# Pantheon International: 1H strong performance, actively managed portfolio

- Link: https://www.directorstalkinterviews.com/pantheon-international-1h-strong-performance-actively-managed-portfolio/4121055774
- Published: 2022-03-07T07:26:20+00:00
- Author: Amilia Stone

We believe a key message from these strong results is that **Pantheon International
plc** (LON:PIN) platform (and so PIN’s investments) gives it the opportunity to 
capture the best PE opportunities wherever they arise. With ca.45% of the portfolio
now made directly into companies, and an increasingly selective choice of manager,
PIN offers investors a focused, but global, exposure to what has been a very strong
PE market The NAV per share grew 22% in six months. Portfolio valuation gains of
19.7% were achieved, with 16%+ gains seen across all regions and investment strategies.
The weighted average uplift from fully realised exits was 43%, and the average cost
multiple was 3.3x.

 * **Cash generation:** PIN was again strongly cash-generative. Distributions received
   during the half year were £198m, equivalent to a distribution rate of 24% of 
   the opening attributable portfolio. After funding £77m of calls, the net cash
   inflow from the portfolio was £121m. End-cash balances were £220m.
 * **Commitments:** Pantheon International steadily increased its commitments coming
   out of the pandemic; at the end of November 2021, they stood at £658m (end-Jan’
   22 £645m), with cash of £220m and undrawn credit lines of £300m (with capacity
   to increase this by £50m). PIN remains much less over-committed than is the case
   for its peers.
 * **Valuation:** PIN shares trade at a 29% discount to NAV, despite their long-
   term outperformance. We believe the “real” NAV is likely to be above the book
   value on the accounting date, given the consistent uplift to carrying value achieved
   on exits. The weighted average uplift achieved on exit in 1HFY’22 was 43%.
 * **Risks:** We note i) sentiment to the economic cycle (NAV rose every year in
   the 1990s’ recession, and in FY’20), ii) adverse sentiment to illiquid and unquoted
   investments (PIN has permanent capital and proven exit uplifts), and iii) sentiment
   to the sustained discount may be an issue. Short term, there could be forex volatility.
 * **Investment summary:** Pantheon International is in an attractive market, can
   pick the best part of that market and has competitive operational advantages.
   Its manager and deal selection, and portfolio structuring, add value. To the 
   end of January 2022, this had delivered 12.2% annual NAV growth since inception
   in 1987. Corporate governance is strong, and the NAV is conservatively valued.
   Investors get liquid access to the global PE market. There are risks around the
   cycle, and illiquid and unquoted underlying assets. The discount appears anomalous
   with risk-adjusted returns.

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