Annual Report • Feb 25, 2021
Annual Report
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Pantheon International Plc ("PIP" or the "Company") is a listed FTSE 250 private equity investment trust, overseen by an independent Board of Directors and managed by Pantheon, one of the leading private equity investment managers globally.
| Strategic Report | 01 |
|---|---|
| Why Choose Us? | 02 |
| Chairman's Statement | 07 |
| Investment Policy | 11 |
| Key Performance Indicators | 12 |
| Digital Transformation | 14 |
| Financing Our Undrawn Commitments | 16 |
| Manager's Review | 18 |
| Our Market | 19 |
| Responsible Investment | 22 |
| Performance | 26 |
| Distributions | 28 |
| Calls | 35 |
| New Commitments | 36 |
| Buyout Analysis | 41 |
| Other Information | 42 |
| Financial Statements | 46 |
|---|---|
| Interim Management Report and | |
| Responsibility Statement of the Directors 47 | |
| Condensed Income Statement | |
| (unaudited) | 48 |
| Condensed Statement of Changes | |
| in Equity (unaudited) | 49 |
| Condensed Balance Sheet (unaudited) | 50 |
| Condensed Cash Flow Statement | |
| (unaudited) | 51 |
| Notes to the Interim Financial | |
| Statements (unaudited) | 52 |
| Independent Review Report to the | |
| Directors of Pantheon International Plc | 57 |
| Other Information | 58 |
| Alternative Performance Measures | 59 |
| Glossary of Terms | 64 |
| Directors and Advisers | 66 |
1 Including financing costs, PIP's total ongoing charges would be 1.45%.
Businesses backed by private equity are all around us, making up a dynamic and growing market. Formany people, this exciting sector can appear to be inaccessible. But withone PIP share, investors can access a high-quality, diversified global portfolio of private equity companies, managed byPantheon.
Pantheon's responsible, transparent and collegiate culture isone of the reasons why PIP has such an outstanding 33-year track record. It is also down to having the right skills, experience and relationships built up over many years. We believe that taking a long-term view leads to better outcomes, whatever is going on in the world.
when it is established.
We purchase the interests of an investor in a company, fund or a portfolio of funds typically late into,
We invest in a new private equity fund 1 Primary Secondary 3 Co-investments
or after, the investment period.
We invest in a portfolio company directly, alongside a private equity fund, during the investment period.
Private equity is the term used for privately negotiated investments typically made in non-public companies. It can be an attractive asset class for a broad range of investors as it
can boost the performance of theirinvestment portfolios. But barriers to entry are high and doing it well requires experience and expertise.
That is where we come in.
Thinking long term, making the right choices and delivering results
A carefully diversified portfolio designed to perform well in a range of conditions
A thoughtful ESG1 approach informs every decision we make
The dispersion of performance between managers in private equity ismuchwiderthan in other asset classes.Therefore, selecting and accessing the best private equity managers with robust organisations, proven operational and sector expertise, and a sustainable investment strategy is key to achieving success.
As at 30 November 2020.
as at 30 September 2020, adjusted for calls and distributions to 30 November 2020. These accountfor 100% of PIP's overall portfolio value.
Thinking long term, making the right choices and delivering results
PIP is a FTSE 250 company and one of the longest established private equity funds listed on the London Stock Exchange.
Our track record speaks for itself: PIP has outperformed the FTSE All-Share and MSCI World over multiple periods and since its inception in 1987.
| Since | |||||
|---|---|---|---|---|---|
| 1 yr | 3 yrs | 5 yrs | 10 yrs | inception | |
| 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% |
| Since | |||||
|---|---|---|---|---|---|
| 1 yr | 3 yrs | 5 yrs | 10 yrs | inception | |
| 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% |
A carefully selected portfolio of private companies designed to perform well in a range of conditions
We manage our portfolio and balance sheet to reduce the risks typically associated with private equity investments, and tomaximise liquidity and growth overtime. As a result, PIP has been able to continue investing through the pandemic.
We carefully select our investments based on the strengths of our appointed underlying private equity managers, and actively monitor and diversify them to reduce specific timing,regional and sectorrisks.
Our continuous focus on the mix of assets in our portfolio and our tilt towards more resilient sectors such as information technology and healthcare,meanthatPIPhas weathered the COVID-19 storm wellsofar.
| Small/mid buyout | 37% |
|---|---|
| Large/mega buyout | 28% |
| Growth | 22% |
| Special situations | 8% |
| Venture | 5% |
| vlogy | 29% |
|---|---|
| 19% | |
| 16% | |
| 11% | |
| 10% | |
| rvices! | 8% |
MSCI World, Total Return (Sterling) FTSE All-Share, Total Return
| Energy | 4% |
|---|---|
| Materials | 2% |
| Others | 1% |
A thoughtful ESG approach informs every decision we make
Pantheon is a responsible and highly experienced investment manager whose culture and values reflect teamwork and diversity across its entire global workforce.
An adherence to sound ESG principles is integrated into our pre- and post-investment due diligence and monitoring processes.
We are committed to promoting ESG and Diversity & Inclusion ("D&I"), and actively engage with our underlying private equity managers to raise standards in ourindustry.
We speak to two of our leading private equity and venture capital managers about what ESG means to them and to their portfolio companies.See pages 22 to 25.
Since I last wrote to you on 5 August 2020, the world has continued to grapple with theCOVID-19 crisis and, while the rollout ofthe vaccine programmes provides hope, the spread of mutations ofthe virus and multiple lockdowns continue to inflict severe economic damage globally.Despite this turmoil, financial markets have rebounded strongly from the lows oflast year, buoyed by optimism and extensive supportfrom 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 £3.8m investment in PIP's shares on behalf of one oftheDirectors afterthe 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 £1.7bn.On an annualised basis, this translates into average annual NAV per share growth of 11.7% since theCompany was launched in 1987, significantly outperforming the FTSE All-Share and MSCI World indices overthe same period.
PIP's Strategic Report, comprising pages 1 to 17, has been approved and signed on behalf ofthe Board. Some ofthe key highlights ofthe report are summarised below, but shareholders are encouraged to read the Strategic Report in its entirety.
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 providerin 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 on page 32 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 ofthe 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.
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.
| +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 |
| £1,698m | Net asset value |
in the half year
£57m Portfolio net cash flow in the half year
We believe that companies that take strong ESG positions and incorporate ESG factors and ethos in their risk assessment will outperform companies that do not.
Applying an ESG perspective to the companies in which we invest is part of building sustainable businesses that generate long-term value for our stakeholders. The strong culture we build in those companies includes a focus on ethics and governance, social and environmental responsibility and a commitment to diversity, equity and inclusion.
Jarlyth Hancock Gibson Director of Risk Management & ESG Advent International
Rini Banerjee Senior Legal Counsel and ESGOfficer
Index Ventures
The performance of special situations, which accounts forjust 8% ofthe 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 oftheCompany's NAV. At the end of November 2020, energy represented just 4% ofthe portfolio.
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 £111m 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 £54m, equivalent to 20% of PIP's opening undrawn commitments. Overall, PIP generated a net positive cash flow of £57m 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 ofthe unlisted Asset Linked Note ("ALN"), which was issued with an initial principal value of £200m inOctober 2017, is made only from the cash distributions received from a reference portfolio of olderinvestment 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 £53m, of which £2.8m represents the net cash flow forthe 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 £300m multi-currency revolving creditfacility, which was due to expire in June 2022, involving the extension of a £225m tranche to May 2024. Since the period end, the remaining £75m tranche has also been extended, with the result that the entire facility is now due to expire in May 2024. The amended agreement allows theCompany the flexibility to increase its committed facilities to £350m. The facility, which has been denominated as toUS\$269.8m and €101.6m to match the principal currencies in which theCompany's undrawn commitments are denominated, was equivalent to £293m as at 30 November 2020.
Altogether, PIP had liquid resources as at 30 November 2020 of £444m, comprising net available cash of £151m and its wholly undrawn creditfacility. PIP's financing cover, which measures the sum of PIP's undrawn commitments of £464m as at 30 November 2020 against its available financing and the value ofits private equity portfolio, was comfortable at 4.4 times.
1 Figures are stated net of movements associated with the ALN share of the reference portfolio.
2 Taxes relate to withholding taxes on investment distributions.
which provide access to growing businesses led by experienced and entrepreneurial managers.During the six months to 30 November 2020, PIP committed £14.6m to six new investments, of which £10.9m was drawn at the time of purchase. This comprised £8.6m invested in four co-investments, £4.7m committed to one secondary investment and £1.3m committed to one primary investment. Since the period end, PIP has committed a further £28.7m to 10 new investments.
Pantheon uses its extensive, deep and long-standing relationships with some ofthe 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 pages 22 and 24 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.
PIP's portfolio is weighted towards the information technology and healthcare sectors, which accounted for almost half ofthe 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 informationtechnology intothedeliveryof servicesandmanufacturing. 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 ofthe companies in PIP's portfolio focused on providing medical care and pharmaceutical products.
Although new investment activity reduced significantly in the aftermath ofthe 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
1 Based on an assessment of the impact of the COVID-19 pandemic on the sub-sectors within PIP's portfolio, and subject to change as conditions evolve.
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.
Upon conclusion ofthe AGM in September 2020, Ian Barby, who had been aDirector 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 overthe role of Chairman of the Audit Committee in April 2020.
Susannah Nicklin, our SeniorIndependentDirector and a member ofthe Board since November 2011, has indicated that she wishes to retire as aDirectorfollowing the conclusion ofthis 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 Directorlaterthis year.
It is difficult to predict how long theCOVID-19 pandemic will last, nor what the global economy will look like afterwards, particularly against a backdrop of worldwide political tensions and increasing anxiety overthe 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
Our investment policy is to maximise capital growth with a carefully managed risk profile.
TheCompany'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 theCompany's Manager, investing on substantially the same terms.
TheCompany 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, theCompany may invest in private equity funds which are quoted. TheCompany 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 oftheCompany.
TheCompany 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 otherforms of collective investment schemes. Investments in funds and companies may be made either directly orindirectly, through one or more holding, special purpose orinvestment vehicles in which one or more co-investors may also have an interest.
TheCompany 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 metfrom anticipated future cash flows to the Company and through the use of borrowings and capital raisings where necessary.
TheCompany's policy is to adopt a global investment approach. The Company's strategy is to mitigate investmentrisk through diversification ofits underlying portfolio by geography, sector and investment stage. Since theCompany's assets are invested globally on the basis, primarily, ofthe merits ofindividual investment opportunities, theCompany does not adopt maximum or minimum exposures to specific geographic regions, industry sectors orthe investment stage of underlying investments.
In addition, theCompany adopts the following limitations forthe purpose of diversifying investment risk:
The Company may invest in funds and other vehicles established and managed or advised by Pantheon or any Pantheon affiliate. In determining the diversification ofits portfolio and applying the Manager's diversification requirementreferred to above, theCompany looks through vehicles established and managed or advised by Pantheon or any Pantheon affiliate.
TheCompany may invest in private equity funds, unquoted companies or special purpose or investment holding vehicles which are geared by loan facilities thatrank ahead oftheCompany's investment. TheCompany does not adoptrestrictions on the extent to which it is exposed to gearing in funds or companies in which it invests.
within capitalist economies, not leastrelative 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 theCOVID-19 crisis in good shape and that the Company is well-positioned forthe future. Pantheon, with nearly 40 years' experience ofinvesting 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 ofits 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 financialresilience 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 overthe long term.
Chairman 24 February 2021
* Cash flows are stated net of movements associated with the ALN share of the reference portfolio.
3,500p
NAV and share price performance
| WHAT IT IS | HOW WE HAVE PERFORMED | LINK TO OUR STRATEGIC OBJECTIVES | EXAMPLES OF RELATED FACTORS THAT WE MONITOR |
||
|---|---|---|---|---|---|
| Performance | |||||
| 5-year cumulative total shareholder return 79.0% |
Total shareholder return demonstrates the return to investors, aftertaking into account share price movements (capital growth) and, if applicable, any dividends paid during the period. |
100% 79.0% 80% 60% 40% 24.1% 20% 0% (0.2%) -20% 1 year 3 years 5 years (cumulative) (cumulative) |
PIP's ordinary shares had a closing price of 2,320.0p at the half year end Discount to NAV was 26% as at 30 November 2020 |
Maximise shareholder returns through long-term capital growth Promote better market liquidity by building demand for the Company's shares |
Rate of NAV growth relative to listed markets Trading volumes for the Company's shares Share price discount to NAV |
| NAV per share growth during the half year 8.9%1 |
NAV per share reflects the attributable value of a shareholder's holding in PIP. The provision of consistent long-term NAV per share growth is central to our strategy. NAV per share growth in any period is shown net of foreign exchange movements and all costs associated with running theCompany. |
15% 10.7% 10% 8.9% 5% 1.0% 0% 6M to 6M to 6M to 30 Nov 2018 30 Nov 2019 30 Nov 2020 |
NAV per share increased by 256.4p to 3,139.2p during the half year NAV growth underpinned by strong performance in the underlying portfolio |
Investing flexibly with top-tier private equity managers to maximise long-term capital growth Containing costs and risks by constructing a well-diversified portfolio in a cost-efficient manner |
Valuations provided by private equity managers Fluctuations in currency exchange rates Ongoing charges relative to NAV growth and private equity peer group Potential for tax leakage from investments Effect of financing (cash drag) on performance |
| Portfolio investment return for the half year 16.6%1 |
Portfolio investment return measures the total movement in the valuation of the underlying funds and companies comprising PIP's portfolio, expressed as a percentage of the opening portfolio value, before taking foreign exchange effects and other expenses into account. |
20% 16.6% 15% 8.9% 10% 5.2% 5% 0% 6M to 6M to 6M to 30 Nov 2018 30 Nov 2019 30 Nov 2020 |
PIP continues to benefitfrom good earnings growth in its underlying portfolio and from realisations at significant uplifts to carrying value |
Maximise shareholder returns through long-term capital growth |
Performance relative to listed markets and private equity peer group Valuations provided by private equity managers |
| Liquidity | |||||
| Net portfolio cash flow for the half year £57m2 |
Net portfolio cash flow is equal to fund distributions less capital calls to finance investments, and reflects the Company's capacity to finance calls from existing investment commitments. PIP manages its maturity profile through a mix of primaries, secondaries and co-investments to ensure that its portfolio remains cash-generative at the same time as maximising the potentialfor growth. |
£100m £79m £75m £64m £57m £50m £25m £0m 6M to 6M to 6M to 30 Nov 2018 30 Nov 2019 30 Nov 2020 |
PIP's portfolio generated £111m of distributions versus £54m of calls In addition, theCompany made new commitments of £15m during the half year, £11m of which was drawn at the time of purchase PIP's portfolio has a weighted average fund age of 5.5 years2 |
Maximise long-term capital growth through ongoing portfolio renewal while controlling financing risk |
Relationship between outstanding commitments and NAV Portfolio maturity and distribution rates by vintage Commitment rate to new investment opportunities |
| Undrawn coverage ratio 130% |
The undrawn coverage ratio is the ratio of available financing and 10% of private equity assets to undrawn commitments. The undrawn coverage ratio is an indicator of the Company's ability to meet outstanding commitments, even in the event of a market downturn. Underthe terms ofits current loan facilities, PIP can continue to make new undrawn commitments unless and until the undrawn coverage ratio falls below 33%. |
140% 130% 120% 102% 100% 90% 80% 60% 31 May 2019 31 May 2020 30 Nov 2020 |
The current level of commitments is consistent with PIP's conservative approach to balance sheet management In line with historical experience, the Company expects undrawn commitments to be funded over a period of several years |
Flexibility in portfolio construction, allowing theCompany to select a mix of primary, secondary and co-investments, and vary investment pace, to achieve long-term capital growth |
Relative weighting of primary, secondary and co-investments in the portfolio Level of undrawn commitments relative to gross assets Trend in distribution rates Ability to access debt markets on favourable terms |
1 Excludes valuation gains and/or cash flows associated with the ALN.
2 Excludes the portion of the reference portfolio attributable to the ALN.
While dedicated information technology businesses are a significant part of our portfolio, the active shift to digital business models and ways of working is a key theme within our investment sectors. Many of our managers see significant investment opportunities as a result of digital transformation.
Nexi is the leading player in card and payment services in Italy. The company serves the majority of Italian financial institutions, as well as corporate and public sector clients, thereby representing a mission-critical component of Italy's financial infrastructure.
Nexi operates in three areas: Merchant Services & Solutions, Cards & Digital Payments and Digital Banking Solutions.
The company operates in strong partnership with c.15 0 banks, serving 900,000 merchants and managing 42 million payment cards for 30 million cardholders.
Clessidra invested in Nexi (formerly ICBPI) as part of a consortium that included Advent International and Bain Capital. In addition to a structural shif t towards card payments and significant opportunities for operational improvement and M&A, the deal
sponsors' track record in the payment processing sector and their history of collaboration in a number of successful investments was a key consideration when entering into this transaction.
Pantheon has invested in Clessidra and Advent International on a primary basis for several years and holds a seat on thei r respective Advisory Boards.
PIP co-invested £4.1 m in Nexi alongside Clessidra in 2015.
MANAGER Clessidra Capital Partners ("Clessidra") GEOGRAPHY Europe TYPE Co-investment, Primary SECTOR Information technology STAGE Large Buyout VINTAGE 2015
NEXI SPA
Wayfair is the largest pure-play e-commerce company addressing the US\$300bn furniture and home goods market in the USA. Trading publicly on the New York Stock Exchange sinc e its 2014 IPO, the company serves customers in the USA, Canada, the UK and Germany.
In April 2020, CEP invested in a convertible debt instrument to support the business during the COVID-19 crisis. Wayfair repositioned itself to benefit from the rapi d shif t to online shopping and customers reprioritising their spending on home improvements instead of travel and entertainment.
Pantheon has invested with CEP on a primary and co-investment basis. Pantheon holds an advisory board seat in its latest fund .
WAYFAIR MANAGER Charlesbank Equity Partners ("CEP") GEOGRAPHY USA TYPE Primary SECTOR Consumer STAGE Mid-market Buyout VINTAGE 2020
ConnectYourCare ("CYC") is one of the largest providers of healthcare account administration services in the USA.
After acquiring CYC from its corporate parent in 2012, ABS Capital re-established the company as a
stand-alone entity, helping to provide the necessary people, processes and infrastructure to capitalise on the significant growt h in consumer-directed healthcare.
Pantheon has invested in seven ABS funds on a secondary basis .
MANAGER ABS Capital Partners ("ABS") GEOGRAPHY North America STAGE Growth Equity
TYPE Secondary SECTOR Healthcare VINTAGE 2012
CONNECT YOUR CARE
As part of the share consolidation effected on 31October 2017, PIP issued an ALN with an initial principal amount of £200m to a single holder(the "Investor"). Repayments under the ALN are made quarterly in arrears and are linked to the ALN share
(approximately 75%) ofthe 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% ofthe reference portfolio.
The ALN is unlisted and subordinated to PIP's existing loan facility (and any refinancing), and is not transferable, otherthan to an affiliate ofthe Investor. The ALN is expected to mature on 31 August 2027, at which point the Company will make the finalrepayment under the ALN.
As at 30 November 2020,
the ALN was valued at £50m. For more information on the ALN,referto page 53.
PIP's undrawn commitments were £464m as at 30 November 2020 (31May 2020:£541m).
At 30 November 2020,PIPhad net available cash balances of £151m. In addition to these cash balances,PIPalso has access to awholly undrawn £300m multi-currency revolving credit facility agreement ("loan facility")that expires inMay 2024.Using exchange rates at 30 November 2020,the loan facility amounted to a sterling equivalent of£293m.
At 30November 2020,theCompany had £444mof available financing which, alongwith the value ofthe private equity portfolio, provides comfortable cover of 4.4 times relative to its undrawn commitments.
Anotherimportantmeasure 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 oftheCompany's ability tomeet outstanding commitments, even in the event of amarket downturn, andwas 130%as at 30November 2020.
The largest share of undrawn commitments represents investments in theUSA and Europe, which highlights theCompany'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 ofits undrawn commitments.
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, orto pay expenses. As a result, the rate of capital calls by these funds tends to slow dramatically.
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% |
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 theCompany's level of undrawn commitments and its ability to finance future calls. A critical part ofthis 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.
1 Includes undrawn commitments attributable to the reference portfolio underlying the ALN.
Maturity1
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.
| Our Market | 19 |
|---|---|
| Responsible Investment | 22 |
| Performance | 26 |
| Distributions | 28 |
| Calls | 35 |
| New Commitments | 36 |
| Buyout Analysis | 41 |
| Other Information | 42 |
Volumes in the global private equity secondary market reached record levels of US\$88bn2 in 2019 but fell to US\$60bn2 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.
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\$1.5tn1 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.
Helen Steers Pantheon Partner and manager of PIP
1 Source: Preqin, January 2021.
2 Source: Greenhill Global Secondary Market Review, January 2021.
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 this report on the role that information technology is playing in many of the underlying companies in PIP's portfolio.
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.
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 20181 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 market1 . 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 year2. 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 employees2 in the USA.
According to research by Preqin, the growing US\$4.4tn global private equity market is expected to double by 20253. 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.
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 can co-underwrite transactions alongside our managers if appropriate.
We assess each co-investment on its own merits but our main investment themes are:
Source: Preqin, November 2020.
Established in 1996, Index Ventures is a global venture capital firm with dual headquarters in San Francisco and London. Index invests primarily in technology-enabled companies, pursuing themes representing fundamental trends and growth opportunities in key sectors of interest, including financial services, e-commerce and consumer services, data and information services, infrastructure software and open source software.
Pantheon has invested in Index Ventures on a primary and secondary basis over multiple fund generations and holds a seat on its Advisory Board.
RB We believe ESG is critical to our overall strategy and we have put in place systems to integrate ESG into our investment processes and to actively monitor ESG risk in our portfolio companies that are growth-stage investments.
Amongst other checks, we believe it is important to undertake appropriate due diligence. In order to uncover any ESG issues pre-investment for example, every prospective portfolio company that is a growth stage investment is asked to complete an ESG due diligence questionnaire or conduct a due diligence call with the legal team and/or the investment team to address principal ESG risks including the effects of its operations on climate change, the company's environmental impact, supply chain analysis, diversity and inclusion as well as good governance and management at the
COUNTRY France SECTOR Information technology
BlaBlaCar is a provider of long-distance carpooling services.
BlaBlaCar started BlaBlaHelp as a way to engage with its users positively during the pandemic. As a result of this initiative, over 20,000 BlaBlaCar users volunteered to help elderly and other vulnerable individuals under lockdown/shelter-in-place rules with their grocery shopping.
The company provided free tax assessment services to individuals who lost their jobs, or were put on "kurzarbeit" or short term work, as a result of the COVID-19 pandemic in 2020.
COUNTRY USA
SECTOR Financial services
Capitolis is a leading provider of software-as-a-service technology platforms for global capital markets.
In June 2020, Capitolis launched "Capital Connects" wherein the company donated 10% of its transactional revenue from its platform to local charities in communities that were particularly affected by COVID-19. The charities selected in 2020 include City Harvest (US), Compliments
of the House (UK) and Magen David Adom (Israel).
RB The pandemic emphasised the importance of community. With the lockdown, we saw our companies becoming increasingly innovative in the way that they brought people together – whether it was BlaBlaCar's initiative to help with grocery shopping for the elderly and other vulnerable individuals; Taxfix, who assisted those who have lost their jobs, or were put on shortterm work, with their tax assessments; MyHeritage, who e-deployed its facilities as affordable COVID-19 test centres; or Capitolis who, in June 2020, donated 10% of their transactional revenue to local charities in their communities that were particularly affected by COVID-19. We saw our portfolio companies focus on relationships and build strong bonds within their communities despite the challenges of the pandemic.
Within Index itself, we provided remote working support for all our employees. We also ensured that our usual service providers continued to get paid throughout the lockdown where possible. This wouldn't be an issue that we would normally have thought about before COVID-19, but once
the pandemic happened, we wanted to make sure our communities were safe, healthy and well.
RB Like many industries across the financial and commercial sector, venture capital can and should do more. At Index, we try to take an organic and team-led approach, empowering employees to suggest and lead actions that they feel improve our overall D&I efforts.
Some examples:
Creation of a Diversity & Inclusion Taskforce: Several Index employees have volunteered to lead efforts to build Index into a more diverse and inclusive organisation over the next 12–24 months. A concrete result of this taskforce was the creation of an internal survey mapping the internal diversity within Index as at December 2020. We also continue with our partnership with WhiteHat (recently rebranded as Multiverse), a UK-based apprenticeship platform, offering internships at Index to promising
candidates from underprivileged backgrounds.
COUNTRY Israel SECTOR Communication services
MyHeritage is an online genealogy platform and provider of DNA testing services.
In partnership with the Israeli government, MyHeritage played a key role in the rapid deployment of affordable COVID-19 test centres in areas of high COVID-19 concentration.
company. The answers to these questions are reviewed and included alongside legal and financial due diligence. All relevant investment committee memorandums must include an assessment of the ESG implications of the portfolio company on the overall fund.
ESG at Index, including the implementation of the ESG policy and reporting to our investors, is maintained by an ESG Officer. Additional support is provided by our legal, investor relations, investment, marketing, secretariat and finance teams to ensure cross-departmental collaboration and deep integration of ESG throughout the firm.
Rini Banerjee Senior Legal Counsel and ESG Officer Index Ventures
JG Our investment philosophy is centred around the sustainable growth of the businesses in which we invest. We have always believed in thinking longer term and seeing business performance through a wider lens. As the role of business in society continues to evolve, we believe our focus on responsible investment drives positive change as well as improved performance. Advent's commitment to our employees, portfolio companies, investors and the broader community reflects this conviction.
Consideration and thoughtful management of ESG risks and opportunities, including diversity, equity and inclusion, at all stages
in our investment process helps to protect and enhance reputation and financial performance and create stronger, more valuable companies. We embed elements of ESG throughout our investment lifecycle, from the diligence phase, through active ownership, collaborative management and value creation, all the way through to exit. We work closely with high-quality management teams and support them with our operational expertise, insights and deep sector knowledge. Our approach to value creation, in collaboration with portfolio company senior management, also involves establishing operational excellence through managing environmental impacts, respecting communities and human capital, and enhancing corporate governance through expertise, processes and culture.
one of the largest and most experienced private equity firms in the world. With 15 offices on four continents, Advent has a globally integrated team of more than 240 investment professionals, focused on buyouts and growth equity investments in five core sectors: business and financial services, technology, industrials, healthcare, and retail, consumer and
leisure. Since initiating its private equity strategy in 1989, the firm has invested US\$55bn in over 370 private equity investments in 41 countries and, as at 31 December 2020, managed US\$66bn in assets.
Pantheon has invested in Advent International on a primary and secondary basis for several years and holds a seat on its Advisory Board.
JG Throughout our investment process, we communicate regularly with our investors. Advent believes it is important to communicate our approach to ESG in our investment strategy and regularly inform our investors about key ESG topics, performance and progress over the life of an investment. We also engage with our investors on particular topics of interest to them on an ongoing basis. These exchanges in turn inform our investor reporting. For our investors, we hold an annual investor meeting and produce twice-yearly company-level ESG reports for our most recent funds. Our public website includes information on responsible
COUNTRY Germany
SECTOR Industrials
Röhm GmbH
Röhm is a leading global producer of methacrylates (PLEXIGLAS®). The company's products are shipped to industrial customers all over the world, for use in a wide variety of industries, including paints and coatings, precious minerals mining, automotive, building and healthcare.
Röhm developed extensive, complex systems to ensure compliance with legal, regulatory and industry requirements, and best
practices. Going beyond compliance to ensure safety and protect its reputation is a priority for Röhm in production, product safety, transportation and the handling of all its products. Röhm's transportation risk analysis process is considered best-in-class in its sector.
JG Each of our portfolio companies has a different mix of important ESG topics depending on their industry, their geography and their growth strategy priorities. In assessing key ESG considerations to monitor and embed, we work with specialist consultancies and refer to industry standards such as SASB1 to inform our high-level perspective. For example, we recognise that for the Business & Financial Services sector, cybersecurity, data privacy and facilitating financial system participation are key ESG themes. In the evolving Technology industry, technology disruption, data usage and mobility have given us greater visibility into the importance of data security and customer privacy as more and more of our everyday activities are driven online. Industrial companies such as Röhm, on the other hand, must focus on risk management and robust health and safety programmes. In sectors such as Healthcare and Retail, ESG key topics include supply chain, access to medicines, innovation, and safe provision of products and services.
investment, diversity, equity and inclusion, as well as our ESG Overview Report which describes Advent's approach to ESG and highlights selected portfolio companies' innovative approaches to managing ESG-related issues.
JG Looking back on 2020, we believe our response to COVID-19 highlights the most important dimensions of Advent's activity in our global society. While each of our core sectors has been affected differently, we are proud of the common principles behind our actions: protecting public health, giving to the most vulnerable and using our skills, products and expertise to alleviate some aspects of the crisis. We had several companies adapt their industrial capabilities to contribute to ventilator production, multiple companies rapidly re-engineer some parts of their manufacturing lines to produce hand sanitiser, while Röhm ramped up its production of PLEXIGLAS® to meet the global demand for protective shields in person-to-person interactions in stores, schools, hospitals and many other locations. Healthcare companies turned to their drug development and marketed product
pipelines to prioritise products with applications in treating COVID-19. Definitive Healthcare, a technology-enabled healthcare company, used its data analytics capabilities to assist in COVID-19 preparedness planning. In retail, consumer and leisure, as well as across our portfolio, companies have raised significant funds to contribute to alleviating food insecurity, to distribute PPE to healthcare workers, donating tens of thousands of mattresses and hotel room space to healthcare workers, and to assist vulnerable populations suffering from homelessness, depression, domestic violence and other issues. As a firm, we created The Advent Relief Fund, which rapidly distributed more than US\$30m to charities, via local offices, in collaboration with our portfolio companies, in the spring and summer to enable communities to cope and adapt.
JG Advent is committed to making our firm and our portfolio companies stronger by promoting diversity, equity and inclusion ("DE&I") inside our firm and across our portfolio companies. Diversity at Advent is integrated within our culture and in how
we see our future. We have long believed that creating an inclusive environment that values diversity of background, race, ethnicity, sexual orientation, experience, ideas and opinion not only makes us better investors but is also the right thing to do. We are dedicated to driving positive change globally across Advent's offices, within our portfolio companies, and in the communities in which we operate. First Watch is an example of a portfolio company that best represents our firm's commitment to DE&I.
In 2020, we created The Advent Leadership Academy, an ambitious collaboration between Advent International and Harvard Business School. This joint effort is designed to provide high-potential leaders at our portfolio companies with the knowledge and skills to accelerate their professional development and create a pipeline of executives who will be prepared for future senior leadership roles. One of the great strengths of the Advent approach has been the continual exchange of ideas across our global community. The programme will further stimulate this collaboration by encouraging alumni to share insights and best practices gained in one sector or geography with fellow leaders elsewhere in the Advent portfolio.
Early into the COVID-19 pandemic, Definitive Healthcare used its proprietary data and analytics to identify geographic hot spots where COVID-19 cases would outstrip local supply of ventilators, hospital bed capacity and other medical resources via its COVID-19 Capacity Predictor. More recently, Definitive Healthcare created a COVID-19 Reopening
Analysis Predictor, an interactive tool that captures key metrics that indicate when different areas can begin safely easing stay-athome restrictions.
Jarlyth Hancock Gibson Advent International
COUNTRY USA SECTOR Consumer
First Watch is a large and fast-growing daytime-only restaurant concept in the USA with more than 400 restaurants in 29 states.
First Watch launched new diversity and inclusion initiatives in September 2020, focusing on scholarship and mentorship programmes, increasing the representation and advancement of underrepresented groups, as well as training initiatives
that foster mutual respect and acceptance of others.
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.
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.
PIP received £111m 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.
With a weighted average fund maturity of 5.5 years3, PIP's portfolio is well-positioned to continue to generate significant levels of cash.
PIP received more than 8501 distributions during the half year, with many reflecting realisations at uplifts to carrying value.
Exit realisations by 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.
The average cost multiple of the sample was 2.5 times, highlighting value creation over the course of an investment.
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.
1 See page 62 of the Alternative Performance Measures section for sample calculations and disclosures.
Colisée is a leading European operator of nursing home facilities and home care services agencies for the elderly.
The company, with its network of 16,000 care providers and more than 270 facilities in France, Belgium, Spain and Italy, has developed a strong expertise in the care and wellbeing of elderly people.
Colisée is well-positioned to benefit from strong secular trends, such as an ageing European population and an increasing shift towards privately managed elderly care.
Led by a highly experienced management team, Colisée is a consolidator in a fragmented market, acquiring small to medium sized nursing home operators in its core geographies.
Recognised for its strong operations, Colisée has a high focus on the quality of care provided to its residents.
Pantheon has a longstanding relationship with IK, with fund investments dating back to 1999. In addition to Colisée, PIP has participated in several other co-investments alongside IK.
2020 Colisée was acquired by EQT Infrastructure and CDPQ Infrastructure in November 2020.
MANAGER IK Investment Partners ("IK") GEOGRAPHY Europe TYPE Co-investment SECTOR Healthcare STAGE Mid-market Buyout VINTAGE 2017 COLISÉE £14.0m
in proceeds
Allegro is Poland's largest online marketplace, with over 20 million registered users, allowing businesses and individuals to sell their products to consumers.
As the preferred online shopping destination for Polish customers, Allegro benefits from an iconic brand with exceptional user engagement metrics.
Allegro.pl is one of the world's top ten e-commerce websites, attracting 12.6m customers.
The Allegro marketplace provides customers with advanced search functionality, safe payment transfer and financing solutions, a buyer protection programme and a managed delivery experience, while providing merchants with data tools and the ability to promote and advertise offers.
As the e-commerce leader in Poland, Allegro is well-positioned to continue to benefit from the shift from offline to online shopping, which is underpenetrated relative to many other countries globally.
Over the course of their ownership, Mid Europa, in collaboration with Cinven and Permira, has supported the management of Allegro's key strategic initiatives of expanding product breadth, optimising merchant processes and innovating the technology platform.
Pantheon is a primary investor in all three of the financial sponsors that backed this business.
In 2017, PIP co-invested £3.0m (€3.5m) in Allegro. PIP has also participated in three other co-investments alongside Mid Europa.
2020 Allegro was listed on the Warsaw Stock Exchange on 12 October 2020, priced at PLN43 per share. PIP continues to be invested in the company.
STAGE Large Buyout VINTAGE 2017
in proceeds to date
97%
three months since IPO2
Moda
Supermarket
2,300+ employees
active customers
1 €4.6m if the €1.1m proceeds from a recapitalisation is included.
2 As at 30 December 2020 and denominated in PLN.
| Total proceeds |
|||||
|---|---|---|---|---|---|
| No. Company | Country | Sector | Description | (£m) | |
| 1 | Galileo Global Education | Luxembourg | Consumer | Global post-secondary school education platform | 17.4 |
| 2 | Colisée | France | Healthcare | Operator of nursing home facilities | 14.0 |
| 3 | Nexi | Italy | Information technology | Card and payment services company | 7.4 |
| 4 | ConnectYourCare | USA | Healthcare | Provider of healthcare account administration services | 5.7 |
| 5 | NIBC Bank | Netherlands | Financials | Corporate and retail bank | 5.6 |
| 6 | Valet Waste | USA | Industrials | Provider of cleaning and sanitation services | 3.6 |
| 7 | CPG International | USA | Industrials | Manufacturer of building products | 3.2 |
| 8 | Allegro | Poland | Consumer | Online marketplace | 3.1 |
| 9 | Compagnie Européenne de Prévoyance |
France | Financials | Credit protection insurance broker | 2.7 |
| 10 | CrowdStrike | USA | Information technology | Security software company | 2.7 |
| 11 | Adyen | Netherlands | Information technology | Payment processing platform | 2.4 |
| 12 | Shift4 Payments | USA | Information technology | Provider of payment processing solutions | 2.3 |
| 13 | Advanced Micro-Fabrication Equipment |
China | Information technology | Manufacturer of semi-conductor equipment | 2.2 |
| 14 | Xplornet | Canada | Communication services | Provider of web hosting and high speed internet services | 1.9 |
| 15 | Adare Pharmaceuticals | USA | Healthcare | Specialty pharmaceutical company | 1.6 |
| 16 | eSolutions | USA | Healthcare | Data analytics and workflow automation software company | 1.6 |
| 17 | Compusearch | USA | Information technology | Provider of software solutions to government agencies | 1.5 |
| 18 | Visma Group | Norway | Information technology | Provider of cloud-based SaaS productivity solutions | 1.5 |
| 19 | Netflix | USA | Communication services | Internet television subscription services company | 1.3 |
| 20 | Home Shopping Europe | Germany | Consumer | Muti-channel home shopping company | 1.3 |
| 21 | Tenable Network Security | USA | Information technology | Developer of network vulnerability assessment solutions | 1.3 |
| 22 | Apollo Education | USA | Consumer | Provider of continuing education programmes and services | 1.3 |
| 23 | Thomson Reuters | UK | Industrials | Information services and analytics company | 1.2 |
| 24 | Kaspi Bank | Kazakhstan | Financials | Commercial bank | 1.2 |
| 25 | SK Fire & Security | Netherlands | Industrials | Provider of fire protection products for businesses | 1.2 |
| 26 | nCino | USA | Information technology | Cloud-based banking platform | 1.1 |
| 27 | Palomar | USA | Financials | Property insurance company | 1.1 |
| 28 | ECT | France | Industrials | Provider of environmental engineering and recycling services | 1.0 |
| 29 | Pepperstone Group | Australia | Financials | Online foreign exchange broker | 1.0 |
| 30 | Freshly | USA | Consumer | Manufacturer of ready-made meals | 0.9 |
| 31 | Vertafore | USA | Information technology | Provider of software solutions for the insurance industry | 0.9 |
| 32 | Floor & Decor Holdings | USA | Consumer | Retailer of hard surface flooring and related accessories | 0.9 |
| 33 | Melia Aloha Hotel | Spain | Consumer | Hotel chain | 0.9 |
| 34 Isotrak | USA | Information technology | Fleet management software solutions provider | 0.9 | |
| 35 | FlagStar | USA | Financials | Commercial bank | 0.8 |
| 36 | LOGEN | South Korea | Industrials | Domestic parcel delivery services company | 0.8 |
| 37 | Vectorply | USA | Consumer | Producer of composite fabrics for industrial use | 0.8 |
| 38 | Crop Corporation | USA | Industrials | Manufacturer of concrete water tanks | 0.8 |
| 39 | Diligent | USA | Information technology | Provider of corporate governance software | 0.8 |
| 40 Fiskarhedenvillan | Sweden | Consumer | Manufacturer of pre-fabricated houses | 0.8 | |
| 41 | Applied Systems | USA | Information technology | Provider of cloud-based insurance software solutions | 0.8 |
| 42 | 1Life Healthcare | USA | Healthcare | Chain of primary healthcare clinics | 0.8 |
| 43 Italia Online | Italy | Communication services | Provider of digital advertising services | 0.7 | |
| 44 Checkmarx | Israel | Information technology | Enterprise security software provider | 0.7 | |
| 45 Xiaomi | China | Information technology | Communication equipment and electronics company | 0.7 | |
| 46 Phreesia | USA | Healthcare | Provider of patient intake management software | 0.7 | |
| 47 | Atria Convergence Technologies | India | Communication services | Broadband internet provider | 0.7 |
| 48 Twist Bioscience | USA | Healthcare | Manufacturer of synthetic DNA for the biotechnology industry |
0.7 | |
| 49 | Genesys | USA | Information technology | Contact centre technology software provider | 0.7 |
| 50 | Spotify | Sweden | Information technology | Provider of digital music streaming services | 0.6 |
| TOTAL | 109.8 | ||||
| COVERAGE OF TOTAL DISTRIBUTIONS | 99% |
Communication services 8% Financials 7% Energy 3%
PIP paid £54m to finance calls on undrawn commitments during the half year.
Calls were predominantly made by private equity managers in the buyout and growth segments.
A large proportion of calls were for investments made in the information technology and healthcare sectors.
The annualised call rate for the six months to 30 November 2020 was equivalent to 20% of opening undrawn commitments.
Calls during the half year were used to finance investments in businesses such as software providers, specialty pharmaceuticals and business process outsourcing companies. In addition, our managers sought to make attractively priced add-on acquisitions for existing platform companies.
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.
The majority of commitments made in the six month period were to US private equity opportunities.
New commitments during the half year reflected the attractiveness of opportunities across the spectrum of PIP's investment activity.
STAGE Buyout, Growth
REGION USA VINTAGE 2008–2015 COMMITMENT £4.7m
This secondary transaction involved the acquisition of interests in eight US-based buyout and growth funds.
The investment gives PIP an opportunity to deploy capital into high-quality funds, many of which PIP already backs on a primary basis.
In addition, PIP stands to benefit from the attractive vintage diversification, with older funds providing near-term liquidity and more recent vintages providing
potential uplifts to the portfolio's current holding value.
All of the new commitments made in the half year were in the buyout and growth segments.
Primary and co-investment commitments comprised nearly 70% of the activity during the last six months, resulting in the predominance of current vintage investments.
PIP committed £15m to six new investments during the half year. Of the total commitments made, £11m was drawn at the time of purchase. Since the period end, PIP has committed a further £29m to 10 new investments. The Company's investment pipeline points to an active period for new commitments for the remainder of the financial year.
Co-investments 59% Secondary 32% Primary 9%
2020 68% 2018 and earlier 32%
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.
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.
SECTOR Information technology
REGION USA STAGE Large Buyout VINTAGE 2020 COMMITMENT £1.3m
Established in 1998, Thoma Bravo is a leading private equity firm focused on the software and technologyenabled services sectors. The firm has offices in Chicago and San Francisco.
Thoma Bravo XIV will invest in a portfolio of 12 to 15 companies, and employ a buy-and-build strategy to create value.
By investing in Thoma Bravo XIV, PIP has gained access to a private equity manager with deep sector expertise and who has consistently delivered strong returns across several market cycles.
Investment opportunities are originated via Pantheon's well-established platform
Cash is generated when those companies are sold, and is returned to PIP to be redeployed into new investment opportunities
Within our diversified portfolio,
we back the best managers globally that are able to identify and create value in growing companies
Visma is a leading provider of mission-critical enterprise resource planning, accounting, payroll and transaction process outsourcing software to small and mediumsized businesses and to the public sector in Northern Europe.
Hg saw an opportunity to invest in a company with strong year-on-year growth underpinned by the ongoing shift towards greater digitalisation and process automation, a succession of new customer wins and scale built through over 80 add-on acquisitions.
Software is a core sector for Hg and the manager has deep knowledge of both the sector and the company, having owned Visma across its funds over the past decade.
Pantheon has a long-standing relationship with Hg, having made primary commitments to its funds since 2006. PIP co-invested in three other transactions alongside Hg.
GP HgCapital ("Hg") GEOGRAPHY Europe TYPE Co-investment SECTOR Information technology
STAGE Large Buyout
commitment
11,000+
employees
Information technology 69% Industrials 31%
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.
| Charles Taylor | MANAGER | Lovell Minnick Partners ("LMP") |
|---|---|---|
| GEOGRAPHY | Europe | |
| STAGE | Mid-market Buyout | |
| SECTOR | Financial services | |
| COMMITMENT | £6.2m |
MANAGER HgCapital ("Hg") GEOGRAPHY North America STAGE Large Buyout SECTOR Information technology
COMMITMENT £1.9m
| MANAGER | HIG Capital ("HIG") |
|---|---|
| GEOGRAPHY | North America |
| STAGE | Mid-market Buyout |
| SECTOR | Industrials |
| COMMITMENT | £2.6m |
| Capstone | |
|---|---|
| Logistics | |
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.
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.
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.
-20% Dec
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| 10% | |
| 0% | |
| -10% | |
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| -40% | |
| Dec 15 |
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6x
4x
2x
1 See page 62 of the Alternative Performance Measures section for sample calculations and disclosures.
| % Of total private | ||||
|---|---|---|---|---|
| Rank | Manager | Region2 | Stage bias | equity asset value1 |
| 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 PRIVATE EQUITY ASSET VALUE1 | 73.0% |
Percentages look through feeders and fund-of-funds and excludes the portion of the reference portfolio attributable to the ALN.
Refers to the regional exposure of funds.
The private equity manager does not permit the Company to disclose this information.
| Company | Country/State | Sector | % of PIP's 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% |
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.
Co-investments/directs.
Listed companies.
The private equity manager does not permit the Company to disclose this information.
Exposure is equivalent to the sum of the NAV and undrawn commitments.
Excludes the portion of the portfolio attributable to the ALN.
Includes the portion of the portfolio attributable to the ALN.
70 managers and 425 companies account for approximately 80% of PIP's total exposure1
.
| NAV1,2 (£m) |
NAV per share2 (pence) |
Ordinary share price (pence) |
Private equity portfolio (£m) |
Outstanding commitments (£m) |
|
|---|---|---|---|---|---|
| Half year ended 30 November 2020 | 1,698 | 3,139.2 | 2,320.0 | 1,593 | 464 |
| Financial year3 | |||||
| 2020 | 1,559 | 2,882.8 | 2,065.0 | 1,496 | 541 |
| 2019 | 1,499 | 2,770.6 | 2,225.0 | 1,450 | 521 |
| 2018 | 1,307 | 2,414.9 | 2,010.0 | 1,275 | 440 |
| 2017 | 1,388 | 2,189.9 | 1,793.0 | 1,224 | 445 |
| 2016 | 1,187 | 1,873.6 | 1,285.0 | 1,072 | 382 |
| 2015 | 1,000 | 1,532.4 | 1,272.0 | 862 | 256 |
| 2014 | 902 | 1,364.2 | 1,150.0 | 815 | 176 |
| 2013 | 903 | 1,331.9 | 1,042.0 | 826 | 195 |
| 2012 | 845 | 1,193.5 | 725.5 | 800 | 191 |
| 2011 | 733 | 1,104.1 | 714.0 | 810 | 243 |
| 2010 | 637 | 958.7 | 486.0 | 763 | 331 |
| 2009 | 514 | 773.6 | 295.3 | 648 | 428 |
| 2008 | 736 | 1,108.7 | 750.0 | 806 | 641 |
| 2007 | 610 | 919.2 | 917.5 | 527 | 528 |
| 2006 | 441 | 796.8 | 726.5 | 372 | 365 |
| 2005 | 382 | 657.9 | 650.5 | 315 | 245 |
| 2004 | 245 | 572.5 | 463.0 | 233 | 137 |
| 2003 | 221 | 546.8 | 447.0 | 237 | 158 |
| 2002 | 196 | 541.6 | 486.5 | 175 | 138 |
| 2001 | 206 | 669.1 | 574.0 | 201 | 138 |
| 2000 | 161 | 599.9 | 457.5 | 140 | 77 |
| 1999 | 146 | 405.6 | 302.5 | 78 | 45 |
| 1998 | 131 | 368.6 | 294.5 | 79 | 50 |
| 1997 | 117 | 328.4 | 270.0 | 73 | 47 |
| 1996 | 106 | 302.5 | 225.0 | 48 | 25 |
| 1995 | 87 | 255.1 | 207.5 | 33 | 8 |
| 1994 | 47 | 239.6 | 176.5 | 42 | 7 |
| 1993 | 31 | 195.5 | 172.5 | 28 | 1 |
| 1992 | 21 | 139.7 | 93.5 | 28 | 0 |
| 1991 | 21 | 129.1 | 86.5 | 31 | 1 |
| 1990 | 20 | 126.7 | 80.5 | 32 | 2 |
| 1989 | 17 | 120.9 | 95.0 | 25 | 2 |
| 1988 | 12 | 102.5 | 75.0 | 2 | 0 |
Includes participating loan notes in issue between 2000 and 2004.
Historical NAV and NAV per share figures disclosed in the table above relate to adjusted NAV and adjusted NAV per share where applicable.
In April 2017, PIP changed its accounting reference date from 30 June to 31 May of each year. Figures for 2017 cover the 11 months to 31 May 2017.
| Interim Management Report and Responsibility Statement of the Directors | 47 |
|---|---|
| Condensed Income Statement (unaudited) | 48 |
| Condensed Statement of Changes in Equity (unaudited) | 49 |
| Condensed Balance Sheet (unaudited) | 50 |
| Condensed Cash Flow Statement (unaudited) | 51 |
| Notes to the Interim Financial Statements (unaudited) | 52 |
| Independent Review Report to the Directors of Pantheon International Plc | 57 |
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.
Each Director confirms that to the best of their knowledge:
This Interim Financial Report was approved by the Board on 24 February 2021 and was signed on its behalf by Sir Laurie Magnus, Chairman.
| Six months ended 30 November 2020 |
Six months ended 30 November 2019 |
Year ended 31 May 2020 |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total* £'000 |
Revenue £'000 |
Capital £'000 |
Total* £'000 |
Revenue £'000 |
Capital £'000 |
Total* £'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 liabilities 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) | – | (1,065) | (1,616) | – | (1,616) |
| Return for the period/year, 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 (10.44p) 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 return for the period is also the total comprehensive income for the period. The supplementary revenue and capital columns are prepared under guidance published in the Statement of Recommended Practice ("SORP") issued by the Association of Investment Companies ("AIC").
** 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.
The Notes on pages 52 to 56 form part of these financial statements.
| Share capital £'000 |
Share premium £'000 |
Capital redemption reserve £'000 |
Other capital reserve £'000 |
Capital reserve on investments held £'000 |
Revenue reserve £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|---|
| Movement for the six months ended 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 ended 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 on pages 52 to 56 form part of these financial statements.
| 30 November 2020 £'000 |
30 November 2019 £'000 |
31 May 2020 £'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 on pages 52 to 56 form part of these financial statements.
| Six months ended 30 November 2020 £'000 |
Six months ended 30 November 2019 £'000 |
Year ended 31 May 2020 £'000 |
|
|---|---|---|---|
| Cash flows 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 from prior years | 6,135 | – | – |
| 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 the beginning of the period/year | 130,091 | 142,773 | 142,773 |
| Foreign exchange (losses)/gains | (9,429) | (5,085) | 1,241 |
| Cash and cash equivalents at end of the period/year | 151,079 | 145,488 | 130,091 |
* Includes interest paid during the period of £17,000 (30 November 2019: £16,000; 31 May 2020: £31,000). The Notes on pages 52 to 56 form part of these financial statements.
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 (£'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 on page 57. 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.
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:
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 £444m (30 November 2019: £331m; 31 May 2020: £431m), comprising £151m (30 November 2019: £154m; 31 May 2020: £121m) in available cash balances and £293m (30 November 2019: £177m; 31 May 2020: £310m) (sterling equivalent) in undrawn bank facilities.
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.
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 on pages 42 and 43 in relation to where the GP may not allow the disclosure of the related company name within this report.
The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business.
The tax charge for the six months to 30 November 2020 is £0.5m (six months to 30 November 2019: £1.1m; year to 31 May 2020: £1.6m). 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, £6.1m of taxation was recovered from the United States Internal Revenue Service, relating to prior years' taxation, which resulted in an overall tax credit of £5.6m in the period.
During the period, fees with a total value of £9,243,000, being £9,048,000 directly from Pantheon Ventures (UK) LLP and £195,000 via Pantheon managed fund investments were charged to the Company (30 November 2019: £9,085,000; £8,861,000; and £224,000; year to 31 May 2020: £18,102,000; £17,674,000 and £428,000 respectively). At 30 November 2020, the amount due to Pantheon Ventures (UK) LLP in respect of management fees, disclosed under creditors, was £1,570,000 (30 November 2019: £1,443,000; 31 May 2020: £1,518,000 respectively).
No performance fee is payable in respect of the period to 30 November 2020 (30 November 2019: £nil; year to 31 May 2020: £nil 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 £179,000 (six months to 30 November 2019: £143,000; year to 31 May 2020: £264,000).
There are no other identifiable related parties at the period end.
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.
No performance fee has been paid.
As part of the share consolidation effected on 31 October 2017, the Company issued an ALN with an initial principal amount of £200m 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.
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. During the year to 31 May 2020, the Company made repayments totalling £28.0m, 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 £65.4m, of which £7.6m represents cash flows for the three months to 31 May 2020, due for repayment on 31 August 2020.
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 £15.9m, 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 £52.7m, of which £2.8m 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 £11.9m, 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 £77.7m, of which £3.8m represents the net cash flow for the three months to 30 November 2019, due for repayment on 29 February 2020.
| 30 November 2020 | 31 May 2020 | |||||
|---|---|---|---|---|---|---|
| Allotted, called up and fully paid: | Shares | £'000 | Shares | £'000 | Shares | £'000 |
| 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).
| Six months to 30 November 2020 | Six months to 30 November 2019 | Year to 31 May 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | |
| Return for the financial period £'000 |
266 138,423 | 138,689 | (5,646) | 21,122 | 15,476 | (11,547) | 72,225 | 60,678 | |
| Weighted average no. of ordinary 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.
| 30 November 2020 |
30 November 2019 |
31 May 2020 |
|
|---|---|---|---|
| Net assets attributable in £'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 |
| Six months to 30 November 2020 £'000 |
Six months to 30 November 2019 £'000 |
Year to 31 May 2020 £'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 liabilities 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 flow from operating activities | 1,387 | (6,466) | (11,957) |
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.
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.
The fair value hierarchy consists of the following three levels:
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
|---|---|---|---|---|
| Unlisted holdings | – | – 1,595,634 1,595,634 | ||
| Listed holdings | 1,126 | – | – | 1,126 |
| Total | 1,126 | – 1,595,634 1,596,760 |
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
|---|---|---|---|---|
| ALN | – | – | 52,660 | 52,660 |
| Total | – | – | 52,660 | 52,660 |
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
|---|---|---|---|---|
| Unlisted holdings | – | – 1,494,944 1,494,944 | ||
| Listed holdings | 745 | – | – | 745 |
| Total | 745 | – 1,494,944 1,495,689 |
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
|---|---|---|---|---|
| ALN | – | – | 65,386 | 65,386 |
| Total | – | – | 65,386 | 65,386 |
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
|---|---|---|---|---|
| Unlisted holdings | – | – 1,433,595 1,433,595 | ||
| Listed holdings | 649 | – | – | 649 |
| Total | 649 | – 1,433,595 1,434,244 |
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|
|---|---|---|---|---|
| ALN | – | – | 77,719 | 77,719 |
| Total | – | – | 77,719 | 77,719 |
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.
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 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.
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.
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.
London, United Kingdom
24 February 2021
| Alternative Performance Measures | 59 |
|---|---|
| Glossary of Terms | 64 |
| Directors and Advisers | 66 |
Annualised operating costs, excluding performance fees, financing costs and taxes, as a percentage of the average month-end NAV over the period.
| AIC ongoing charges (annualised) | 1.24% | 1.22% | (a / b) x 2 | |
|---|---|---|---|---|
| Average month-end NAV | 1,586,057 | 1,537,215 | (b) | |
| Total expenses | 9,888 | 9,398 | (a) | |
| Other expenses | 48 | 645 | 313 | |
| Lookthrough charges | 53 | 195 | 224 | |
| Investment management fees | 53 | 9,048 | 8,861 | |
| Page | Half year ended 30 November 2020 £'000 |
Half year ended 30 November 2019 £'000 |
Available cash
Cash and debtors less next ALN repayment and other creditors (see Note 8).
Sum of net available cash and undrawn loan facility.
| Available financing | 444 | 331 | (a + b) | |
|---|---|---|---|---|
| Undrawn loan facility | 52 | 293 | 177 | (b) |
| Net available cash | 50, 53 | 151 | 154 | (a) |
| Page | At 30 November 2020 £m |
At 30 November 2019 £m |
Calls to limited partners ("LPs") to pay in a portion of the LP's committed capital when the general partner ("GP") has identified a new investment for purchase.
| Page | Half year ended 30 November 2020 £m |
Half year ended 30 November 2019 £m |
||
|---|---|---|---|---|
| Purchases of investments | 51 | 76 | 101 | (a) |
| Recallable distributions | (10) | (5) | (b) | |
| Amount drawn for new commitments | (11) | (37) | (c) | |
| ALN share of calls | (1) | – | (d) | |
| Capital calls | 54 | 59 | (a + b + c + d) |
Capital calls in the period divided by opening undrawn commitments.
| Half year ended 30 November 2020 £m |
Half year ended 30 November 2019 £m |
||
|---|---|---|---|
| Capital calls | 54 | 59 | (a) |
| Opening undrawn commitments | 541 | 521 | (b) |
| Annualised capital call rate | 20% | 23% | (a/b x 2 x 100) |
Cash or stock returned to the LPs after the fund has exited from an investment by selling it or from distributions received before a sale. Excludes such proceeds received relative to the portion of the portfolio attributable to the ALN.
| Page | Half year ended 30 November 2020 £m |
Half year ended 30 November 2019 £m |
||
|---|---|---|---|---|
| Disposals of investments | 50, 51 | 127 | 128 | (a) |
| Investment income received | 51 | 6 | 5 | (b) |
| Recallable distributions | (10) | 5 | (c) | |
| Withholding tax | 51 | – | (1) | (d) |
| ALN share of distributions | (12) | (14) | (e) | |
| Distributions from PIP's portfolio | 111 | 123 (a + b + c + d + e) |
Distributions for the period divided by opening portfolio value.
| Half year ended 30 November |
Half year ended 30 November 2019 |
|||
|---|---|---|---|---|
| Page | 2020 £m |
£m | ||
| Distributions from PIP's portfolio | 111 | 123 | (a) | |
| Opening investments at fair value | 50 | 1,496 | 1,450 | (b) |
| ALN share of opening investments | (58) | (93) | (c) | |
| Opening portfolio value (excluding the ALN) | 1,438 | 1,357 | (d) = (b +c) | |
| Distribution rate from PIP's portfolio (annualised) | 15% | 18% | (a/d x 2 x 100) |
Ratio of available cash, private equity assets and undrawn loan facility to outstanding commitments.
| Page | At 30 November 2020 £m |
At 30 November 2019 £m |
||
|---|---|---|---|---|
| Net available financing | 444 | 331 | (a) | |
| Investments at fair value | 50 | 1,597 | 1,435 | (b) |
| Total | 2,041 | 1,766 | (c) = (a + b) | |
| Outstanding commitments | 464 | 486 | (d) | |
| Financing cover | 4.4x | 3.6x | (c/d) |
Income and capital distributions received from funds following exit realisations less capital calls made to finance investments or expenses.
| Half year ended 30 November 2020 £m |
Half year ended 30 November 2019 £m |
||
|---|---|---|---|
| Distributions from PIP's portfolio | 111 | 123 | (a) |
| Capital calls | (54) | 59 | (b) |
| Net portfolio cash flow | 57 | 64 | (a - b) |
Total movement in the valuation of the underlying funds and companies comprising the portfolio, expressed as a percentage of opening portfolio value. Foreign exchange effects and other expenses are excluded from the calculation. The figure excludes returns attributable to the ALN. A reconciliation of the Return After Taxation to the Portfolio Valuation Movement is shown below.
| Page | Half year ended 30 November 2020 £m |
Half year ended 30 November 2019 £m |
||
|---|---|---|---|---|
| Return after taxation (per Income Statement) | 49 | 139 | 15 | (a) |
| Adjusted for non portfolio income and expenses | ||||
| Investment management fees | 49 | 9 | 9 | (b) |
| Other expenses | 49 | 1 | 1 | (c) |
| Interest payable and similar expenses | 49 | 2 | 1 | (d) |
| Other income | 49 | – | (1) | (e) |
| Portfolio and other FX | * | 87 | 44 | (f) |
| Portfolio valuation movement | 238 | 70 (g) = (a) + (b) + (c) + (d) + (e) + (f) |
||
| Opening investment at fair value | 1,496 | 1,450 | (h) | |
| ALN share of opening investments | (58) | (93) | (i) | |
| Opening portfolio value (excluding the ALN) | 1,438 | 1,357 | (j) = (h) + (i) | |
| Portfolio investment return | 16.6% | 5.2% | (g/j) |
* Includes £83m of FX on the portfolio excluding ALN (2019: £40m).
The sample buyout figures for the 12 months to 30 June 2020 were calculated using all the information available to the Company. The figures are based on unaudited data. MSCI and FTSE data was sourced from Bloomberg.
The revenue and EBITDA figures were based upon the last 12 months to 30 June 2020 or, where not available, the closest annual period disclosed, and provide coverage of 66% and 68% (for revenue and EBITDA growth respectively) of PIP's buyout portfolio.
Individual company revenue and EBITDA growth figures were capped if in excess of -100% and +100% to avoid distortions from large outliers. Sample data for 2014–2019 is based on the same methodology and provides coverage of 45%–75% of the portfolio in each year.
Enterprise value is defined as equity value plus net debt. The net debt and enterprise value figures were based on underlying valuations as at 30 June 2020, or the closest disclosed period end. The valuation multiple sample covers approximately 57% of PIP's buyout portfolio. The debt multiple sample covers approximately 50% to 60% of PIP's buyout portfolio.
The cost multiple data on page 29 is based on a sample that represented approximately 58% by value of PIP's gross distributions for the half year to 30 November 2020. The data covers primary investments and co-investments, and is based upon gross cost multiples available at the time of the distribution.
Realisation events are classified as exit realisations when proceeds equate to at least 80% of total investment value and once confirmation of exit realisation is received from the underlying private equity manager. Uplift on full exit compares the value received upon realisation against the investment's carrying value 12 months prior to the transaction taking place. The analysis on page 29 only includes exit realisations that occurred during the period and disregards the impact of any proceeds received outside of the 12 month period covered in the uplift analysis. The data in the sample represents 100% of proceeds from exit realisations and 72% of distributions received during the period.
Annualised operating costs, including financing costs and any performance fees charged by Pantheon but excluding taxes, expressed as a percentage of the average month-end NAV over the period.
| Investment management fees 53 9,048 8,861 Performance fee payable to Pantheon 53 – – Look-through charges 53 195 224 Other expenses 48 645 313 Interest payable and similar expenses 48 1,683 1,077 Total expenses and financing costs 11,571 10,475 Average month-end NAV 1,586,057 1,537,215 Total ongoing charges (annualised) 1.45% 1.36% |
Page | Half year ended 30 November 2020 £'000 |
Half year ended 30 November 2019 £'000 |
|
|---|---|---|---|---|
| (a) | ||||
| (b) | ||||
| (a/b x 2 x 100) |
Ratio of available financing and 10% of private equity assets to undrawn commitments. Under the terms of its loan facility, PIP is required to maintain an undrawn coverage ratio of at least 33%.
| Page | At 30 November 2020 £m |
At 30 November 2019 £m |
||
|---|---|---|---|---|
| Available financing | 50 | 444 | 331 | (a) |
| Investments at fair value (10%) | 160 | 144 | (b) | |
| Total liquid resources | 604 | 475 | (c) = (a + b) | |
| Undrawn commitments | 464 | 486 | (a) | |
| Undrawn coverage ratio | 130% | 102% | (a/d) |
Alternative Investment Fund Managers Directive.
Unlisted, subordinated note due August 2027, the repayment of which and the performance of which are linked to a reference portfolio consisting of older vintage funds. The holder of the ALN has rights to receive c.75% of net cash flows arising from the reference portfolio prior to the repayment of any outstanding balance in August 2027.
Funds that acquire controlling interests in companies with a view towards later selling those companies or taking them public.
Portion of realised investment gains payable to the GP as a profit share.
Direct shareholding in a company by invitation alongside a private equity fund.
The amount of capital that each LP agrees to contribute to the fund when and as called by the GP.
Ratio of net debt to EBITDA.
Funds committed but not yet invested that are available for investment.
A measure of earnings before interest and taxes that excludes non-cash expenses. Valuation methods are commonly based on a comparison of private and public companies' value as a multiple of EBITDA.
The sum of a company's market capitalisation and net debt (net debt equals debt less cash and cash equivalents).
Realisation of an investment usually through trade sale, sale by public offering (including IPO), or sale to a financial buyer.
A pro rata share of the Company's Total Ongoing Charges allocated to the ALN, reducing each quarterly payment. This is deducted from Other expenses through the revenue account of the Income Statement.
It is an investment vehicle, often a limited partnership, that pools capital commitments of investors and invests or "feeds" such capital into an umbrella fund, often called a master fund ("Master"), which directs and oversees all investments held in the Master portfolio.
Private equity fund that invests in a portfolio of several private equity funds to achieve, compared with a direct investment fund, a broader diversification of risk, including individual manager risk.
Annual fee, typically charged by the GP as a percentage of LP commitments to the fund during the investment period and attenuating thereafter, intended to cover the costs of running and administering a fund.
The entity managing a private equity fund that has been established as a limited partnership, also commonly referred to as the private equity fund manager.
The first offering by a company of its own shares to the public on a regulated stock exchange.
The IRR, a common measure of private equity performance, is calculated as an annualised compounded rate of investment return based on the timing and quantity of cash flows.
Period, typically five years, during which the GP is permitted to make new investments.
Refers to the tendency of private equity funds to experience capital outflows and negative returns in early years, and cash flow distributions and investment gains in later years as portfolio companies mature and are exited.
An institution or individual who commits capital to a private equity fund established as a limited partnership. Limited partners are generally protected from legal actions and any losses beyond their original commitment to the fund.
The sale of all remaining assets of a fund prior to its final cessation of operations.
Share price multiplied by the number of shares outstanding.
A common measure of private equity performance, MOIC is calculated by dividing the fund's cumulative distributions and residual value by the paid-in capital.
Amount by which the value of assets of a fund exceeds liabilities, reflecting the value of an investor's attributable holding.
Cash and net current assets/(liabilities) less next ALN repayment (see Note 8).
Cumulative amount of capital that has been called.
A company that is an investment within a private equity fund.
Total movement in the valuation of the underlying funds and companies comprising the portfolio, expressed as a percentage of opening portfolio value. Foreign exchange effects and other expenses are excluded from the calculation. The figure excludes returns attributable to the ALN.
Commitments made to private equity funds at the time such funds are formed.
Privately negotiated investments typically made in non-public companies.
As defined under the terms of the Asset Linked Note, a subset of PIP's private equity portfolio assets, substantially comprising the Company's oldest funds (2006 and earlier vintages).
Purchase of existing private equity fund or company interests and commitments from an investor seeking liquidity in such funds or companies.
Occurs when a company's share price is higher (lower) than the net asset value per share.
Purchase of an interest in a single portfolio company alongside a private equity manager, where the manager is seeking to extend the investment holding period in order to participate in the company's next phase of growth.
Undrawn portion of total commitment.
Increase in value received upon exit realisation of an investment relative to its carrying value 12 months prior to realisation.
Multiple of earnings (typically EBITDA or net income) or revenue applied in valuing a business enterprise.
Investment in early and development-stage companies, often used to finance technological product and market development.
The year in which a private equity fund makes its first investment.
Average fund age for the portfolio is weighted by the funds' respective closing net asset values. Fund age refers to the number of years since a private equity fund's first investment.
Sir Laurie Magnus (Chairman) John Burgess David Melvin Susannah Nicklin Dame Susan Owen DCB Mary Ann Sieghart John Singer
10 Finsbury Square 4th Floor London EC2A 1AF
Email: [email protected] PIP website: www.piplc.com Pantheon website: www.pantheon.com LinkedIn: www.linkedin.com/company/pantheon-international-plc
Beaufort House 51 New North Road Exeter EX4 4EP
Telephone: 01392 477500
Ernst & Young LLP 25 Churchill Place London E14 5EY
10 Harewood Avenue London NW1 6AA
| 10th Floor |
|---|
| Central Square |
| 29 Wellington Street |
| Leeds |
| LS1 4DL |
international rate.
Condor House 5–10 St Paul's Churchyard London EC4M 8AL
Shareholders now have the opportunity to be notified by email when the Company's annual reports, interim reports and other formal communications are available on the Company's website, instead of receiving printed copies by post. This has environmental benefits in the reduction of paper, printing, energy and water usage, as well as reducing costs to the Company. If you have not already elected to receive electronic communications from the Company and wish to do so, visit www.signalshares.com. To register, you will need your investor code, which can be found on your share certificate.
Alternatively, you can contact Link's Customer Support Centre, which is available to answer any queries you have in relation to your shareholding:
By phone: call +44 (0)371 664 0300. Calls from outside the UK will be charged at the applicable international rate. Link is open between 09:00 and 17:30, Monday to Friday (excluding public holidays in England and Wales).
By email: [email protected]
By post: Link Group, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL, UK.
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10 Finsbury Square 4th Floor London EC2A 1AF United Kingdom
Telephone +44 (0)20 3356 1800
Email [email protected]
Website www.piplc.com
Registered in England Number: 2147984
PIP is a founding member of
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