TIDMPIN
RNS Number : 3193Z
Pantheon International PLC
14 March 2017
PANTHEON INTERNATIONAL PLC (the "Company" or "PIP")
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 31 DECEMBER
2016
The Half-Yearly Financial Report can be accessed via the
Company's website at www.piplc.com or by contacting the Company
Secretary by telephone on +44 (0)1392 477500.
Pantheon International Plc (the "Company" or "PIP")
Pantheon International Plc, an investment trust that invests in
private equity funds globally, today publishes its Half-Yearly
Financial Report for the six months ended 31 December 2016.
A positive half year as PIP continued to grow its assets and
generate returns in its underlying portfolio.
HALF YEAR PERFORMANCE
-- NAV per share increased by 12%, from 1,873.6p to 2,089.5p.
-- Net assets increased to GBP1,324m (June 2016: GBP1,187m).
-- The ordinary share price increased from 1,285.0p to 1,733.0p,
an increase of 35% and the discount decreased from 31% to 17%.
-- The redeemable share price increased from 1,175.0p to
1,502.5p, an increase of 28% as the discount narrowed from 37% to
28%.
Portfolio update
-- Assets in the portfolio generated underlying (pre-FX) returns of 5.8%.
-- Distributions received in the six months to 31 December 2016
were GBP155m, equivalent to an annualised rate of 29% of opening
private equity assets. Excluding sale proceeds from some tail-end
funds sold in the period, the distribution equivalent would be
26%.
-- After funding GBP43m of calls, net cash flow from the portfolio totalled GBP112m.
-- GBP125m of new investment commitments were made during the
half year with GBP59m drawn at the time of purchase.
Commenting on PIP's half year performance, Sir Laurie Magnus,
Chairman, said:
"PIP has delivered good results during the second half of 2016
and the NAV per share now exceeds GBP20. I am also pleased to note
that both the ordinary and redeemable share prices have increased
significantly during the period, albeit that both classes of share
continue to trade at wide discounts. Despite the challenging high
valuation environment, PIP continues to see interesting
opportunities derived from Pantheon's network and made 19 new
investments in the half year, predominantly in the US and Europe
across the buyout and growth stages. The political surprises of
2016 have increased the economic uncertainty ahead, however it is
the Board's view that the long-term nature of private equity -
coupled with the expertise of PIP's manager, Pantheon, in selecting
the best managers globally - means that the Company is
well-positioned to respond advantageously to those challenges. We
will maintain our disciplined approach and continue to focus on
generating healthy returns and maximising capital growth over the
long term for our shareholders."
For more information please contact:
Andrew Lebus or Vicki Bradley
Pantheon
+44 (0)20 3356 1800
PIP will host a webcast at 10.30am GMT today. Access details can
be found below.
The presentation can be viewed on the day via
view-w.tv/819-1359-18071/en. Please refer to the numbers below for
your local dial-in details. When you dial in for the webcast, you
will be asked to provide your name, company name and the password
Pantheon.
Dial-in details:
Standard International +44 (0) 20 3003
Access: 2666
UK Toll Free: 0808 109 0700
Password: Pantheon
A copy of the presentation and a recording of the webcast will
be available on our website www.piplc.com following the event.
HALF YEAR AT A GLANCE
TO 31 DECEMBER 2016
Key Performance Indicators
+12% NAV per share increase (FTSE All-Share TR:
+12%; MSCI World TR: +16%)
17% Ordinary share price discount to NAV (JUN
2016: 31%)
28% Redeemable share price discount to NAV (JUN
2016: 37%)
1.35% Total ongoing charges excluding tax (annualised)
(JUN 2016: 1.34%)
Other Indicators
+35% Ordinary share price increase (FTSE All
Share TR: +12%; MSCI World TR: +16%)
+28% Redeemable share price increase (FTSE All-Share
TR: +12%; MSCI World TR: +16%)
GBP1,324m Net Asset Value (JUN 2016: GBP1,187m)
2,089.5p NAV per share (JUN 2016: 1,873.6p)
GBP112m Net cash flow generated from PIP's portfolio
in the half year
GBP125m New investment commitments made in the half
year, GBP59m of which was drawn
7.0 years Weighted average fund age of portfolio (JUN
2016: 7.3 YEARS)
3.5x Ratio of assets and available financing
to undrawn commitments (JUN 2016: 3.4x)
PERFORMANCE SUMMARY
NAV and Share Price Performance
-- NAV per share increased by 12%, from 1,873.6p
to 2,089.5p.
-- The ordinary share price increased from 1,285.0p
to 1,733.0p, an increase of 35%. The discount
to NAV decreased from 31% to 17%.
-- The redeemable share price increased from 1,175.0p
to 1,502.5p, an increase of 28%. The discount
to NAV decreased from 37% to 28%.
Net Investment Cash Flow
-- Distributions received in the six months to 31
December 2016 were GBP154.9m, equivalent to an
annualised rate of 29% of opening private equity
assets.
-- PIP funded investments of GBP101.6m in the six
months to 31 December 2016 across calls (GBP42.9m)
and new investments (GBP58.7m).
SINCE
Performance
as at 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
31 December
2016 % % P.A. % P.A. % P.A. % P.A.
-------------------- ------- -------- -------- --------- ----------
NAV per share* 26.1 17.0 13.0 9.7 11.8
Ordinary share
price* 31.8 19.0 22.6 7.8 11.6
FTSE All-Share
Total Return 16.8 6.1 10.1 5.6 8.0
MSCI World Total
Return (sterling) 29.0 15.1 16.3 9.3 7.9
-------------------- ------- -------- -------- --------- ----------
* PIP was launched on 18 September 1987. The figures since
inception assume reinvestment of dividends, capital repayments and
cash flows from the exercise of warrants.
Capital Structure as at
31 December 2016
--------------------------------
Ordinary shares 33,062,013
Redeemable shares 30,297,534
Total 63,359,547
------------------- -----------
CHAIRMAN'S STATEMENT
The Company has delivered good results during the second half of
2016. As at 31 December 2016, the Company's net assets stood at
GBP1.3bn and the NAV per share has exceeded GBP20. In addition, the
renewed investor interest in the listed private equity sector has
resulted in a very positive performance in both share classes over
the last six months. The ordinary and redeemable share prices rose
by 35% and 28% respectively and, although they both continue to
trade at wide discounts, these discounts have narrowed
significantly. Both classes of share outperformed the FTSE
All-Share (12.0%) and MSCI World (15.8%) indices over the same
period and, at the time of writing, PIP's combined market
capitalisation is just over GBP1bn.
The political surprises of 2016 have increased the economic
uncertainties ahead as the consequent changes in policy,
particularly in the US and Europe, affect the terms of global
trade. It is the Board's view that the long-term nature of private
equity - coupled with the expertise of PIP's manager, Pantheon, in
selecting the best managers globally - means that the Company is
well-positioned to respond advantageously to those challenges. It
should continue to appeal to investors seeking access to the
potentially more attractive returns available from private equity
while also diversifying their portfolios.
Half year performance
During the half year to 31 December 2016, PIP's NAV per share
increased by 11.5% to 2,089.5p, and net assets rose from GBP1,187m
to GBP1,324m. Assets in the underlying portfolio generated returns
of 5.8% and foreign exchange gains added 6.8% to the NAV per share,
reflecting the weighting of PIP's portfolio in non-UK assets and
the continued weakness in sterling. These gains were offset by
expenses and taxes (-0.9%).
Our portfolio emphasises buyout funds, which performed well
during the six months to 31 December 2016, although the returns in
the small/mid buyout portfolio were more subdued due to
company-specific events. Early stage venture assets showed least
growth, impacted in part by the disposal of some older tail-end
assets in a secondary sale at a discount to NAV. This segment,
which expanded to 22% in particular through secondary purchases of
assets following the technology sector downturn, has reduced to
6.5% of the portfolio and continues to diminish through
realisations. The Special Situations portfolio, which consists
primarily of energy funds that had felt the effects of declining
oil prices, has started to recover and delivered positive returns
during the half year. The Company has reported previously that it
had taken advantage of the dislocation in the energy sector and
acquired additional assets at attractive prices, contributing to
the good performance from this segment.
Investment and realisation activity during the half year
During the half year to 31 December 2016, PIP's portfolio
generated GBP154.9m of distributions including GBP14.3m in respect
of previously reported disposals of secondary interests. Excluding
these disposals, PIP's annualised distribution rate would be 26% of
opening portfolio assets. Trade sales and secondary buyouts
continued to represent the most significant source of exit
activity. During the period, calls from existing commitments to
private equity funds amounted to GBP42.9m, equivalent to an
annualised call rate of 22% of opening undrawn commitments. This
resulted in a net portfolio cash inflow of GBP112m during the
period before new investments are taken into account. The weighted
average fund age in PIP's portfolio is 7.0 years, which supports
the cash-generative nature of PIP's mature portfolio.
Global deal activity has remained strong and assets have
continued to be highly priced during the first half of PIP's
financial year. Against this backdrop, Pantheon's disciplined
approach to assessing investment opportunities means it has been
more challenging to secure secondary deals, which offer significant
potential to create value, at attractive prices. Notwithstanding
this challenging environment, PIP continues to see interesting
opportunities derived from Pantheon's network and access to high
quality private equity managers globally. PIP made 19 new
investments in the half year, predominantly in the US and Europe
across the buyout and growth stages, amounting to GBP125.1m in
commitments, of which GBP58.7m was drawn at the time of purchase.
This included GBP48.2m committed to two secondary transactions,
GBP36.1m committed to 11 co-investments and GBP40.8m to six primary
commitments, which allowed the Company to continue to manage its
maturity profile while gaining access to niche funds that are
unlikely to trade on the secondary market. The Company has an
active deal pipeline and, since the half year end, has committed an
additional GBP18.2m.
Financial position and strength
As at 31 December 2016, the Company held cash of GBP173m and the
balance sheet remained ungeared. In October, the Company announced
that it had agreed an additional multi-currency revolving credit
facility agreement ("Loan Facility") of GBP50m, which was an
extension to the existing 4-year facility that is in place until
November 2018. The Loan Facility, denominated as to US$139m and as
to EUR67m, was equivalent to GBP169m as at 31 December 2016.
Therefore, together with its undrawn credit facility, the Company
had total liquid resources of GBP342m available to meet total
undrawn commitments of GBP433m. Its undrawn commitment cover
(comprising the sum of PIP's available financing and private equity
portfolio) was comfortable at 3.5x.
In addition to providing cover to meet undrawn commitments,
PIP's robust cash position also gives it the flexibility to pursue
larger portfolios in the secondaries market. It also enables it to
maintain its opportunistic approach to buying back PIP's shares
when they offer an attractive investment opportunity relative to
other potential new investment commitments. Any such purchase is
dependent upon the prevailing market conditions and must also
comply with relevant regulatory requirements.
Board changes
I became Chairman of PIP upon the conclusion of its Annual
General Meeting ("AGM") on 23 November 2016, succeeding Tom Bartlam
who had been Chairman for 12 years. Susannah Nicklin replaced me as
Senior Independent Director. Given Tom's considerable experience
within the private equity sector, the Board was keen to appoint new
directors who could bring similar market knowledge to its
deliberations. Following a careful search, we were delighted to
announce the appointment of two new Non-Executive Directors, John
Burgess and John Singer, who took up their positions following the
AGM. Both have very strong track records of investing in global
private equity and understand first-hand the dynamics of managing
such assets through multiple economic cycles. I am confident that
we have a strong Board in place, with the right mix of experience
and skills, as we face the opportunities and challenges that will
arise in the year ahead and beyond.
Outlook
The political and economic uncertainties experienced in 2016
will continue to feature during the year ahead. The new US
administration, the implications of Brexit and possible changes in
the political landscape in Europe will throw up many questions for
investors. The majority of PIP's portfolio (58%) is invested in the
US, where it is still unclear what changes are likely to occur in
regulation and tax policy. While the proposed removal of the tax
deductibility for interest expenses would have a serious impact on
the cash flow characteristics for companies acquired by US buyout
fund managers, given the amount of debt normally used to finance
such acquisitions, the proposed lower corporation tax rate should
mitigate this impact.
High demand and strong fundraising activities have resulted in
record levels of "dry powder" in the private equity market and this
trend looks set to continue into 2017. Although the elevated
pricing levels have created a more challenging and competitive
landscape for sourcing new deals, it should also be noted that
managers have been able to take advantage of the high valuation
environment by using the secondary market to manage their
portfolios and realise assets. These conditions in turn, enable
continued realisations from PIP's mature portfolio. We are
confident that our manager, Pantheon, has the expertise and
experience to select deals effectively, screening out funds that
have mixed growth prospects, high leverage or limited upside
potential, whilst taking advantage of sector dislocations and
cyclical downturns where pricing is more compelling.
PIP offers access to a global and diversified portfolio of high
quality private equity assets that are selected by leading managers
with a track record of identifying and managing investments
actively to secure better investment returns through multiple
cycles. We expect the second half of PIP's financial year to be at
least as active as the first. We will maintain our disciplined
approach and continue to focus on generating healthy returns and
maximising capital growth over the long term for our
shareholders.
SIR LAURIE MAGNUS
Chairman
13 March 2017
OBJECTIVE AND INVESTMENT POLICY
Investment Objective
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.
Investment Policy
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 the
interests of the Company.
The Company may invest in any type of financial instrument,
including equity and non-equity shares, debt securities,
subscription and conversion rights and options in relation to such
shares and securities and interests in partnerships and limited
partnerships and other forms of collective investment 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:
-- that no holding in a company will represent more
than 15% by value of the Company's investments
at the time of investment (in accordance with
the requirement for approval as an investment
trust which applied to the Company in relation
to its accounting periods ended on and before
30 June 2012);
-- the aggregate of all the amounts invested by the
Company in (including commitments to or in respect
of) funds managed by a single management group
may not, in consequence of any such investment
being made, form more than 20% of the aggregate
of the most recently determined gross asset value
of the Company and the Company's aggregate outstanding
commitments in respect of investments at the time
such investment is made;
-- the Company will invest no more than 15% of its
total assets in other UK-listed closed-ended investment
funds (including UK-listed investment trusts).
The Company may invest in funds and other vehicles established
and managed or advised by Pantheon or any Pantheon affiliate. In
determining the diversification of its portfolio and applying the
manager 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.
MANAGER'S REVIEW
Market Review
The rise of populism, which so dramatically influenced the
political agenda in the US and UK in 2016, is now a recognisable
political reality in many of the mature democracies facing lower
rates of economic growth following the global financial crisis.
With elections due to be held in France, Germany and the
Netherlands in 2017, further upsets to the liberal international
political landscape are a real possibility. While the political
surprises of 2016 have increased uncertainty, it is our belief that
market dislocations and distressed situations can often create
compelling investment opportunities for long-term private equity
investors. More than ever, it is paramount that we continue to work
with the best managers who are nimble and able to respond to change
quickly and effectively.
US administration likely to be positive for private equity in
the short term
Based on what we currently know about the economic plans of the
new US administration, it is difficult to be optimistic about the
medium to long-term economic prospects for the US economy if trade
barriers are erected. However, the Trump administration could be
positive for equity investors, at least in the short term. Fiscal
stimulus in the first part of his term of office could have a
significant positive impact on US economic activity, and therefore
corporate earnings. This might provide support for the current high
equity valuations and, at the same time, a steeper US yield curve
could provide greater opportunities for normalising US monetary
policy. Should all these outcomes come to pass, they are likely be
positive for US private equity.
However, the proposed removal of the tax deductibility for
interest expenses would have a serious impact on the cash flow
characteristics for companies acquired by US buyout fund managers,
given the amount of debt normally used to finance such
acquisitions, although this impact would be mitigated by the
proposed lower corporation tax rate. Any policy that reduces
corporation tax and lowers taxes on remittances from corporate
earnings held offshore will be unambiguously positive for corporate
cash flows and therefore should support US buyout activity; it also
provides greater personal incentives for entrepreneurial behaviour.
To the extent that such gains are not fully incorporated into the
cost of acquiring new investments, their impact on US private
equity returns could be positive, at least until the longer-term
likely detrimental effects of lower foreign trade, a higher fiscal
deficit, higher inflation and higher long-term interest rates
become visible.
In 2016, fundraising continued at a pace in the US with 457
funds raising $188bn(1) . Exit activity was also strong while new
investments were at lower levels than in the previous year,
possibly as a result of the political uncertainty. The US has the
deepest, most established and resilient private equity market in
the world, and it is where the majority of PIP's portfolio is
invested. We expect this to continue as we work with leading
managers that have experience of investing in companies which can
deliver strong earnings growth regardless of the economic and
political environment. In terms of the sectors that PIP has
invested in, traditional energy assets, healthcare and financial
services are likely to perform well under this new administration.
The US-based energy assets that PIP acquired at attractive prices
last year have contributed positively to performance during the
first half of the financial year.
Good flow of opportunities in Europe despite political
uncertainty
The UK Government's intention to trigger Article 50 of the
Lisbon Treaty in March, as well as the elections due to be held in
France, Germany and the Netherlands, will create greater political
uncertainty across Europe during 2017. These uncertainties increase
the risk to economic performance in Europe and the financial
markets will remain subject to greater volatility depending on the
outcomes of these important political processes.
Although deal flow initially slowed in the UK immediately
following the "Brexit" vote, the economic impact of the referendum
has been muted so far and deal activity rates are recovering.
Experienced managers have been able to take advantage of the
uncertain environment and, in some cases, have negotiated more
attractive pricing for investments. While the UK is the largest
private equity market in Europe, it represents a small portion
(less than 10%) of PIP's portfolio.
Despite the gloomy outlook for the political environment and
muted economic growth forecasts, fundraising activity in Europe was
strong in 2016 with 170 funds raising a total of EUR100bn(2) . This
was driven by a number of well-established larger buyout managers
raising even larger successor funds. Dry powder (being private
equity capital commitments waiting to be invested) has been
steadily rising over the past few years and we believe that the
current high levels represent 3-4 years of deployment in Europe.
This reinforces the need for investment discipline and rigorous
manager selection, reflecting Pantheon's conviction about a
manager's ability to deploy capital diligently. We expect
fundraising in Europe in 2017 to be lower than in 2016, due to a
smaller cluster of large funds in the market, however we expect
that the best managers, particularly in the mid-market, will still
be able to take advantage of the buoyant fundraising environment
and raise funds above their target sizes.
In terms of new investments, a mix of founder- and family-owned
primary management buyouts, corporate carve-outs and
transformational secondary buyouts will present compelling new
opportunities. Purchase price multiples in the small and mid-cap
space have been notably lower when compared with the upper middle
and large buyout segment of the market. Managers have managed to
maintain their discipline and we have not seen too much price
inflation at the smaller end of the market during the year. This
trend supports Pantheon's approach of targeting mid-market buyout
opportunities where pricing levels are often more attractive.
Exit activity in Europe continued at a robust pace during 2016
across buyout investments; the majority of deals were exited
through secondary buyouts and strategic sales. We expect this to
continue in 2017 with corporate buyers taking advantage of the
depreciation of the euro and sterling versus the US dollar to
acquire companies based in Europe. Furthermore, larger buyout funds
with reserves of dry powder will continue to target small and
medium sized deals in secondary and tertiary buyouts.
A strong year for Pantheon in China and emerging markets
As China has continued to rebalance its economic model away from
manufacturing to domestic consumption, there was a further slowdown
in growth in 2016 with warnings that this could continue in 2017.
Fears about China's rising debt levels and an unwinding property
boom, along with concerns over how future trade relations with the
US may look under a Trump presidency, have weighed on investor
sentiment. As a result, investment activity, fundraising levels and
exits in 2016 were slightly down on the previous year. However,
this could at least be partly explained by the higher number of
large pan-regional funds raising capital in 2015, which were not as
prevalent in 2016. We expect to see more large funds returning to
raise capital in 2017.
Despite the prevailing headwinds, underlying earnings have
remained strong and the lower levels of foreign capital flowing
into the region has arguably created more deal opportunities for
private equity managers. Pantheon focuses on opportunities within
domestic consumption (e.g. healthcare, education and consumer) and
therefore these could be largely unaffected by the US
administration's stated aims of imposing higher trade tariffs on
Chinese imports. In addition, we are seeing a good flow of
opportunities in the technology sector where companies are able to
scale up quickly.
More recently, India has experienced stronger economic growth
than China although government moves against the unofficial
economy, leading to the elimination from circulation (in late 2016)
of the two highest value banknotes, is likely to have a short-term
negative impact on consumption and economic growth. Nevertheless,
the move to introduce electronic payments and smart financing
solutions has produced some interesting investment opportunities
for the Company.
Overall, we remain relatively cautious on Latin America although
we will continue to respond to compelling deal opportunities in the
region.
While Asia and emerging markets represent a smaller part of
PIP's portfolio, when compared to North America and Europe, we will
continue to acquire assets in the region that support PIP's
long-term investment strategy.
Another active year for secondary markets
A very active second half of 2016 offset the relatively slow
start, with overall private equity secondary volume transacted
reaching $33bn(3) , a modest increase from $32.5bn in 2015. After
the jolt to the markets in June following the UK's Brexit vote, a
more stable macroeconomic outlook saw secondary buyers bid more
determinedly for portfolios, helping to sustain pricing at
attractive levels.
In addition to improving economic fundamentals, the conclusion
of successful fundraisings in the secondary market, including
Pantheon's latest global secondary fund, increased the level of dry
powder in the secondary market to $70bn, thereby helping to fuel
demand. Seller behaviour has also adjusted, as greater awareness
and familiarity has resulted in more frequent use of the secondary
market to actively manage portfolios. Indeed, the key sellers were
public and private pension funds, and asset managers, which each
accounted for 25% of deal volume.(4)
Due to the strength of underlying demand, and the more positive
market sentiment in the second half of the year, the average high
bid for secondary interests increased to 95% of NAV, slightly up on
the 94% average high bid price in 2015. The implied level of
discount masks a divergence in pricing between pre-crisis and
post-crisis funds where pricing for post-2009 vintage funds in
particular saw higher average pricing, running to premiums to NAV,
offsetting the higher discounts, often in double digits, to NAV
seen for mature funds. Funds with a vintage of 2006 or earlier
represented over 55% of total funds offered on the market in 2016,
up from 48% in the previous year.
In addition, transactions led by managers restructuring or
recapitalising a fund, accounted for 25% of the total transaction
volume, meaningfully up from the prior year's 15% proportion of
total volume. Pantheon has sought out such transactions but only in
cases where the manager is of a high quality, the underlying
companies have considerable growth potential and where the
alignment with the manager can be appropriately structured.
Given the full average pricing, Pantheon is careful to screen
out funds with more questionable growth prospects, unjustifiably
high leverage or limited upside potential. Instead, origination has
focused on secondary opportunities that are not as competitively
bid, either as a result of a restrictive manager who is keen to
extend a pre-existing relationship or where the manager sees
Pantheon as a strong potential partner. Pantheon's approach
continues to be very selective, transacting 10 deals worth
approximately $825m in 2016.
Pantheon continues to co-invest in high quality assets alongside
leading managers
The co-investment market, comprising a variety of institutional
investors including sovereign wealth funds, pension funds, family
offices and other co-investment funds, has remained competitive
over the past six months. Through its continuous efforts to
position itself with favoured managers, Pantheon has been able to
respond effectively to this and has maintained a robust deal flow
in terms of quality and volume. Pantheon has continued to co-invest
in opportunities with strong downside protection, favourable
demographic trends, attractive growth features and that, crucially,
represent a strong sector, geographic and style fit with the
investment strategy of the deal sponsors. While Pantheon assesses
deals across all sectors, information technology and industrials in
particular have offered interesting deal opportunities during the
half year. Pantheon will continue to be disciplined when assessing
co-investment opportunities and will maintain its thorough approach
to due diligence while ensuring that it is in a prime position to
source deal flow and deliver on its co-investment strategy as
opportunities arise.
Outlook
We will remain vigilant to macroeconomic and political
developments during 2017, however it is our view that private
equity should continue to outperform relative to other asset
classes. This will be driven by a number of factors including, but
not limited to, the illiquidity premium generated by private
equity, the approach of our managers, who are nimble and reactive
to changing market dynamics, as well as their confidence in seeking
deal opportunities in market dislocations, mispricing and
distressed situations. We believe that our managers continue to
exercise discipline on leverage levels, despite the good
availability of debt, and that the underlying portfolio companies
will still benefit from those managers' operational expertise and
experience, which will in turn drive future growth. Private equity
gives investors access to parts of the economy that they would not
be able to reach via public markets and the revenue and earnings
reported by a sample of the underlying companies in PIP's portfolio
consistently outperform the broader equity benchmark indices.
Pantheon has a strong track record of selecting the best
managers and gaining privileged access to the most compelling deals
via those relationships. Although uncertain times lie ahead, we
believe that we are well-positioned to draw on our over 35 years'
experience of investing in private equity funds globally and that
we will be able to respond effectively to the challenges and
opportunities during the coming year.
(1) Source: The World Bank, Global Economic Prospects, Forecast
Table, January 2016.
(2) 2017 Preqin Global Private Equity and Venture Capital
Report.
(3) Greenhill Cogent Secondary Market Trends & Outlook,
January 2017.
(4) Evercore 2016 Survey Results 2016.
PORTFOLIO OVERVIEW
SIX MONTHS TO 31 DECEMBER 2016
5.8% Underlying (pre FX) half year return relative
to opening assets
GBP112m Net cash flow generated from PIP's portfolio
in the half year
35% Average uplift on exit realisations(1)
GBP155m Distributions
GBP125m New investment commitments made in the half
year, GBP59m of which was drawn
29% Distributions as a percentage of opening portfolio
(annualised) (2)
GBP1,154m Portfolio value
GBP43m Calls made from existing undrawn commitments
7.0 Weighted average fund age of portfolio
years
(1) 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 manager.
Uplift on full exit compares the value received upon realisation
against the investment's carrying value up to six months prior to
the transaction taking place. The analysis only includes exit
realisations that occurred during the financial period and
disregards the impact of any proceeds received outside of the six
month period covered in the uplift analysis. Exit realisations
represented approximately 39% of PIP's gross distributions for the
six month period to 31 December 2016.
(2) Distributions included GBP14m proceeds from secondary
disposals, excluding such distributions results in an annualised
distribution rate of 26%.
The Company offers a global, diversified selection of high
quality private equity assets, which have been carefully selected
by Pantheon. The diversification of PIP's portfolio, with assets
spread across different investment styles and stages, helps to
reduce the volatility of both 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.
Portfolio Analysis by Value as at 31 December 2016(1)
Fund Geography
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.
USA 58%
Europe 25%
Asia and EM(2) 12%
Global(3) 5%
Total 100%
-----
(1) Fund geography, stage, maturity and
primary/secondary/co-investment charts are based upon underlying
fund valuations and account for 100% of PIP's overall portfolio
value. Company sector and company geography tables are based upon
underlying company valuations as at 30 June 2016 and account for
over 90% of PIP's overall portfolio value.
(2) EM: Emerging Markets.
(3) Global category contains funds with no target allocation to
any particular region equal to or exceeding 60%.
Fund Stage
PIP's portfolio is well diversified across different private
equity investment styles and stages.
Buyout funds continue to constitute the majority of PIP's
portfolio.
Special situation investments are comprised of funds investing
primarily in the energy sector and distressed securities.
Small/Mid Buyout 33%
Large/Mega Buyout 26%
Growth 17%
Venture 12%
Special Situations 10%
Generalist 2%
Total 100%
-----
Pantheon Vehicles
At 31 December 2016, 3% of PIP's portfolio value and 2% of PIP's
outstanding commitments were comprised of funds-of-funds managed
directly by Pantheon. The value of investments in and outstanding
commitments to, investment funds managed or advised by the Pantheon
group ("Pantheon Funds") are excluded in calculating the monthly
management fee and the fee on uncalled commitments payable by PIP
to Pantheon. In addition, Pantheon has agreed that the total fees
(including performance fees) payable by Pantheon Funds to members
of the Pantheon group and attributable to PIP's investments in
Pantheon Funds shall be less than the total fees (excluding the
performance fee) that PIP would have been charged under its
management agreement with Pantheon had it invested directly in all
of the underlying investments of the relevant Pantheon Funds
instead of through the relevant Pantheon Funds. With the consent of
the Board of Directors, the Company can agree that an investment
fund managed or advised by the Pantheon group shall not be treated
as a Pantheon Fund for this purpose (so that the fee rebate
described above would not apply in respect of an investment in such
fund).
Fund Maturity
The portfolio is well diversified by fund vintage.
New primary commitments and co-investments are increasing PIP's
exposure to more recent vintages, with the 2010 and later segment
of the portfolio increasing to 43% (from 35% as at 30 June
2016).
2016 8%
2015 13%
2014 8%
2013 5%
2012 4%
2011 4%
2010 1%
2009 2%
2008 13%
2007 19%
2006 10%
2005 and earlier 13%
Total 100%
-----
Investment Type
Secondary investments continue to constitute the largest
component of PIP's portfolio.
Co-investments are becoming a more established part of PIP's
portfolio at 24% of value (up from 20% as at 30 June 2016).
Secondary 46%
Primary 30%
Co-investments 24%
Total 100%
-----
Company Sectors(1)
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 energy sectors.
Consumer 27%
Information Technology 26%
Healthcare 14%
Industrials 12%
Financials 9%
Energy 7%
Materials 3%
Telecommunication
Services 2%
Total 100%
-----
Company Geography(1)
Over half of the portfolio is invested in companies based in
North America, which benefit from greater capital market scope and
depth.
PIP's European exposure, which represents approximately a third
of the portfolio, is predominantly in companies based in the
stronger Northern European economies, including the UK, Scandinavia
and Germany.
13% of PIP's portfolio is based in Asia, providing access to
faster-growing economies such as China and India.
North America 57%
Asia 13%
UK 7%
Scandinavia 4%
Germany 4%
Benelux 3%
Italy 3%
Other Europe 3%
Iberia 2%
France 2%
Central and
Eastern Europe 1%
Rest of World 1%
Total 100%
-----
(1) Company sector and company geography charts are based on
underlying company valuations as at 30 June 2016 and account for
over 90% of PIP's overall portfolio value.
PORTFOLIO ANALYSIS
Portfolio Performance by Stage for the Half Year to 31 December
2016(1)
-- PIP's portfolio generated investment returns,
prior to foreign exchange effects, of 5.8% during
the half year.
-- Solid performance from growth and large buyout
managers underpinned PIP's overall NAV growth,
aided by a strong recovery by special situations
during the period.
-- Returns in small/mid buyout were more subdued
due to company-specific events.
-- Venture funds were adversely impacted mostly due
to older maturities, with higher distribution
profiles.
Debt Multiples(2)
Venture, growth and buyout investments have differing leverage
characteristics.
-- The venture and growth portfolio has little or
no reliance on leverage.
-- Average debt multiple for large/mega buyout investments
increased from 5.0 times to 5.1 times between
30 June 2016 and 31 December 2016, while the average
debt multiple for small/medium buyout investments
increased from 3.8 times to 4.2 times over the
same period.
(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
30 June 2016 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 30 June
2016 or, where not available, the closest annual period disclosed,
and provide coverage of 40% (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 2011-2016 is
based on the same methodology and provides coverage of 60% - 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 on underlying valuations as at 30 June 2016, or the closest
period end disclosed. The valuation multiple sample covers
approximately 31% of PIP's buyout portfolio. The debt multiple
sample covers 32% of PIP's buyout portfolio. Data sourced from
Bloomberg.
PORTFOLIO ANALYSIS - BUYOUT
Valuation Multiple(1)
-- Accounting standards require private equity managers
to value their portfolio at fair value. Public
market movements can be reflected in valuations.
-- Sample-weighted average enterprise value/EBITDA
for the year to 30 June 2016 was 10.6 times,
compared to 14.3 times and 12.2 times for the
FTSE All-Share and MSCI World indices.
Revenue and EBITDA Growth(1)
-- Weighted average revenue growth for the sample
buyout companies was +5.3% in the 12 months to
30 June 2016, compared to -7.3% and -1.0% for
the FTSE All-Share and MSCI World indices.
-- Weighted average EBITDA growth for the sample
buyout companies was +2.7% in the 12 months to
30 June 2016, compared to -18.1% and -10.0% for
the FTSE All-Share and MSCI World indices.
-- 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.
(1) The data is based on a sample of PIP's buyout funds. Buyout
Sample Methodology: The sample buyout figures for the 12 months to
30 June 2016 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 30 June
2016 or, where not available, the closest annual period disclosed,
and provide coverage of 40% (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 2011-2015 is
based on the same methodology and provides coverage of 60% - 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 on underlying valuations as at 30 June 2016, or the closest
period end disclosed. The valuation multiple sample covers
approximately 31% of PIP's buyout portfolio. The debt multiple
sample covers 32% of PIP's buyout portfolio. Data sourced from
Bloomberg.
PORTFOLIO ANALYSIS - VENTURE AND GROWTH
-- Venture and growth assets represent 29% of the
portfolio at 31 December 2016 with growth representing
17% and venture representing 12%.
-- Before foreign exchange effects, PIP's venture
and growth funds generated a return of approximately
4% in the half year to 31 December 2016.
-- Although the combined 2006 and earlier vintage
funds generated lower returns during the half
year, these vintages continue to produce substantial
levels of distributions.
-- 2010 and later funds, which constitute the largest
segment of the venture and growth portfolio (approximately
30%), generated pre-FX returns of approximately
11% and distributed at an annualised rate of 10%
of opening assets.
DISTRIBUTIONS IN THE HALF YEAR TO 31 DECEMBER 2016
PIP received more than 900(1) distributions in the half year,
with many reflecting realisations at significant uplifts to
carrying value. PIP's mature portfolio should continue to generate
significant distributions. Distributions in the period included
GBP14m of proceeds from the sale of secondary stakes of some of
PIP's older fund interests.
(1) This figure looks through feeders and funds-of-funds.
DISTRIBUTIONS
Distributions by Region and Stage
PIP received GBP155m in proceeds from the portfolio in the six
months to 31 December 2016, equivalent to 29% of opening private
equity assets.
The US accounted for the majority of PIP's distributions, where
market conditions supported a good level of exits among larger
buyouts.
Europe continues to generate significant distributions despite
its lower portfolio weighting.
DISTRIBUTIONS BY REGION
= GBP155M
USA 65%
Europe 25%
Asia and other 6%
Global 4%
-----
Total 100%
-----
DISTRIBUTIONS BY STAGE
= GBP155M
Large/Mega Buyout 32%
Small/Mid Buyout 30%
Venture 16%
Growth 15%
Special Situations 5%
Generalist 2%
-----
Total 100%
-----
DISTRIBUTION RATES
Quarterly Distribution Rate(2)
Quarterly distribution rates remain strong, increasing to over
30% on an annualised basis in the last quarter. This reflected the
maturity of PIP's portfolio.
Distribution Rates(2) in the Half Year to 31 December 2016 by
Vintage
Mature vintages continue to distribute at higher rates, with
2009 and earlier funds distributing at a rate in excess of 40% of
opening value. With a weighted fund maturity of 7.0 years, PIP's
portfolio should continue to generate significant levels of
cash.
(2) Distribution rate equals distributions in period
(annualised) divided by opening portfolio value.
EXIT REALISATIONS IN THE HALF YEAR TO 31 DECEMBER 2016
Uplifts on Exit Realisations for the Half Year to 31 December
2016(1)
On a sample of exit realisations, the value weighted average
uplift in the half year to 31 December 2016 was 35%. This average
uplift is consistent with our view that realisations can be
significantly incremental to returns. PIP's mature portfolio is
well placed to continue to generate a good level of distributions
from exit realisations in the coming year.
(1) 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 manager.
Uplift on full exit compares the value received upon realisation
against the investment's carrying value up to six months prior to
the transaction taking place. The analysis only includes exit
realisations that occurred during the half year and discards the
impact of any proceeds received outside of the six month period
covered in the uplift analysis. Exit realisations represented
approximately 39% of PIP's gross distributions for the half year to
31 December 2016.
Exit Realisations by Sector and Type
The portfolio benefited from strong realisation activity,
particularly in the information technology, consumer, industrials
and healthcare sectors.
Trade sales and secondary buyouts represented the most
significant source of exit activity during the six month
period.
EXIT REALISATIONS BY
SECTOR
Information Technology 31%
Consumer 25%
Industrials 21%
Healthcare 12%
Financials 8%
Materials 3%
-----
Total 100%
-----
EXIT REALISATIONS BY
TYPE
Trade Sales 46%
Secondary Buyout 45%
IPO and Secondary
Share Sale 5%
Refinancing and
Recapitalisation 4%
Total 100%
-----
INVESTMENTS AND CALLS IN THE HALF YEAR TO 31 DECEMBER 2016
Calls on existing investments made during the half year ranged
across regions and sectors, including cloud-based software,
logistics, telecommunications and oil and gas exploration
companies.
Calls
Calls by Region and Stage
PIP paid GBP42.9m to finance calls on undrawn commitments during
the half year to 31 December 2016.
The calls were predominantly made by managers in the small and
mid-market buyout and growth segments, reflecting the focus of
PIP's recent primary commitments.
CALLS BY REGION =
GBP43m
USA 56%
Europe 29%
Asia & EM 8%
Global 7%
------
Total 100%
------
CALLS BY STAGE = GBP43m
Small/Mid Buyout 39%
Growth 24%
Large/Mega
Buyout 22%
Special Situations 12%
Venture 2%
Generalist 1%
Total 100%
-----
New Commitments
PIP committed GBP125m to new investments during the half year,
mostly to buyout and growth equity funds. GBP59m was drawn at the
time of purchase.
New Commitments by Region
The majority of commitments made in the half year were to
US-focused private equity funds, reflecting greater investment
opportunities in the region.
USA 71%
Europe 20%
Asia and EM 9%
-----
Total 100%
-----
New Commitments by Stage
The majority of new investments made in the half year were to
buyout funds.
Small/Mid Buyout 41%
Large/Mega Buyout 30%
Growth 24%
Special Situations 5%
Total 100%
-----
New Commitments by Investment Type
Although the emphasis continues to be on secondary commitments,
PIP's half year investment activity demonstrates the depth of
opportunity in attractive co-investments and primaries.
Secondary 38%
Co-Investment 29%
Primary 33%
-----
Total 100%
-----
New Commitments by Vintage
Primaries and co-investments, which accounted for slightly over
half of total commitments in the half year, offer exposure to more
recent vintages.
2016 55%
2015 5%
2013 8%
2011 11%
2010 3%
2009 2%
2008 9%
2006 and earlier 7%
Total 100%
-----
NEW COMMITMENTS:
SECONDARY AND PRIMARY (FUNDS)
PIP committed approximately GBP48m to two secondary transactions
during the half year, comprising 13 underlying funds. In addition,
PIP committed GBP41m to six primaries, which added current vintage
exposure with high quality managers.
New Secondary and Primary Commitments(1)
Secondary Commitments in the Half Year to 31 December 2016
COMMITMENTS
REGION STAGE DESCRIPTION GBPM % FUNDED(2)
-------- ------------ ----------------------- ------------ ------------
A North American
portfolio comprised
mostly of small
Global Various buyout funds 41 71%
An interest in
a European bank
managed by a global
large buyout manager
focused on the
financial services
Europe Large/Mega sector 7 100%
TOTAL 48 75%
----------------------------------------------- ------------ ------------
Primary Commitments in the Half Year to 31 December 2016
COMMITMENTS
INVESTMENT STAGE DESCRIPTION GBPM
------------------- ------------ --------------------------- ------------
Riverstone
Global Energy
and Power Fund Special A North American
VI Sits energy fund 1
A North American
middle-market buyout
fund focusing on
Arbor Investments food, beverage
IV Small/Mid and packaging industries 7
A European medium
IK VIII Small/Mid buyout fund 11
A growth fund focused
LYFE Capital on the healthcare
Fund II Growth sector in China 8
A North American
KKR Americas mid-market buyout
Fund XII Large/Mega fund 2
Veritas Capital A North American
Fund VI Large/Mega large buyout fund 12
TOTAL 41
-------------------------------------------------------------- ------------
(1) Funds acquired in new secondary transactions are not named
due to non-disclosure agreements.
(2) The funding level does not include deferred payments.
OUTSTANDING COMMITMENTS
PIP's outstanding commitments(1) 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 private equity worldwide. The Board and
Manager keep the level of outstanding commitments under review so
as not to exceed an amount that can be financed (comfortably) out
of cash flows generated internally and for which the Company's
liquid resources and unutilised bank facilities can provide
sufficient cover in the event that distributions received from the
portfolio slow down in adverse market conditions.
(1) Capital committed to funds that to date remains undrawn.
Analysis of Outstanding Commitments as at 31 December 2016
PIP's outstanding commitments to investments increased to
GBP433m as at 31 December 2016 compared with GBP382m as at 30 June
2016. The Company paid calls of GBP43m and added an additional
GBP66m of outstanding commitments associated with new investments
made in the half year. Foreign exchange movements accounted for
most of the remaining GBP28m increase.
Geography
The US and Europe have the largest outstanding commitments,
reflecting the Company's investment emphasis. Commitments to Asia
and other regions provide access to faster-growing economies.
USA 55%
Europe 28%
Asia and EM 10%
Global 7%
Total 100%
-----
Stage
PIP's undrawn commitments are diversified across the major
stages, with an emphasis on small and mid-market buyout managers.
This reflects the focus of recent primary commitments.
Small/Mid Buyout 40%
Large/Mega
Buyout 30%
Growth 16%
Special Situations 10%
Venture 3%
Generalist 1%
Total 100%
-----
Maturity
Approximately 28% of PIP's undrawn commitments are in the 2009
vintage or older where draw-downs may naturally occur at a slower
pace. It is likely that a portion of these commitments will not be
drawn.
The rise in 2015 and 2016 vintage undrawn commitments reflects
PIP's recent primary commitment activity.
2016 37%
2015 21%
2014 7%
2013 4%
2012 1%
2011 1%
2010 1%
2009 1%
2008 7%
2007 8%
2006 and earlier 12%
Total 100%
-----
FINANCE AND SHARE BUYBACKS
Cash and Available Bank Facility
At 31 December 2016, PIP had cash balances of GBP173.3m.
In addition to these cash balances, PIP can also finance
investments out of its multi-currency revolving credit facility
agreement ("Loan Facility"). An increase to the Loan Facility of
GBP50m was agreed in October 2016. The Loan Facility is due to
expire in November 2018 and comprises facilities of $138.8m and
EUR66.6m which, using exchange rates at 31 December 2016, amount to
a sterling equivalent of GBP169.2m. At 31 December 2016, the Loan
Facility remained fully undrawn.
Undrawn Commitment Cover
At 31 December 2016, the Company had GBP342.5m of available
financing, comprised of its cash balances and Loan Facility. The
sum of PIP's available financing and private equity portfolio
provide 3.5 times cover relative to undrawn commitments. When a
fund is past its investment period, which is typically between five
and six years, it generally cannot make any new investments and
only draws 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 30% of the Company's
undrawn commitments are in fund vintages that are older than six
years.
LARGEST 50 MANAGERS BY VALUE AS AT 31 DECEMBER 2016
% OF PIP'S TOTAL
PRIVATE EQUITY
NUMBER MANAGER REGION(2) STAGE BIAS ASSET VALUE(1)
1 Providence Equity Partners USA Buyout 6.3%
2 Texas Pacific Group USA Buyout 4.2%
3 Baring Private Equity Asia Asia & EM Growth 2.1%
4 Warburg Pincus Capital Global Growth 2.1%
5 Unison USA Special Situations 1.8%
6 The Banc Funds Company USA Growth 1.7%
7 ABS Capital USA Growth 1.7%
8 Yorktown Partners(4) USA Special Situations 1.5%
9 Essex Woodlands Europe Buyout 1.4%
10 MatlinPatterson Global Advisers USA Special Situations 1.3%
11 Apollo Advisors USA Buyout 1.3%
12 Kayne Anderson(4) USA Special Situations 1.2%
13 KKR Europe Buyout 1.1%
14 Insight Venture Partners USA Growth 1.1%
15 Shamrock Capital Advisors USA Buyout 1.0%
16 Gemini Capital Europe Venture 1.0%
17 EQT(3) Asia & EM Buyout 0.9%
18 Francisco Partners Management USA Buyout 0.9%
19 CVC Capital Partners Europe Europe Buyout 0.9%
20 Abris Capital Europe Buyout 0.9%
21 Lee Equity Partners USA Growth 0.9%
22 Ares Management USA Buyout 0.9%
23 Bridgepoint Partners Europe Buyout 0.9%
24 Mid-Europa Partners Europe Buyout 0.9%
25 IK Investment Partners Europe Buyout 0.9%
26 Golden Gate Capital USA Buyout 0.9%
27 Brentwood Associates Private Equity USA Buyout 0.8%
28 KRG USA Buyout 0.8%
29 Nordic Capital Europe Buyout 0.8%
30 Andreessen Horowitz USA Growth 0.8%
31 ABRY Partners USA Buyout 0.8%
32 Vision Capital Europe Buyout 0.8%
33 Equistone Partners Europe Europe Buyout 0.7%
34 Altor Capital Europe Buyout 0.7%
35 Not disclosed USA Buyout 0.7%
36 Baring Vostok Capital Partners Europe Buyout 0.7%
37 Index Ventures Europe Venture 0.7%
38 Veritas Capital USA Buyout 0.6%
39 Sun Capital Partners USA Buyout 0.6%
40 Carlyle Group USA Buyout 0.6%
41 Wasserstein Management USA Buyout 0.6%
42 Technology Crossover Management USA Growth 0.6%
43 Blackstone Group USA Buyout 0.6%
44 Lovell Minnick Equity Advisors USA Buyout 0.6%
45 J.C. Flowers Europe Buyout 0.6%
46 Polaris Venture Partners USA Venture 0.6%
47 Thomas H. Lee Partners USA Buyout 0.5%
48 Hutton Collins Europe Special Situations 0.5%
49 Stonepeak Infrastructure Partners(4) USA Special Situations 0.5%
50 Apax Partners Europe Buyout 0.5%
------ ------------------------------------ --------- ------------------ ----------------
COVERAGE OF PIP's TOTAL PRIVATE EQUITY ASSET VALUE 55.5%
--------------------------------------------------------------------------- ----------------
(1) 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 EQT Greater China II. (4)
Predominantly focused on investments in the energy sector.
LARGEST 50 COMPANIES BY VALUE AS AT 30 JUNE 2016(1)
% OF PIP'S
NET
NUMBER COMPANY COUNTRY SECTOR ASSET VALUE
1 LBX Pharmacy(3) China Consumer 0.9%
2 Alarm.Com(3,4) USA Information Technology 0.9%
3 ALM Media(2,4) USA Consumer 0.8%
4 Spotify Sweden Information Technology 0.8%
5 Grupo Farmaceutico Biotoscana(2) Colombia Healthcare 0.7%
6 Not disclosed France Healthcare 0.7%
7 Western Gas Partners(2) USA Energy 0.7%
8 Abacus Data Systems(2) USA Information Technology 0.7%
9 Vistra and Orangefield(2) Asia Industrials 0.6%
10 ZeniMax Media USA Information Technology 0.6%
11 Standard Pacific(3) USA Consumer 0.6%
12 StandardAero(2) USA Industrials 0.5%
13 Recorded Books(2) USA Consumer 0.5%
14 Salad Signature(2) Belgium Consumer 0.5%
15 Targa Resources USA Energy 0.5%
16 Sivantos (Siemens Audiology Solutions)(2) Singapore Healthcare 0.5%
17 Vertical Bridge USA Telecommunication Services 0.5%
18 Nord Anglia Education(3,4) Hong Kong Consumer 0.5%
19 Blackboard USA Information Technology 0.5%
20 Applied Medical Resources(2) USA Healthcare 0.5%
21 ConvaTec Healthcare USA Healthcare 0.5%
22 American Tire Distributors(2) USA Consumer 0.4%
23 IMS Health(3,4) USA Healthcare 0.4%
24 McGraw-Hill Education(2) USA Consumer 0.4%
25 SoftBrands USA Information Technology 0.4%
26 GlobalTranz Enterprises(2) USA Industrials 0.4%
27 CPL Industries UK Energy 0.4%
28 Verimatrix USA Information Technology 0.4%
29 Extraction Oil & Gas(2) USA Energy 0.4%
30 Not disclosed Mexico Financials 0.4%
31 Rightpoint Consulting(2) USA Industrials 0.4%
32 Atria Convergence Technologies India Telecommunication Services 0.4%
33 ILX(2) USA Energy 0.4%
34 Univision USA Consumer 0.4%
35 USI (2,4) USA Financials 0.4%
36 Alliant Insurance Services(2) USA Financials 0.3%
37 Home Shopping Europe Germany Consumer 0.3%
38 ista International Germany Information Technology 0.3%
39 Burning Glass International(2) USA Information Technology 0.3%
40 K-Mac USA Consumer 0.3%
41 Standard Bancshares(2) USA Financials 0.3%
42 Virgin Pulse(2) USA Industrials 0.3%
43 Jimmy John's(4) USA Consumer 0.3%
44 Vitruvian Exploration USA Energy 0.3%
45 Antero Resources Corporation(3) USA Energy 0.3%
46 Not disclosed USA Information Technology 0.3%
47 S-Process Equipment Germany Industrials 0.3%
48 Flagstar Bancorp USA Financials 0.3%
49 Michaels Stores(3) USA Consumer 0.3%
50 LogicMonitor, Inc. USA Information Technology 0.3%
------ ----------------------------------------- --------- -------------------------- -----------
COVERAGE OF PIP's NET ASSET VALUE 23.1%
---------------------------------------------------------------------------------------- -----------
(1) The largest 50 companies table is based upon underlying
company valuations at 30 June 2016. (2) Co-investments/directs. (3)
Listed companies.
(4) Liquidation event post 30 June 2016.
INTERIM MANGEMENT REPORT AND RESPONSIBILITY STATEMENT OF THE
DIRECTORS
IN RESPECT OF THE HALF-YEARLY FINANCIAL REPORT
Interim Management Report
The important events that have occurred during the period under
review, the key factors influencing the financial statements and
the principal uncertainties for the remaining six months of the
financial year are set out in the 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 30
June 2016 and continue to be as set out in that report on pages
13-15.
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, the
long-term 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.
Responsibility Statement
Each Director confirms that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with FRS 102 and FRS 104 'Interim Financial
Reporting'; and gives a true and fair view of the assets,
liabilities, financial position and return of the Company;
-- this 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 on
13 March 2017 and was signed on its behalf by Sir Laurie Magnus,
Chairman.
INCOME STATEMENT (UNAUDITED)
FOR THE SIX MONTHS TO 31 DECEMBER
2016
SIX MONTHS TO SIX MONTHS TO YEAR TO
31 DECEMBER 2016 31 DECEMBER 2015 30 JUNE 2016
REVENUE CAPITAL TOTAL* REVENUE CAPITAL TOTAL* REVENUE CAPITAL TOTAL*
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- -------- -------- -------- --------- -------- ---------
Gains on investments
at fair value
through profit
or loss** - 130,785 130,785 - 71,063 71,063 - 191,298 191,298
Currency gains
on cash and borrowings - 8,276 8,276 - 10,905 10,905 - 22,864 22,864
Investment income 8,394 - 8,394 7,522 - 7,522 11,832 - 11,832
Investment management
fees (6,708) - (6,708) (5,264) - (5,264) (11,249) - (11,249)
Other expenses (774) (150) (924) (658) (478) (1,136) (1,531) (896) (2,427)
-------------------------- -------- -------- -------- -------- -------- -------- --------- -------- ---------
RETURN ON ORDINARY
ACTIVITIES BEFORE
FINANCING COSTS
AND TAX 912 138,911 139,823 1,600 81,490 83,090 (948) 213,266 212,318
Interest payable
and similar
charges/finance
costs (913) - (913) (602) - (602) (1,261) - (1,261)
-------------------------- -------- -------- -------- -------- -------- -------- --------- -------- ---------
RETURN ON ORDINARY
ACTIVITIES
BEFORE TAX (1) 138,911 138,910 998 81,490 82,488 (2,209) 213,266 211,057
Tax on ordinary
activities (Note
4) (2,087) - (2,087) (1,295) - (1,295) (1,985) - (1,985)
-------------------------- -------- -------- -------- -------- -------- -------- --------- -------- ---------
RETURN ON ORDINARY
ACTIVITIES FOR
THE PERIOD, BEING
TOTAL COMPREHENSIVE
INCOME FOR THE
PERIOD (NOTE
8) (2,088) 138,911 136,823 (297) 81,490 81,193 (4,194) 213,266 209,072
-------------------------- -------- -------- -------- -------- -------- -------- --------- -------- ---------
RETURN PER ORDINARY
AND REDEEMABLE
SHARE (NOTE 8) (3.29)p 219.24p 215.95p (0.46)p 124.94p 124.48p (6.47)p 328.99p 322.52p
-------------------------- -------- -------- -------- -------- -------- -------- --------- -------- ---------
* The Company does not have any income or expense that is not
included in the return for the period and accordingly the return
for the period is also the total comprehensive income for the
period. The total column of the statement represents the Company's
Statement of Total Comprehensive Income prepared in accordance with
Financial Reporting Standards ("FRS"). 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.
No operations were acquired or discontinued during the
period.
There were no recognised gains or losses other than those
passing through the Income Statement.
The Notes form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
FOR THE SIX MONTHS TO 31 DECEMBER CAPITAL
2016
CAPITAL OTHER RESERVE
ON
SHARE SHARE REDEMPTION CAPITAL INVESTMENTS SPECIAL REVENUE
CAPITAL PREMIUM RESERVE RESERVE HELD RESERVE* RESERVE* TOTAL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- ---------- ----------- ---------- ------------ --------- ----------- ------------
Movement
for the six
months ended
31 December
2016
OPENING EQUITY
SHAREHOLDERS'
FUNDS 22,456 283,555 3,089 515,720 422,180 - (59,886) 1,187,114
Return for
the period - - - 81,593 57,318 - (2,088) 136,823
Redeemable
shares bought
back for
cancellation - - - (26) - - - (26)
---------------- --------- ---------- ----------- ---------- ------------ --------- ----------- ------------
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 22,456 283,555 3,089 597,287 479,498 - (61,974) 1,323,911
Movement
for the six
months ended
31 December
2015
OPENING EQUITY
SHAREHOLDERS'
FUNDS 22,475 283,555 3,070 409,584 324,062 13,010 (55,692) 1,000,064
Return for
the period - - - 59,843 21,647 - (297) 81,193
Redeemable
shares bought
back for
cancellation (1) - 1 - - (1,219) - (1,219)
---------------- --------- ---------- ----------- ---------- ------------ --------- ----------- ------------
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 22,474 283,555 3,071 469,427 345,709 11,791 (55,989) 1,080,038
---------------- --------- ---------- ----------- ---------- ------------ --------- ----------- ------------
Movement
for the year
ended 30
June 2016
OPENING EQUITY
SHAREHOLDERS'
FUNDS 22,475 283,555 3,070 409,584 324,062 13,010 (55,692) 1,000,064
Return for
the year - - - 115,148 98,118 - (4,194) 209,072
Redeemable
shares bought
back for
cancellation (19) - 19 (9,012) - (13,010) - (22,022)
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 22,456 283,555 3,089 515,720 422,180 - (59,886) 1,187,114
---------------- --------- ---------- ----------- ---------- ------------ --------- ----------- ------------
* Reserves that are distributable by way of dividends. In
addition, the Special Reserve and Other Capital Reserve can be used
for share buybacks.
The Notes form part of these financial statements.
BALANCE SHEET (UNAUDITED)
AS AT 31 DECEMBER
2016
AS AT AS AT AS AT
31 DECEMBER 31 DECEMBER 30 JUNE
2016 2015 2016
GBP'000 GBP'000 GBP'000
---------------------------- ------------ ------------- -------------
Fixed assets
Investments at fair
value 1,153,815 903,758 1,071,876
---------------------------- ------------ ------------- -------------
Current assets
Debtors 1,267 2,724 3,654
Cash at bank 173,318 174,843 115,522
---------------------------- ------------ ------------- -------------
174,585 177,567 119,176
---------------------------- ------------ ------------- -------------
Creditors: amounts
falling due within
one year
Other creditors 4,489 1,287 3,938
4,489 1,287 3,938
---------------------------- ------------ ------------- -------------
NET CURRENT ASSETS 170,096 176,280 115,238
---------------------------- ------------ ------------- -------------
NET ASSETS 1,323,911 1,080,038 1,187,114
---------------------------- ------------ ------------- -------------
Capital and reserves
Called-up share capital
(Note 7) 22,456 22,474 22,456
Share premium 283,555 283,555 283,555
Capital redemption
reserve 3,089 3,071 3,089
Other capital reserve 597,287 469,427 515,720
Capital reserve on
investments held 479,498 345,709 422,180
Special reserve - 11,791 -
Revenue reserve (61,974) (55,989) (59,886)
---------------------------- ------------ ------------- -------------
TOTAL EQUITY SHAREHOLDERS'
FUNDS 1,323,911 1,080,038 1,187,114
---------------------------- ------------ ------------- -------------
NET ASSET VALUE PER
SHARE - ORDINARY
AND REDEEMABLE (NOTE
9) 2,089.52p 1,657.53p 1,873.62p
---------------------------- ------------ ------------- -------------
NUMBER OF ORDINARY
SHARES IN ISSUE 33,062,013 33,062,013 33,062,013
NUMBER OF REDEEMABLE
SHARES IN ISSUE 30,297,534 32,097,534 30,297,534
---------------------------- ------------ ------------- -------------
TOTAL SHARES IN ISSUE
(NOTE 7) 63,359,547 65,159,547 63,359,547
---------------------------- ------------ ------------- -------------
The Notes form part of these financial statements.
CASH FLOW STATEMENT (UNAUDITED)
FOR THE SIX MONTHS TO 31
DECEMBER 2016
SIX MONTHS SIX MONTHS YEAR TO
TO TO
31 DECEMBER 31 DECEMBER 30 JUNE
2016 2015 2016
GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ ----------
Cash flow from
operating activities
Investment income
received 8,283 7,467 11,664
Deposit and
other interest
received 117 45 159
Investment management
fees paid (6,620) (5,214) (11,011)
Secretarial
fees paid (108) (125) (232)
Depositary fees
paid (109) (93) (193)
Other cash payments (871) (855) (1,730)
Withholding
tax deducted (2,087) (1,295) (1,985)
--------------------------- ------------ ------------ ----------
NET CASH OUTFLOW
FROM OPERATING
ACTIVITIES (1,395) (70) (3,328)
--------------------------- ------------ ------------ ----------
Cash flows from
investing activities
Purchases of
investments (102,925) (115,364) (263,203)
Disposals of
investments 154,624 143,614 244,540
--------------------------- ------------ ------------ ----------
NET CASH INFLOW/(OUTFLOW)
FROM INVESTING
ACTIVITIES 51,699 28,250 (18,663)
--------------------------- ------------ ------------ ----------
Cash flows from
financing activities
Redeemable shares
purchased for
cancellation (26) (1,219) (22,022)
Loan commitment
and arrangement
fees paid (618) (491) (992)
NET CASH OUTFLOW
FROM FINANCING
ACTIVITIES (644) (1,710) (23,014)
--------------------------- ------------ ------------ ----------
INCREASE/(DECREASE)
IN CASH IN PERIOD 49,660 26,470 (45,005)
CASH AND CASH
EQUIVALENTS
AT BEGINNING
OF PERIOD 115,522 137,483 137,483
FOREIGN EXCHANGE
GAINS 8,136 10,890 23,044
CASH AND CASH
EQUIVALENTS
AT OF PERIOD 173,318 174,843 115,522
--------------------------- ------------ ------------ ----------
The Notes form part of these financial statements.
NOTES TO THE HALF-YEARLY FINANCIAL STATEMENTS (UNAUDITED)
1. Financial Information
The Company applies FRS 102 and the AIC's SORP (issued in
November 2014 and updated in January 2017 with consequential
amendments) for its financial year ending 30 June 2017 in its
Financial Statements. The financial statements for the six months
to 31 December 2016 have therefore been prepared in accordance with
FRS 104 'Interim Financial Reporting'. As stated in the Company's
Annual Report the Company has early adopted the amendments to FRS
102 paragraph 34.22. The financial statements have been prepared on
the same basis as the accounting policies set out in the statutory
accounts for the year ended 30 June 2016. They have also been
prepared on the assumption that approval as an investment trust
will continue to be granted.
The financial information contained in this Half-Yearly
Financial Report and the comparative figures for the financial year
ended 30 June 2016 are not the Company's statutory accounts for the
financial year, but are based on those accounts. The financial
information for the six months ended 31 December 2016 and 31
December 2015 are not for a financial year and have not been
audited but have been reviewed by the Company's auditors and their
report can be found below. The statutory accounts for the financial
year ended 30 June 2016 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.
2. Going Concern
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 above.
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.
3. Segmental Reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment business.
4. Tax on Ordinary Activities
The tax charge for the six months to 31 December 2016 is
GBP2,087,000 (six months to 31 December 2015: GBP1,295,000; year to
30 June 2016: GBP1,985,000). 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.
5. Transactions with the Manager and Related Parties
During the period, services with a total value of GBP6,995,000,
being GBP6,708,000 directly from Pantheon Ventures (UK) LLP and
GBP287,000 via Pantheon managed fund investments (31 December 2015:
GBP5,570,000; GBP5,264,000; and GBP306,000; year to 30 June 2016:
GBP11,824,000; GBP11,249,000 and GBP575,000 respectively). At 31
December 2016, the amount due to Pantheon Ventures (UK) LLP in
management fees and performance fees disclosed under creditors was
GBP1,168,000 and GBPnil respectively.
The existence of an Independent Board of Directors demonstrates
that the Company is free to pursue its own financial and operating
policies and therefore, under the AIC SORP, the manager is not
considered to be a related party.
The Company's related parties are its Directors. Fees paid to
the Company's Board for the six months to 31 December 2016 totalled
GBP119,000 (six months to 31 December 2015: GBP116,000; year to 30
June 2016: GBP231,000).
There are no other identifiable related parties at the period
end.
6. Performance Fee
The Manager is entitled to a performance fee from the Company in
respect of each 12 calendar month period ending on 30 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 31 December 2016, the notional performance fee hurdle
is a net asset value per share of 2,633.86p.
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.
7. Called Up Share Capital
During the six months to 31 December 2016 the Company purchased
no ordinary or redeemable shares in the market for cancellation,
(31 December 2015: 100,000 redeemable shares; year to 30 June 2016:
1,900,000 redeemable shares). As at 31 December 2016 there were
33,062,013 ordinary shares and 30,297,534 redeemable shares in
issue, (31 December 2015: 33,062,013 and 32,097,534 respectively,
year to 30 June 2016: 33,062,013 and 30,297,534 respectively).
8. Return per Ordinary and Redeemable
Share
SIX MONTHS TO SIX MONTHS TO YEAR TO
31 DECEMBER 2016 31 DECEMBER 2015 30 JUNE 2016
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
------------------- -------- -------- ----------- -------- -------- ----------- -------- -------- -----------
Return on ordinary
activities
for the period
GBP'000 (2,088) 138,911 136,823 (297) 81,490 81,193 (4,194) 213,266 209,072
Weighted average
ordinary and
redeemable
shares 63,359,547 65,223,677 64,823,481
Return per
ordinary and
redeemable
share (3.29)p 219.24p 215.95p (0.46)p 124.94p 124.48p (6.47)p 328.99p 322.52p
------------------- -------- -------- ----------- -------- -------- ----------- -------- -------- -----------
9. Net Asset Value per Share
31 DECEMBER 31 DECEMBER 30 JUNE
2016 2015 2016
------------------------- ------------ ------------ ------------
Net assets attributable
in GBP'000 1,323,911 1,080,038 1,187,114
Ordinary and
redeemable shares 63,359,547 65,159,547 63,359,547
Net asset value
per share -
ordinary and
redeemable 2,089.52p 1,657.53p 1,873.62p
10. Reconciliation Of Return On Ordinary Activities
Before Financing Costs and Tax to Net Cash Flow
from Operating Activities
SIX MONTHS SIX MONTHS
TO TO YEAR TO
31 DECEMBER 31 DECEMBER 30 JUNE
2016 2015 2016
GBP'000 GBP'000 GBP'000
---------------------- ------------ ------------ ----------
Return on ordinary
activities before
finance costs
and tax 139,823 83,090 212,318
Withholding
tax deducted (2,087) (1,295) (1,985)
Gains on investments (130,785) (71,063) (191,298)
Currency gains
on cash and
borrowings (8,276) (10,905) (22,864)
(Decrease)/increase
in creditors (108) 26 466
Decrease in
other debtors 38 77 35
---------------------- ------------ ------------ ----------
NET CASH OUTFLOW
FROM OPERATING
ACTIVITIES (1,395) (70) (3,328)
---------------------- ------------ ------------ ----------
11. Fair Value Hierarchy
i) Unquoted fixed asset investments are stated at the estimated
fair value.
In the case of investments in private equity funds, this is
based on the net asset value of those funds ascertained from
periodic valuations provided by the managers of the funds and
recorded up to the measurement date. Such valuations are
necessarily dependent upon the reasonableness of the valuations by
the fund managers of the underlying investments. In the absence of
contrary information the values are assumed to be reliable. These
valuations are reviewed periodically for reasonableness and
recorded up to the measurement date. If a class of assets were sold
post year 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 purchased at a premium are normally
revalued to their stated net asset values at the next reporting
date. Those fund holdings purchased at a discount are normally held
at cost until the receipt of a valuation from the fund manager in
respect of a date after acquisition, when they are revalued to
their stated net asset values, unless an adjustment against a
specific investment is considered appropriate.
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. This information
may include the valuations provided by private equity managers who
are also invested in the company. Valuations are reduced where the
company's performance is not considered satisfactory.
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 year end. If there has been a material movement in
the value of these holdings, the valuation is adjusted to reflect
this.
(ii) Quoted investments are valued at the bid price on the
relevant stock exchange.
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 - The unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date;
-- Level 2 - Inputs other than quoted prices included within
level 1 that are observable (i.e. developed using market data) for
the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
-- Level 3 - Inputs are unobservable (i.e. for which market data
is unavailable) for the asset or liability.
In accordance with FRS 104, the Company must disclose the fair
value hierarchy of financial instruments.
Financial Assets at Fair Value through Profit or Loss at 31
December 2016
LEVEL LEVEL LEVEL TOTAL
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ---------- ----------
Unlisted holdings - - 1,152,368 1,152,368
Listed holdings 1,447 - - 1,447
------------------- -------- -------- ---------- ----------
TOTAL 1,447 - 1,152,368 1,153,815
------------------- -------- -------- ---------- ----------
Financial Assets at Fair Value through Profit or Loss at 31
December 2015
LEVEL LEVEL LEVEL TOTAL
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- -------- --------
Unlisted holdings - - 903,234 903,234
Listed holdings 524 - - 524
------------------- -------- -------- -------- --------
TOTAL 524 - 903,234 903,758
------------------- -------- -------- -------- --------
Financial Assets at Fair Value through Profit or Loss at 30 June
2016
LEVEL LEVEL LEVEL TOTAL
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ---------- ----------
Unlisted holdings - - 1,070,507 1,070,507
Listed holdings 1,369 - - 1,369
------------------- -------- -------- ---------- ----------
TOTAL 1,369 - 1,070,507 1,071,876
------------------- -------- -------- ---------- ----------
Independent Review Report to Pantheon International Plc
Introduction
We have been engaged by the Company to review the financial
information in the Half-Yearly financial report for the six months
ended 31 December 2016, which comprises the Income Statement,
Statement of Changes in Equity, 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 the Half Year at a Glance, Performance Summary,
Historical Data, Chairman's Statement, Objective and Investment
Policy, Manager's Review and Interim Management Report and
Responsibility Statement of the Directors and considered whether it
contains any apparent misstatements or material inconsistencies
with the financial information.
This report is made solely to the Company in accordance with
guidance contained in Independent 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. Our review work has been undertaken so
that we might state to the Company those matters we are required to
state to it in an independent 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.
Directors' responsibilities
The Half-Yearly financial report is the responsibility of, and
has been approved by the Directors. The Directors are responsible
for preparing the Half-Yearly Financial Report in accordance with
the Disclosure 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 FRS 102 and the Association
of Investment Companies' Statement of Recommended Practice (issued
in November 2014 and updated in January 2017 with consequential
amendments). The financial information in the Half-Yearly financial
report has been prepared in accordance with Financial Reporting
Standard 104.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the financial information in the Half-Yearly financial report based
on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and 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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the financial information in the
Half-Yearly financial report for the six months ended 31 December
2016 is not prepared, in all material respects, in accordance with
the basis of accounting described in Note 1.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
13 March 2017
NATIONAL STORAGE MECHANISM
A copy of the Half-Yearly Financial Report will be submitted
shortly to the National Storage Mechanism ("NSM") and will be
available for inspection at the NSM, which is situated at:
http://www.morningstar.co.uk/uk/nsm
Ends
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFEFMDFWSELD
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