TIDMPIN
RNS Number : 2587Q
Pantheon International PLC
25 February 2021
For immediate release
The information contained in this announcement is restricted and
is not for publication, release or distribution in the United
States of America, Canada, Australia (other than to persons who are
both wholesale clients and professional or sophisticated investors
in Australia), Japan, the Republic of South Africa or any other
jurisdiction where its release, publication or distribution is or
may be unlawful.
PANTHEON INTERNATIONAL PLC (the "Company" or "PIP")
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 30 NOVEMBER
2020
The full Half-Yearly Financial Report can be accessed via the
Company's website at www.piplc.com or by contacting the Company
Secretary by telephone on +44 (0)1392 477500.
Pantheon International Plc (the "Company" or "PIP")
Pantheon International Plc, a FTSE 250 investment trust that
provides access to a global and diversified portfolio of private
equity companies, today publishes its Half-Yearly Financial Report
for the six months ended 30 November 2020.
Annualised performance as at 30 NOVEMBER 2020
Since inception
1 yr 3 yrs 5 yrs 10 yrs (1987)
NAV per share 12.1% 11.8% 14.1% 12.8% 11.7%
------- ------- ------- -------- ----------------
Ordinary share price -0.2% 7.5% 12.4% 14.7% 11.1%
------- ------- ------- -------- ----------------
FTSE All Share,
TR -10.3% -0.6% 4.1% 5.9% 7.2%
------- ------- ------- -------- ----------------
MSCI World, TR (Sterling) 12.7% 10.8% 14.3% 12.6% 8.2%
------- ------- ------- -------- ----------------
Share price relative performance
Versus FTSE All
Share, TR +10.1% +8.1% +8.3% +8.8% +3.9%
Versus MSCI World,
TR (Sterling) -12.9% -3.3% -1.9% +2.1% +2.9%
-------- ------- ------- ------- -------
HIGHLIGHTS - SIX MONTHSED 30 NOVEMBER 2020
Performance update
-- PIP performed well during the period as NAV per share grew by 8.9% to 3,139.2p.
-- Net assets at 30 November 2020 increased to GBP1,698m (31 May 2020: GBP1,559m).
-- PIP's share price, which has recovered in line with the
global stock markets, increased by 12.4%; the discount to NAV was
26%.
Portfolio update
-- Assets in the portfolio generated impressive underlying
(pre-FX) returns of 15.4%, reflecting the strong tilt towards more
resilient sectors such as information technology and
healthcare.
-- Distributions received in the six months to 30 November 2020
were GBP111m, equivalent on an annualised basis to a distribution
rate of 15% of the opening attributable portfolio. After funding
GBP54m of calls, net cash inflow from the portfolio totalled
GBP57m.
-- The average age of PIP's funds at the half year-end was 5.5
years (May 2020: 5.1 years), reflecting the careful balance between
cash being received from mature funds and value being created from
more recent investments.
-- Following a short hiatus in deal activity due to the COVID-19
pandemic , GBP14.6m was committed to six new investments during the
half year, of which GBP10.9m was funded at the time of
purchase.
-- PIP has a full pipeline and has committed GBP28.7m to 10
investments since the period end.
Financial position update
-- Undrawn multi-currency revolving GBP300m credit facility
amended to extend the term of a GBP225m tranche to May 2024. The
remaining GBP75m tranche extended to May 2024 since the period end.
The amendment also facilitates an increase in commitments to
GBP350m through additional facilities.
-- PIP's financing cover, which measures the sum of PIP's
undrawn commitments of GBP464m as at 30 November 2020 against its
available financing and the value of its private equity portfolio,
was 4.4 times .
Commenting on PIP's performance for the half year, Sir Laurie
Magnus, Chairman, said:
"PIP's financial strength and tilt towards more resilient
sectors gives the Board confidence that PIP will continue to
produce attractive returns for shareholders which can outperform
public market benchmarks over the long term."
For more information please contact:
Vicki Bradley
Pantheon
+44 (0)20 3356 1800
Follow us on LinkedIn: https://www.linkedin.com/company/pantheon-international-plc
A series of videos of the team at Pantheon discussing PIP's half
year results, interviews with two of our leading private equity
managers on their approach to ESG and case studies showcasing some
of our portfolio companies are available on our website at
www.piplc.com .
Important Information
A copy of this announcement will be available on the Company's
website at www.piplc.com Neither the content of the Company's
website, nor the content on any website accessible from hyperlinks
on its website for any other website, is incorporated into, or
forms part of, this announcement nor, unless previously published
by means of a recognised information service, should any such
content be relied upon in reaching a decision as to whether or not
to acquire, continue to hold, or dispose of, securities in the
Company.
CHAIRMAN'S STATEMENT
Resilience, growth and opportunity
IN SUMMARY
* Strong performance from the underlying portfolio
reflects tilt towards resilient sectors such as
information technology and healthcare.
* PIP's flexible investment approach, strong balance
sheet and liquidity mean it can respond quickly to
market conditions.
* PIP has continued investing through the pandemic.
Highlights
11.7% Average annual NAV growth since inception
8.9% NAV per share growth in the half year
12.4% Share price increase in the half year
GBP1,698m Net asset value
GBP57m Portfolio net cash flow in the half year
Since I last wrote to you on 5 August 2020, the world has
continued to grapple with the COVID-19 crisis and, while the
rollout of the vaccine programmes provides hope, the spread of
mutations of the virus and multiple lockdowns continue to inflict
severe economic damage globally. Despite this turmoil, financial
markets have rebounded strongly from the lows of last year, buoyed
by optimism and extensive support from governments and central
banks. This positive sentiment has benefitted PIP and its share
price, which increased by 12.4% during the six months ended 30
November 2020 . Despite this, the Board continues to believe that
PIP's shares trade at an excessive discount (26% as at 30 November
2020), a belief underlined by a GBP3.8m investment in PIP's
shares on behalf of one of the Directors after the period
end.
PIP's underlying portfolio performance reflects its strong tilt
towards more resilient sectors, such as information technology and
healthcare, which have demonstrated impressive growth during the
period. During the six months ended 30 November 2020, PIP's NAV per
share increased by 8.9% to 3,139.2p and its net assets stood at
GBP1.7bn. On an annualised basis, this translates into average
annual NAV per share growth of 11.7% since the Company was launched
in 1987, significantly outperforming the FTSE All-Share and MSCI
World indices over the same period.
PIP's Strategic Report, within the full Interim Report, has been
approved and signed on behalf of the Board. Some of the key
highlights of the report are summarised below, but shareholders are
encouraged to read the Strategic Report in its entirety.
Performance for the six months to 30 November 2020
During the half year, our underlying portfolio performed
strongly, with valuation gains of 15.0% and income of 0.4%. The
strengthening of sterling versus the US$ resulted in foreign
exchange movements of -6.1%, while expenses and taxes deducted
0.4%.
The buyout and growth segments, which form the majority of PIP's
portfolio, benefitted from strong valuation gains and exits during
the six months. These were primarily in healthcare and information
technology, with one notable gain in particular coming from
Allegro, an online marketplace provider in Poland, which launched
an Initial Public Offering ("IPO") and has since become the largest
company by market capitalisation on the Warsaw Stock Exchange. PIP
co-invested in Allegro in 2017: see the case study within the full
Interim Report to find out more. The very strong performance in
venture was driven primarily by the successful IPO of a technology
company in the portfolio. By investing in private companies managed
by many of the best private equity managers globally, PIP is able
to capture the rapid growth and value creation that often occurs
before those companies reach the listed markets.
The performance of special situations, which accounts for just
8% of the overall portfolio, was flat during the period as it
continued to be impacted by valuation declines in companies with
energy exposure. As I indicated in my update on 5 August 2020, we
are de-emphasising energy in our portfolio and, as investments are
realised, we would expect to see PIP's energy exposure decline
further over time as a proportion of the Company's NAV. At the end
of November 2020, energy represented just 4% of the portfolio.
Cash flow and balance sheet liquidity
The Board and Pantheon regularly stress test PIP's investment
portfolio on various scenarios to ensure that the Company is able
to withstand a potential downturn, including the risk of a sharp
decline in distributions and a significant increase in calls from
our underlying private equity managers. Although there was an
understandable hiatus in deal activity following the immediate
onset of the COVID-19 pandemic, PIP has continued to receive
distributions and a ramp up in calls has not materialised. During
the period, PIP received GBP111m in distributions, equivalent on an
annualised basis to a distribution rate of 15% of PIP's opening
portfolio value. Calls from existing commitments to private equity
funds during the period amounted to GBP54m, equivalent to 20% of
PIP's opening undrawn commitments. Overall, PIP generated a net
positive cash flow of GBP57m during the period, before taking
account of new investments.
The average age of PIP's funds at the half year end was 5.5
years, providing a balance between cash being received from mature
funds and value being created from more recent investments.
Repayment of the unlisted Asset Linked Note ("ALN"), which was
issued with an initial principal value of GBP200m in October 2017,
is made only from the cash distributions received from a reference
portfolio of older investment assets, mainly dating from 2006 and
earlier. The ALN matures on 31 August 2027 and, as at 30 November
2020, had a remaining value of GBP53m, of which GBP2.8m represents
the net cash flow for the three months to 30 November 2020, due for
repayment on 28 February 2021.
In November 2020, we announced that PIP had agreed an amendment
to its GBP300m multi-currency revolving credit facility which was
due to expire in June 2022, involving the extension of a GBP225m
tranche to May 2024. Since the period end, the remaining GBP75m
tranche has also been extended, with the result that the entire
facility is now due to expire in May 2024. The amended agreement
allows the Company the flexibility to increase its committed
facilities to GBP350m. The facility, which has been denominated as
to US$269.8m and EUR101.6m to match the principal currencies in
which the Company's undrawn commitments are denominated, was
equivalent to GBP293m as at 30 November 2020.
Altogether, PIP had liquid resources as at 30 November 2020 of
GBP444m, comprising net available cash of GBP151m and its wholly
undrawn credit facility. PIP's financing cover, which measures the
sum of PIP's undrawn commitments of GBP464m as at 30 November 2020
against its available financing and the value of its private equity
portfolio, was comfortable at 4.4 times.
Taking advantage of exciting deal flow and structural trends
PIP's portfolio is weighted towards the information technology
and healthcare sectors, which accounted for almost half of the
portfolio at the end of November (Information technology: 29%;
Healthcare: 19%), whereas it has limited exposure (1.3% in total)
to the sectors hardest hit by the pandemic, such as travel and
hospitality. It has been widely recognised that the pandemic has
accelerated many of the trends that were already underway in
consumer and business behaviour, such as the move towards more
remote working, the greater use of online retailing and the
increased integration of information technology into the delivery
of services and manufacturing. Our underlying managers had already
been investing in many of the businesses operating in the provision
of tech-enabled solutions for these purposes. Throughout this
report, you will find case studies on some of the information
technology companies in PIP's portfolio and the services they
offer. Healthcare has also been resilient through the crisis, with
many of the companies in PIP's portfolio focused on providing
medical care and pharmaceutical products.
Although new investment activity reduced significantly in the
aftermath of the crisis, it has picked up in recent months as
private equity managers have taken advantage of the market
dislocation and sought out buy-and-build and take-private
businesses in attractive sectors. PIP has continued investing in
opportunities identified by Pantheon and our private equity
managers which provide access to growing businesses led by
experienced and entrepreneurial managers. During the six months to
30 November 2020, PIP committed GBP14.6m to six new investments, of
which GBP10.9m was drawn at the time of purchase. This comprised
GBP8.6m invested in four co-investments, GBP4.7m committed to one
secondary investment and GBP1.3m committed to one primary
investment. Since the period end, PIP has committed a further
GBP28.7m to 10 new investments.
Pantheon's experience and responsible investment approach
Pantheon uses its extensive, deep and long-standing
relationships with some of the world's best private equity
managers, together with their connections and often privileged
access to information, to source compelling deals for PIP. In
addition, Pantheon uses its position on over 470 fund advisory
boards worldwide to promote high standards in relation to
environmental practices, corporate governance and social awareness
amongst private equity managers and investee companies. The Board
is encouraged to note that many private equity managers have
already recognised the importance of embedding these principles
into their business practices and the positive opportunities for
creating value from such an approach. See the full Interim Report
to hear from two of our private equity managers about what ESG
means to them. Pantheon is a strong promoter of equal opportunity,
diversity and inclusion and such principles are fully integrated
into its investment due diligence questionnaires and processes.
Board changes and succession
Upon conclusion of the AGM in September 2020, Ian Barby, who had
been a Director since 2005, retired from the Board. David Melvin,
who has been a Director of the Company and a member of the Audit
Committee since 2015, took over the role of Chairman of the Audit
Committee in April 2020.
Susannah Nicklin, our Senior Independent Director and a member
of the Board since November 2011, has indicated that she wishes to
retire as a Director following the conclusion of this year's AGM.
Susannah has been a very effective contributor to the Board's work
and will be greatly missed by her colleagues. The Board will
undertake a search to find a new Director later this year.
Positive outlook for PIP
It is difficult to predict how long the COVID-19 pandemic will
last, nor what the global economy will look like afterwards,
particularly against a backdrop of worldwide political tensions and
increasing anxiety over the effects of climate change. PIP's global
portfolio is of course highly exposed to many developments over
which it has no influence, but the dynamism of private
equity-backed businesses within capitalist economies, not least
relative to public companies, justifies PIP's objective to be the
"go to" investment platform for accessing a portfolio of growth
orientated companies.
The Board believes that PIP's investment positions have, in
general to date, come through the COVID-19 crisis in good shape and
that the Company is well-positioned for the future. Pantheon, with
nearly 40 years' experience of investing in private markets, has
valuable longstanding relationships with the underlying managers of
PIP's portfolio, which are not easy to replicate. PIP's flexible
investment approach and ability to vary the pace of its
commitments, together with its strong balance sheet and liquidity,
means that it can respond opportunistically and quickly to market
conditions. This combination of PIP's financial resilience and
Pantheon's managerial acumen gives the Board confidence that PIP
will continue to produce attractive returns for shareholders which
can outperform public market benchmarks over the long term.
SIR LAURIE MAGNUS
Chairman
24 February 2021
INVESTMENT POLICY
Our investment policy is to maximise capital growth with a
carefully managed risk profile.
The Company's policy is to make unquoted investments. It does so
by subscribing to investments in new private equity funds ("Primary
Investment"), buying secondary interests in existing private equity
funds ("Secondary Investment"), and acquiring direct holdings in
unquoted companies ("Co-investments"), usually either where a
vendor is seeking to sell a combined portfolio of fund interests
and direct holdings or where there is a private equity manager,
well known to the Company's Manager, investing on substantially the
same terms.
The Company may, from time to time, hold quoted investments as a
consequence of such investments being distributed to the Company
from its fund investments as the result of an investment in an
unquoted company becoming quoted. In addition, the Company may
invest in private equity funds which are quoted. The Company will
not otherwise normally invest in quoted securities, although it
reserves the right to do so should this be deemed to be in the
interests of the Company.
The Company may invest in any type of financial instrument,
including equity and non-equity shares, debt securities,
subscription and conversion rights and options in relation to such
shares and securities and interests in partnerships and limited
partnerships and other forms of collective investment schemes.
Investments in funds and companies may be made either directly or
indirectly, through one or more holding, special purpose or
investment vehicles in which one or more co-investors may also have
an interest.
The Company employs a policy of over-commitment. This means that
the Company may commit more than its available uninvested assets to
investments in private equity funds on the basis that such
commitments can be met from anticipated future cash flows to the
Company and through the use of borrowings and capital raisings
where necessary.
The Company's policy is to adopt a global investment approach.
The Company's strategy is to mitigate investment risk through
diversification of its underlying portfolio by geography, sector
and investment stage. Since the Company's assets are invested
globally on the basis, primarily, of the merits of individual
investment opportunities, the Company does not adopt maximum or
minimum exposures to specific geographic regions, industry sectors
or the investment stage of underlying investments.
In addition, the Company adopts the following limitations for
the purpose of diversifying investment risk:
-- No holding in a company will represent more than 15% by value of the
Company's investments at the time of investment (in accordance with
the requirement for approval as an investment trust which applied
to the Company in relation to its accounting periods ended on and
before 30 June 2012).
-- The aggregate of all the amounts invested by the Company in (including
commitments to or in respect of) funds managed by a single management
group may not, in consequence of any such investment being made, form
more than 20% of the aggregate of the most recently determined gross
asset value of the Company and the Company's aggregate outstanding
commitments in respect of investments at the time such investment
is made.
-- The Company will invest no more than 15% of its total assets in other
UK-listed closed-ended investment funds (including UK-listed investment
trusts).
The Company may invest in funds and other vehicles established
and managed or advised by Pantheon or any Pantheon affiliate. In
determining the diversification of its portfolio and applying the
Manager's diversification requirement referred to above, the
Company looks through vehicles established and managed or advised
by Pantheon or any Pantheon affiliate.
The Company may enter into derivatives transactions for the
purposes of efficient portfolio management and hedging (for
example, hedging interest rate, currency or market exposures).
Surplus cash of the Company may be invested in fixed interest
securities, bank deposits or other similar securities.
The Company may borrow to make investments and typically uses
its borrowing facilities to manage its cash flows flexibly,
enabling the Company to make investments as and when suitable
opportunities arise, and to meet calls in relation to existing
investments without having to retain significant cash balances for
such purposes. Under the Company's Articles of Association, the
Company's borrowings may not at anytime exceed 100% of the
Company's net asset value. Typically, the Company does not expect
its gearing to exceed 30% of gross assets. However, gearing may
exceed this in the event that, for example, the Company's future
cash flows alter.
The Company may invest in private equity funds, unquoted
companies or special purpose or investment holding vehicles which
are geared by loan facilities that rank ahead of the Company's
investment. The Company does not adopt restrictions on the extent
to which it is exposed to gearing in funds or companies in which it
invests.
Key Performance Indicators
What it is How we have Link to our Examples of
performed strategic related
objectives factors that we
monitor
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Performance
5-Year cumulative Total shareholder 1 year -- PIP's ordinary -- Maximise -- Rate of NAV
total shareholder return (0.2%) shares had a shareholder growth relative
return demonstrates closing returns through to listed markets
79.0% the return to 3 years price of 2,320.0p long-term capital
investors, after (cumulative) at the half year growth -- Trading
taking into 24.1% end volumes
account -- Promote better for the Company's
share price 5 years -- Discount to market liquidity shares
movements (cumulative) NAV was 26% as by building
(capital 79.0% at 30 November demand -- Share price
growth) and, if 2020 for the Company's discount to NAV
applicable, any shares
dividends paid
during the
period.
NAV per share NAV per share 6M to 30 Nov 2018 -- NAV per share -- Investing -- Valuations
growth during reflects the 10.7% increased by flexibly provided by
the half year attributable 256.4p with top-tier private
8.9%(1) value of a 6M to 30 Nov 2019 to private equity managers
shareholder's 1.0% 3,139.2p during equity managers
holding in PIP. the half year to maximise -- Fluctuations
The provision 6M to 30 Nov 2020 long-term in currency
of consistent 8.9% -- NAV growth capital growth exchange
long-term NAV underpinned by rates
per share growth strong -- Containing
is central to performance in costs and risks -- Ongoing
our strategy. the underlying by constructing charges
portfolio a relative to NAV
NAV per share well-diversified growth andprivate
growth in any portfolio equity peer group
period is shown in a
net of foreign cost-efficient -- Potential tax
exchange manner leakage from
movements investments
and all costs
associated with -- Effect of
running the financing
Company. (cash drag) on
performance
Portfolio Portfolio 6M to 30 Nov 2018 -- PIP continues -- Maximise -- Performance
investment investment 8.9% to benefit from shareholder relative to
return for the return measures good earnings returns through listed
half year the total 6M to 30 Nov 2019 growth in its long-term capital market and
16.6%(1) movement 5.2% underlying growth private
in the valuation portfolio equity peer group
of the underlying 6M to 30 Nov 2020 and
funds and 16.6% from realisations -- Valuations
companies at significant provided by
comprising PIP's uplifts to private
portfolio, carrying value equity managers
expressed
as a percentage
of the opening
portfolio value,
before taking
foreign exchange
effects and other
expenses into
account.
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Liquidity
Net portfolio Net portfolio 6M to 30 Nov 2018 -- PIP's -- Maximise -- Relationship
cash flow for cash flow is GBP79m portfolio long-term between
the half year equal generated GBP111m capital growth outstanding
GBP57m(2) to fund 6M to 30 Nov 2019 of distributions through commitments and
distributions GBP64m versus GBP54m ongoing portfolio NAV
less capital of calls renewal while
calls 6M to 30 Nov 2020 controlling -- Portfolio
to finance GBP57m -- In addition, financing maturity
investments, the Company made risk and distribution
and reflects the new rates
Company's commitments of by vintage.
capacity GBP15m during
to finance calls the half -- Commitment
from existing year, GBP11m of rate to new
investment which was drawn investment
commitments. at the time opportunities
of purchase
PIP manages its
maturity profile -- PIP's
through a mix portfolio
of primaries, has a weighted
secondaries and average
co-investments fund age of 5.5
to ensure that years(2)
its portfolio
remains
cash-generative
at the same time
as maximising
the potential
for growth.
Undrawn coverage The undrawn 31 May 2019 -- The current -- Flexibility -- Relative
ratio coverage 90% level of in portfolio weighting
130% ratio is the commitments construction, of primary,
ratio 31 May 2020 is consistent allowing the secondary
of available 102% with PIP's Company and
financing conservative to allocate co-investments
and 10% of 30 Nov 2020 approach to between in the portfolio
private 130% balance primary,
equity assets sheet management secondary -- Level of
to undrawn and undrawn
commitments. -- In line with co-investments, commitments
The undrawn historical and vary relative
coverage experience, investment to gross assets
ratio is an the Company pace, to achieve
indicator expects undrawn long-term capital -- Trend in
of the Company's commitments to growth distribution
ability to meet be funded rates
outstanding over a period
commitments, of several years -- Ability to
even in the event access debt
of a market markets
downturn. on favourable
terms
Under the terms
of its current
loan facilities,
PIP can continue
to make new
undrawn
commitments
unless
and until the
undrawn coverage
ratio falls below
33%.
(1) Excludes valuation gains and/or cash flows associated with
the ALN.
(2) Excludes the portion of the reference portfolio attributable
to the ALN.
FINANCING OUR UNDRAWN COMMITMENTS
Prudent balance sheet management supports PIP's long-term
investment strategy
We manage PIP to ensure that it has enough liquidity to finance
its undrawn commitments, which represent capital committed to funds
but yet to be drawn by the private equity managers, as well as to
take advantage of new investment opportunities. We monitor and
closely control the Company's level of undrawn commitments and its
ability to finance future calls. A critical part of this exercise
is ensuring that the undrawn commitments do not become excessive
relative to PIP's private equity portfolio and available financing.
We achieve this by managing PIP's investment pacing as well as
constructing its portfolio so that it has the right balance of
exposure to primaries, secondaries and co-investments.
Managing our financing cover(1)
PIP's undrawn commitments were GBP464m as at 30 November 2020
(31 May 2020: GBP541m).
At 30 November 2020, PIP had net available cash balances of
GBP151m. In addition to these cash balances, PIP also has access to
a wholly undrawn GBP300m multi-currency revolving credit facility
agreement ("loan facility") that expires in May 2024. The facility
comprises a GBP225m tranche that expires in May 2024 and a GBP75m
tranche that expires in June 2022. Using exchange rates at 30
November 2020, the loan facility amounted to a sterling equivalent
of GBP293m.
At 30 November 2020, the Company had GBP444m of available
financing which, along with the value of the private equity
portfolio, provides comfortable cover of 4.4 times relative to its
undrawn commitments.
Another important measure is the undrawn coverage ratio, which
is the ratio of available financing and 10% of private equity
assets to undrawn commitments. The undrawn coverage ratio is a key
indicator of the Company's ability to meet outstanding commitments,
even in the event of a market downturn, and was 130% as at 30
November 2020.
Asset Linked Note (ALN)
As part of the share consolidation effected on 31 October 2017,
PIP issued an ALN with an initial principal amount of GBP200m to a
single holder (the "Investor"). Repayments under the ALN are made
quarterly in arrears and are linked to the ALN share (approximately
75%) of the net cash flow from a reference portfolio which is
comprised of interests held by PIP in over 300 of its oldest
private equity funds, substantially 2006 and earlier vintages. PIP
retains the net cash flow relating to the remaining c.25% of the
reference portfolio. The ALN is unlisted and subordinated to PIP's
existing loan facility (and any refinancing), and is not
transferable, other than to an affiliate of the Investor. The ALN
is expected to mature on 31 August 2027, at which point the Company
will make the final repayment under the ALN. As at 30 November
2020, the ALN was valued at GBP50m. For more information on the
ALN, refer to note 8 of the financial statements below.
(1) Includes undrawn commitments attributable to the reference
portfolio underlying the ALN.
Maturity(1)
We actively manage PIP's maturity profile to maximise the
potential for growth and generate cash. This is achieved through a
mix of primaries, secondaries and co-investments.
As at 30 November 2020, PIP's portfolio had a weighted average
fund age of 5.5 years.
Year %
2020 and later 3%
2019 10%
2018 14%
2017 15%
2016 15%
2015 15%
2014 5%
2013 3%
2012 3%
2011 3%
2010 1%
2009 1%
2008 and earlier 12%
Undrawn commitments by vintage
The rise in more recent vintages is a result of PIP's primary
commitment activity during the past three years.
Approximately 22% of PIP's undrawn commitments are in funds with
vintage years which are 2014 or older. Generally, when a fund is
past its investment period, which is typically between five and six
years, it cannot make any new investments and only draws capital to
fund follow-on investments into existing portfolio companies, or to
pay expenses. As a result, the rate of capital calls by these funds
tends to slow dramatically.
Year %
2020 15%
2019 26%
2018 18%
2017 8%
2016 5%
2015 6%
2014 1%
2013 2%
2010-2012 3%
2009 1%
2008 4%
2007 6%
2006 and earlier 5%
Undrawn commitments by region
The largest share of undrawn commitments represents investments
in the USA and Europe, which highlights the Company's investment
focus on more developed private equity markets. PIP's undrawn loan
facility is denominated in US$ and euros to match the predominant
currencies of its undrawn commitments.
Region %
USA 46%
Europe 37%
Global 10%
Asia and EM 7%
Undrawn commitments by stage
PIP's undrawn commitments are diversified by stage with an
emphasis on small and mid-market buyout managers, many of whom have
experience of successfully investing across multiple economic
cycles.
%
Small/mid buyout 44%
Large/mega buyout 25%
Growth 19%
Special situations 9%
Venture 3%
(1) Maturity chart is based on underlying fund valuations and
accounts for 100% of PIP's portfolio value. Excludes the portion of
the reference portfolio attributable to the ALN.
MANAGER'S REVIEW
OUR MARKET
Navigating the crisis with skill and dexterity
Helen Steers, Partner at Pantheon and manager of PIP, discusses
how the private equity market has responded so far to the COVID-19
pandemic, and considers the outlook for 2021.
This is no doubt that 2020 will go down in history as a year of
extraordinary social and economic upheaval. The damage wrought by
the COVID-19 pandemic has unleashed an unprecedented monetary and
fiscal response from governments around the world. Interest rates
have been cut to zero, central banks have launched vast programmes
of quantitative easing and policy makers have applied emergency
fiscal stimulus to soften the effects of the crisis. These policy
actions have led to a recovery for most financial assets, with
public equity markets bouncing back from the sharp declines that
were triggered by the onset of the pandemic. The development and
deployment of a range of effective vaccines have further boosted
markets, and at the end of 2020 the MSCI World index was up by 14%,
having rallied over 40% since the end of March. This aggregate
performance masks a huge dispersion between countries, industry
sectors and companies, and a vast amount of public market
volatility during the year. There was a similar pattern of returns
in private equity, although the valuation write-downs in the first
quarter of the year were not as severe as those seen in listed
equities, and the asset class as a whole recovered steadily in the
second and third quarters of the year.
The impact of COVID-19 was felt in other ways in the private
equity sector: new deal activity ground to a halt as private equity
managers focused on their existing portfolio companies, assessing
and resolving the operational and financial issues caused by the
pandemic. The deep experience of the private equity managers in
PIP's portfolio has served them well so far during this difficult
period. Through rapid action - securing the safety of portfolio
company staff, managing the closure and re-opening of sites,
sorting out supply chain problems, meeting key customer demands,
pivoting towards online solutions and obtaining financing - PIP's
private equity managers were able to support our underlying
companies and protect their portfolios. Although we had anticipated
a potential surge in capital calls, and were ready for this
eventuality, this did not materialise. Furthermore, although exit
activity slowed during this initial phase of the pandemic,
realisations then picked up and PIP has continued to receive
distributions from the portfolio, albeit initially at lower than
average levels.
During the second half of 2020, deal activity recovered as our
private equity managers sought out add-on acquisitions for their
existing investee companies, taking advantage of the opportunity to
consolidate fragmented market segments. They also completed new
transactions, frequently targeting businesses that they had tracked
for several months or years prior to the pandemic. They also made
use of the dislocation in public markets to pursue certain
take-private deals. With this resurgence in activity, preliminary
estimates for deal volumes at the end of 2020 are positive, and the
momentum has continued into 2021. The large war chests amassed by
private equity managers pre-crisis means that there is now an
estimated US$1.5tn(1) of dry powder (capital raised and available
to invest but not yet deployed) globally. This indicates a lively
M&A market for private equity in 2021 and beyond, and we see
this reflected in PIP's active deal pipeline.
(1) Source: Preqin, January 2021.
A busy period ahead in the private equity secondary market
Volumes in the global private equity secondary market reached
record levels of US$88bn(2) in 2019 but fell to US$60bn(2) in 2020.
However, the slowdown in deal activity occurred early on in the
pandemic and the volumes in the second half of the year were only
marginally behind those of the same period in 2019.
Traditional secondary deals from investors seeking to exit
existing investments and rebalance their portfolios were delayed in
anticipation of a market recovery in 2021. Meanwhile, within those
sectors faring well through the pandemic, the number of
"sponsor-led" (where the private equity managers themselves are
actively involved in finding liquidity for investors in their
funds) and single asset deals (individual companies carved out of
older funds) increased significantly. These types of deals have
already been a growing part of the secondaries market and we expect
this to continue.
Pantheon is an established player in the secondary market and,
through its extensive network of relationships spanning many years,
is able to selectively identify and source deals that offer
embedded value. Sponsor-led and single asset deals are a
specialised area of the secondary market, where our secondary
team's extensive track record, expertise and transaction lead
capabilities enable PIP to capitalise on the most attractive
available opportunities.
(2) Source: Greenhill Global Secondary Market Review, January
2021 .
Invested in resilient sectors in uncertain times
Prior to the onset of the pandemic, many of PIP's underlying
managers were investing already in sectors focused on the rapid
digitalisation of the economy, process automation and data
management, and others had backed segments in the healthcare and
consumer services areas that were benefitting from secular trends
driven by demographics and lifestyle shifts. Information technology
and healthcare form the majority of PIP's portfolio and both of
those sectors have shown resilience over the past months and
performed well despite the pandemic. We have been steering PIP's
portfolio away from consumer discretionary sector investments for
several years and there is limited exposure to the segments hardest
hit by the pandemic, such as travel and hospitality. Nevertheless,
private equity's focus on selecting companies which have clear
theses for value creation means that even in pressured sectors our
private equity managers will remain alert to opportunities where
the business fundamentals are strong and there are opportunities
for future growth.
This crisis has highlighted the fact that technology is an
enabler across many other industry sectors as well as being a
vertical sector in its own right. Digital transformation, which is
the use of technology to improve products, services and revenues,
is one of several tools that many of our private equity managers
use to enhance products and improve efficiencies both within their
own businesses and those of their portfolio companies. In
recognition of the growing importance of digitalisation, many
managers have experts on staff. See the case studies in the full
Interim Report on the role that information technology is playing
in many of the underlying companies in PIP's portfolio.
Acting responsibly and having a positive impact on the
communities around us
Private equity managers are well-positioned to assess the risks
related to Environment, Social and Governance ("ESG") effectively
and to manage potential ESG issues and opportunities at both the
portfolio level and the underlying companies. The interests of the
ultimate investors, the private equity manager and the business'
management are well aligned and the tight governance in private
equity ensures that action can be taken if a portfolio company is
not achieving its plan. As one of the first private equity
signatories to the United Nations-backed Principles for Responsible
Investment (UNPRI) in 2007, the core principles of responsible
investment are embedded in Pantheon's due diligence processes when
assessing an investment opportunity as well as through the
proactive monitoring of the businesses in PIP's underlying
portfolio for the duration of the investment. This continual
assessment persists right up until the investment is exited.
While good governance is a hallmark of private equity ownership,
and many companies have been considering their environmental impact
for some time, the devastation caused by COVID-19 has led to the
"S" of ESG - social impact - gaining greater importance and
traction than ever before. We have been pleased to observe many of
PIP's underlying private equity managers and their portfolio
companies recognising their own responsibilities during the crisis
and donating products, services and expertise to the relief effort.
Examples of these efforts are highlighted in this report. Pantheon
is also a champion of promoting diversity and inclusion both within
our own business and those of our managers. Consideration of these
principles is fully integrated into our investment due diligence
questionnaires and processes.
Pantheon's platform continues to yield significant co-investment
opportunities
Co-investments, which now account for 35% of PIP's portfolio,
are economically attractive as they are typically free of
management and performance fees, and enable PIP to invest directly
in portfolio companies on the same terms and conditions as the
private equity manager. Pantheon is able to source attractive
co-investment deal flow for PIP because:
-- We have an experienced, dedicated team which carries out detailed and
extensive due diligence on each deal. This capability was enhanced further
during the period with the appointment of an additional Partner to Pantheon's
co-investment team.
-- We do not compete against our underlying managers.
-- We are reliable, and we have the scale and ability to deploy capital
quickly and efficiently.
-- We can co-underwrite transactions alongside our managers if appropriate.
We assess each co-investment on its own merits but our main
investment themes are:
-- Only invest where the targeted business is a good fit for the manager
in terms of their sector and geographic expertise.
-- Co-investments in attractive sectors offering clear prospects for high
organic growth through differentiated product or service offerings.
-- Strong platform companies targeting add-on acquisitions to build scale
in existing businesses and consolidate fragmented end-markets.
-- Resilient businesses with recurring revenues and stable demand for products
or services.
As attention turns to rebuilding economies and restoring growth
once the crisis ends, private equity has the credentials to
contribute positively to the recovery effort. Research has shown
that historically private equity has played an instrumental role in
creating jobs and driving economic growth, particularly in the
developed markets. For example, according to a recent study,
private equity supported 10.5 million jobs in Europe through its
company ownership in 2018(1) and was a major employer in most
industry sectors. In that same year, employment levels at private
equity-backed firms increased by 5.5%, with jobs created within all
stages of investment from venture through to buyouts, which
compared to overall growth of 1.1% in the European job market(1) .
In the USA, which has the deepest and most established private
equity market in the world, private equity invests half a trillion
dollars in American businesses each year(2) . Furthermore, private
equity has demonstrated its commitment to supporting smaller
businesses through the pandemic with nearly half of all private
equity investments being channelled into companies with fewer than
500 employees(2) in the USA.
(1) Source: Invest Europe "Private equity at work" report,
published September 2020.
(2) Source: American Investment Council (
https://www.investmentcouncil.org/ ).
Outlook
According to research by Preqin, the growing US$4.4tn global
private equity market is expected to double by 2025(3) . We believe
that private equity will continue to benefit from the continuing
shrinkage of the listed markets, which has seen the number of
public companies in North America and Europe reduce each year while
the number of private equity-backed companies has been increasing
year-on-year. In our view, it is the strategic and operational
expertise, experience and the long-term view taken by our private
equity managers - which when combined with the capital provided by
private equity brings demonstrable value to the companies under
their ownership - that is fuelling the growth of the private equity
industry. PIP is well- positioned to continue to be a beneficiary
of this trend and we believe that the effect of our managers'
hands-on approach is evidenced by the significantly stronger
revenue and earnings growth exhibited by the underlying companies
in PIP's portfolio when compared to that of the MSCI World
index.
In many parts of the capital markets, valuations are considered
to be full and the overall risks are currently skewed to the
downside. However, we are managing risk in PIP by building a
globally diversified portfolio which invests across the full
spectrum of private equity, weighted towards small and mid-market
buyouts and growth opportunities which offer the potential for
strong returns. PIP's direct investment approach into the third
party funds and co-investment opportunities that are sourced by
Pantheon means that PIP has the flexibility to increase and
decrease its exposure to the different investment types according
to the best fit for its portfolio, and to vary the rate at which it
makes investments.
The rollout of various vaccine programmes to protect against the
COVID-19 virus has provided light at the end of the tunnel but the
uncertainty is far from over and the economic impacts of the
pandemic may last for many years to come. While private equity is
not immune to these events, which are affecting us all, we believe
that its inherent ability to be nimble, flexible and respond
quickly to changing market dynamics means that private equity, and
PIP with its more than 33 year track record, has the ability to
emerge strongly from the COVID-19 crisis.
(3) Source: Preqin, January 2021
PERFORMANCE
Overall, PIP's underlying portfolio continues to deliver robust
returns. The cash-generative profile of the portfolio, and the
portfolio's tilt towards more resilient sectors, underpinned strong
performance during the half year.
Private equity portfolio movements
-- Excluding returns attributable to the ALN share of the
portfolio, PIP's portfolio generated returns of 16.6% during the
half year.
-- PIP's total portfolio generated investment returns, prior to
foreign exchange effects, of 16.4%.
Valuation gains by stage(1)
-- There was positive performance across all key segments of PIP's portfolio.
-- Venture performance was driven primarily by a successful
initial public offering of a portfolio company in the information
technology sector.
-- Buyout and growth segments performed well, helped by strong exits and valuation gains.
-- The special situations segment, which accounts for 8% of
PIP's portfolio by value, underperformed, mainly due to valuation
declines in the de-emphasised energy sector.
(1) Portfolio returns include income, exclude gains and losses
from foreign exchange movements, and look through feeders and
funds-of-funds to the underlying funds. Portfolio returns exclude
returns generated by the portion of the reference portfolio
attributable to the ALN, and are calculated by dividing valuation
gains by opening portfolio values.
Valuation gains by region
-- Strong performance in European and US investments during the
half year, driven by favourable exits and positive valuation
movements in some listed portfolio companies.
-- Good performance in Asia and Emerging Markets, albeit muted relative to other regions.
Valuation gains by type
-- Strong primary and secondary performance underpinned by successful exits.
-- Co-investment performance driven by public market valuation
gains, strong operational performance and a number of exits at
significant uplifts to carrying value.
DISTRIBUTIONS
PIP received more than 850(1) distributions during the half
year, with many reflecting realisations at uplifts to carrying
value.
Distributions by region and stage
PIP received GBP111m in proceeds from PIP's portfolio in the six
months to 30 November 2020 equivalent to 15%(2) of opening private
equity assets.
The USA and Europe accounted for the majority of PIP's
distributions, where market conditions supported a good level of
exits, particularly from buyouts.
DISTRIBUTIONS BY REGION
USA 44%
Europe 44%
Global 7%
Asia and EM 5%
----
DISTRIBUTIONS BY STAGE
Small/mid buyout 48%
Large/mega buyout 25%
Growth 20%
Venture 5%
Special situations 2%
----
Quarterly distribution rates
-- Distribution rate equals distributions in the period
(annualised) divided by opening portfolio value.
-- Distribution rate in the quarters to May and August impacted
by onset of COVID-19 and broader market decline in deals.
-- Recovery in annualised distribution rates seen in the quarter ending 30 November 2020.
Distribution rates by vintage
With a weighted average fund maturity of 5.5 years(3) , PIP's
portfolio is well-positioned to continue to generate significant
levels of cash.
(1) This figure looks through feeders and funds-of-funds.
(2) Including distributions attributable to the ALN, the
distribution rate for the year was 17%.
(3) Calculation for weighted average age excludes the portion of
the reference portfolio attributable to the ALN. Fund age refers to
the year in which a fund makes its first call or, in the case of a
co-investment, the year in which the co-investment was made.
Cost multiples on exit realisations for the half year to 30
November 2020(1)
The average cost multiple of the sample was 2.5 times,
highlighting value creation over the course of an investment.
Uplifts on exit realisations for the half year to 30 November
2020(1)
The value-weighted average realised uplift in the half year was
20%, consistent with our view that realisations can be
significantly incremental to returns.
The method used to calculate the average uplift is to compare
the value at exit with the value 12 months prior to exit.
Exit realisations by sector and type
Reflecting their resilience through the pandemic so far, the
majority of exit realisations occurred in the healthcare, consumer
and information technology sectors. Secondary buyouts represented
the most significant route for exit activity during the half year.
The data in the sample provide coverage for 100% (for exit
realisations by sector) and 91% (for exit realisations by type) of
proceeds from exit realisations received during the period.
EXIT REALISATIONS BY SECTOR
Healthcare 35%
Consumer 34%
Information technology 17%
Industrials 9%
Financials 4%
Energy 1%
EXIT REALISATIONS BY TYPE
Secondary buyout 61%
Trade sale 20%
Public market sale 17%
Refinancing and recapitalisation 2%
(1) See the Alternative Performance Measures section within the
full Interim Report for sample calculations and disclosures.
CALLS
Calls during the half year were used to finance investments in
businesses such as software providers, specialty pharmaceuticals
and business outsourcing companies. In addition, our managers
sought to make attractively priced add-on acquisitions for existing
platform companies.
Calls by region and stage
PIP paid GBP54m to finance calls on undrawn commitments during
the half year.
Calls were predominantly made by private equity managers in the
buyout and growth segments.
CALLS BY REGION
USA 39%
Europe 26%
Asia & EM 20%
Global 15%
CALLS BY STAGE
Large/mega Buyout 30%
Growth 25%
Small/mid buyout 22%
Special situations 19%
Venture 4%
Calls by sector
A large proportion of calls were for investments made in the
information technology and healthcare sectors.
CALLS BY SECTOR
Information Technology 35%
Healthcare 26%
Industrials 11%
Consumer 9%
Communication services 8%
Financials 7%
Energy 3%
Others 1%
Quarterly call rate(1)
The annualised call rate for the six months to 30 November 2020
was equivalent to 20% of opening undrawn commitments.
(1) Call rate equals calls in the period (annualised) divided by
opening undrawn commitments. All call figures exclude the
acquisition cost of new secondary and co-investment
transactions.
NEW COMMITMENTS
PIP committed GBP15m to six new investments during the half
year. Of the total commitments made, GBP11m was drawn at the time
of purchase. Since the period end, PIP has committed a further
GBP29m to 10 new investments. The Company's investment pipeline
points to an active period for new commitments for the remainder of
the financial year.
Our investment process
Investment opportunities are originated via Pantheon's
well-established platform.
Within our diversified portfolio, we back the best managers
globally that are able to identify and create value in growing
companies.
Cash is generated when those companies are sold, and is returned
to PIP to be redeployed into new
investment opportunities.
New commitments by region
The majority of commitments made in the six month period were to
US private equity opportunities.
USA 89%
Europe 11%
New commitments by stage
All of the new commitments made in the half year were in the
buyout and growth segments.
Small/mid buyout 35%
Large/mega buyout 33%
Growth 32%
New commitments by investment type
New commitments during the half year reflected the
attractiveness of opportunities across the spectrum of PIP's
investment activity.
Co-investments 59%
Secondary 32%
Primary 9%
New commitments by vintage
Primary and co-investment commitments comprised nearly 70% of
the activity during the last six months, resulting in the
predominance of current vintage investments.
2020 68%
2018 and earlier 32%
Secondary commitments
Secondary investments allow the Company to invest in funds at a
stage when the underlying companies are ready to be sold to
generate cash distributions.
The private equity secondary market has grown significantly over
the last 10 years, both in scale and complexity. Despite strong
competition, PIP continues to originate compelling opportunities
derived from Pantheon's global platform and its market-leading
expertise in sourcing and executing complex secondary transactions
over which it may have proprietary access.
This includes accessing secondary transactions in the attractive
manager-led space, where top tier private equity managers are
selectively transferring some of their most attractive portfolio
companies into continuation vehicles, mainly in the form of single
company secondaries. By holding companies for longer, secondary
managers are able to participate in the companies' next phase of
growth.
EXAMPLES OF SECONDARY COMMITMENTS MADE DURING THE HALF YEAR:
INVESTMENT COMMITMENTS
REGION STAGE VINTAGE GBPM
----------------- -------- --------- ----------- ------------
DIVERSIFIED Buyout,
FUND PORTFOLIO USA Growth 2008-2015 4.7
Primary commitments
Investing in primary funds allows PIP to gain exposure to
top-tier, well-recognised managers including smaller niche funds
that might not typically be traded on the secondary market.
Our focus remains on investing with high quality,
access-constrained managers who have the proven ability to drive
value at the underlying company level, and generate strong returns
across market cycles. In addition, we target funds with
market-leading specialisms in high-growth sectors such as
healthcare and information technology.
EXAMPLES OF PRIMARY COMMITMENTS MADE DURING THE HALF YEAR:
INVESTMENT REGION SECTOR STAGE VINTAGE COMMITMENTS GBPM
------------- ---------- ------------------------ -------------- ----------- -----------------
THOMA BRAVO
XIV USA Information technology Large Buyout 2020 1.3
Co-investments
PIP's co-investment programme benefits from Pantheon's extensive
primary investment platform which has enabled PIP to participate in
proprietary mid-market deals that would otherwise be difficult to
access. PIP invests alongside private equity managers who have the
sector expertise to source and acquire attractively priced
companies and build value through operational enhancements, organic
growth and buy-and-build strategies. The information technology
sector offered compelling investment opportunities during the
period.
NEW CO-INVESTMENTS BY REGION
USA 81%
Europe 19%
NEW CO-INVESTMENTS BY SECTOR
Information technology 69%
Industrials 31%
BUYOUT ANALYSIS(1)
Valuation multiple
Accounting standards require private equity managers to value
their portfolios at fair value. Public market movements can be
reflected in valuations.
PIP's sample-weighted average Enterprise Value (EV)/EBITDA was
13.8 times, compared to 10.8 times and 13.9 times for the FTSE
All-Share and MSCI World indices respectively.
PIP invests proportionately more in high-growth sectors such as
information technology and healthcare, and these sectors tend to
trade at a premium to other sectors.
PIP's sample valuation multiple of 13.8 times should be
considered in the context of the buyout sample's underlying growth
rates relative to the MSCI World Index.
Revenue and EBITDA growth
Weighted average revenue and EBITDA growth of 17.2% and 15.2%
respectively for PIP's sample buyout companies continued to exceed
growth rates seen among companies that constitute the MSCI World
Index. Strong top-line performance, disciplined cost control and
good earnings growth, together with an efficient use of capital,
underpin the investment thesis of many private equity managers.
Debt multiples
Venture, growth and buyout investments have differing leverage
characteristics. Average debt multiples for small/medium buyout
investments, which represent the largest segment of PIP's buyout
portfolio, are typically lower than debt levels in the large/mega
buyout segment.
The venture and growth portfolio has little or no reliance on
leverage.
Large/mega buyout 5.9x
Small/mid buyout 4.2x
(1) See the Alternative Performance Measures section within the
full Interim Report for sample calculations and disclosures.
LARGEST 50 MANAGERS BY VALUE
% OF TOTAL
PRIVATE EQUITY
RANK MANAGER REGION(2) STAGE BIAS ASSET VALUE(1)
1 Insight Venture Partners USA Growth 5.7%
2 Providence Equity Partners USA Buyout, Growth 5.3%
3 Essex Woodlands USA Growth 4.9%
4 Apax Partners SA Europe Buyout 2.8%
5 Baring Private Equity Asia Asia & EM Growth 2.6%
6 Gemini Capital Europe Venture 2.4%
7 Index Ventures Global Growth, Venture 2.1%
8 Mid-Europa Partners Europe Buyout 2.0%
9 Veritas Capital USA Buyout 2.0%
10 Energy & Minerals Group USA Special situations 2.0%
11 IK Investment Partners Europe Buyout 1.8%
12 Parthenon Capital USA Buyout 1.7%
13 LYFE Capital Asia & EM Growth 1.7%
14 Advent International Global Buyout 1.7%
15 ABRY Partners USA Buyout 1.6%
16 Warburg Pincus Capital Global Growth 1.6%
17 Hg Europe Buyout 1.6%
18 Ares Management USA Buyout 1.6%
19 Hellman & Friedman USA Buyout 1.5%
20 Searchlight Capital Partners Global Special situations 1.5%
21 BC Partners Europe Buyout 1.4%
22 HIG Capital USA Buyout 1.3%
23 Texas Pacific Group USA Buyout 1.2%
24 Calera Capital USA Buyout 1.1%
25 Growth fund(3) USA Growth 1.0%
26 Quantum Energy Partners USA Special situations 1.0%
27 Oak HC/FT USA Growth 1.0%
28 NMS Management USA Buyout 1.0%
29 Lee Equity Partners USA Growth 1.0%
30 Equistone Partners Europe Europe Buyout 0.9%
31 Francisco Partners USA Buyout 0.9%
32 IVF Advisors Asia & EM Buyout 0.9%
33 Wasserstein Partners USA Buyout 0.8%
34 Altor Capital Europe Buyout 0.8%
35 ECI Partners Europe Buyout 0.8%
36 Sageview Capital USA Growth 0.8%
37 PAI Partners Europe Buyout 0.8%
38 Shamrock Capital Advisors USA Buyout 0.8%
39 Apollo Advisors USA Buyout 0.7%
40 Avenue Broadway Partners Europe Buyout 0.7%
41 Abris Capital Europe Buyout 0.7%
42 Marguerite Europe Special situations 0.7%
43 Horizon Capital Europe Buyout 0.6%
44 J.C. Flowers & Co USA Buyout 0.6%
45 CHAMP Asia & EM Buyout 0.6%
46 The Vistria Group USA Buyout 0.6%
47 Madison India Capital Asia & EM Buyout 0.6%
48 CVC Capital Partners Europe Buyout 0.6%
49 Idinvest Partners Europe Growth 0.5%
50 3i Group Europe Buyout 0.5%
---------------------------- ------------------ --------------
COVERAGE OF PIP's TOTAL PRIVATE EQUITY ASSET VALUE(1) 73.0%
----------------------------------------------------------------- --------------
(1) Percentages look-through feeders and funds-of-funds and
excludes the portion of the reference portfolio attributable to the
ALN.
(2) Refers to the regional exposure of funds.
(3) The private equity manager does not permit the Company to
disclose this information.
LARGEST 50 COMPANIES BY VALUE
% OF PIP'S
NUMBER COMPANY COUNTRY SECTOR NAV
1 EUSA Pharma(2) UK Healthcare 3.9%
2 JFrog(3) Israel Information technology 1.8%
3 Allegro(2,3) Poland Consumer 1.1%
4 Insurance company(2,4) USA Financials 1.0%
5 Abacus Data Systems(2) USA Information technology 1.0%
6 ZeniMax Media USA Communication services 0.9%
7 Ophthalmology company(4) USA Healthcare 0.9%
8 Software company (2,4) USA Information technology 0.9%
9 Chewy(2,3) USA Consumer 0.9%
10 Visma(2) Norway Information technology 0.8%
11 Ascent Resources (2) USA Energy 0.8%
12 Signature Foods(2) Netherlands Consumer 0.7%
13 Marlink(2) France Communication services 0.7%
14 Nexi(2,3) Italy Information technology 0.6%
15 Vistra Group(2) Hong Kong Financials 0.6%
16 Atria Convergence Technologies(2) India Communication services 0.6%
17 Recorded Future(2) USA Information technology 0.6%
18 Froneri UK Consumer 0.6%
19 ALM Media(2) USA Communication services 0.6%
20 Arnott Industries(2) USA Consumer 0.6%
21 CPG International USA Industrials 0.5%
22 Centric Group(2) USA Consumer 0.5%
23 Apollo Education Group(2) USA Consumer 0.5%
24 CallRail(2) USA Information technology 0.5%
25 Star Health Insurance(2) India Financials 0.5%
26 nCino USA Information technology 0.5%
27 Alion Science and Technology(2) USA Industrials 0.5%
28 Profi Rom Food(2) Romania Consumer 0.5%
29 Action Netherlands Consumer 0.5%
30 WalkMe USA Information technology 0.5%
31 Kyobo Life Insurance South Korea Financials 0.5%
32 Virence Health Technologies USA Healthcare 0.5%
33 CIPRES Life(2) France Financials 0.4%
34 KD Pharma Group(2) Germany Healthcare 0.4%
35 Mobilitie(2) USA Communication services 0.4%
36 Vertical Bridge(2) USA Communication services 0.4%
37 OWP Butendiek Germany Others 0.4%
38 LogicMonitor(2) USA Information technology 0.4%
39 Burning Rock Biological Technology China Healthcare 0.4%
40 GE Capital Services India India Financials 0.4%
41 Univativ(2) Germany Industrials 0.4%
42 Southern Dental Alliance(2) USA Healthcare 0.4%
43 Nord Anglia Education(2) Hong Kong Consumer 0.4%
44 Millennium Trust(2) USA Financials 0.4%
45 Cotiviti Holdings(2) USA Healthcare 0.4%
46 Therapy Brands USA Information technology 0.4%
47 Correct Care Solutions(2) USA Healthcare 0.3%
48 Confie Seguros(2) USA Financials 0.3%
49 Software company(2,4) USA Information technology 0.3%
50 CHECK24 Germany Communication services 0.3%
---------------------------------- ----------
COVERAGE OF PIP's PRIVATE EQUITY ASSET VALUE 32.4%
------------------------------------------------------------------------------- ----------
(1) The largest 50 companies table is based upon underlying
company valuations at 30 September 2020 adjusted for known call and
distributions to 30 November 2020, and includes the portion of the
reference portfolio attributable to the ALN.
(2) Co-investments/directs.
(3) Listed companies.
(4) The private equity manager does not permit the Company to
disclose this information.
PORTFOLIO CONCENTRATION
70 managers and 425 companies account for approximately 80% of
PIP's total exposure(1) .
(1) Exposure is equivalent to the sum of the NAV and undrawn
commitments.
INTERIM MANGEMENT REPORT AND RESPONSIBILITY STATEMENT OF THE
DIRECTORS
Interim Management Report
In Respect of the Half-Yearly Financial 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 Chairman's Statement and the
Manager's Review.
The principal risks facing the Company are substantially
unchanged since the date of the Annual Report for the financial
period ended 31 May 2020 and continue to be as set out in that
report on pages 32 to 35.
Risks faced by the Company include, but are not limited to, the
impact of COVID-19 on the global economy and underlying portfolio
companies, funding of investment commitments and default risk,
risks relating to investment opportunities, financial risk of
private equity, long-term nature of private equity investments,
valuation uncertainty, gearing, foreign currency risk, the
unregulated nature of underlying investments, counterparty risk,
taxation, the risks associated with the engagement of the Manager
or other third-party advisers, Brexit and cybersecurity risks.
Responsibility Statement
Each Director confirms that to the best of their knowledge:
-- The condensed set of financial statements has been prepared
in accordance with FRS 102 and FRS 104 'Interim Financial
Reporting'; and gives a true and fair view of the assets,
liabilities, financial position and return of the Company;
-- This interim Financial Report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
Company during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
This Interim Financial Report was approved by the Board on 24
February 2021 and was signed on its behalf by Sir Laurie Magnus,
Chairman.
CONDENSED INCOME STATEMENT (UNAUDITED)
FOR THE SIX MONTHS TO 30 NOVEMBER 2020
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 NOVEMBER 2020 30 NOVEMBER 2019 31 MAY 2020
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
---------------------- -------- -------- -------- --------- -------- -------- ---------- --------- ----------
Gains on
investments
at fair value
through
profit or loss** - 151,699 151,699 - 22,941 22,941 - 72,264 72,264
(Losses)/gains on
financial
instruments
at fair value
through profit or
loss - ALN** (522) (2,994) (3,516) (94) 4,160 4,066 (502) 277 (225)
Currency
(losses)/gains
on cash and
borrowings - (9,512) (9,512) - (5,044) (5,044) - 1,403 1,403
Investment income 6,530 - 6,530 5,764 - 5,764 11,198 - 11,198
Investment management
fees (9,048) - (9,048) (8,861) - (8,861) (17,674) - (17,674)
Other expenses (645) (770) (1,415) (313) (935) (1,248) (730) (1,719) (2,449)
---------------------- -------- -------- -------- --------- -------- -------- ---------- --------- ----------
RETURN BEFORE
FINANCING
COSTS AND TAXATION (3,685) 138,423 134,738 (3,504) 21,122 17,618 (7,708) 72,225 64,517
Interest payable
and similar expenses (1,683) - (1,683) (1,077) - (1,077) (2,223) - (2,223)
---------------------- -------- -------- -------- --------- -------- -------- ---------- --------- ----------
RETURN BEFORE
TAXATION (5,368) 138,423 133,055 (4,581) 21,122 16,541 (9,931) 72,225 62,294
Taxation (Note 5) 5,634 - 5,634 (1,065) - (1,616) - (1,616) (1,616)
---------------------- -------- -------- -------- --------- -------- -------- ---------- --------- ----------
RETURN FOR THE PERIOD
BEING TOTAL
COMPREHENSIVE
INCOME FOR THE
PERIOD/YEAR
(Note 10) 266 138,423 138,689 (5,646) 21,122 15,476 (11,547) 72,225 60,678
---------------------- -------- -------- -------- --------- -------- -------- ---------- --------- ----------
RETURN PER
SHARE BASIC AND
DILUTED
(Note 10) 0.49p 255.91p 256.40p (10.44)p 39.05p 28.61p (21.35p) 133.53p 112.18p
---------------------- -------- -------- -------- --------- -------- -------- ---------- --------- ----------
* The Company does not have any income or expense that is not
included in the return for the period therefore 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").
** Includes currency movements on investments.
All revenue and capital items in the above statement relate to
continuing operations.
The total column of the statement represents the Company's
Statement of Total Comprehensive Income prepared in accordance with
Financial Reporting Standards ("FRS").
No operations were acquired or discontinued during the
period.
There were no recognised gains or losses other than those
passing through the Income Statement.
The Notes form part of these financial statements
CONDENSED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
FOR THE SIX MONTHS TO 30 NOVEMBER 2020 CAPITAL
CAPITAL OTHER RESERVE ON
SHARE SHARE REDEMPTION CAPITAL INVESTMENTS REVENUE
CAPITAL PREMIUM RESERVE RESERVE HELD RESERVE TOTAL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------- ---------- ----------- ---------- ------------ ----------- ------------
Movement for
the six months
to 30 November
2020
Opening equity
shareholders'
funds 36,240 269,535 3,325 842,675 503,307 (95,816) 1,559,266
Return for the
period - - - 50,678 87,745 266 138,689
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 36,240 269,535 3,325 893,353 591,052 (95,550) 1,697,955
--------- ---------- ----------- ---------- ------------ ----------- ------------
Movement for
the six months
to 30 November
2019
Opening equity
shareholders'
funds 36,240 269,535 3,325 735,104 538,653 (84,269) 1,498,588
Return for the
period - - - 59,299 (38,177) (5,646) 15,476
--------- ---------- ----------- ---------- ------------ ----------- ------------
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 36,240 269,535 3,325 794,403 500,476 (89,915) 1,514,064
----------------- --------- ---------- ----------- ---------- ------------ ----------- ------------
Movement for
the year ended
31 May 2020
Opening equity
shareholders'
funds 36,240 269,535 3,325 735,104 538,653 (84,269) 1,498,588
Return for the
year - - - 107,571 (35,346) (11,547) 60,678
--------- ---------- ----------- ---------- ------------ ----------- ------------
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 36,240 269,535 3,325 842,675 503,307 (95,816) 1,559,266
----------------- --------- ---------- ----------- ---------- ------------ ----------- ------------
The Notes form part of these financial statements
CONDENSED BALANCE SHEET
(UNAUDITED)
AS AT 30 NOVEMBER 2020
30 NOVEMBER 30 NOVEMBER 31 MAY
2020 2019 2020
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------------------ -------------
Fixed assets
Investments at fair value 1,596,760 1,434,244 1,495,689
-------------------------------- ------------ ------------------------ -------------
Current assets
Debtors 5,478 14,282 1,259
Cash at bank 151,079 145,488 130,091
-------------------------------- ------------ ------------------------ -------------
156,557 159,770 131,350
-------------------------------- ------------ ------------------------ -------------
Creditors: amounts falling
due within one year
Other creditors 5,455 6,048 10,030
5,455 6,048 10,030
-------------------------------- ------------ ------------------------ -------------
NET CURRENT ASSETS 151,102 153,722 121,320
-------------------------------- ------------ ------------------------ -------------
TOTAL ASSETS LESS CURRENT
LIABILITIES 1,747,862 1,587,966 1,617,009
-------------------------------- ------------ ------------------------ -------------
Creditors: Amounts falling
due after one year
Asset Linked Note (Note
8) 49,907 73,902 57,743
-------------------------------- ------------ ------------------------ -------------
49,907 73,902 57,743
-------------------------------- ------------ ------------------------ -------------
NET ASSETS 1,697,955 1,514,064 1,559,266
-------------------------------- ------------ ------------------------ -------------
Capital and reserves
Called-up share capital
(Note 9) 36,240 36,240 36,240
Share premium 269,535 269,535 269,535
Capital redemption reserve 3,325 3,325 3,325
Other capital reserve 893,353 794,403 842,675
Capital reserve on investments
held 591,052 500,476 503,307
Revenue reserve (95,550) (89,915) (95,816)
-------------------------------- ------------ ------------------------ -------------
TOTAL EQUITY SHAREHOLDERS'
FUNDS 1,697,955 1,514,064 1,559,266
-------------------------------- ------------ ------------------------ -------------
NET ASSET VALUE PER SHARE
- ORDINARY (NOTE 11) 3,139.16p 2,799.19p 2,882.75p
-------------------------------- ------------ ------------------------ -------------
TOTAL ORDINARY SHARES
IN ISSUE (NOTE 9) 54,089,447 54,089,447 54,089,447
-------------------------------- ------------ ------------------------ -------------
The Notes form part of these financial statements.
CONDENSED CASH FLOW STATEMENT (UNAUDITED)
FOR THE SIX MONTHS TO 30 NOVEMBER 2020
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 NOVEMBER 2020 30 NOVEMBER 2019 31 MAY 2020
GBP'000 GBP'000 GBP'000
------------------------------ ----------------- ----------------- ------------
Cash flow from operating
activities
Investment income
received 6,446 5,116 10,356
Deposit and other
interest received 82 742 952
Investment management
fees paid (8,996) (8,885) (17,623)
Secretarial fees
paid (141) (118) (219)
Depositary fees paid (127) (127) (219)
Legal and professional
fees paid (828) (1,111) (1,913)
Other cash payments* (756) (870) (1,517)
Taxation recovered 6,135 - -
from prior years
Withholding tax deducted (428) (1,213) (1,776)
------------------------------ ----------------- ----------------- ------------
NET CASH INFLOW/
(OUTFLOW) FROM OPERATING
ACTIVITIES 1,387 (6,466) (11,959)
------------------------------ ----------------- ----------------- ------------
Cash flows from investing
activities
Purchases of investments (75,853) (101,038) (239,251)
Disposals of investments 122,095 128,108 267,126
------------------------------ ----------------- ----------------- ------------
NET CASH INFLOW FROM
INVESTING ACTIVITIES 46,242 27,070 27,875
------------------------------ ----------------- ----------------- ------------
Cash flows from financing
activities
ALN repayments (15,948) (11,897) (28,023)
Loan commitment and
arrangement fees
paid (1,264) (907) (1,816)
NET CASH OUTFLOW
FROM FINANCING ACTIVITIES (17,212) (12,804) (29,839)
------------------------------ ----------------- ----------------- ------------
INCREASE/(DECREASE)
IN CASH IN THE PERIOD/YEAR 30,417 7,800 (13,923)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD/YEAR 130,091 142,773 142,773
FOREIGN EXCHANGE
(LOSSES)/GAINS (9,429) (5,085) 1,241
CASH AND CASH EQUIVALENTS
AT OF PERIOD/YEAR 151,079 145,488 130,091
------------------------------ ----------------- ----------------- ------------
* Includes interest paid during the period of GBP17,000 (30
November 2019: GBP16,000; 31 May 2020: GBP31,000).
The Notes form part of these financial statements.
NOTES TO THE HALF-YEARLY FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of preparation
The Company applies FRS 102 and the Association of Investment
Companies ("AIC") SORP for its financial period ending 31 May 2020
in its Financial Statements. The financial statements for the six
months to 30 November 2020 have therefore been prepared in
accordance with FRS 104 "Interim Financial Reporting". The
financial statements have been prepared on the same basis as the
accounting policies set out in the statutory accounts for the
period ended 31 May 2020. They have also been prepared on the
assumption that approval as an investment trust will continue to be
granted. The Company's financial statements are presented in
sterling and all values are rounded to the nearest thousand pounds
(GBP'000) except when indicated otherwise.
The financial information contained in this Interim Report and
Accounts and the comparative figures for the financial year ended
31 May 2020 are not the Company's statutory accounts for the
financial period as defined in the Companies Act 2006. The
financial information for the half year periods ended 30 November
2020 and 30 November 2019 are not for a financial year and have not
been audited but have been reviewed by the Company's auditors and
their report can be found below. The Annual Report and Financial
Statements for the financial period ended 31 May 2020 have been
delivered to the Registrar of Companies. The report of the
auditors: (i) was unqualified; (ii) did not include a reference to
any matters which the auditors drew attention by way of emphasis
without qualifying the report; and (iii) did not contain statements
under section 498 (2) and (3) of the Companies Act 2006.
2. Going Concern
The financial information has been prepared on a going concern
basis and under the historical cost basis of accounting, modified
to include the revaluation of certain assets at fair value.
COVID-19 presents the biggest risk to the global economy and to
individual companies since the 2008 Global Financial Crisis
("GFC"); the unprecedented nature of the COVID-19 pandemic has
resulted in significant disruption to global commerce, economic and
social hardship and uncertain financial markets.
The Directors have made an assessment of going concern, taking
into account the Company's current performance and financial
position as at 30 November 2020. In addition, the Directors have
assessed the outlook, which considers the potential further impact
of the COVID-19 pandemic, using information available as at the
date of issue of these financial statements. As part of this
assessment, the Directors considered:
-- Various downside liquidity modelling scenarios with varying
degrees of decline in investment valuations, decreased investment
distributions and increased call rates, with the worst being a low
case downside scenario representing an impact on to the portfolio
that is worse than that experienced during the GFC.
-- The Company manages and monitors liquidity regularly,
ensuring it is adequate and sufficient and is underpinned by its
monitoring of investments, distributions, capital calls and
outstanding commitments. Total available financing as at 30
November 2020 stood at GBP444m (30 November 2019: GBP331m; 31 May
2020: GBP431m), comprising GBP151m (30 November 2019: GBP154m; 31
May 2020: GBP121m) in available cash balances and GBP293m (30
November 2019: GBP177m; 31 May 2020: GBP310m) (sterling equivalent)
in undrawn bank facilities.
-- Total available financing as at 30 November 2020 stood at
GBP444m (30 November 2019: GBP331m; 31 May 2020: GBP431m),
comprising GBP151m (30 November 2019: GBP154m; 31 May 2020:
GBP121m) in available cash balances and GBP293m (30 November 2019:
GBP177m; 31 May 2020: GBP310m) (sterling equivalent) in undrawn
bank facilities.
-- PIP's 30 November 2020 valuation is primarily based on
reported GP valuations with a reference date of 30 September 2020,
updated for capital movements and foreign exchange impacts. As the
longer-term impacts of COVID-19 may not be fully apparent, the
Directors have considered the impact that declining valuations
could have on the Company's going concern assessment.
-- Unfunded commitments - PIP's unfunded commitments at 30
November 2020 were GBP464m (30 November 2019: GBP486m; 31 May 2020:
GBP541m). The Directors have considered the maximum level of
unfunded commitments which could theoretically be drawn in a
12-month period, the ageing of commitments and available financing
to fulfil these commitments. In these scenarios, PIP can take steps
to limit or mitigate the impact on the Balance Sheet, namely
drawing on the credit facility, pausing on new commitments, selling
assets to increase liquidity and reducing outstanding commitments
if necessary. In addition, subject to market conditions, the
Company could also seek to raise additional credit or capital.
Having performed the assessment on going concern, the Directors
considered it appropriate to prepare the financial statements of
the Company on a going concern basis. The Company has sufficient
financial resources and liquidity, is well placed to manage
business risks in the current economic environment and can continue
operations for a period of at least 12 months from the date of
issue of these financial statements.
3. AIC SORP
The financial information contained in this report has been
prepared in accordance with the SORP for the financial statements
of investment trust companies and venture capital trusts issued by
the AIC, other than where restrictions are imposed on the Company
which prohibit specific disclosures, as noted in the full Interim
Report on pages 42 and 43 in relation to where the GP may not allow
the disclosure of the related company name within this report.
4.Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment business.
5.Tax on ordinary activities
The tax charge for the six months to 30 November 2020 is GBP0.5m
(six months to 30 November 2019: GBP1.1m; year to 31 May 2020:
GBP1.6m). The tax charge is wholly comprised of irrecoverable
withholding tax suffered. Investment gains are exempt from capital
gains tax, owing to the Company's status as an investment trust. In
addition, during the period to 30 November 2020, GBP6.1m of
taxation was recovered from the United States Internal Revenue
Service, relating to prior years' taxation, which resulted in an
overall tax credit of GBP5.6m in the period.
6. Transactions with the Manager and related parties
During the period, fees with a total value of GBP9,243,000,
being GBP9,048,000 directly from Pantheon Ventures (UK) LLP and
GBP195,000 via Pantheon managed fund investments were charged to
the Company (30 November 2019: GBP9,085,000; GBP8,861,000; and
GBP224,000; year to 31 May 2020: GBP18,102,000; GBP17,674,000 and
GBP428,000 respectively). At 30 November 2020, the amount due to
Pantheon Ventures (UK) LLP in respect of management fees, disclosed
under creditors, was GBP1,570,000 (30 November 2019: GBP1,443,000;
31 May 2020: GBP1,518,000 respectively).
No performance fee is payable in respect of the period to 30
November 2020 (30 November 2019: GBPnil; year to 31 May 2020:
GBPnil respectively).
The existence of an independent Board of Directors demonstrates
that the Company is free to pursue its own financial and operating
policies and therefore, under the AIC SORP, the Manager is not
considered to be a related party.
The Company's related parties are its Directors. Fees paid to
the Company's Board for the six months to 30 November 2020 totalled
GBP179,000 (six months to 30 November 2019: GBP143,000; year to 31
May 2020: GBP264,000).
There are no other identifiable related parties at the period
end.
7. Performance fee
The Manager is entitled to a performance fee from the Company in
respect of each 12 calendar month period ending on 31 May in each
year and, prior to 31 May 2017, the period of 12 calendar months
ending 30 June in each year. The performance fee payable in respect
of each such calculation period is 5% of the amount by which the
NAV at the end of such period exceeds 110% of the applicable
"high-water mark", i.e. the NAV at the end of the previous
calculation period in respect of which a performance fee was
payable, compounded annually at 10% for each subsequent completed
calculation period up to the start of the calculation period for
which the fee is being calculated. For the six month calculation
period ended 30 November 2020, the notional performance fee hurdle
is a NAV per share of 3,995.05p. The performance fee is calculated
using the adjusted NAV.
The performance fee is calculated so as to ignore the effect on
performance of any performance fee payable in respect of the period
for which the fee is being calculated or of any increase or
decrease in the net assets of the Company resulting from any issue,
redemption or purchase of any shares or other securities, the sale
of any treasury shares or the issue or cancellation of any
subscription or conversion rights for any shares or other
securities and any other reduction in the Company's share capital
or any distribution to shareholders.
No performance fee has been paid.
8. Asset Linked Note ("ALN")
As part of the share consolidation effected on 31 October 2017,
the Company issued an ALN with an initial principal amount of
GBP200m to the Investor. Payments under the ALN are made quarterly
in arrears and are linked to the ALN share (c.75%) of the net cash
flow from a reference portfolio which is comprised of interests
held by PIP in over 300 of its oldest private equity funds,
substantially 2006 and earlier vintages. PIP retains the net cash
flow relating to the remaining c.25% of the reference
portfolio.
The ALN is held at fair value through profit or loss and
therefore movements in fair value are reflected in the Income
Statement. The Directors do not believe there to be a material own
credit risk, due to the fact that repayments are only due when net
cash flow is received from the reference portfolio. Fair value is
calculated as the sum of the ALN share of fair value of the
reference portfolio plus the ALN share of undistributed net cash
flow which is equivalent to the amount which would be required to
be repaid had the ALN matured on 30 November 2020. Therefore no
fair value movement has occurred during the period as a result of
changes to credit risk.
A pro rata share of the Company's Total Ongoing Charges is
allocated to the ALN, reducing each quarterly payment ("the Expense
Charge") and deducted from Other Expenses in the Income
Statement.
The ALN's share of net cash flow is calculated after withholding
taxation suffered. These amounts are deducted from Taxation in the
Income Statement.
During the six months to 30 November 2020, the Company made
repayments totalling GBP15.9m, representing the ALN share of the
net cash flow for the three month period to 31 May 2020 and three
month period to 31 August 2020. The fair value of the ALN at 30
November 2020 was GBP52.7m, of which GBP2.8m represents the net
cash flow for the three months to 30 November 2020, due for
repayment on 26 February 2021.
During the six months to 30 November 2019, the Company made
repayments totalling GBP11.9m, representing the ALN share of the
net cash flow for the three month period to 31 May 2019 and three
month period to 31 August 2019. The fair value of the ALN at 30
November 2019 was GBP77.7m, of which GBP3.8m represents the net
cash flow for the three months to 30 November 2019, due for
repayment on 29 February 2020.
During the year to 31 May 2020, the Company made repayments
totalling GBP28.0m, representing the ALN share of the net cash flow
for the year to 29 February 2020. The fair value of the ALN at 31
May 2020 was GBP65.4m, of which GBP7.6m represents cash flows for
the three months to 31 May 2020, due for repayment on 31 August
2020.
9. Called-Up Share Capital
ALLOTED, CALLED-UP AND
FULLY PAID:
30 NOVEMBER 2020 30 NOVEMBER 2019 31 MAY 2020
Allocated, called up and SHARES GBP'000 SHARES GBP'000 SHARES GBP'000
fully paid:
-------------------------- ----------- -------- ----------- -------- ----------- --------
Ordinary Shares of 67p
each
Opening position 54,089,447 36,240 54,089,447 36,240 54,089,447 36,240
Cancellation of shares - - -
-------------------------- ----------- -------- ----------- -------- ----------- --------
CLOSING POSITION 54,089,447 36,240 54,089,447 36,240 54,089,447 36,240
-------------------------- ----------- -------- ----------- -------- ----------- --------
TOTAL SHARES IN ISSUE 54,089,447 36,240 54,089,447 36,240 54,089,447 36,240
-------------------------- ----------- -------- ----------- -------- ----------- --------
During the six months ended 30 November 2020, no ordinary shares
were bought back in the market for cancellation (six months to 30
November 2019: nil; year to 31 May 2020: nil).
As at 30 November 2020, there were 54,089,447 ordinary shares in
issue (30 November 2019: 54,089,447 ordinary shares; year to 31 May
2020: 54,089,447 ordinary shares).
10. Return per Share
SIX MONTHS TO 30 NOVEMBER SIX MONTHS TO 30 NOVEMBER
2020 2019 31 MAY 2020
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
----------------- -------- -------- ----------- --------- -------- ----------- --------- -------- -----------
Return for the
financial
period
GBP'000 266 138,423 138,689 (5,646) 21,122 15,476 (11,547) 72,225 60,678
Weighted average
no. of shares 54,089,447 54,089,447 54,089,447
Return per share 0.49p 255.91p 256.40p (10.44p) 39.05p 28.61p (21.35p) 133.53p 112.18p
There are no dilutive effects to the return per share.
11. Net Asset Value per Share
30 NOVEMBER 2020 30 NOVEMBER 2019 31 MAY 2020
------------------------- ----------------- ----------------- ------------
Net assets attributable
in GBP'000 1,697,955 1,514,064 1,559,266
Ordinary shares 54,089,447 54,089,447 54,089,447
Net asset value
per share 3,139.16p 2,799.19p 2,882.75p
12. Reconciliation of Return Before Financing Costs and Tax to
Net Cash Flow from Operating Activities
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 NOVEMBER 2020 30 NOVEMBER 2019 31 MAY 2020
GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ----------------- ------------
Return before finance
costs and taxation 134,738 17,618 64,517
Taxation recovered
in respect of prior
years 6,135 - -
Withholding tax
deducted (501) (1,065) (1,616)
Gains on investments (151,699) (22,941) (72,264)
Currency losses/(gains)
on cash and borrowings 9,512 5,044 (1,403)
Increase/(decrease)
in creditors 78 (348) (216)
(Increase)/decrease
in other debtors (94) 60 65
(Gains)/losses on
financial instruments
at fair value through
profit or loss -
ALN 3,516 (4,066) 225
Expenses and taxation
associated with
ALN (298) (768) (1,265)
NET CASH OUTFLOW
FROM OPERATING ACTIVITIES 1,387 (6,466) (11,957)
---------------------------- ----------------- ----------------- ------------
13. Fair Value Hierarchy
(i) Unquoted fixed asset investments are stated at the estimated
fair value
In the case of investments in private equity funds, this is
based on the net asset value of those funds ascertained from
periodic valuations provided by the managers of the funds and
recorded up to the measurement date. Such valuations are
necessarily dependent upon the reasonableness of the valuations by
the fund managers of the underlying investments. These valuations
are reviewed periodically for reasonableness and recorded up to the
measurement date. If an investment was sold post period end,
management would consider the effect, if any, on the investment
portfolio.
The Company may acquire secondary interests at either a premium
or a discount to the fund manager's valuation. Within the Company's
portfolio, those fund holdings are normally revalued to their
stated net asset values at the next reporting date unless an
adjustment against a specific investment is considered
appropriate.
The fair value of each investment is derived at each reporting
date. In the case of direct investments in unquoted companies, the
initial valuation is based on the transaction price. Where better
indications of fair value become available, such as through
subsequent issues of capital or dealings between third parties, the
valuation is adjusted to reflect the new evidence, at each
reporting date. This information may include the valuations
provided by private equity managers who are also invested in the
Company.
(ii) Quoted investments are valued at the closing bid price on
the relevant stock exchange
Private equity funds may contain a proportion of quoted shares
from time to time, for example where the underlying company
investments have been taken public but the holdings have not yet
been sold. The quoted market holdings at the date of the latest
fund accounts are reviewed and compared with the value of those
holdings at the period end.
All investments are initially recognised and subsequently
measured at fair value. Changes in fair value are recognised in the
Income Statement.
(iii) Fair value hierarchy
The fair value hierarchy consists of the following three
levels:
-- Level 1 - The unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date. The Level 1 holdings include publicly listed
holdings held directly by the Company from in specie distributions
received from underlying investments;
-- Level 2 - Inputs other than quoted prices included within
level 1 that are observable (i.e. developed using market data) for
the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
-- Level 3 - Inputs are unobservable (i.e. for which market data
is unavailable) for the asset or liability.
Financial Assets at Fair Value through Profit or Loss at 30
November 2020
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ---------- ----------
Unlisted holdings - - 1,595,634 1,595,634
Listed holdings 1,126 - - 1,126
------------------- -------- -------- ---------- ----------
TOTAL 1,126 - 1,595,634 1,596,760
------------------- -------- -------- ---------- ----------
Financial Liabilities at Fair Value through Profit or Loss at 30
November 2020
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------- --------- --------- -------- --------
ALN - - 52,660 52,660
TOTAL - - 52,660 52,660
------- --------- --------- -------- --------
Financial Assets at Fair Value through Profit or Loss at 31 May
2020
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ---------- ----------
Unlisted holdings - - 1,494,944 1,494,944
Listed holdings 745 - - 745
------------------- -------- -------- ---------- ----------
TOTAL 745 - 1,494,944 1,495,689
------------------- -------- -------- ---------- ----------
Financial Liabilities at Fair Value through Profit or Loss at 31
May 2020
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------- --------- --------- -------- --------
ALN - - 65,386 65,386
TOTAL - - 65,386 65,386
------- --------- --------- -------- --------
Financial Assets at Fair Value through Profit or Loss at 30
November 2019
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ---------- ----------
Unlisted holdings - - 1,433,595 1,433,595
Listed holdings 649 - - 649
------------------- -------- -------- ---------- ----------
TOTAL 649 - 1,433,595 1,434,244
------------------- -------- -------- ---------- ----------
Financial Liabilities at Fair Value through Profit or Loss at 30
November 2019
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------- --------- --------- -------- --------
ALN - - 77,719 77,719
TOTAL - - 77,719 77,719
------- --------- --------- -------- --------
Independent Review Report to the Directors of Pantheon
International plc
Introduction
We have been engaged by Pantheon International Plc (the
'Company') to review the condensed set of financial statements in
the half yearly financial report for the six months ended 30
November 2020 which comprises the Condensed Income Statement, the
Condensed Balance Sheet, the Condensed Statement of Changes in
Equity, the Condensed Cash Flow Statement, Basis of Preparation and
Accounting Policies and the related notes 1 to 13 (together the
'condensed financial statements'). 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.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. 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.
Directors' Responsibilities
The half yearly financial report is the responsibility of, and
has been approved by, 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.
As disclosed in the Basis of Preparation and Accounting
Policies, 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 Financial Reporting Standard 104, 'Interim
Financial Reporting.'
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. 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.
Conclusion
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
November 2020 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 Services Conduct Authority.
Ernst & Young LLP
London, United Kingdom
24 February 2021
NATIONAL STORAGE MECHANISM
A copy of the Half-Yearly Financial Report will be submitted
shortly to the National Storage Mechanism ("NSM") and will be
available for inspection at the NSM, which is situated at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Ends
LEI: 2138001B3CE5S5PEE928
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IR SEDFWLEFSEDE
(END) Dow Jones Newswires
February 25, 2021 02:00 ET (07:00 GMT)
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