815 - 740
Other debtors - current(1) 841 561 486
Prepayments and accrued income 341 36 473
------------------------------- ------- ------- -----------
1,997 597 1,699
------------------------------- ------- ------- -----------
1. Relates to the revolving credit facility (RCF) arrangement
fees which are to be released to the Income Statement until the
loan maturity date of 18 December 2025.
11. Cash and cash equivalents
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
----------------- ------- -------- -----------
Cash 27,508 251,674 26,670
Cash equivalents 63,308 - 156,267
----------------- ------- -------- -----------
90,816 251,674 182,937
----------------- ------- -------- -----------
Cash equivalents of GBP63,308,000 were held in a money market
fund at 30 June 2023 (30 June 2022: GBPnil, 31 December 2022:
GBP156,267,000).
12. Derivative financial instruments
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------------------ ------- ------- -----------
At the beginning of the period (8,520) - -
Gains/(losses) on financial instruments at fair value
through profit or loss 9,724 (4,994) (8,520)
------------------------------------------------------ ------- ------- -----------
At the end of the period 1,204 (4,994) (8,520)
------------------------------------------------------ ------- ------- -----------
The Company uses forward foreign exchange contracts to minimise
the effect of fluctuations in the value of the investment portfolio
from movements in exchange rates. As at 30 June 2023, there were
five contracts due to expire in the next twelve months with a
valuation of GBP2,048,000. The remaining contracts due to expire
after the twelve months following period end were valued as a
liability of GBP844,000.
The fair value of these contracts is recorded in the Balance
Sheet. No contracts are designated as hedging instruments and
consequently all changes in fair value are taken through profit or
loss.
As at 30 June 2023, the notional amount of the forward foreign
exchange contracts held by the Company was GBP325.1 million (30
June 2022: GBP120.2 million, 31 December 2022: GBP278.9
million).
13. Other creditors
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
----------------------------------- ------- ------- -----------
Investment management fees payable 1,218 550 1,200
Other creditors and accruals 722 561 1,537
----------------------------------- ------- ------- -----------
1,940 1,111 2,737
----------------------------------- ------- ------- -----------
14. Interest-bearing loans and borrowings
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------------------------------------- ------- ------- -----------
Interest-bearing loans and borrowings - - --
---------------------------------------------- ------- ------- -----------
Loan arrangement fee brought forward 1,087 - -
Loan arrangement fee incurred in the period 788 - 1,100
Amortised loan arrangement fee for the period (219) - (13)
---------------------------------------------- ------- ------- -----------
Loan arrangement fee carried forward(1) 1,656 - 1,087
---------------------------------------------- ------- ------- -----------
Total credit facility payable - - -
---------------------------------------------- ------- ------- -----------
1. The loan arrangement fee carried forward are shown as other debtors in Note 10.
The Company entered into a GBP62.5 million RCF with Lloyds Bank
Corporate Markets in December 2022. In June 2023, this was
increased by GBP52.5 million, bringing the RCF total to GBP115
million. As part of the increase, the Company has sought to
diversify the lender group through the introduction of The Royal
Bank of Scotland International Limited alongside, Lloyds Bank
Corporate Markets.
The RCF is denominated in GBP, with the option to be utilised in
other major currencies. The rate of interest is the relevant
currency benchmark plus an initial margin of 2.85% per annum,
reducing to 2.65% once certain expansions thresholds have been met.
A commitment fee of 1.00% per annum is payable on undrawn amounts,
and the tenor of the RCF is three years from December 2022. The
facility is secured against the assets held in the Company's
subsidiary, Pantheon Infrastructure Holdings LP.
Borrowing costs associated with the RCF are shown as interest
payable and similar expenses in Note 5 to these financial
statements.
The Loan arrangement fee of GBP1.7 million carried forward at 30
June 2023 is included within Debtors, Note 10 to these financial
statements.
15. Called-up share capital
30 June 2023 30 June 2022 31 December 2022
--------------------- --------------------- ---------------------
Allotted, called up and Shares GBP'000 Shares GBP'000 Shares GBP'000
fully paid:
---------------------------- ------------ ------- ------------ ------- ------------ -------
Ordinary Shares of GBP0.01
Opening balance 480,000,000 4,800 -- - - -
Ordinary Shares issued
in the period - - 400,000,000 4,000 400,000,000 4,000
Conversion of subscription
shares in the period - - - - 80,000,000 800
---------------------------- ------------ ------- ------------ ------- ------------ -------
Closing balance 480,000,000 4,800 400,000,000 4,000 480,000,000 4,800
---------------------------- ------------ ------- ------------ ------- ------------ -------
Subscription shares of
GBP0.01
Opening balance - - - - - -
Subscription shares issued
in the period - - 80,000,000 800 80,000,000 800
Conversion of subscription
shares in the period - - - - (80,000,000) (800)
---------------------------- ------------ ------- ------------ ------- ------------ -------
Closing balance - - 80,000,000 800 - -
---------------------------- ------------ ------- ------------ ------- ------------ -------
Treasury shares
Opening balance - - - - - -
Share buybacks in the
period 1,185,000 979 - - - -
---------------------------- ------------ ------- ------------ ------- ------------ -------
Closing balance 1,185,000 979 - - - -
---------------------------- ------------ ------- ------------ ------- ------------ -------
Total called-up share
capital excluding treasury
shares 478,815,000 3,821 480,000,000 4,800 480,000,000 4,800
---------------------------- ------------ ------- ------------ ------- ------------ -------
During the six months to 30 June 2023, 1,185,000 Ordinary Shares
were bought back in the market, to be held in treasury (30 June
2022: nil, 31 December 2022: nil) at a total cost, including stamp
duty, of GBP979,000.
16. Net asset value per share
NAV per share is calculated by dividing net assets in the
Balance Sheet attributable to ordinary equity holders of the
Company by the number of Ordinary Shares outstanding at the end of
the period. As there were no dilutive instruments outstanding at 30
June 2023 there is no difference between basic and diluted NAV per
share:
30 June 30 June 31 December
2023 2022 2022
---------------------------------- ----------- ------------ ------------
Net assets attributable (GBP'000) 483,693 391,526 474,761
Ordinary Shares 478,815,000 400,000,000 480,000,000
---------------------------------- ----------- ------------ ------------
NAV per Ordinary Share 101.0p 97.9p 98.9p
---------------------------------- ----------- ------------ ------------
17. Reconciliation of gain/(loss) before financing costs and
taxation to net cash flows from operating activities
Six months Period ended Period
ended
30 June 9 September 9 September
2023 2021 to 2021 to
30 June 31 December
2022 2022
------------------------------------------------------- ---------- ------------ -----------
Gain/(loss) before financing costs and taxation 13,696 (962) 5,968
Losses/(gains) on investments (7,193) (5,711) (19,592)
Foreign exchange losses/(gains) on cash and borrowings (116) (26) (5)
Increase in operating debtors (88) (597) (182)
(Decrease)/increase in operating creditors 208 1,111 1,606
(Gains)/losses on financial instruments at fair value
through profit or loss (9,724) 4,994 8,520
------------------------------------------------------- ---------- ------------ -----------
Net cash flows from operating activities (3,217) (1,191) (3,685)
------------------------------------------------------- ---------- ------------ -----------
18. Subsidiaries
The Company has two wholly owned subsidiaries. The Company has
ownership and control over these two entities and as such they are
deemed to be subsidiaries by the Board.
i. PIH LP was incorporated on 5 November 2021 with a registered
address in the State of Delaware, National Registered Agents, Inc.,
209 Orange Street, Wilmington, Delaware, 19801, USA and is wholly
owned by the Company.
The Company holds an investment in PIH LP. In accordance with
FRS 102, the Company has not consolidated the subsidiary on the
grounds it does not carry out business through the subsidiary and
that it is held exclusively with a view to subsequent resale. It is
therefore considered part of an investment portfolio.
Several of the investments in the Portfolio are held through PIH
LP and are valued based on the fair value of the investments held
in those entities. The Company holds a 99.9% investment in PIH LP,
with the remaining holding is held by Pantheon Infrastructure
Holdings GP LLC (PIH GP).
ii. PIH GP was incorporated on 5 November 2021 with a registered
address in the State of Delaware, National Registered Agents, Inc.,
209 Orange Street, Wilmington, Delaware, 19801, USA and is wholly
owned by the Company.
The Company has not consolidated PIH GP as it is immaterial.
This treatment is supported by the Companies Act 2006, section 405
(2), whereby a subsidiary undertaking may be excluded from
consolidation if its inclusion is not material for the purpose of
giving a true and fair view.
19. Fair value
Fair value hierarchy
Financial assets are carried in the Balance Sheet at their fair
value or approximation of fair value. The fair value is the amount
at which the asset could be sold in an orderly transaction between
market participants, at the measurement date, other than a forced
liquidation sale.
The Company measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements. Categorisation within the hierarchy has
been determined on the basis of the lowest level input that is
significant to the fair value measurement of the relevant assets as
follows:
Level 1: Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by
reassessing categorisation at the end of each reporting period.
There were no transfers between levels during the period.
Financial assets at fair value through profit or loss at 30 June
2023
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- ------- ------- -------
Investments - - 391,616 391,616
Derivatives - financial instruments - 1,204 - 1,204
------------------------------------ -------- ------- ------- -------
- 1,204 391,616 392,820
--------------------------------------------- ------- ------- -------
Financial assets at fair value through profit or loss at 30 June
2022
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------- ------- -------- --------
Investments - - 145,360 145,360
Derivatives - financial instruments - (4,994) - (4,994)
------------------------------------ ------- ------- -------- --------
- (4,994) 145,360 140,366
------------------------------------ ------- ------- -------- --------
Financial assets at fair value through profit or loss at 31
December 2022
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------- ------- -------- --------
Investments - - 301,382 301,382
Derivatives - financial instruments - (8,520) - (8,520)
------------------------------------ ------- ------- -------- --------
- (8,520) 301,382 292,862
------------------------------------ ------- ------- -------- --------
The fair value of these investments and derivatives - financial
instruments is recorded in the Balance Sheet as at the period
end.
There have been no transfers between Level 1 and Level 2 during
the period, nor have there been any transfers between Level 2 and
Level 3 during the period.
The carrying amount of all assets and liabilities, detailed
within the Balance Sheet, is considered to be the same as their
fair value.
The majority of the assets held within Level 3 are valued on a
discounted cash flow basis; hence, the valuations are sensitive to
the discount rate assumed in the valuation of each asset. Other
significant unobservable inputs include inflation and interest rate
assumptions used to project future cash flows and the forecast cash
flows themselves.
The majority of assets held within Level 3 have revenues that
are linked, partially linked or in some way correlated to
inflation.
The valuations are sensitive to changes in interest rates. These
comprise a wide range of interest rates from short-term deposit
rates to longer-term borrowing rates across a broad range of debt
products.
20. Transactions with the Investment Manager and related
parties
The amounts payable to the Investment Manager, together with the
details of the Investment Management Agreement, and outstanding
amounts are disclosed in Note 2.
The Company's related parties are its Directors and its
subsidiaries as disclosed in Note 18. The fees paid to the
Company's Board for the six months to 30 June 2023 totalled
GBP98,000 (period ended 30 June 2022: GBP145,000, period ended 31
December 2022: GBP244,000). There were no other identifiable
related parties at the period end.
21. Subsequent events
Commitments
At 30 June 2023 the Company had undrawn commitments of GBP32.9
million outstanding in respect of infrastructure assets (period
ended 30 June 2022: GBP92.1 million).
On 7 September 2023 the Company made a commitment to invest in
Zenobe, a battery storage and electric vehicle fleet specialist,
committing approximately GBP35.0 million.
Disclosure 1 - Investments
This interim report provides information about certain
investments made by PINT. They should NOT be regarded as a
recommendation. Pantheon makes no representation or forecast about
the performance, profitability or success of such investments. You
should not assume that future investments will be profitable or
will equal the performance of past recommendations. The statements
made reflect the views and opinions of Pantheon as of the date of
the investment analysis.
Contact Information:
Pantheon Infrastructure Plc
Telephone
+44 (0)20 3356 1800
Email
pint@pantheon.com
Website
www.pantheoninfrastructure.com
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 at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Ends
LEI: 213800CKJXQX64XMRK69
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IR FFFSIAIIRFIV
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