Interim / Quarterly Report • Dec 31, 2014
Interim / Quarterly Report
Open in ViewerOpens in native device viewer
Pantheon International Participations ("PIP") invests in a diversified portfolio of private equity assets managed by third party managers across the world.
Private equity funds purchase large equity stakes in private companies. This gives investors access to a broader universe of opportunities than that offered by public markets. Private equity managers are long-term, disciplined investors who can bring about beneficial changes to businesses and align shareholder interests with those of company management through majority ownership.
The Manager, Pantheon, is one of the world's foremost private equity specialists. With more than 30 years' experience, and a team of over 70 investment professionals globally, Pantheon is well positioned to guide PIP towards its objective of maximising capital growth.
| Half-Year at a Glance | 1 |
|---|---|
| Performance Summary | 2 |
| Historical Data | 4 |
| Chairman's Statement | 5 |
| Objective and Investment Policy | 7 |
| Manager's Review | 8 |
| Interim Management Report and Responsibility Statement of the Directors | 38 |
| Income Statement (unaudited) | 39 |
| Reconciliation of Movements in Equity Shareholders' Funds (unaudited) | 40 |
| Balance Sheet (unaudited) | 41 |
| Cash Flow Statement (unaudited) | 42 |
| Notes to the Half-Yearly Financial Statements (unaudited) | 43 |
| Independent Review Report | 46 |
| Glossary of Terms | 47 |
| Directors and Contacts | 48 |
| Key Performance Indicators | Other Indicators | |
|---|---|---|
| +11% | +10% | +10% |
| NAV per share increase | Ordinary share price increase |
Redeemable share price increase |
| FTSE All-Share TR: 0% MSCI World TR: +9% |
FTSE All-Share TR: 0% MSCI World TR: +9% |
FTSE All-Share TR: 0% MSCI World TR: +9% |
| 16% | £995m | 1,513.3p |
| Ordinary share price discount to NAV |
NAV | NAV per share |
| JUN 2014: 16% | JUN 2014: £902m DEC 2013: £872m |
JUN 2014: 1,364.2p DEC 2013: 1,303.9p |
| 22% | £113m | £132m |
| Redeemable share price discount to NAV JUN 2014: 22% |
Net cash flow generated from PIP's portfolio |
Total new investment commitments made in the half-year |
| 1.36% | £4m | 4.5x |
| Total ongoing charges excluding tax (annualised) |
Investments in share buybacks in the half-year, generating a 0.1% uplift to NAV per share |
Ratio of assets and available financing to undrawn commitments |
| JUN 2014: 1.321 % |
This report contains terminology which may be unfamiliar to some readers. The Glossary on page 47 gives definitions for frequently used terms.
NAV per Share Reconciliation
The above chart reconciles the opening and closing NAV per share for the six months to 31st December 2014.
* Taxes relate to withholding taxes on investment distributions.
| SINCE | |||||
|---|---|---|---|---|---|
| 1 YEAR | 3 YEARS | 5 YEARS | 10 YEARS | INCEPTION | |
| Performance at 31st December 2014 | % | % P.A. | % P.A. | % P.A. | % P.A. |
| NAV per share* | 16.1 | 10.1 | 12.4 | 10.1 | 11.4 |
| Ordinary share price* | 23.2 | 26.5 | 24.4 | 9.2 | 11.2 |
| FTSE All-Share Total Return | 1.2 | 11.1 | 8.7 | 7.6 | 7.9 |
| MSCI World Total Return (sterling) | 12.1 | 15.9 | 11.6 | 8.8 | 7.3 |
* PIP was launched on 18th September 1987. The figures since inception assume reinvestment of dividends, capital repayments and cash flows from the exercise of warrants.
* Includes the effects of dividends, capital repayments and warrants. NAV figure based upon adjusted NAV per share where applicable.
| MSCI World | £2,330 |
|---|---|
| FTSE All-Share | £2,076 |
| PIP | £2,408 |
* As at 31st December 2014.
| 33,397,013 |
|---|
| 32,372,534 |
| 65,769,547 |
| NAV | ORDINARY | PRIVATE EQUITY | OUTSTANDING | ||
|---|---|---|---|---|---|
| NAV1,2 | PER SHARE2 | SHARE PRICE | PORTFOLIO | COMMITMENTS | |
| Historical Data | (£M) | (PENCE) | (PENCE) | (£M) | (£M) |
| Half-year ended 31st December 2014 | 995.3 | 1,513.3 | 1,266.5 | 863 | 240 |
| Financial year end (30th June): | |||||
| 2014 | 901.7 | 1,364.2 | 1,150.0 | 815 | 176 |
| 2013 | 903.3 | 1,331.9 | 1,042.0 | 826 | 195 |
| 2012 | 845.4 | 1,193.5 | 725.5 | 800 | 191 |
| 2011 | 733.1 | 1,104.1 | 714.0 | 810 | 243 |
| 2010 | 636.5 | 958.7 | 486.0 | 763 | 331 |
| 2009 | 513.6 | 773.6 | 295.3 | 648 | 428 |
| 2008 | 736.1 | 1,108.7 | 750.0 | 806 | 641 |
| 2007 | 610.3 | 919.2 | 917.5 | 527 | 528 |
| 2006 | 441.0 | 796.8 | 726.5 | 372 | 365 |
| 2005 | 381.5 | 657.9 | 650.5 | 315 | 245 |
| 2004 | 245.2 | 572.5 | 463.0 | 233 | 137 |
| 2003 | 220.9 | 546.8 | 447.0 | 237 | 158 |
| 2002 | 196.4 | 541.6 | 486.5 | 175 | 138 |
| 2001 | 206.1 | 669.1 | 574.0 | 201 | 138 |
| 2000 | 161.3 | 599.9 | 457.5 | 140 | 77 |
| 1999 | 145.8 | 405.6 | 302.5 | 78 | 45 |
| 1998 | 131.3 | 368.6 | 294.5 | 79 | 50 |
| 1997 | 116.8 | 328.4 | 270.0 | 73 | 47 |
| 1996 | 106.2 | 302.5 | 225.0 | 48 | 25 |
| 1995 | 86.9 | 255.1 | 207.5 | 33 | 8 |
| 1994 | 47.4 | 239.6 | 176.5 | 42 | 7 |
| 1993 | 30.8 | 195.5 | 172.5 | 28 | 1 |
| 1992 | 21.3 | 139.7 | 93.5 | 28 | 0 |
| 1991 | 21.0 | 129.1 | 86.5 | 31 | 1 |
| 1990 | 20.2 | 126.7 | 80.5 | 32 | 2 |
| 1989 | 16.7 | 120.9 | 95.0 | 25 | 2 |
| 1988 | 12.4 | 102.5 | 75.0 | 2 | 0 |
1 Includes participating loan notes in issue between 2000 and 2004.
2 Historical NAV and NAV per share figures disclosed in the table above relate to adjusted NAV and adjusted NAV per share where applicable.
We are pleased to report NAV per share rose 10.9% to 1,513.3 pence during the halfyear. This good result reflects positive progress in the value of the underlying portfolio of 5.1% (including income), boosted by positive foreign exchange movements stemming from the US dollar's gains against sterling. The share prices of the ordinary and redeemable shares mirrored these gains, each rising by 10% in the period.
The portfolio continued to generate significant realisations as market conditions remained supportive of exit activity, resulting in increased distributions to the Company.
During the half-year to 31st December 2014, the Company's NAV per share grew by 10.9%. This growth was driven by portfolio gains of 4.2%, investment income of 0.9% and share buybacks which added 0.1% to NAV per share. The reversal of sterling's gains versus the US dollar in the second half of 2014 led to positive foreign exchange effects in the period of 6.5% per share, reflecting the effect of a strengthening US dollar on PIP's portfolio, of which 56% is invested in funds operating mainly in the USA. Expenses and taxes in the period reduced NAV per share by 0.8%.
Sample EBITDA and revenue growth amongst underlying portfolio companies, representing approximately 48% by value of the buyout portfolio, was 9.8% and 8.5% respectively in the 12 months to 30th June 2014. Our portfolio weighting emphasises the consumer, IT, healthcare and industrial sectors. These sectors provide ample opportunity for private equity managers, investing often in the mid-market, to acquire companies with higher growth characteristics relative to the broader equity markets due to their market positioning and scale. Our relentless focus on investing with high quality managers globally, often with specialist knowledge of the sectors in which they are investing, helps to ensure that our portfolio is exposed to these growth opportunities through disciplined ownership practices that drive operational and capital efficiencies.
In the half-year to 31st December 2014, the Company invested £3.6m to buy back and cancel 125,000 ordinary shares and 200,000 redeemable shares, resulting in an uplift to NAV per share of 1.5p, or 0.1% of PIP's NAV per share. PIP began buying back shares in August 2011 and so far has invested £80m in buying back 13% of the Company's shares. The discounts at which the Company's shares trade from time to time may make buybacks an attractive investment opportunity relative to other potential new investment commitments.
The portfolio benefited in the period from significant distributions, including from a number of IPOs that had listed during the first half of 2014. The Company received distributions of £129m during the half-year, equivalent to an annualised rate of 32% of opening portfolio assets. Calls from underlying private equity funds were £16m, or approximately 18% of opening undrawn commitments on an annualised basis. This resulted in a net portfolio cash flow prior to new investment commitments of £113m during the period. PIP's portfolio is mature, with a weighted average fund age of 7.9 years. If conditions remain supportive, this maturity should lead to continued positive net cash flows.
A sample of PIP's largest 50 distributions during the half-year had an average uplift of 27% to their previous holding value. This tendency for exits to occur at an uplift can add to performance.
The portfolio continued to generate significant realisations as market conditions remained supportive of exit activity "
Demand for assets remains high, with markets consequently appearing to be fully priced. The Company's flexible investment strategy has enabled it to seek out assets which demonstrate relative value. During the half-year, PIP made 19 new commitments amounting to £132m, comprising £72m in seven secondaries, £16m in six co-investments and £44m in six primaries.
Our secondary purchases were mainly in US and European buyout funds, typically in more concentrated portfolios involving single fund interests where portfolio prospects could be more fully evaluated. Our Manager's investment emphasis continues to target high quality funds with identifiable near term liquidity prospects, exploiting information often gained from prior investments. Moreover, in line with current strategy, the Company has made six carefully selected primary commitments, mostly in mid-market funds that are oversubscribed and where such fund interests are thought less likely to be readily available in the secondary market.
Since 31st December 2014, the Company has committed a further £30m: £14m to two secondaries, £7m to two co-investments and £9m to two primary funds.
In November, the Company renewed its credit facility with improved terms and a revised maturity date of November 2018. The size of the new loan facility remains unchanged at \$100m and €46m, which was equivalent to £100m as at 31st December 2014. The facility was undrawn as at this date. Given the average maturity of PIP's funds, we expect the private equity portfolio to generate net cash for investments. Our positive net cash flows and ungeared balance sheet allow us to renew the portfolio on an ongoing basis with a view to achieving some consistency in deployment, ideally over a 4-5 year period.
At 31st December 2014, the Company held cash of £123m, which together with the credit facility gave it total liquid resources of £223m.
The Company's flexible investment strategy has enabled the Company to seek out assets which demonstrate relative value "
The Company's strategy continues to emphasise opportunities in the secondary market. While pricing of assets in the secondary market has moved in sympathy with rising prices in all asset markets, our relationships with more than 100 selected private equity managers globally positions us to be able to buy assets on the secondary market when portfolios look to be at a favourable point in their value development. This approach provides the Company with access to assets selected for their high quality that are nearer to being realised. Should these market conditions continue, purchasing assets in the secondary market with an emphasis on their ripeness for sale enables the Company to continue to benefit from these unusually buoyant equity markets. Selective co-investment in opportunities where the price can be clearly justified by the opportunity for value growth, together with targeted primary commitments to funds managed in all regions by some of the world's best private equity managers, allows the Company to continue to renew its portfolio while maintaining a conservative approach to balance sheet management.
Following Peter Readman's retirement from the Board at the Annual General Meeting, I am pleased to announce the appointment of David Melvin as a Director with effect from 23rd February 2015. David's private equity experience has been acquired over many years as a capital markets practitioner, providing a set of perspectives that will complement those of the other Board members. David was a Partner and Head of Investor Relations for TDR Capital LLP and was formerly Global Co-Head of Financial Sponsors at Merrill Lynch.
TOM BARTLAM Chairman 25th February 2015
The Company's primary investment objective is to maximise capital growth by investing in a diversified portfolio of private equity funds and directly in private companies.
The Company's policy is to make unquoted investments, in general by subscribing for investments in new private equity funds ("Primary Investment") and by buying secondary interests in existing private equity funds ("Secondary Investment"), and from time to time to capitalise further on its fund investment activities by acquiring direct holdings in unquoted companies ("Co-investments"), usually either where a vendor is seeking to sell a combined portfolio of fund interests and direct holdings or where there is a private equity manager, well known to the Company's Manager, investing on substantially the same terms.
The Company may invest in private equity funds which are quoted. In addition, the Company may from time to time hold quoted investments in consequence of such investments being distributed to the Company from its fund investments or in consequence of an investment in an unquoted company becoming quoted. The Company will not otherwise normally invest in quoted securities, although it reserves the right to do so should this be deemed to be in its interests.
The Company may invest in any type of financial instrument, including equity and non-equity shares, debt securities, subscription and conversion rights and options in relation to such shares and securities and interests in partnerships and limited partnerships and other forms of collective investment scheme. Investments in funds and companies may be made either directly or indirectly, through one or more holding, special purpose or investment vehicles in which one or more co-investors may also have an interest.
The Company employs a policy of over-commitment. This means that the Company may commit more than its available uninvested assets to investments in private equity funds on the basis that such commitments can be met from anticipated future cash flows to the Company and through the use of borrowings and capital raisings where necessary.
The Company's policy is to adopt a global investment approach. The Company's strategy is to mitigate investment risk through diversification of its underlying portfolio by geography, sector and investment stage. Since the Company's assets are invested globally on the basis, primarily, of the merits of individual investment opportunities, the Company does not adopt maximum or minimum exposures to specific geographic regions, industry sectors or the investment stage of underlying investments.
In addition, the Company adopts the following limitations for the purpose of diversifying investment risk:
The Company may invest in funds and other vehicles established and managed or advised by Pantheon or any Pantheon affiliate. In determining the diversification of its portfolio and applying the manager diversification requirement referred to above, the Company looks through vehicles established and managed or advised by Pantheon or any Pantheon affiliate.
The Company may enter into derivatives transactions for the purposes of efficient portfolio management and hedging (for example, hedging interest rate, currency or market exposures).
Surplus cash of the Company may be invested in fixed interest securities, bank deposits or other similar securities.
The Company may borrow to make investments and typically uses its borrowing facilities to manage its cash flows flexibly, enabling the Company to make investments as and when suitable opportunities arise and to meet calls in relation to existing investments without having to retain significant cash balances for such purposes. Under the Company's articles of association, the Company's borrowings may not at any time exceed 100% of the Company's net asset value. Typically, the Company does not expect its gearing to exceed 30% of gross assets. However, gearing may exceed this in the event that, for example, the Company's pipeline of future cash flows alters.
The Company may invest in private equity funds, unquoted companies or special purpose or investment holding vehicles which are geared by loan facilities that rank ahead of the Company's investment. The Company does not adopt restrictions on the extent to which it is exposed to gearing in funds or companies in which it invests.
Economic stimulus is nothing without structural reform. Nor, for that matter, is swingeing austerity. Just when most of the world appeared to be recovering from the economic ills of the past six years, symptoms have returned to many markets that indicate that the medicine administered has proven unsuccessful as the widespread cure.
Europe, having turned a corner, is slipping into recession once more. Deflation across the Eurozone is a threat, and indeed already a reality in some markets1 . The UK, which emerged strongly from the downturn, may not be able to escape the pull backwards. Meanwhile, Japan has slipped into recession once more, with its fifth technical recession since 2002 deeper than at first thought2 . At the end of 2014, the Bank of Japan signalled its intention to lift its bond buying program to unprecedented levels, while the European Central Bank in January announced plans to buy €60bn a month of sovereign debt and other assets until September 2016 in the hope of rekindling growth. So, just as one large central bank – the US Federal Reserve – seems to be turning off the printing presses, two other central banks appear ready to flood markets with masses of liquidity.
The problem of slow growth is most acute in those two markets, but not confined to them. A large part of the world is now faced with the symptoms of what economists call "secular stagnation" – a long-term reduction in the potential growth rates of developed economies. Meanwhile, large emerging markets, including China and India, have stronger growth but seem unlikely to recapture the heady double-digit or high single-digit rates registered just a couple of years ago. The prospect of anaemic growth leaves policymakers around the world grappling with ways to stimulate their economies, create jobs and increase prosperity for their citizens.
As investors, we have to find ways to generate returns against a backdrop of persistent uncertainty and volatility. In the face of slower growth and stagnation, investors' fundamental quest for yield has fuelled the credit markets. Treasury yields flirt with record lows and high-yield credit can prove to be anything but. While, of course, a lower cost of credit is helpful to private equity managers in reducing the cost of capital for portfolio companies, it also has the effect of pushing up asset prices. As such, private equity is not immune to downward pressure on returns, but private equity managers can be more active in order to create value, including making judicious use of the credit markets as well as financing growth in businesses with clear opportunities to increase operating efficiency and/or market penetration.
Amidst the uncertainty, bright spots remain on the horizon. In the US, growth is on an upward trajectory, joblessness has fallen, consumer spending and business investment are growing, and inflation – pushed down in part by low oil prices – is picking up and wages are responding3 . Normal economic progress, though not boundless growth, is returning. The US experience of quantitative easing shows that such measures can work, but only when allied with financial and structural reform. Certain emerging markets are also showing strong signs of continued growth and undervaluation from a private equity perspective. And globally, oil prices – which at the time of writing have slipped to below \$60 a barrel4 – can provide a fillip for growth, particularly in those countries reliant on oil imports for their manufacturing output.
Contrast the situation in the US with that in Western Europe and Japan – economies where last year we observed encouraging signs of growth5 . As we enter 2015, both are tipping backwards as deflation and recession take hold once more. The result is that as one massive monetary program comes to a close, two new packages are ready to take its place.
In Europe, a brief honeymoon of improving economic growth has been replaced with a deteriorating outlook. The European Union registered GDP growth of just 0.3% in the third quarter, with its largest actor Germany having effectively ground to a halt since the end of March6. ECB President Mario Draghi's planned €1 trillion quantitative easing stands ready to administer emergency liquidity 7 . Yet, without long-term reform, the benefit is likely to be short-lived. The politics of inequality is trumping much of Europe's political commitment for reforming labour markets, cleaning out its banking problems, and dealing with an inconsistent Stability and Growth Pact, which is driving the continent into deflation.
1 Source: Eurostat Newsrelease, October 2014. Six EU countries including Greece, Bulgaria, Hungary and Spain were registering negative annual inflation. 2 Source: Japan Recession 2014: Why Abenomics Isn't Working, Jessica Menton, International Business Times, December 8, 2014. 3 Source: Big Job Gains and Rising Pay in Labor Data, Nelson D Schwartz, New York Times, December 5, 2014. 4 Source: Bloomberg Energy & Oil Prices, February 23, 2015. Brent Crude priced at \$58.42 a barrel. 5 Source: Japan Recession and EU Slump Hold Lessons for U.S., Investor's Business Daily, November 17, 2014. 6 Source: Eurostat, December 5, 2014. Germany contracted by 0.1% in Q2 followed by 0.1% growth in Q3. 7 Source: European Central Bank United on €1 trillion Liquidity Injection, Claire Jones, Financial Times, November 6, 2014.
(CONTINUED)
In Japan, structural market reforms, one of Shinzo Abe's "three arrows" of expansionist policies, have been disappointingly slow in coming. It remains to be seen whether the renewed mandate of his government can deliver on this elusive goal.
While the quantitative easing that is expected in both these markets is likely to be helpful for equity markets in the short term, private equity investors, as long term investors, will need to be particularly careful to invest in areas of the market that are better defended against these largely deflationary effects.
best run since 20089 with record levels of dry powder increasing competition for assets. We expect that run to continue in 2015 as the European Central Bank and the Bank of Japan take on the mantle of providers of liquidity of last resort to the global economy. High valuations and high levels of market liquidity, which increases the risk of overpaying when deploying capital in new investments, provides a welcome boost to sellers of assets and consequently the market as a whole, as well as PIP's own portfolio, has seen increasing levels of distributions from funds as assets are realised in this favourable environment.
Long-term slowing growth extends to large emerging markets, presenting challenges for their respective administrations. Additional political volatility creates a backdrop of uncertainty for investors, despite the potential long-term attractive characteristics as these economies grow.
China's growth has come off its peak, and while much has been made of attempts to increase the pace of growth, the OECD is predicting that GDP expansion will dip below 7% in 2016, while OECD member growth increases to 3%8. Addressing wasteful investment will help, but China's transition to a domestically-driven consumption economy will inevitably mean slower-paced growth in the long run.
Despite the prevailing macroeconomic and political headwinds, there will be opportunities to invest in companies whose prospects for growth can be transformed by the economic development within many emerging markets. Experienced private equity managers, used to the greater volatility of equity prices typical in these markets, use their understanding of the longer term prospects for certain businesses to create buying opportunities.
One of the hazardous consequences of quantitative easing is the widespread asset price inflation witnessed globally. Stock markets are above where they stood before the crisis, while bond yields are at some of their lowest levels. Private equity has not been immune. Public market comparables set a high benchmark for valuations, while cheap loans and high-yield bonds enable sponsors to stretch prices further. Furthermore, fundraising has been enjoying its
The macroeconomic environment and socio-political backdrop are important factors which influence Pantheon's strategic view on certain investment markets. For instance, we remain positively inclined to the US given improving fundamentals. Meanwhile, our view on Europe is marginally more bearish because of the strengthening economic headwinds. However, slavish adherence to such broad views would overlook beneficial undercurrents and opportunities in any individual market. In the face of low growth and high asset prices globally, a more fundamental view on investment and value creation is needed. The discipline of investors and the value-adding operational skill of private equity managers have always been important, but now they are critical. Expanding valuation multiples and cheap leverage cannot be relied upon to lift returns in these markets.
Secondary transaction volume reached another record level in 2014 with \$38.5bn10 transacted, significantly surpassing the 2013 level of \$24.5bn10. The growth reflected a favourable pricing environment for sellers of secondary interests in funds enjoying helpful exit market conditions. Consequently, in addition to the expected sellers, we saw many institutions making opportunistic use of the secondary market to reduce exposure to non-core managers.
Pricing in the market has been robust, with an average high bid of 95%11 of NAV throughout the year. Discounts to NAV stabilised in the second half of 2014 following contraction in the first half, as buyers' expectations of further valuation write-ups have reduced11.
Underpinning the high transaction volume levels were a record number of deals above \$1bn11, as sellers increased concentration in their portfolios, and continued to shift their strategy focus (e.g. from large buyout to mid-market).
As a reflection of this, pension funds were the most active sellers during the year, accounting for 28%12 of all sellers. Despite having been active sellers for some time now, banks continue to remain one of the most active at 25%12.
Pantheon has screened over \$50bn of deals, committing to nine transactions during the year, targeting more concentrated transactions involving fund interests with identifiable value drivers; these typically comprise a number of investments with strong growth prospects or where potential liquidity events give rise to significant upside relative to current holding valuations.
The most active sellers in the market are expected to provide significant secondary deal flow in 2015. Despite the Federal Reserve Board's announcement in December 2014 of a deadline extension for banks' compliance with the Volcker Rule to at least July 2016, banks are expected to engage in further selling activity this year. Moreover, pension funds are expected to look to take advantage of a more active secondary market to concentrate their resources on fewer fund relationships. These trends, along with a recovering US economy and further volatility in Europe is likely to mean another active year for secondary deal flow in 2015.
While we see high prices and fierce competition for assets in many markets, we do believe there are broad themes shaping consumption trends globally, including developments in technology and in large emerging markets. These are enduring investment themes which private equity can tap into and ultimately profit from. Among these we see demand for new energy sources, resurgent US manufacturing and the ageing global populations as driving forces for our investment markets.
12 Setter Capital Volume Report, Secondary Market 2014.
13 Source: Cogent Partners.
14 Transaction volume defined as purchase price plus unfunded commitments.
15 Secondary deal volume excludes real estate transactions. Source: Cogent Partners Secondary Market Update, January 2015.
| 5.1% Underlying (pre FX) half-year return relative to opening assets |
£129m Distributions |
£132m Total new investment commitments made in the half-year |
|---|---|---|
| £113m | 32% | £16m |
| Net cash flow generated | Distributions as a percentage of | New commitments made |
| from PIP's portfolio | opening portfolio (annualised) | to six co-investments |
| 27% | £16m | 7.9 years |
| Average realisation uplift | Calls made from existing | Weighted average |
| on largest distributions | undrawn commitments | fund age of portfolio |
The Company offers a global, diversified selection of private equity assets, carefully selected by Pantheon for their quality. The diversification of PIP's portfolio, with assets spread across different investment styles and stages, including buyout, venture and growth, and special situations, helps to reduce volatility both of returns and cash flows. The maturity profile of the portfolio ensures that PIP is not overly exposed to any one vintage. PIP's geographical diversification extends its exposure beyond the US and Europe, to regions with higher rates of economic growth such as Asia.
The majority of PIP's geographical exposure is focused on the US and Europe, reflecting the fact that these regions have the most developed private equity markets.
Portfolio assets based in Asia and other regions provide access to faster-growing economies.
PIP's portfolio is well diversified across different private equity investment styles and stages.
The majority of the portfolio is made up of buyout funds.
Exposure to co-investments increased to 8% (from 7%) during the half-year, due to new investments.
At 31st December 2014, 6% of PIP's portfolio value and 5% of PIP's outstanding commitments were comprised of funds-offunds directly managed by Pantheon. Pantheon is not entitled to management and commitment fees in respect of PIP's holdings in, and outstanding commitments to, the firm's managed fund-
of-funds vehicles. In addition, Pantheon has agreed that PIP will never be disadvantaged in terms of fees compared with the position it would have been in had it made investments directly into the underlying funds rather than indirectly through such fund-of-funds vehicles.
1 Fund geography, stage, maturity and primary/secondary charts are based upon underlying fund valuations and account for 100% of PIP's overall portfolio value. Company sector and company geography charts are based upon underlying company valuations at 30th June 2014 and account for approximately 90% of PIP's overall portfolio value.
The portfolio is well diversified by fund vintage. PIP's secondary activity is expected to lead to continued exposure to the high fundraising years of 2006-2008.
In addition, new primary commitments and co-investments are increasing PIP's exposure to more recent vintages, with the 2009 and later segment of the portfolio increasing to 15% (from 11%) during the half-year.
| 2009-2014 | 15% |
|---|---|
| 2008 | 14% |
| 2007 | 25% |
| 2006 | 18% |
| 2005 | 11% |
| 2004 | 4% |
| 2003 | 1% |
| 2002 | 1% |
| 2001 and earlier | 11% |
53% of the portfolio is derived from primary commitments.
However, PIP's secondary emphasis has increased the secondary exposure of the portfolio to 47%, up from 44% as at 30th June 2014.
| Primary | 53% |
|---|---|
| Secondary | 47% |
PIP's sectoral exposure diversifies the effects of cyclical trends within particular industry segments.
Relative to the FTSE All-Share and MSCI World indices, PIP has greater exposure to information technology, and lower exposure to the banking, mining and utilities sectors.
Over half of the portfolio is with companies based in North America, which benefit from greater capital market scope and depth.
PIP's European exposure, which represents a third of the portfolio, is predominantly in companies based in the stronger Northern European economies, including the UK, Scandinavia and Germany.
15% of PIP's portfolio is based in Asia and other regions, providing access to faster growing economies such as China and India.
| North America | 52% |
|---|---|
| Asia and other | 15% |
| UK | 11% |
| Scandinavia | 5% |
| Germany | 4% |
| Benelux | 3% |
| Other Europe | 3% |
| Iberia | 2% |
| France | 2% |
| Italy | 2% |
| Central and Eastern Europe | 1% |
Venture and growth and buyout investments have differing leverage characteristics.
Valuation Multiple at 30th June 2014
Annual Revenue Growth: PIP Sample vs Indices
Annual EBITDA Growth: PIP Sample vs Indices
1 Portfolio stage returns include income, exclude gains and losses from foreign exchange movements, and look through feeders and funds-of-funds to the underlying funds.
2 The data is based on a sample of PIP's buyout funds. Buyout Sample Methodology: The sample buyout figures for the 12 months to 30th June 2014 were calculated from the companies, where information was available. The figures are based on unaudited data. The revenue and EBITDA figures were based upon the last 12 months to 30th June 2014 or, where not available, the closest annual period disclosed, and provide coverage of 48% (for both revenue and EBITDA growth) of PIP's buyout portfolio. Individual company revenue and EBITDA growth figures were capped between +100% and –100% to avoid large distortions from excessive outliers. Sample data for 2009–2013 is based on the same methodology and provides coverage of 50-75% of the portfolio in each year. Enterprise value is defined as carrying value + net debt. The net debt and enterprise value figures were based upon 30th June 2014 underlying valuations, or the closest period end disclosed. The valuation multiple sample covers approximately 56% of PIP's buyout portfolio. The debt multiple sample covers 61% of PIP's buyout portfolio and 51% of PIP's co-investment portfolio. Data sourced from Bloomberg.
Venture and Growth Returns1 : Half-Year to 31st December 2014
1 Returns exclude gains from foreign exchange movements.
2 Distribution rate equals distributions in period divided by opening portfolio value.
| Trends | Key Data1 |
|---|---|
| • New markets |
• % of PIP NAV: 27% |
| • Evolving consumer patterns |
• Average EV/EBITDA: 10.0x |
| • Ageing demographics |
• Average Revenue Growth: 8% |
| Examples of Private Equity Focus | • Average EBITDA Growth: 7% |
| • Niche brands in growth sectors |
• Average Net Debt to EBITDA: 4.3x |
| • Lifestyle trends |
|
| • Consumption patterns among ageing population |
|
| • E-commerce platforms |
|
| Distribution Examples | |
| Investment Examples | |
| Information Technology | |
| Trends | Key Data1 |
| • Increasing internet usage |
• % of PIP NAV: 24% |
| • Software and hardware development |
• Average EV/EBITDA: 10.4x |
| • Outsourcing of IT infrastructure and services |
• Average Revenue Growth: 11% |
| Examples of Private Equity Focus | • Average EBITDA Growth: 17% |
| • Mobile internet |
• Average Net Debt to EBITDA: 4.2x |
| • Internet infrastructure and data centres |
|
| • Internet security |
|
| • Cloud computing and software-as-a-service |
|
| Distribution Examples | |
| Investment Examples | |
1 Apart from sector value as a proportion of PIP's NAV, key data is based on information provided by GPs and derived from a sample of PIP's buyout funds. Buyout Sample Methodology: Figures above are based on data as at 30th June 2014 in GBP, accounting for approximately 90% of the value of PIP's portfolio. Data includes financials made available by GPs for PIP's active buyout investments. Enterprise value is defined as equity value + net debt. The valuation multiple samples cover the approximate percentage of NAV within each respective sector of PIP's portfolio, as shown in brackets: Consumer (49%), Information Technology (63%), Industrials (62%) and Healthcare (60%). The net debt multiple coverage for each of the sectors are: Consumer (65%), Information Technology (72%), Industrials (70%) and Healthcare (66%).
(CONTINUED)
| Key Data1 • % of PIP NAV: 15% • Average EV/EBITDA: 10.8x • Average Revenue Growth: 11% • Average EBITDA Growth: 9% • Average Net Debt to EBITDA: 4.7x |
|---|
| Key Data1 |
| • % of PIP NAV: 14% |
| • Average EV/EBITDA: 9.5x |
| • Average Revenue Growth: 7% |
| • Average EBITDA Growth: 8% |
| • Average Net Debt to EBITDA: 4.0x |
1 Apart from sector value as a proportion of PIP's NAV, key data is based on information provided by GPs and derived from a sample of PIP's buyout funds. Buyout Sample Methodology: Figures above are based on data as at 30th June 2014 in GBP, accounting for approximately 90% of the value of PIP's portfolio. Data includes financials made available by GPs for PIP's active buyout investments. Enterprise value is defined as equity value + net debt. The valuation multiple samples cover the approximate percentage of NAV within each respective sector of PIP's portfolio, as shown in brackets: Consumer (49%), Information Technology (63%), Industrials (62%) and Healthcare (60%). The net debt multiple coverage for each of the sectors are: Consumer (65%), Information Technology (72%), Industrials (70%) and Healthcare (66%).
PIP received more than 9001 distributions in the half-year, with many at significant uplifts to carrying value. Given the current robust exit environment, the Company's mature portfolio should continue to generate significant distributions in the coming quarters.
Quarterly distribution rates continue to remain strong, increasing to 30% over the last two quarters on an annualised basis. This reflects a continued improvement in market conditions, the maturity of PIP's portfolio and seasonal increases in deal activity.
Mature vintages continue to distribute at higher rates, with 2009 and earlier funds distributing at a rate in excess of 30%. With a weighted fund maturity of 7.9 years, PIP's mature portfolio should continue to generate significant levels of cash, particularly if we see sustained improvements in the financial markets.
1 This figure looks through feeders and funds-of-funds. 2 Distribution rate equals distributions in period divided by opening portfolio value.
| Location | Florida, USA |
|---|---|
| Sector | Consumer |
| Sub-Sector | Advertising |
| Stage | Large buyout |
| PIP Distribution / GP Return | £1.8m / 3.4x |
Acosta is a US-based sales and marketing agency, providing outsourced sales, marketing and merchandising services to manufacturers, suppliers and producers of consumer packaged goods ("CPG"). The company represents the majority of #1 and #2 brands in the CPG industry. Clients include Pepsi, Nestle, Kraft and Procter & Gamble.
Thomas H. Lee Partners ("THL") acquired Acosta in March 2011.
PIP invested as part of a secondary transaction in Thomas H. Lee Fund VI in January 2014.
| Location | Germany |
|---|---|
| Sector | Consumer |
| Sub-Sector | Packaged Foods and Meats |
| Stage | Large buyout |
| PIP Distribution / GP Return | £2.0m / 3.4x |
WILD Flavors develops and produces natural ingredients, flavours, and colours for the food and beverage industry worldwide. It serves consumer packaged goods companies, foodservice manufacturers and distributors, and private label manufacturers, as well as start-up corporations. WILD's primary expertise is in ingredients, particularly flavours, for the soft drinks industry.
KKR invested \$236m into the company in June 2010, acquiring a 35% stake at €1.0bn enterprise value.
PIP invested as part of a secondary transaction in KKR Europe III in July 2014.
Zoë's (NYSE:ZOES) operates 125 fast casual Mediterranean cuisine restaurants in 15 states across the United States. The company has emerged as one of the fastest-growing businesses in the food retail and restaurants sector. It was founded in 1995.
Value Creation
Exit
Location Texas, USA Sector Consumer Sub-Sector Restaurants Stage Medium buyout PIP Distribution / GP Return £4.5m / 7.5x (realised)
• Brand repositioning using demographic and opinion
• Store roll-outs across new geographies drove sales growth at 37% CAGR since investment
• Operational improvements along with an increasing top-line generated EBITDA growth of 465%
• Brentwood IPO'd the company in April 2014 and has been selling down shares. Including the unrealised position, the deal is marked
analyses to better target customers
at 7.8x invested capital (7.5x realised)
• PIP received proceeds of £4.5m
Brentwood Associates Private Equity ("Brentwood") acquired Zoë's in October 2007 when it had 19 stores.
PIP invested as part of a secondary transaction in Brentwood Associates IV in January 2008.
Spanish private hospital group
Distributions: £2.5m Cost multiple: 2.0 times
German telecommunications and IT services provider
Distributions: £1.8m Cost multiple: 2.8 times
Dutch manufacturer of printing systems for graphics and textiles
Distributions: £1.7m Cost multiple: Confidential
UK-based biscuits and branded snacks manufacturer
Distributions: £1.6m Cost multiple: 3.7 times
US healthcare software and payment solutions provider
Distributions: £1.5m Cost multiple: 2.5 times
Provider of transaction processing services and payment technologies
Distributions: £1.0m Cost multiple: 4.1 times
(CONTINUED)
The chart shows the range of multiples, where information was available, on initial cost achieved by the underlying fund manager on the largest 50 distributions. The value-weighted average cost multiple of the sample was 2.1 times, highlighting the continued ability of private equity managers to create significant value over the course of an investment.
1 The available data in the sample represented approximately 36% by value of PIP's total distributions for the half-year to 31st December 2014. This data is based upon gross cost multiples available at the time of the distribution.
The chart shows the range of uplifts on liquidity event achieved by the underlying fund manager on the largest 50 distributions. The valueweighted average uplift of the sample was 27%. This average uplift is consistent with PIP's view that realisations tend to be significantly incremental to returns. PIP's mature portfolio is well placed to continue to generate a good level of distributions in the coming year.
2 Uplift on liquidity event compares the value received upon realisation against the investment's carrying value prior to the transaction taking place. In the event of an IPO, the uplift is the difference between the carrying value prior to the IPO and the value at the close of the first day of trading. The available data in the sample represented approximately 34% by value of PIP's total distributions for the half-year to 31st December 2014.
The portfolio generally benefited from better economic and public market conditions, with all sectors providing good levels of distributions. In particular, distributions reflected potentially growing confidence among acquirers in the consumer and industrials sectors as the economic recovery becomes better established.
Secondary buyouts represented the most significant source of exit activity, with trade sales and IPOs also playing an important part.
SA
MPLE DISTRIBUTIONS
| COMPANY1 | SECTOR | DESCRIPTION | FUND DISTRIBUTIONS £M |
|---|---|---|---|
| Zoë's Kitchen | Consumer | Chain of fast casual restaurants in the US | 4.5 |
| Visma | Information Technology | Business software provider | 2.7 |
| Quirón | Healthcare | Spanish private hospital group | 2.5 |
| Gala TV | Consumer | Taiwanese cable television operator | 2.1 |
| WILD Flavors | Consumer | Supplier of natural ingredients to food industry | 2.0 |
| Acosta | Consumer | Provider of outsources sales and marketing services to consumer industry | 1.8 |
| Versatel AG | Telecoms | German telecommunications provider | 1.8 |
| Clece | Industrials | Facility management | 1.8 |
| SPG Prints | Industrials | Dutch manufacturer of printing systems for graphics and textiles | 1.7 |
| Lindorff | Industrials | Provider of debt-related administrative services | 1.7 |
| United Biscuits | Consumer | Manufacturer of biscuits and branded snacks | 1.6 |
| Evolution1 | Healthcare | Healthcare software and payment solutions provider | 1.5 |
| Sonion | Information Technology | Manufacturer of hearing equipment | 1.4 |
| Pirelli | Industrials | Tyre manufacturer | 1.4 |
| Inghams Enterprises | Consumer | Producer of poultry products | 1.3 |
| Corialis | Industrials | Belgian supplier of aluminium systems | 1.3 |
| Fletchers Bakeries | Consumer | Producer of bakery products | 1.3 |
| TriZetto | Healthcare | Healthcare information technology solutions | 1.2 |
| TransFirst Holdings | Information Technology | Payment processing company | 1.0 |
| RentPath | Information Technology | Digital apartment listings marketplace | 1.0 |
| Excelligence Learning Corporation | Consumer | Manufacturer of educational products for child care programs | 1.0 |
| Sebia | Healthcare | French medical diagnostics group | 0.9 |
| MINDBODY | Information Technology | Online business management software provider | 0.9 |
| CSPC Pharmaceutical | Healthcare | Speciality pharmaceuticals | 0.9 |
| Gorkana Group | Industrials | Market intelligence and public relations company | 0.9 |
| Insurity | Information Technology | Software solutions for insurance industry | 0.9 |
| German Care Services | Healthcare | Nursing home operator | 0.9 |
| Aquafil | Industrials | Manufacturer of synthetic fibres | 0.9 |
| McGraw-Hill Education | Consumer | Educational materials and learning solutions | 0.8 |
| Olson & Co | Consumer | Integrated marketing and digital solutions provider | 0.8 |
| Profil | Industrials | Manufacturer of fastener elements for the automotive industry | 0.7 |
| Schleich | Consumer | Toy manufacturer | 0.7 |
| SK FireSafety Group | Industrials | Fire safety products and systems provider | 0.7 |
| Ontex Group NV / Enlivant | Industrials | Manufacturer of hygienic disposables / Assisted living residences | 0.7 |
| Advantage Sales & Marketing | Consumer | Sales and marketing agency | 0.7 |
| Minimax Viking | Industrials | Supplier of fire protection systems | 0.7 |
| Monash IVF | Healthcare | Assisted reproductive technology | 0.7 |
| Healogics | Healthcare | Disease management services | 0.7 |
| PD&MS | Energy | Exploration services for the oil and gas industry | 0.6 |
| Survey Sampling International (SSI) | Information Technology | Outsourced data collection and market research | 0.6 |
| The Mill | Industrials | Video content business | 0.5 |
| Meat Processing Systems | Industrials | Meat processing company | 0.5 |
| Evonik | Industrials | Speciality chemicals manufacturer | 0.4 |
| ATI Holdings | Healthcare | Orthopaedic rehabilitation clinics | 0.4 |
| Prestige Cruise Holdings | Consumer | Cruise line operator | 0.4 |
| Acromas (AA) | Consumer | Vehicle breakdown cover and car insurance | 0.3 |
| Convergint Technologies | Industrials | Security, fire and building automation services | 0.3 |
| Sprouts Farmers Market | Consumer | Speciality organic food retailer | 0.3 |
| Konrad Hornschuch | Industrials | Manufacturer of films and synthetic coating | 0.2 |
| Rexnord | Industrials | Water management products | 0.2 |
| TOTAL | 54.8 . | ||
| COVERAGE OF TOTAL DISTRIBUTIONS | 43% . |
Investments called during the year ranged across regions and sectors, including consumer, speciality pharmaceuticals, energy companies and outsourced business services providers.
The largest 25 calls show a high proportion of new investment focused on the consumer sector. Good quality consumer companies, often operating in niches with solid customer bases and sound business models, should be well positioned to benefit from a continuation in the recovery of the global economy.
1 Call rate equals calls in period divided by opening undrawn commitments. All call figures exclude the acquisition cost of new secondary and co-investment transactions.
| COMPANY | SECTOR | DESCRIPTION | FUND CALLS £M |
|---|---|---|---|
| Paris Presents / Recorded Books | Consumer | Distributor of personal care accessories / Audiobook publishing | 1.1 |
| Renaissance Offshore / Xplorer | Energy | Oil and gas exploration companies | 0.8 |
| Warranty Group / Point Park Properties | Financials / Industrials | Warranty underwriting / Speciality logistics property developer | 0.7 |
| Ringier Digital | Information Technology | Digital marketplace and e-commerce business provider | 0.6 |
| Sutherland Global Services | Information Technology | Business process outsourcing | 0.5 |
| Kalyan Jewellers | Consumer | Jewellery chain in India | 0.4 |
| ORC International | Industrials | Integrated marketing services industry | 0.3 |
| Huarong AM | Financials | Chinese investment manager | 0.3 |
| Solenis / Mauser Group | Industrials | Supplier of speciality chemicals / Industrial packaging manufacturer | 0.3 |
| TriMark | Industrials | Food service equipment distributor | 0.3 |
| TOTAL | 5.3 | ||
| COVERAGE OF TOTAL CALLS | 34% |
| COMPANY | SECTOR | DESCRIPTION | Commitments £m |
|---|---|---|---|
| ALM Media | Media | US content and information services provider | 4.9 |
| Vertical Bridge | Telecom Services | US operator of wireless communication infrastructure | 3.4 |
| TriTech Software Systems | Industrials | US public safety software provider | 3.1 |
| Chindex | Healthcare | Private hospital operator in China | 2.0 |
| Sebia | Healthcare | French medical diagnostics group | 1.7 |
| Tanium | Information Technology | US enterprise network security company | 0.7 |
| TOTAL | 15.8 |
PIP committed £132m to new investments during the half-year, concentrated on buyout funds in the US and European markets. £66m was drawn at the time of purchase. As a result of Pantheon's targeted origination, PIP continued to benefit from good deal flow, with all secondary deals during the half-year in processes that were either proprietary or involved restricted competition.1
Secondary transactions accounted for the majority of new commitments.
Investment activity in the half-year reflected PIP's efforts to grow its primary programme on a targeted basis, committing £45m to six top tier funds. PIP also participated in six co-investments. Co-investments and primaries offer exposure to more recent vintages and assets which may be less accessible in the secondary market.
1 A proprietary deal is where Pantheon was in exclusive discussions with the seller. A restricted process deal is where there are three or fewer bidders for the asset.
2 Includes late primary commitments.
PIP committed £72m to five secondary and two late primary transactions, with a majority of commitments in large and mid-market buyout funds. Late primary commitments enable PIP on occasion to invest in a fund being raised when there is evidence of value manifesting in the portfolio.
PIP's commitment to primaries during the half-year included four buyout funds and two growth capital firms, adding current vintage exposure with high quality managers to its portfolio.
| INVESTMENT DATE | STAGE | DESCRIPTION | Commitments £m |
% Funded |
|---|---|---|---|---|
| Jul-14 | Buyout | Large buyout fund focused on European assets | 20.1 | 89% |
| Jul-14 | Buyout | Porfolio of European mid-market and large buyout fund interests | 11.1 | 83% |
| Aug-14 | Buyout | Nordic focused mid-market buyout fund | 9.5 | 77% |
| Aug-14 | Buyout | Investment in Wasserstein III, a US mid-market fund 2 | 5.5 | 34% |
| Oct-14 | Buyout | Investment in Herkules Capital IV, a Nordic mid-market fund 2 | 7.4 | 26% |
| Oct-14 | Buyout | Latin American buyout fund | 1.4 | 63% |
| Dec-14 | Buyout | US fund interest with global exposure | 17.0 | 89% |
| TOTAL | 72.0 | 75% |
| INVESTMENT | STAGE | DESCRIPTION | Commitments £m |
|---|---|---|---|
| Altor Fund IV | Buyout | Nordic mid-market buyout fund | 9.3 |
| ECI 10 | Buyout | Buyout fund focused on UK mid-market space | 7.5 |
| ABRY Partners VIII | Buyout | US mid-market buyout fund focused on media, communications and IT sector | 6.0 |
| Hellman & Friedman Capital Partners VIII | Buyout | Large buyout manager with global exposure | 9.9 |
| Baring Asia Fund VI | Venture and Growth | Pan-Asian buyout and growth fund | 5.7 |
| Growth Fund3 | Venture and Growth | US growth equity fund | 6.2 |
| TOTAL | 44.6 |
1 Funds acquired in new secondary transactions are not named due to non-disclosure agreements.
2 Late primary commitments.
3 Confidential.
Transaction completed in July 2014. The key features of the deal were:
Transaction completed in December 2014. The key features of the deal were:
| Region | Europe |
|---|---|
| Sector | Generalist |
| Stage | Large Buyout |
| Vintage | 2008 |
| PIP commitment | €25.0m (£20.1m) |
| Region | USA |
|---|---|
| Sector | Generalist |
| Stage | Large Buyout |
| Vintage | 2007 |
| PIP commitment | \$26.5m (£17.0m) |
The deal was considered to be attractive due to:
| Region | USA |
|---|---|
| Sectors | TMT |
| Stage | Medium Buyout |
| Fund size | \$1,950m (£1,158m) |
| PIP commitment | \$10m (£6.0m) |
ABRY Partners was formed in 1989 and is currently led by co-CEOs Jay Grossman and Peggy Koenig. The firm has grown into a premier media, communications, and information services focused private equity firm. ABRY has raised around \$12bn across three complementary fund strategies, with around 50% for the original buyout strategy. The entire ABRY team is based out of one office in Boston, MA.
ABRY will invest \$25m to \$150m per investment in middle market media, communications and information services businesses, primarily in the US, with the following characteristics:
| Region | Europe (UK & Ireland) |
|---|---|
| Sectors | Generalist |
| Stage | Medium Buyout |
| Fund size | £512m |
| PIP commitment | £7.5m |
ECI was founded in 1976 by the Bank of England to invest in UK small-cap companies facing liquidity issues. Since ECI 4, which was raised in 1990, the fund has been exclusively investing in UK mid-market buyouts, and have made investments totalling £868m across 108 deals. The team is split between offices in London and Manchester.
ECI focuses on backing ambitious management teams in growth companies valued between £20 million and £150 million, with average equity tickets of £30m. It will aim to invest:
PIP committed £16m to six co-investments alongside top tier managers, mainly in large and mid-sized buyout companies operating in the US and Europe with robust business models and leading market positions.
Information technology, healthcare and telecom services constituted the largest areas of focus during the half-year.
(Wasserstein & Co.)
(Insight Venture Partners)
£3.4m Co-investment VERTICAL BRIDGE (The Jordan Company)
infrastructure
exit options
(TPG Asia)
• Largest premium private hospital chain operator in China
• Private owner and manager of wireless communication
• Recurring revenue, high margin business with attractive
• Management growth platform focused on the development and acquisition of cellular tower and rooftop tower installations
(Montagu)
TANIUM (Andreessen Horowitz)
PIP's outstanding commitments to fund investments are well-diversified by stage and geography and will enable the Company to participate in future investments with many of the highest quality fund managers in the private equity industry worldwide.
PIP's outstanding commitments to investments increased to £240m at 31st December 2014 compared with £176m at 30th June 2014. The Company paid calls of £16m and added an additional £66m of outstanding commitments associated with new investments made in the half-year. The remaining £14m increase was due to foreign exchange movements in the portfolio's underlying funds.
47% of PIP's undrawn commitments are in the 2007 vintage or older. It is likely that a portion of these commitments will not be drawn.
Rise in vintage 2014 undrawns reflect increase in primary commitment levels.
Generalist 3%
At 31st December 2014, PIP had cash balances of £123m.
In addition to these cash balances, PIP can also finance investments out of its multi-currency revolving credit facility agreement ("Loan Facility"). The Loan Facility is due to expire in November 2018 and comprises facilities of \$100m and €46m which, using exchange rates at 31st December 2014, amount to a sterling equivalent of £100m. At 31st December 2014, the Loan Facility remained fully undrawn.
At 31st December 2014, the Company had £223m of available financing, comprised of its cash balances and Loan Facility. The sum of PIP's available financing and private equity portfolio provide 4.5 times cover relative to undrawn commitments.
It should be noted that a portion of the Company's undrawn commitments of £240m is unlikely to be called in full by the underlying managers. When a fund is past its investment period, which is typically between five and six years, it generally cannot make any new investments (only drawing capital to fund existing follow-on investments or pay expenses). As a result, the rate of capital calls in these funds tends to slow dramatically.
Approximately 60% of the Company's undrawn commitments are in fund vintages that are greater than six years old.
PIP bought back 0.5%1 of its shares in the financial year. In total, 125,000 ordinary shares and 200,000 redeemable shares were bought back at a weighted discount of 16% and 23% respectively, resulting in a total uplift to NAV per share of 1.5p, or 0.1% of opening NAV per share. The discounts at which the Company's shares trade from time to time may make buybacks an attractive investment opportunity relative to other potential new investment commitments.
| % OF PIP'S TOTAL PRIVATE | ||||
|---|---|---|---|---|
| NUMBER | MANAGER | REGION2 | STAGE BIAS | EQUITY ASSET VALUE |
| 1 | TPG | Global | Buyout | 4.7% |
| 2 | Providence Equity Partners | USA | Buyout | 3.5% |
| 3 | KKR | Global | Buyout | 2.2% |
| 4 | Carlyle Group | Global | Generalist | 2.1% |
| 5 | Vision Capital | Europe | Buyout | 1.8% |
| 6 | Warburg Pincus Partners | Global | Generalist | 1.7% |
| 7 | Blackstone Capital Partners | USA | Buyout | 1.7% |
| 8 | Apax Partners | Europe | Buyout | 1.7% |
| 9 | CVC Capital Partners | Global | Buyout | 1.5% |
| 10 | Quantum Energy Partners | USA | Energy | 1.5% |
| 11 | Golden Gate Capital | USA | Buyout | 1.4% |
| 12 | Bridgepoint Partners | Europe | Buyout | 1.4% |
| 13 | Matlin Patterson | USA | Special Situations | 1.3% |
| 14 | Brentwood Associates | USA | Buyout | 1.3% |
| 15 | EQT | Asia3 | Buyout | 1.3% |
| 16 | Baring Vostok Capital Partners | Russia | Buyout | 1.2% |
| 17 | Apollo Management | USA | Buyout | 1.1% |
| 18 | Equistone | Europe | Buyout | 1.1% |
| 19 | Baring Private Equity | Asia | Venture and Growth | 1.1% |
| 20 | Altor Capital | Europe | Buyout | 1.1% |
| 21 | Oak Investment Partners | USA | Venture and Growth | 1.0% |
| 22 | Riverstone Holdings | USA | Venture and Growth | 1.0% |
| 23 | Hutton Collins | Europe | Special Situations | 0.9% |
| 24 | Canaan Partners | USA | Venture and Growth | 0.9% |
| 25 | Polaris Venture Partners | USA | Venture and Growth | 0.9% |
| 26 | ABS Capital Partners | USA | Venture and Growth | 0.9% |
| 27 | Bain Capital | USA | Buyout | 0.8% |
| 28 | Nova Capital Management | Europe | Buyout | 0.8% |
| 29 | Avista Capital Partners | USA | Buyout | 0.8% |
| 30 | Doughty Hanson & Co | Europe | Buyout | 0.8% |
| 31 | Catalyst Investors | USA | Venture and Growth | 0.8% |
| 32 | Technology Crossover Ventures | USA | Venture and Growth | 0.8% |
| 33 | Summit Partners | Global | Generalist | 0.7% |
| 34 | Nordic Capital | Europe | Buyout | 0.7% |
| 35 | IK Investment Partners | Europe | Buyout | 0.7% |
| 36 | Permira | Europe | Buyout | 0.7% |
| 37 | Tricor US Management | USA | Buyout | 0.7% |
| 38 | Advent International Group | Global | Buyout | 0.7% |
| 39 | Francisco Partners | USA | Buyout | 0.7% |
| 40 | Mid-Europa Partners | Europe | Buyout | 0.7% |
| 41 | Yorktown Partners | USA | Energy | 0.7% |
| 42 | Genstar Capital Partners | USA | Buyout | 0.7% |
| 43 | Cinven Partners | Europe | Buyout | 0.7% |
| 44 | Thomas H. Lee Partners | USA | Buyout | 0.6% |
| 45 | Baker Capital Partners | USA | Venture and Growth | 0.6% |
| 46 | Rutland Partners | Europe | Special Situations | 0.6% |
| 47 | Essex Venture Partners | USA | Venture and Growth | 0.6% |
| 48 | Gemini Israel Funds | Europe | Venture and Growth | 0.6% |
| 49 | Herkules Capital | Europe | Buyout | 0.6% |
| 50 | ARCH Venture Partners | USA | Venture and Growth | 0.6% |
| Covera | ge of PIP's total private equity asset value |
57.0% |
Percentages look through feeders and funds-of-funds. 2 Refers to the regional exposure of funds. 3 The majority of PIP's remaining investment in EQT is held in one of its Asian funds.
| % OF PIP'S TOTAL PRIVATE | ||||
|---|---|---|---|---|
| NUMBER | COMPANY | COUNTRY | SECTOR | EQUITY ASSET VALUE |
| 1 | Spotify Limited | Sweden | Information Technology | 0.7% |
| 2 | King.com 4 | UK | Information Technology | 0.7% |
| 3 | Zoë's Kitchen 2, 4 | USA | Consumer | 0.7% |
| 4 | Attendo 3 | Sweden | Healthcare | 0.7% |
| 5 | CPL Industries | UK | Energy | 0.7% |
| 6 | Standard Pacific 4 | USA | Consumer | 0.7% |
| 7 | Applied Medical Resources 3 | USA | Healthcare | 0.6% |
| 8 | InterXion 4 | Netherlands | Information Technology | 0.6% |
| 9 | Vitruvian Exploration 3 | USA | Energy | 0.6% |
| 10 | CPI Card Group | USA | Industrials | 0.6% |
| 11 | EP Energy 3, 4 | USA | Energy | 0.6% |
| 12 | Nord Anglia Education 4 | Hong Kong | Consumer | 0.5% |
| 13 | LBX Pharmacy Chain | China | Consumer | 0.5% |
| 14 | Alarm.com | USA | Industrials | 0.5% |
| 15 | Miclyn 3 | Singapore | Energy | 0.5% |
| 16 | CSPC Pharmaceutical Group 4 | China | Healthcare | 0.5% |
| 17 | Maplin Electronics 3 | UK | Consumer | 0.5% |
| 18 | ista International 3 | Germany | Information Technology | 0.5% |
| 19 | McGraw-Hill 2,3 | USA | Consumer | 0.4% |
| 20 | Standard Bancshares 3 | USA | Financials | 0.4% |
| 21 | IMS Health 4 | USA | Healthcare | 0.4% |
| 22 | ConvaTec Healthcare | USA | Healthcare | 0.4% |
| 23 | JDR Cable Systems | USA | Energy | 0.4% |
| 24 | Yongda Automobiles Services 3, 4 | China | Consumer | 0.4% |
| 25 | SoftBrands | USA | Information Technology | 0.4% |
| 26 | BrightHouse | UK | Consumer | 0.4% |
| 27 | Kosmos Energy 4 | Bermuda | Energy | 0.4% |
| 28 | Bibby Scientific | UK | Information Technology | 0.4% |
| 29 | Par Pharmaceutical | USA | Healthcare | 0.3% |
| 30 | Healthscope 4 | Australia | Healthcare | 0.3% |
| 31 | MINDBODY 2 | USA | Information Technology | 0.3% |
| 32 | Antero Resources 4 | USA | Energy | 0.3% |
| 33 | United Surgical Partners | Spain | Healthcare | 0.3% |
| 34 | Heptagon Advanced Micro-Optics 3 | Singapore | Information Technology | 0.3% |
| 35 | Hilton Worldwide 4 | USA | Consumer | 0.3% |
| 36 | GGC Credit Opps | USA | Financials | 0.3% |
| 37 | USI Holdings 3 | USA | Financials | 0.3% |
| 38 | TMF Group | Netherlands | Industrials | 0.3% |
| 39 | Hugo Boss 4 | Germany | Consumer | 0.3% |
| 40 | K-Mac Holdings | USA | Consumer | 0.3% |
| 41 | Univision Communications | USA | Consumer | 0.3% |
| 42 | Syniverse Technologies | USA | Information Technology | 0.3% |
| 43 | OOO Lenta 4 | Russia | Consumer | 0.3% |
| 44 | Classic Fine Foods | Singapore | Consumer | 0.3% |
| 45 | Wagamama | UK | Consumer | 0.3% |
| 46 | The Teaching Company | USA | Consumer | 0.3% |
| 47 | Michaels Stores | USA | Consumer | 0.3% |
| 48 | Visma 2 | Norway | Information Technology | 0.3% |
| 49 | P&I Personal & Informatik 3 | Germany | Information Technology | 0.2% |
| 50 | Jimmy John's | USA | Consumer | 0.2% |
| TOTAL | 21.1% |
The largest 50 companies table is based upon underlying company valuations at 30th June 2014, adjusted for known calls, distributions, new investment commitments and post valuation information. 2 Liquidation event subsequent to 30th June 2014. 3 Co-investments/directs. 4 Listed companies.
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 year ended 30th June 2014 and continue to be as set out in that report.
Risks faced by the Company include, but are not limited to, funding of investment commitments and default risk, risks relating to investment opportunities, financial risk of private equity, longterm nature of private equity investments, valuation uncertainty, gearing, foreign currency risk, the unregulated nature of underlying investments, taxation and the risks associated with the engagement of the Manager or other third party advisers.
Each Director confirms that to the best of their knowledge:
the condensed set of financial statements has been prepared in accordance with the Statement on Half-Yearly Financial Reports issued by the UK Accounting Standards Board.
this Half-Yearly Financial Report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last annual report that could do so.
This Half-Yearly Financial Report was approved by the Board of Directors on 25th February 2015 and the above responsibility statement was signed on its behalf by Tom Bartlam, Chairman.
| SIX MONTHS TO 31ST DECEMBER 2014 | SIX MONTHS TO 31ST DECEMBER 2013 | YEAR TO 30TH JUNE 2014 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| REVENUE | CAPITAL | TOTAL* | REVENUE | CAPITAL | TOTAL* | REVENUE | CAPITAL | TOTAL* | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Gains/(losses) on investments designated | |||||||||
| at fair value through profit or loss** | - | 88,398 | 88,398 | - | (15,946) | (15,946) | - | 25,659 | 25,659 |
| Currency gains/(losses) on cash and | |||||||||
| borrowings | - | 8,122 | 8,122 | - | (7,466) | (7,466) | - | (10,530) | (10,530) |
| Investment income | 7,713 | - | 7,713 | 7,925 | - | 7,925 | 13,681 | - | 13,681 |
| Investment management fees | (4,908) | - | (4,908) | (4,232) | - | (4,232) | (8,749) | - | (8,749) |
| Other expenses | (654) | (337) | (991) | (615) | - | (615) | (995) | (189) | (1,184) |
| Return on ordinary activities |
|||||||||
| before financin g costs and TAX |
2,151 | 96,183 | 98,334 | 3,078 | (23,412) | (20,334) | 3,937 | 14,940 | 18,877 |
| Interest payable and similar charges/ | |||||||||
| finance costs | (915) | - | (915) | (724) | - | (724) | (1,419) | - | (1,419) |
| Return on ordinary activities |
|||||||||
| before tax |
1,236 | 96,183 | 97,419 | 2,354 | (23,412) | (21,058) | 2,518 | 14,940 | 17,458 |
| Tax on ordinary activities | (231) | - | (231) | (612) | - | (612) | (945) | - | (945) |
| Return on ordinary activities |
|||||||||
| after tax for the period |
1,005 | 96,183 | 97,188 | 1,742 | (23,412) | (21,670) | 1,573 | 14,940 | 16,513 |
| RETURN PER ORDINARY AND | |||||||||
| REDEEMABLE SHARE*** | 1.53p | 146.04p | 147.57p | 2.58p | (34.74)p | (32.16)p | 2.35p | 22.30p | 24.65p |
* The total column of the statement represents the Company's profit and loss statement prepared in accordance with UK Accounting Standards. The supplementary revenue return and capital columns are prepared under guidance published by the Association of Investment Companies.
** Includes currency movements on investments.
*** Return per ordinary and redeemable share is shown in note 6.
All revenue and capital items in the above statement relate to continuing operations.
No operations were acquired or discontinued during the period.
There were no recognised gains or losses other than those passing through the Income Statement.
The Notes on pages 43 to 45 form part of these financial statements.
| CAPITAL | REVENUE | |||||||
|---|---|---|---|---|---|---|---|---|
| SHARE CAPITAL |
CAPITAL SHARE REDEMPTION |
OTHER | RESERVE ON | |||||
| CAPITAL | INVESTMENTS | SPECIAL | ||||||
| PREMIUM | RESERVE | RESERVE | HELD | RESERVE | RESERVE | TOTAL | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Movement for the six months ended | ||||||||
| 31st December 2014 | ||||||||
| OPENING EQUITY SHAREHOLDERS' FUNDS | 22,787 | 283,555 | 2,758 | 337,152 | 288,689 | 23,198 | (56,448) | 901,691 |
| Return for the period | - | - | - | 52,485 | 43,698 | - | 1,005 | 97,188 |
| Ordinary shares bought back for cancellation | (84) | - | 84 | - | - | (1,449) | - | (1,449) |
| Redeemable shares bought back for cancellation | (2) | - | 2 | - | - | (2,163) | - | (2,163) |
| CLOSING EQUITY SHAREHOLDERS' FUNDS | 22,701 | 283,555 | 2,844 | 389,637 | 332,387 | 19,586 | (55,443) | 995,267 |
| Movement for the six months ended | ||||||||
| 31st December 2013 | ||||||||
| OPENING EQUITY SHAREHOLDERS' FUNDS | 23,454 | 283,555 | 2,091 | 314,138 | 296,763 | 41,304 | (58,021) | 903,284 |
| Return for the period | - | - | - | 10,969 | (34,381) | - | 1,742 | (21,670) |
| Ordinary shares bought back for cancellation | (452) | - | 452 | - | - | (7,044) | - | (7,044) |
| Redeemable shares bought back for cancellation | (3) | - | 3 | - | - | (3,005) | - | (3,005) |
| CLOSING EQUITY SHAREHOLDERS' FUNDS | 22,999 | 283,555 | 2,546 | 325,107 | 262,382 | 31,255 | (56,279) | 871,565 |
| Movement for the year ended | ||||||||
| 30th June 2014 | ||||||||
| OPENING EQUITY SHAREHOLDERS' FUNDS | 23,454 | 283,555 | 2,091 | 314,138 | 296,763 | 41,304 | (58,021) | 903,284 |
| Return for the year | - | - | - | 23,014 | (8,074) | - | 1,573 | 16,513 |
| Ordinary shares bought back for cancellation | (660) | - | 660 | - | - | (10,456) | - | (10,456) |
| Redeemable shares bought back for cancellation | (7) | - | 7 | - | - | (7,650) | - | (7,650) |
| CLOSING EQUITY SHAREHOLDERS' FUNDS | 22,787 | 283,555 | 2,758 | 337,152 | 288,689 | 23,198 | (56,448) | 901,691 |
The Notes on pages 43 to 45 form part of these financial statements.
| AS AT 31ST DECEMBER 2014 | AS AT 31ST DECEMBER 2013 | AS AT 30TH JUNE 2014 | |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| Fixed assets | |||
| Investments designated at fair value through profit or loss | 863,313 | 803,366 | 814,959 |
| Current assets | |||
| Debtors | 10,602 | 967 | 576 |
| Cash at bank | 122,844 | 68,103 | 88,346 |
| 133,446 | 69,070 | 88,922 | |
| Creditors: amounts falling due within one year | |||
| Other creditors | 1,492 | 871 | 2,190 |
| 1,492 | 871 | 2,190 | |
| NET CURRENT ASSETS | 131,954 | 68,199 | 86,732 |
| NET ASSETS | 995,267 | 871,565 | 901,691 |
| Capital and reserves | |||
| Called-up share capital | 22,701 | 22,999 | 22,787 |
| Share premium | 283,555 | 283,555 | 283,555 |
| Capital redemption reserve | 2,844 | 2,546 | 2,758 |
| Other capital reserve | 389,637 | 325,107 | 337,152 |
| Capital reserve on investments held | 332,387 | 262,382 | 288,689 |
| Special reserve | 19,586 | 31,255 | 23,198 |
| Revenue reserve | (55,443) | (56,279) | (56,448) |
| TOTAL EQUITY SHAREHOLDERS' FUNDS | 995,267 | 871,565 | 901,691 |
| NET ASSET VALUE PER SHARE – ORDINARY AND REDEEMABLE | 1,513.26p | 1,303.87p | 1,364.24p |
| Number of Ordinary shares in issue |
33,397,013 | 33,832,013 | 33,522,013 |
| Number of redee mable shares in issue |
32,372,534 | 33,012,534 | 32,572,534 |
| Total shares in issue |
65,769,547 | 66,844,547 | 66,094,547 |
The Notes on pages 43 to 45 form part of these financial statements
| SIX MONTHS TO | SIX MONTHS TO | YEAR TO | |
|---|---|---|---|
| 31ST DECEMBER 2014 | 31ST DECEMBER 2013 | 30TH JUNE 2014 | |
| £'000 | £'000 | £'000 | |
| Cash flow from operating activities | |||
| Investment income received | 7,690 | 7,899 | 13,637 |
| Deposit and other interest received | 23 | 26 | 44 |
| Investment management fees paid | (4,824) | (4,481) | (8,772) |
| Secretarial fees paid | (101) | (115) | (201) |
| Other cash payments | (810) | (477) | (977) |
| Withholding tax deducted | (231) | (612) | (945) |
| NET CASH INFLOW FROM OPERATING ACTIVITIES | 1,747 | 2,240 | 2,786 |
| Servicing of finance | |||
| Loan commitment and arrangement fees paid | (1,200) | (551) | (1,110) |
| NET CASH OUTFLOW FROM RETURNS ON INVESTMENT AND SERVICING OF FINANCE | (1,200) | (551) | (1,110) |
| Capital expenditure and financial investment | |||
| Purchases of investments | (106,031) | (78,866) | (134,472) |
| Disposals of investments | 136,578 | 85,811 | 171,724 |
| NET CASH INFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT | 30,547 | 6,945 | 37,252 |
| NET CASH INFLOW BEFORE FINANCING | 31,094 | 8,634 | 38,928 |
| Financing | |||
| Ordinary shares purchased for cancellation | (2,522) | (8,484) | (11,896) |
| Redeemable shares purchased for cancellation | (2,163) | (3,005) | (6,577) |
| NET CASH OUTFLOW FROM FINANCING | (4,685) | (11,489) | (18,473) |
| INCREASE/(DECREASE) IN CASH | 26,409 | (2,855) | 20,455 |
The Notes on pages 43 to 45 form part of these financial statements
The financial information has been prepared on the historical cost basis of accounting, except for the measurement at fair value of investments and financial instruments, and in accordance with applicable UK accounting standards on the basis that all activities are continuing. The accounting policies set out in the statutory accounts for the year ended 30th June 2014 have been applied to this Half-Yearly Financial Report. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.
The accounting policies are also consistent with the Statement of Recommended Practice (revised January 2009) issued by the Association of Investment Companies. The financial information has been prepared in accordance with the Accounting Standards Board Statement 'Half-Yearly Financial Reports' issued in July 2007.
The financial information contained in this Half-Yearly Financial Report is not the Company's statutory accounts. The financial information for the six months ended 31st December 2014 and 31st December 2013 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 46. The statutory accounts for the financial year ended 30th June 2014 have been delivered to the Registrar of Companies and received an audit report which was unqualified, did not include a reference to any matters which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 498 (2) and (3) of the Companies Act 2006.
The Company's business activities, together with the factors likely to affect its future development, performance and position, including its financial position, are set out in the Chairman's Statement and Manager's Review on pages 5 to 36.
At each Board meeting, the Directors review the Company's latest management accounts and other financial information. Its commitments to private equity investments are reviewed, together with its financial resources, including cash held and the Company's borrowing capability. One-year cash flow scenarios are also presented to each meeting and discussed.
After due consideration of the balance sheet and activities of the Company and the Company's assets, liabilities, commitments and financial resources, the Directors have concluded that the Company has adequate resources to continue in operation for the foreseeable future. For this reason, they consider it appropriate to continue to adopt the going concern basis in preparing the financial statements.
The tax charge for the six months to 31st December 2014 is £231,000 (six months to 31st December 2013: £612,000; year to 30th June 2014: £945,000). 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.
Under the FCA listing rules, the Manager, Pantheon Ventures (UK) LLP, is regarded as a related party of the Company.
During the period, services were provided with a total value of £5,202,000, being £4,908,000 directly from Pantheon Ventures (UK) LLP and £294,000 via Pantheon managed fund investments. (31st December 2013: £4,522,000; £4,232,000; and £290,000; year to 30th June 2014: £9,312,000; £8,749,000; and £563,000 respectively). At 31st December 2014, the amount due to Pantheon Ventures (UK) LLP in management fees and performance fees disclosed under creditors was £830,000 and £nil respectively.
The Manager is entitled to a performance fee from the Company in respect of each 12 calendar month period ending on 30th June in each year. The performance fee payable in respect of each such calculation period is 5% of the amount by which the net asset value at the end of such period exceeds 110% of the applicable "high-water mark", i.e. the net asset value 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 period ended 31st December 2014, the notional performance fee hurdle is a net asset value per share of 2,139.06p. The performance fee is calculated using the adjusted net asset value. In previous periods this was adjusted to exclude the derivative asset.
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.
| SIX MONTHS TO 31ST DECEMBER 2014 | SIX MONTHS TO 31ST DECEMBER 2013 | YEAR TO 30TH JUNE 2014 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| REVENUE | CAPITAL | TOTAL | REVENUE | CAPITAL | TOTAL | REVENUE | CAPITAL | TOTAL | |
| Return on ordinary activities after tax £'000 |
1,005 | 96,183 | 97,188 | 1,742 | (23,412) | (21,670) | 1,573 | 14,940 | 16,513 |
| Weighted average ordinary and redeemable shares |
65,862,754 | 67,389,248 | 66,994,396 | ||||||
| Return per ordinary and redeemable share |
1.53p | 146.04p | 147.57p | 2.58p | (34.74)p | (32.16)p | 2.35p | 22.30p | 24.65p |
| 7. Net Asset Value per Share | |||
|---|---|---|---|
| 31ST DECEMBER 2014 | 31ST DECEMBER 2013 | 30TH JUNE 2014 | |
| Net assets attributable in £'000 | 995,267 | 871,565 | 901,691 |
| Ordinary and redeemable shares | 65,769,547 | 66,844,547 | 66,094,547 |
| Net asset value per share – ordinary and redeemable | 1,513.26p | 1,303.87p | 1,364.24p |
| SIX MONTHS TO | SIX MONTHS TO | YEAR TO | |
|---|---|---|---|
| 31ST DECEMBER 2014 | 31ST DECEMBER 2013 | 30TH JUNE 2014 | |
| £'000 | £'000 | £'000 | |
| Return on ordinary activities before financing costs and tax | 98,334 | (20,334) | 18,877 |
| Withholding tax deducted | (231) | (612) | (945) |
| (Gains)/losses on investments | (88,398) | 15,946 | (25,659) |
| Currency (gains)/losses on cash and borrowings | (8,122) | 7,466 | 10,530 |
| Increase/(decrease) in creditors | 114 | (266) | (16) |
| Decrease/(increase) in other debtors | 50 | 40 | (1) |
| Net cash inflow fro m operatin g activities |
1,747 | 2,240 | 2,786 |
| SIX MONTHS TO | SIX MONTHS TO | YEAR TO | |
|---|---|---|---|
| 31ST DECEMBER 2014 | 31ST DECEMBER 2013 | 30TH JUNE 2014 | |
| £'000 | £'000 | £'000 | |
| Increase/(decrease) in cash in the period | 26,409 | (2,855) | 20,455 |
| Non-cash movement | |||
| – foreign exchange gains/(losses) | 8,089 | (7,429) | (10,496) |
| Movement in net cash flows | 34,498 | (10,284) | 9,959 |
| Net cash at beginning of period | 88,346 | 78,387 | 78,387 |
| Net funds at end of period |
122,844 | 68,103 | 88,346 |
| 10. Analysis of Net Funds | |||
|---|---|---|---|
| 31ST DECEMBER 2014 | 31ST DECEMBER 2013 | 30TH JUNE 2014 | |
| £'000 | £'000 | £'000 | |
| Cash at bank | 122,844 | 68,103 | 88,346 |
| 122,844 | 68,103 | 88,346 |
| LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | |
|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | |
| Unlisted holdings | - | - | 862,832 | 862,832 |
| Listed holdings | 481 | - | - | 481 |
| Total | 481 | - | 862,832 | 863,313 |
| PRIVATE EQUITY INVESTMENTS | |
|---|---|
| £'000 | |
| Opening balance | 814,846 |
| Purchases at cost | 106,034 |
| Transfer of book cost to level 1* | (2,624) |
| Sales proceeds | (143,055) |
| Total gains or losses included in "Gains on investments" in the Income Statement | |
| – on assets sold | 44,091 |
| – on assets held as at 31st December 2014 | 43,540 |
| CLOSING BALANCE | 862,832 |
* The transfer of book cost to level 1 is due to stock distributions received from private equity investments.
We have been engaged by the Company to review the condensed set of financial statements in the Half-Yearly Financial Report for the six months ended 31 December 2014 which comprises the Income Statement, Reconciliation of Movements in Equity Shareholder's Funds, Balance Sheet, Cash Flow Statement and Notes to the Half-Yearly Financial Statements. We have read the other information contained in the Half-Yearly Financial Report which comprises only the Half-Year at a Glance, Performance Summary, Historical Data, Chairman's Statement, Objective and Investment Policy, Manager's Review and the Interim Management Report and Responsibility Statement of the Directors and considered whether it contains any apparent misstatements or material inconsistencies with the financial information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusion 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 and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in Note 1, the annual financial statements of the Company are prepared in accordance with applicable United Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts', issued in January 2009. The financial information in the Half-Yearly Financial Report has been prepared in accordance with the Accounting Standards Board Statement 'Half-Yearly Financial Reports' issued in July 2007.
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 Ireland) 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 31 December 2014 is not prepared, in all material respects, in accordance with the Accounting Standards Board Statement 'Half-Yearly Financial Reports' and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Auditor London 25th February 2015
Funds that acquire controlling interests in companies with a view towards later selling those companies or taking them public
Capital calls in the period divided by opening outstanding commitments
Call to limited partners ("LP") to pay-in a portion of the LP's committed capital when the general partner ("GP") has identified a new investment for purchase
Direct shareholding in a company alongside a private equity fund
The amount of capital that each limited partner agrees to contribute to the fund when and as requested by the GP
Calculated by dividing the fund's cumulative distributions and remaining value by paid-in capital. It measures fund performance by showing the fund's total value as a multiple of cost
Cash or stock returned to the LPs after the fund has exited from an investment
Distributions for the period divided by opening portfolio value
A measure of earnings before interest and taxes that exclude 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 total debt, less cash and cash equivalents
Realisation of an investment through trade sale, sale by public offering (including IPO), or sale to a financial buyer
Private equity fund that, instead of making direct investments in companies, invests in a number of private equity funds to achieve broader diversification of risk, including individual manager risk
The entity managing a private equity fund that has been established as a limited partnership, also commonly referred to as the private equity manager
The first offering of stock by a company 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 return based on the timing of cash flows
Period, typically five years, during which the GP is permitted to make new investments
Illustrates the historical tendency of private equity funds to experience capital outflows and negative returns in early years, and cash flow distributions and investment gains in future years as portfolio companies mature
Institutions or individuals who commit 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 investment
The sale of all remaining assets of a fund prior to its final cessation of operations
Annual fee, typically charged 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
Amount by which the value of assets of a fund exceeds liabilities, reflecting the value of an investor's attributable holding
Income and gains from funds following exit realisations less capital calls to finance investments or expenses
Undrawn portion of total commitment
Cumulative amount of capital that has been drawn down
A company that is an investment within a private equity fund
Commitments made to a private equity fund at the time a fund is formed
Investments made in non-public companies through privately negotiated transactions
Purchasing existing private equity fund interests and commitments from an investor seeking liquidity in such funds
Increase in value received upon realisation of an investment relative to its carrying value immediately 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 first year that the private equity fund makes an investment
Tom Bartlam (Chairman) Ian Barby Sir Laurie Magnus David Melvin (with effect from 23rd February 2015) Susannah Nicklin Rhoddy Swire
Norfolk House 31 St. James's Square London SW1Y 4JR
Telephone: 020 7484 6200 PIP Investor Relations: [email protected] PIP website: www.pipplc.com Pantheon website: www.pantheon.com
(trading as Capita Asset Services) Beaufort House 51 New North Road Exeter EX4 4EP
Telephone: 01392 412122
30 Finsbury Square London EC2P 2YU
88 Wood Street London EC2V 7QR
The Registry 34 Beckenham Road Beckenham Kent BR3 4TU
Covington & Burling LLP 265 Strand London WC2R 1BH
PO Box 2000 Aylesbury Buckinghamshire HP21 8ZB
Telephone: 08456 185 130 Email: [email protected] Website: www.share.com
Norfolk House 31 St. James's Square London SW1Y 4JR United Kingdom
Telephone: +44 (0)20 7484 6200 Facsimile: +44 (0)20 7484 6201 E-mail: [email protected] Internet: www.pipplc.com
Registered in England number: 2147984 A member of the Association of Investment Companies
Designed by COH Associates Printed by DG3 Group (Holdings) Ltd.
DG3 has achieved the ISO 14001 standard for the quality of its environmental management systems, with FSC and PEFC certification confirming the good stewardship and sustainability of the paper sources used in this publication.
PIP IS A FOUNDING MEMBER OF
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.