Pantheon International Regulatory News (PIN)

For immediate release

The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, Canada, Australia (other than to persons who are both wholesale clients and professional or sophisticated investors in Australia), Japan, the Republic of South Africa or any other jurisdiction where its release, publication or distribution is or may be unlawful.

PANTHEON INTERNATIONAL PLC

ANNUAL REPORT FOR THE TWELVE MONTHS ENDED 31 MAY 2023

The full Annual Report and Accounts can be accessed via the Company's website at www.piplc.com or by contacting the Company Secretary by telephone on +44 (0)333 300 1950.

Pantheon International Plc

(the "Company" or "PIP")

Pantheon International Plc, a FTSE 250 investment trust that provides access to an actively-managed global and diversified portfolio of private equity-backed companies, today publishes its Annual Report and Accounts for the twelve months ended 31 May 2023.

Revision of PIP's capital allocation policy

· PIP is committing up to £200m to invest in its own portfolio by acquiring its own shares during the financial year to 31 May 2024.

· The Board intends to extend PIP's capital allocation policy in the future to dedicate a proportion of the Company's net positive cash flow to share buybacks.

· Further details of the policy, which will be applied according to the levels of prevailing discount to NAV, will be announced in due course.

Performance update

· NAV per share held up well in the current macroeconomic environment, growing 2.4% during the year.

· Net assets at 31 May 2023 increased to £2,450m (31 May 2022: £2,427m).

· PIP's share price decreased by 8.0% and Total Shareholder Return (5Y) was +35.0%.

· Disappointingly, in line with the wider listed private equity sector, the share price discount to NAV has widened and was 41% at the end of the period.

Annualised performance as at 31 MAY 2023

1 Inception in September 1987.

NAV per share vs. market performance

Share price vs. market performance

Portfolio update

· Buyouts, which accounted for 71% of the portfolio at the financial year end, performed positively during the period.

· Weighted average uplift from fully realised exits was 27% and the average cost multiple on exit realisations was 3.0 times, demonstrating the embedded value in PIP's portfolio. Since 2012, the weighted average uplift has been 31% and the average cost multiple on exit realisations has been 3.0 times.

· Slowdown in distributions in current macroeconomic environment with £223m received during the financial year, equivalent to a distribution rate of 10% of the opening attributable portfolio, resulting from realisations primarily to strategic buyers and to other private equity managers. After funding £155m of calls, this resulted in net cash inflow from the portfolio of £68m.

· PIP actively manages the profile of its portfolio with the objective of receiving cash from the more mature assets as they are realised, while at the same time refreshing the portfolio with younger assets. The average age of PIP's assets at the financial year end was 4.8 years (31 May 2022: 4.9 years).

· As a result of PIP increasing its allocations to co-investments and single-asset secondaries, approximately 52% of PIP's portfolio was invested directly in companies at the end of the period.

· During the period, £441m was committed to 25 new investments, of which £180m was funded at the time of purchase. During the year, the Company invested c.£20m in buying back 7,600,183 shares.

Financial position update

· PIP had access to net available cash of £63m net available cash as at 31 May 2023 in addition to its undrawn multi-currency revolving £500m credit facility that is due to expire in July 2027.

· PIP's undrawn commitments were £857m at the period end, of which £48m relates to funds that are more than 13 years old and therefore outside their investment periods.

· PIP's undrawn coverage ratio, which is a key indicator of the Company's ability to meet its outstanding commitments even in the event of a market downturn, was 98% as at 31 May 2023.

Company update

· Zoe Clements and Rahul Welde were appointed to the Board of PIP, providing additional expertise in finance, marketing and audit.

Commenting on the full year, John Singer CBE, Chair of PIP, said: "By committing up to £200m to buy back PIP's shares, on behalf of shareholders we will capture the exceptional value offered by the Company's high quality portfolio. Investors in PIP will also benefit from our intention to dedicate a proportion of future net cash flow to share buybacks while still making new investments with many of the best PE managers in the world. We hope that shareholders will welcome and support the exciting initiatives which the Board is now taking to seize the investment opportunity before us."

Commenting on PIP, Helen Steers, Partner at Pantheon and co-lead manager of PIP, said: "The quality of the underlying companies, and the managers that PIP has selected, the experience in navigating challenging economic periods and the ability to effect change will all stand PIP in good stead to traverse the current macroeconomic environment."

Commenting on PIP, Jie Gong, Partner at Pantheon and co-lead manager of PIP, said: "PIP has been constructed to provide investors with an "all-weather" portfolio, which is reflected in the choice of sectors with a weighting towards defensive and resilient areas, in the buyout-heavy composition of the portfolio, in the sensible level of portfolio diversification and the ability to flex investment pacing through the majority tilt towards direct company investments."

A video of John Singer CBE discussing the share repurchase and a video of the team at Pantheon discussing PIP's full year results are available on our website at www.piplc.com along with a series of case studies showcasing some of our portfolio companies.

Capital Markets Event

PIP will host a Capital Markets Afternoon on 13 September 2023 during which there will be presentations from Pantheon and some of PIP's underlying private equity managers. Institutional investors and analysts wishing to attend should contact the Pantheon team at pip.ir@pantheon.com for further details.

LEI: 2138001B3CE5S5PEE928

For more information please contact:

PantheonHelen Steers / Vicki Bradley +44 (0)20 3356 1800 pip.ir@pantheon.com

Jie Gong +852 3718 9605

Investec Bank plc +44 (0)20 7597 4000 Joint Corporate Broker Tom Skinner (Corporate Broking) Lucy Lewis (Corporate Finance)J.P. Morgan Cazenove +44 (0)203 493 8000Joint Corporate BrokerWilliam Simmonds (Corporate Finance) Montfort Communications Gay Collins / Pippa Bailey / Nita Shah +44 (0)7738 912267 PIP@montfort.london

Follow PIP on LinkedIn: https://www.linkedin.com/company/pantheon-international-plc

ANNUAL GENERAL MEETING

The Company's Annual General Meeting ("AGM") will be held at IET London, Savoy Place, London, WC2R OBL at 10.30 a.m. on Thursday, 19 October 2023. A separate circular containing the AGM notice will be published and made available on the Company's website and the National Storage Mechanism.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Financial Statements and the separate circular containing the AGM notice will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

This announcement contains inside information.

John Singer CBE

Chair, Pantheon International Plc

Broadwalk House, Southernhay West, Exeter, Devon EX1 1T

Important Information

A copy of this announcement will be available on the Company's website at www.piplc.com Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website for any other website, is incorporated into, or forms part of, this announcement nor, unless previously published by means of a recognised information service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

STRATEGIC REPORT

AT A GLANCE

Making the private, public

A share in Pantheon International Plc provides access to a high-quality diversified portfolio of private companies around the world that would otherwise be inaccessible to most investors. Shares in PIP can be bought and sold as they would in any other publicly listed company.

Pantheon International Plc ("PIP" or the "Company") is a FTSE 250 private equity investment trust, actively managed by Pantheon, one of the leading private markets investment managers globally.

PIP is overseen by an independent Board of Directors who come from a range of backgrounds.

1 Including financing costs, PIP's total ongoing charges would be 1.50%. See the Alternative Performance Measures section in the Full Annual Report for calculations and disclosures.

CHAIR'S STATEMENT

Seizing the opportunity

When invited to take over the PIP Chair, I was delighted to accept. I share PIP's values of openness and transparency, a team-based and not egotistical spirit, and a genuine deep-seated drive to add value and provide shareholders with excellent returns.

I strongly support the move away from a pure fund-of-funds to a portfolio with a majority of direct company investments, which will build successful returns for investors. Crucially, though, I believe that the listed private equity (LPE) sector has not kept up with the changing needs of its stakeholders and that there is a real opportunity now to do more to put shareholders' interests first.

My first tasks were to set up a review group of Board Directors and Pantheon executives to think afresh about PIP's capital allocation, and at the same time to engage with the Company's shareholders, to understand why they own LPE, and PIP in particular, and how the Company can best address their needs. One recurrent theme, both for the Board and investors, has been the persistent discount to net asset value (NAV) at which the Company's shares trade. 

Whilst this is typical of the whole LPE sector, it presents a challenge, implying that the market does not believe the integrity of our NAVs, despite our long history of delivering significant uplifts to NAV when we realise our investments. The current discount, however, also represents an exciting opportunity that we intend to seize on behalf of shareholders. 

Working with Pantheon, we are revising our capital allocation policy, which in the past has not taken sufficient account of the returns to be generated by reinvesting in PIP's portfolio when the discount is high. By using buybacks, we are effectively committing capital to a portfolio that we know well and in whose asset value we have faith. At high discount levels, most obviously the current 40% for example, the resulting improvement to NAV per share is significant and immediate. In addition, in order to take advantage of the opportunities, especially those created by the current market dislocation, and for broader portfolio composition considerations, we will continue to make other investments alongside buybacks.

The Board has therefore decided upon three key initiatives:

Firstly, given the material discount at which the Company's shares are currently trading (42% at the time of writing), PIP intends to commit up to £200m during the current financial year to invest in its portfolio by acquiring its own shares in order to capture this value for shareholders.

Secondly, the Board intends to implement an extension to its capital allocation policy with effect from the next financial year. This policy will dedicate a proportion of the Company's net portfolio cash flow to share buybacks. The exact proportion will be determined by reference to the prevailing discount to NAV at which the Company's shares trade and will be reviewed periodically.

In this way, the wider the discount at which the Company's shares trade at any time, the more attractive the reinvestment opportunity will be and thus the greater the proportion of net realised cash flow channelled to share buybacks whilst also reinvesting to participate in the best private equity opportunities. Further

details of the policy will be announced in due course.

In determining the level of £200m to be committed to repurchasing PIP shares, which represents approximately 15% of PIP's current market capitalisation, your Board has been very mindful, as you would expect, of the impact on our balance sheet, and in particular the likely headroom on our credit facilities at a time when portfolio distributions are at relatively low levels. We believe this to be a significant but nevertheless prudent amount for two reasons.

Firstly, at the end of June, PIP had £60m of net available cash and £500m of unused credit facilities. Secondly, since a majority of PIP's new investments are now made on a discretionary basis to individual co-investments and secondaries, it is possible to manage our cash position at relatively short notice by dialling those down if the outlook worsens, which would not be the case if the whole portfolio were committed to primary funds whose drawdowns are not within PIP's control.

The third initiative is to redouble our marketing efforts to broaden the investor base for PIP in order to increase demand for PIP's shares. In seeking to do so we are mindful of the fact that when investment trusts were created in the late 1880s, their objective was to democratise investing through allowing smaller investors to diminish risk by spreading their investment over a number of stocks. We view this as being an important part of PIP's raison d'être today.

The best PE funds are "invitation-only", and attractive co-investment and secondary opportunities are obtained through close relationships with top quality PE managers. Also, PE managers invariably require a high minimum level of investment in their funds. So it is not possible for many investors to access these types of investments directly, nor to build up an appropriate degree of diversification to spread the risk. PIP offers immediate access to a global, well diversified, high-quality portfolio of private companies for all types of investors, and is therefore an ideal vehicle through which both institutions and individual investors can achieve an appropriate allocation to private equity. Furthermore, since access is enabled through the purchase of shares traded on the stock market, liquidity is provided in an otherwise illiquid asset class.

PIP is overseen by a talented and committed Board of which I have been a member since 2016 and have chaired since October 2022. The Board does not include anyone from our manager, Pantheon, and acts in a fully independent capacity, taking its responsibilities to shareholders as the prime reason for its existence, while at the same time working in a highly collegiate and goals-focused manner with Pantheon. Four of the seven Directors have deep experience of PE, and other expertise on the Board includes marketing, PR, audit, investment trusts and government relations.

I indicated in my last letter to shareholders that the Board had started a search for two new Non-Executive Directors (NED) and I am delighted to report that we have concluded that process. Zoe Clements was appointed as NED on 5 July 2023 and Rahul Welde on 25 July 2023. Zoe trained as an accountant, has a background in a variety of finance, private equity and investment roles and experience of serving on boards across a range of industries. Rahul is a marketing and digital professional who spent over 30 years in senior, international roles at Unilever and is on the board of a FTSE 100 company. The appointment of Zoe and Rahul to the Board is an enhancement to the complementary mix of expertise and experience of PIP's Directors, and strengthens our finance, marketing and audit skills as well as providing additional operational and strategic knowhow. I know that they will both make an important contribution to PIP.

The governance of PIP is the Board's key responsibility but of course its success also depends on the people managing PIP's portfolio. At the end of June 2023, Jie Gong, who has been an investment partner at Pantheon for nearly ten years, became a co-lead manager of the Company to work alongside Helen Steers. This represents a broadening of the senior resources dedicated to PIP as Jie brings her transactional background, co-investment expertise, credit market knowledge, ESG understanding and a global perspective through experience in North America, UK & Europe, and Asia Pacific.

PIP benefits greatly from an experienced team looking after it on a day-to-day basis as well as from Pantheon's global platform, which includes 134 investment professionals around the world. The Pantheon team has decades of experience of investing highly selectively in PE funds and direct investments and has steered PIP successfully through multiple economic cycles. In my view, the collaborative culture of Pantheon, based on teamwork, is vital to harnessing the potential of PIP.

Both the Board's and the Manager's interests are closely aligned with PIP's shareholders, as the Board Directors collectively own 3.3m shares in the Company, valued at the time of writing at £8.7m, while 20 Partners of Pantheon collectively held a further 2.7m shares as at 1 July 2023, which were valued at £7.1m at the time of writing.

The expansion of senior resources dedicated to PIP also applies to the advisors and suppliers with whom we work closely. As PIP's NAV and its profile have increased, our stable of partner relationships has evolved over time to underpin this growth. J.P. Morgan Cazenove has been appointed as Joint Corporate Broker to work alongside Investec Bank plc whose team has already been supporting PIP for many years.

Outlook

We are in a challenging period for the world economy and equity markets, with geopolitical shifts and uncertainties, weakened global leadership, the war between Russia and Ukraine, inflation and the rise in interest rates. As a result, market sentiment is nervous and tending towards risk-off rather than the reverse.

Past experience of the PE industry has shown that challenging economic times tend to coincide with the years when the capital invested goes on to show the strongest performance. A general climate of caution means that competition for investments tends to be lower for those, like ourselves, with stronger portfolios and the capacity to invest. Investment multiples typically reset to lower entry levels, future projections of performance are less bullish, debt multiples are lowerand return expectations either rise or remain the same. In this environment, there is more upside than downside in projected investment returns, which is the opposite of what prevails when economic and market conditions are strong. These conditions are also favourable for our top-tier managers, who have superior track records, typically fewer problem investments and are able to raise funds when the climate for doing so is challenging and are then able to deploy those funds at attractive entry valuations. Historically, private equity has shown that it is able to produce market-beating returns and this is reflected in PIP's own NAV which has continued to significantly outperform the MSCI World and FTSE All-Share indices over the long term. The Company's NAV held up well during the financial year, growing modestly by 2.4%.

Your Board and I appreciate the shareholder support that we have received during the last year and the time that many of you have taken to meet us and express your views. We believe that PIP is well positioned at this point in the economic cycle and has all the necessary components to offer an attractive investment proposition to existing and new investors alike. We hope that shareholders will welcome and support the initiatives which the Board is now taking to seize the investment opportunity before us.

PIP's Strategic Report, sections of which are set out below has been approved by the Board and should be read in its entirety by shareholders.

JOHN SINGER CBE

Chair

2 August 2023

Issues Raised at Meetings with Shareholders:

I will now move on to address some specific issues that have come up in our conversations in more detail.

Why do we have confidence in the value of PIP's portfolio in today's markets?

As I mentioned, the discounts indicate that the market does not believe in the stated net asset values of listed PE vehicles, particularly when market sentiment is generally unfavourable. Since PE valuations are based on the latest figures provided by our managers, which can be a month or two in arrears, one of the stated reasons is that, when markets decline, the valuations are overstated and will come down over time. Another reflects a concern that PE managers are too optimistic and do not bring their valuations down in line with the prevailing outlook. In a risk-off environment there is also a tendency for the higher perceived risk of PE, owing perhaps to leverage and the greater fragility of small companies, to lead to a greater sell-off than in other asset categories. In addition, PE vehicles recently have all been affected indiscriminately by the sharp decline in quoted technology valuations that took place during 2022.

We understand these concerns but believe that they are not justified in our case by the facts and past experience. Firstly, the evidence shows that when our PE managers sell an investment, the average uplift over their latest prior valuation is substantial. Last year, this uplift was 27%, indicating that our valuations relative to market are conservative rather than overstated. Since 2012 our average uplift has been 31%. Secondly, good managers have no incentive to overvalue their investments, partly since their remuneration is not linked to those valuations, but also because they would rather surprise their investors on the upside than the downside. Thirdly, we believe that the risk of PIP's highly diversified portfolio, supported by highly experienced managers, is no greater than that of a diversified portfolio of public equities. Fourthly, through its close relationship with most of its managers built up over the years, supported by its presence on 585 advisory boards worldwide, Pantheon regularly probes the underlying valuation methodologies that they use. Finally, in the case of PIP, our exposure to venture capital investments of the kind that experienced a sharp pullback last year is only about 3% of the portfolio. Further details of the valuation methodologies used are set out below in this report.

Your Board therefore believes that now, as before, PIP's net asset value tends to be conservative rather than the reverse, even when the prevailing outlook has turned negative.

Why does your Board feel that the risk of PIP's diversified portfolio is no greater than that of an average portfolio of listed equities?

The PE model has a number of advantages over that of a publicly listed company. The PE fund managers with whom Pantheon works are led by experienced investment executives who are sector specialists and know the markets and the environment in which their companies operate extremely well. They are then complemented by a team of operating executives, all of whom have had proven experience of improving the performance of companies. Members of this operating team work with the management of their portfolio companies to improve operations in the areas where they are deemed to be weak. In the majority of their investments, particularly in buyouts which comprise over 70% of PIP's portfolio, the PE fund as shareholder owns a majority share of its portfolio companies and is therefore able to exert a considerable degree of influence, including the ability to change the CEO or other senior managers. PE fund executives know their portfolio companies well and, through close collaboration with their management teams, decisions can be taken quickly and problems addressed at short notice. Portfolio companies also have immediate access to capital, should this be required to take advantage of acquisition opportunities or support the business through times of unexpected difficulty.

Compared to publicly listed companies therefore, these factors mean that PE-backed companies typically have quicker decision-making capabilities, more resources to make acquisitions or access other cash needs at short notice, shareholders who understand their businesses and markets in detail, immediate access to resources to effect operating improvements, managers who are highly incentivised to grow their businesses, and the ability to be much more nimble.

Another important factor is the composition of PIP's portfolio and the likely resilience of its underlying companies in the face of a downturn. As mentioned, over 70% of PIP's portfolio is in buyout investments of well-established companies, many of which are mid-market businesses with attractive growth and margin profiles. Of the remainder, the vast majority is in smaller growth companies, mostly with strong market positions and defensive characteristics in attractive industry sectors. Only a small proportion are in loss-making businesses or in early-stage tech businesses, which can be highly volatile in both performance and valuation. Furthermore, PIP's portfolio businesses have been selected for investment by experienced sector-based investors in attractive market areas with long-term thematic growth drivers. The degree of leverage in most of PIP's portfolio companies is relatively modest and lower than that typically prevalent at the top end of the market, which is the source of much of the negative market commentary about leverage.

As shown below in this report, the average revenue and EBITDA growth of a large sample of PIP's buyout portfolio companies is significantly higher than that of a portfolio of listed companies. Since growth over time is the principal driver of investment value and a source of value resilience in difficult times, this also suggests that PIP's portfolio valuation is likely to be more resilient than a comparable public portfolio.

How is the rising interest rate environment affecting our portfolio companies and our management of PIP's balance sheet?

Since interest rates have risen sharply over the last year, shareholders are naturally concerned about the impact that this is having on PIP's portfolio companies as well as on the management of PIP's balance sheet.

We consider the impact on portfolio companies to be at two levels: firstly, the impact of rising interest rates on the cost of their debt, and secondly the fact that as interest rates rise, earnings multiples and therefore the valuations of businesses tend to decline.

The managers that PIP backs and the single-asset secondaries and co-investments in which PIP invests directly are focused primarily on growing businesses that are cash-generative and where the value creation comes from growth, operating improvements and acquisitions rather than leverage. The average debt multiple for our small-to-mid buyout investments, which constitute almost half the portfolio, was 4.2x compared to the industry average of 5.9x, while the growth and venture investments have very little or no leverage.

Furthermore, where companies do have leverage, a significant proportion of their debt is either at fixed rates or protected by interest rate swaps. So far we have seen little stress from the rise in interest rates in either our direct holdings or our fund investments, based on feedback from our managers.

In terms of valuations, while the multiples used by our managers have contracted when appropriate in line with market comparables, the underlying growth in much of the portfolio has compensated for that, which is why PIP's NAV has remained relatively static in spite of the decline in multiples since the beginning of 2022. This is why we are confident in the valuations provided to us by our managers and the NAV of PIP.

Turning to PIP's balance sheet, we monitor the outlook carefully, run stress test sets of projections and take a prudent view at all times. This has become particularly important recently, as we have seen the distribution rates decline to levels similar to those experienced in 2008 and 2009.

Over the last financial year the annualised distribution rate from the portfolio declined to 10% of NAV, resulting in distributions of £222.5m, while calls, which were also below average at 21% of commitments, led to a cash outflow of £154.8m. In these less favourable conditions, the portfolio nevertheless generated a net cash inflow of £67.6m, leaving £63m of available cash on the balance sheet at the year end. The cash position and our £500m of unused credit facilities has led us to feel comfortable about our decision to commit up to £200m to invest in our own portfolio by buying back PIP shares (subject to discount levels), even if the environment worsens to that which combines continuing low distribution levels with a step-up in calls.

How does the consideration of environmental, social and governance (ESG) factors go hand in hand with generating good financial returns?

How companies conduct their business and the impact that they have on the environment and the communities in which they operate is in the spotlight like never before, with investors now looking beyond simply making a financial return from the companies that they back.

Pantheon has incorporated ESG assessments into its investment process for many years and continues to develop its monitoring and due diligence capabilities in this area, not only in its direct secondary and co-investments but also through its managers. PE managers themselves are also increasingly aware of the importance investors attach to ESG, and the standard of assessment continues to rise. Pantheon has developed a scorecard approach to its assessments which it shares with its managers and uses as a tool for improvement.

Through these assessments, Pantheon has been able to see if and when implementing good ESG practices works against achieving good financial returns and is encouraged by the fact that this is rarely the case. Furthermore, a number of portfolio investments have been made based on the growth opportunities afforded by sustainability and impact. PIP's move to a majority of single-asset investments has made our measurement of ESG KPIs much easier, as we are now even closer to the companies in our portfolio.

Overall the Board is encouraged by the enhancements that Pantheon has made to its ESG approach and intends to strengthen the reporting it receives by nominating one of the Directors to spearhead our oversight in this area, which our Senior Independent Director has been doing on an interim basis.

John Singer CBE

Chairman

2 August 2023

KEY PERFORMANCE INDICATORS

1 Peer group comprised: APEO, CTPE, HVPE, ICGT.

2 Excludes valuation gains and/or cash flows associated with the ALN.

3 Excludes the portion of the reference portfolio attributable to the ALN.

4 Outstanding commitments relating to funds outside their investment period (>13 years old) were excluded from the calculation as there is a low likelihood of these being drawn.

OUR STRATEGY

Our investment strategy is to build a resilient portfolio that can deliver long-term outperformance.

The Board regularly reviews PIP's overall investment strategy and it has formed part of Board discussions throughout the year.

Through the ongoing dialogue between the Board and the Manager, Pantheon, the Manager reports to the Board on progress and highlights any obstacles or changes in market conditions which may affect the Company's ability to achieve its strategic goals. In cases where this may occur, the Manager will propose solutions for which it will seek the support of the Board. Equally, the Board maintains the flexibility to propose amendments to the strategy as it deems necessary.

In addition, the Board reviews individual investments that exceed exposure limits, which are set at appropriate levels to reflect a diversified approach. At times, the Manager may make recommendations to the Board and seek approval for certain investments that fall outside of any limits expressed in the agreed strategic approach, but which Pantheon believes to be a good investment opportunity for PIP. The Board maintains its independence at all times and robustly challenges such recommendations to ensure that they are in the best interests of shareholders. The Manager also reports to the Board on PIP's marketing and investor relations activities, considering new initiatives that could help to increase PIP's profile, and to reach potential new shareholders in the Company.

Culture and Purpose

It is a requirement for all companies to set out their culture and purpose. The Company's defined purpose is relatively simple: it is to deliver our investment strategy led by a Board that promotes strong governance and a long-term investment approach that actively considers the interests of all stakeholders.

The Directors agree that establishing and maintaining a healthy corporate culture within the Board and in its interaction with the Manager, shareholders and other stakeholders will support the delivery of its purpose, values and strategy. The Board seeks to promote a culture of openness and integrity through ongoing dialogue and engagement with its service providers, principally the Manager.

Investment type: Focus on maturity profile and potential to boost performance

Primaries, manager-led secondaries and co-investments all have attractive characteristics, as highlighted in the Business Model above. PIP's transparent and direct investment approach gives it the flexibility to take advantage of prevailing market conditions and to maximise control over the Company's financing risk, including its ability to generate positive cash flows.

As the weighting towards co-investments has been increased over time, the three different investment types have intentionally taken on more equal weightings. These weightings do not represent hard caps; however, the Board and the Manager believe that this is the optimal mix to benefit from the cash generated by the more mature assets in PIP's portfolio while rejuvenating the portfolio with the younger vintages offered by primaries and co-investments. In addition, we have been steering PIP's secondary investment strategy towards manager-led secondaries which form a fast-growing part of the secondary market and are attractive for several reasons as highlighted below. These investments also provide younger vintages to the portfolio.

With an increased weighting towards co-investments and manager-led secondaries, we expect the number of underlying managers and portfolio companies to which the Company is exposed to continue to reduce over time. As a result, the potential for the Company's overall NAV to be driven by the performance of individual assets should be increased while maintaining the benefits of a portfolio that is well diversified by type, stage, geography and sector.

The Board believes that there are several benefits to this investment approach: risk is effectively managed through diversification while the improved transparency of PIP's underlying portfolio and increased investment flexibility, should create a clearer link between the strongest performing companies in the portfolio and the potential to boost NAV growth in the future. Also, Pantheon can remain highly selective and disciplined when assessing deal flow, while at the same time reducing the risk of PIP being excluded from exciting opportunities due to investment constraints.

1 Fund investment type is based upon underlying fund valuations and account for 100% of PIP's overall portfolio value. The charts exclude the portion of the reference portfolio attributable to the Asset Linked Note.

Investment stage: Focus on mid-market and growth

PIP's portfolio is diversified by stage. While the Company's strategy is to maintain a healthy mix of all stages, Pantheon and PIP favour the buyout segments, with a particular focus on the small and mid-market. The small/ mid-market offers distinct characteristics, when compared with large deals, such as:

- More attractively priced assets which tend to have lower levels of leverage than the broader market average;

- Greater visibility of the value drivers and the levers to pull to improve operational efficiency to better drive growth, both organically and through buy-and-build strategies; and

- More routes to exit including strategic acquisitions, sales to other private equity managers or initial public offerings ("IPOs"). In PIP's case, it should be noted that the majority of exits have consistently been to strategic buyers and other private equity managers, with IPOs accounting for just 3% of exits during the year to 31 May 2023.

Venture accounts for a very small proportion of PIP's portfolio and any investment activity by PIP in early stage venture funds is focused on investing with top-tier venture managers, mainly through primary fund investments, who are able to identify innovative opportunities with the potential to generate significant outperformance.

While special situations include assets with unique characteristics which can offer potential for outperformance, it is the Board's intention that special situations

investments will only be a small minority of the overall portfolio.

Stage1

1 Stage chart is based upon underlying fund valuations and accounts for 100% of PIP's overall portfolio value. The chart excludes the portion of the reference portfolio attributable to the Asset Linked Note.

2 Special situations investments can include distressed debt, mezzanine, energy/utilities and turnarounds.

Sector and geographic exposure: Global with a focus on high-growth and niche areas

The Board is committed to offering investors a global portfolio with investments in North America, Europe, Asia and Emerging Markets. It takes an active approach towards the weightings of those geographies in response to market conditions but supports the majority of the Company's capital being invested in the USA and Europe where the private equity markets are well established.

The Board relies on Pantheon's investment teams located around the world that can take advantage of proprietary information flows and access to opportunities through their extensive networks of relationships.

It is Pantheon's objective to identify managers globally that are able to take a thematic approach and focus on high-growth sectors, many of which may not be fully represented by the public markets. In addition, Pantheon has a deliberate strategy of targeting sectors experiencing dislocation, as well as niches where underlying growth is less correlated to GDP growth. Recent examples of this have been within the Information Technology and Healthcare sectors. For more information on the sectors in which PIP is invested, see below.

The Board believes that its oversight of the Manager's activities, while at the same time allowing Pantheon the flexibility that it needs to make the appropriate investment decisions on the Company's behalf, ensures that PIP is able to deliver on its strategic objectives for shareholders over the long term.

Company sectors1

Region2

1 The company sector table is based upon underlying company valuations as at 31 March 2023, adjusted for calls and distributions to 31 May 2023. These account for 100% of PIP's overall portfolio value.

2 Region is based upon underlying fund valuations and accounts for 100% of PIP's overall portfolio value. The chart excludes the portion of the reference portfolio attributable to the Asset Linked Note.

3 EM is Emerging Markets.

OUR BUSINESS MODEL

We aim to deliver consistent returns over the long term.

Our investment process

1. Investment opportunities in companies and complementary funds are originated via Pantheon's extensive and well-established platform.

2. We invest in many of the best private equity managers who are able to identify and create value in their portfolio companies.

3. Cash generated from the sale of those companies is returned to PIP and redeployed into new investment opportunities.

What we do

PIP invests directly in private companies worldwide through co-investments alongside selected private equity managers and through manager-led opportunities , as well as in complementary private equity funds.

- An investment in PIP offers shareholders exposure to a growing private market of over US$5.2tn1 globally where the best private equity managers might otherwise be inaccessible to shareholders.

We aim to deliver attractive and consistent returns to shareholders over the long term, and at relatively low risk. The Board remains committed to its policy of maximising capital growth and therefore, as in previous years, is not proposing the payment of a dividend.

Why we do it

Through Pantheon, we have an opportunity to invest with and alongside many of the best private equity managers globally based on the trust and experience built up over the 40 years that Pantheon has been making investments.

- It is our aim to bring the attractive credentials of private equity and its track record of outperforming public markets to a wider set of investors.

It is our mission to generate sustainably high investment returns through an actively managed, institutional grade portfolio of private companies and funds built by investing with the best managers globally.

How we do it

PIP's Manager, Pantheon, has a well-established platform built on three strategic pillars of investment: primary, secondary and co-investments, with each offering their own merits.

We believe that by combining the three ways of accessing private equity investments, we are able to:

- Build and maintain a well-balanced portfolio in a combination that we monitor and manage with the aim of maximising capital growth;

- Manage the maturity profile of our assets so that our portfolio remains naturally cash-generative on a sustainable basis; and

- Ensure that the vehicle remains as cost-effective as possible for our shareholders by reducing any potential drag on returns.

1 Source: Preqin As at 31 December 2022.

We have full control over portfolio construction

PIP has the opportunity to participate in all of the private equity investments sourced for it by Pantheon.

This means that:

- We have control of investment strategy, overseen by the fully independent Board

- We have the flexibility to tilt the portfolio towards where we see the best fit for our long-term objectives.

- We can accept or decline deals without being "tied in" to other Pantheon fund strategies.

- We can control PIP's investment pacing according to its financial resources at the time.

- We have the flexibility to vary the size of its commitments as appropriate and in line with any adjustments to its investment strategy.

- We avoid the additional costs that can occur when investing via intermediate vehicles.

Our investment strategies:

Direct company investments: 52% of PIP's portfolio*

Funds: 48% of PIP's portfolio*

* As at 31 May 2023

Co-investments

We invest in a company directly, alongside a private equity manager.

- Direct investment in individual companies, which have attractive growth characteristics and have effectively passed through a "double quality filter", alongside PIP's leading private equity managers.

- This boosts the performance potential because of asset selection, and there are typically very low or no fees, making it a cost-effective way of capitalising on the high value added by PIP's selected managers.

- Co-investments are through invitation only and are therefore not accessible to most investors.

For more information on the commitments that PIP has made during the year, see the full Annual Report.

Manager - led Secondaries

We invest in a company directly, alongside a private equity manager, that the manager has already owned for a period of time and therefore knows well.

- We partner with high-quality private equity managers to acquire, as single transactions, their most attractive portfolio companies via a continuation fund.

- Allows the private equity manager to hold onto a prized asset, which they believe has potential for further growth, when the fund in which it is held comes to the end of its life.

Primaries

We invest in a new private equity fund when it is established.

- Captures exposure to top-tier, well-recognised managers as well as to smaller niche funds that are generally hard to access.

- Targets leading managers predominantly in the USA and Europe, with a focus on funds which are unlikely to become available in the secondary market.

Fund Secondaries

We purchase the interests of an investor in a fund or funds typically late into, or after, the investment period.

- Targets favoured companies and funds at a stage when the underlying assets' performance is visible and the funds are realising investments, returning cash to PIP more quickly.

- One of the advantages of investing in secondaries is that earlier fees will have been borne by the seller so total expenses are lower.

What sets us apart

Proven track record and focus on risk management

For over 36 years, PIP has been able to adapt quickly and effectively to changing market conditions. This flexible and proactive approach means that PIP is well placed to continue to deliver on its long-term strategic objectives. PIP's NAV has outperformed its public market benchmark indices over multiple periods and since the Company's inception in 1987.

We pay close attention to the management of risk. PIP provides a carefully constructed and appropriately diversified portfolio for investors with a particular emphasis on well-established companies in the buyout stage. This is supported by a prudently managed balance sheet which has the strength to continue to

meet its outstanding commitments, even in more difficult economic times. See below for more information on the balance sheet.

A global portfolio

Just over half of PIP's portfolio is invested in the USA, which is the deepest, most developed private equity market in the world and is often inaccessible to many investors in other regions. The next largest proportion of the portfolio is invested in the developed economies of Europe, with an emphasis on Northern Europe, while the remaining exposure is to faster-growing economies such as Asia.

The presence of Pantheon's teams in its 11 offices around the world means that they are on the ground locally, working with their extensive networks of relationships with private equity managers and taking advantage of proprietary information flows and access to opportunities. These relationships enable Pantheon to source and respond quickly to the best deal flow in those regions. In addition, through its participation on over 5851 advisory boards globally, Pantheon actively engages with its private equity managers on portfolio monitoring issues on a continuous basis.

Culture & Diversity

Pantheon has a strong culture of openness and inclusive teamwork, and encourages the exchange of ideas. PIP is supported by 455 people around the world including a large team of 134 investment professionals2. PIP also benefits from a dedicated and experienced team that looks after it on a day-to-day basis. See below for more information. In keeping with its collaborative culture, Pantheon avoids investments in private equity managers with "star" individuals which would give rise to a higher degree of key person risk.

From day one, Pantheon has understood that a diverse workforce creates a more productive environment. Each year, Pantheon publishes statistics documenting its global staff breakdowns according to gender identity, ethnic diversity, LGBTQ+ and disability profiles. The firm has consistently exceeded industry averages for gender diversity. Pantheon also supports a number of inclusion and diversity initiatives and organisations around the world.

1 As at 31 March 2023.

2 As at 30 June 2023.

For more information on PIP's strategic objectives, see below.

INVESTMENT POLICY

Our investment policy is to maximise capital growth with a carefully managed risk profile.

The Company's policy is to make unquoted investments. It does so by subscribing to investments in new private equity funds ("Primary Investment"), buying secondary interests in existing private equity funds ("Secondary Investment"), and acquiring direct holdings in unquoted companies ("Co-investments"), usually either where a vendor is seeking to sell a combined portfolio of fund interests and direct holdings or where there is a private equity manager, well known to the Company's Manager, investing on substantially the same terms.

The Company may, from time to time, hold quoted investments as a consequence of such investments being distributed to the Company from its fund investments as the result of an investment in an unquoted company becoming quoted. In addition, the Company may invest in private equity funds which are quoted. The Company will not otherwise normally invest in quoted securities, although it reserves the right to do so should this be deemed to be in the interests of the Company.

The Company may invest in any type of financial instrument, including equity and non-equity shares, debt securities, subscription and conversion rights and options in relation to such shares and securities, and interests in partnerships and limited partnerships and other forms of collective investment schemes. Investments in funds and companies may be made either directly or indirectly, through one or more holding, special purpose or investment vehicles in which one or more co-investors may also have an interest.

The Company employs a policy of over-commitment. This means that the Company may commit more than its available uninvested assets to investments in private equity funds on the basis that such commitments can be met from anticipated future cash flows to the Company and through the use of borrowings and capital raisings where necessary.

The Company's policy is to adopt a global investment approach. The Company's strategy is to mitigate investment risk through diversification of its underlying portfolio by geography, sector and investment stage. Since the Company's assets are invested globally on the basis, primarily, of the merits of individuinvestment opportunities, the Company does not adopt maximum or minimum exposures to specific geographic regions, industry sectors or the investment stage of underlying investments.

In addition, the Company adopts the following limitations for the purpose of diversifying investment risk:

- No holding in a company will represent more than 15% by value of the Company's investments at the time of investment (in accordance with the requirement for approval as an investment trust which applied to the Company in relation to its accounting periods ended on and before 30 June 2012).

- The aggregate of all the amounts invested by the Company (including commitments to or in respect of) in funds managed by a single management group may not, in consequence of any such investment being made, form more than 20% of the aggregate of the most recently determined gross asset value of the Company and the Company's aggregate outstanding commitments in respect of investments at the time such investment is made.

- The Company will invest no more than 15% of its total assets in other UK-listed closed-ended investment funds (including UK-listed investment trusts).

The Company may invest in funds and other vehicles established and managed or advised by Pantheon or any Pantheon affiliate. In determining the diversification of its portfolio and applying the Manager's diversification requirement referred to above, the Company looks through vehicles established and managed or advised by Pantheon or any Pantheon affiliate.

The Company may enter into derivatives transactions for the purposes of efficient portfolio management and hedging (for example, hedging interest rate, currency or market exposures).

Surplus cash of the Company may be invested in fixed interest securities, bank deposits or other similar securities.

The Company may borrow to make investments and typically uses its borrowing facilities to manage its cash flows flexibly, enabling the Company to make investments as and when suitable opportunities arise, and to meet calls in relation to existing investments without having to retain significant cash balances for such purposes. Under the Company's Articles of Association, the Company's borrowings may not at any time exceed 100% of the Company's NAV. Typically, the Company does not expect its gearing to exceed 30% of gross assets. However, gearing may exceed this in the event that, for example, the Company's future cash flows alter.

The Company may invest in private equity funds, unquoted companies or special purpose or investment holding vehicles which are geared by loan facilities that rank ahead of the Company's investment. The Company does not adopt restrictions on the extent to which it is exposed to gearing in funds or companies in which it invests.

FINANCING OUR UNDRAWN COMMITMENTS

Prudent balance sheet management supports PIP's long-term investment strategy.

We manage PIP to ensure that it has enough liquidity to finance its undrawn commitments, which represent capital committed to funds but yet to be drawn by the private equity managers, as well as to take advantage of new investment opportunities. A critical part of this exercise is ensuring that the undrawn commitments do not become excessive relative to PIP's private equity portfolio and available financing. We achieve this by managing PIP's investment pacing as well as constructing its portfolio so that it has the right balance of exposure to primaries, manager-led secondaries and co-investments.

Managing our financing cover

PIP's undrawn commitments were £857m as at 31 May 2023 (31 May 2022: £755m). Of the £857m undrawn commitments as at the period end, £48m relate to funds that are more than 13 years old and therefore outside their investment periods. Generally, when a fund is past its investment period, it cannot make any new investments and only draws capital to fund follow-on investments or to pay expenses. As a result, the rate of capital calls by these funds tends to slow dramatically.

As at 31 May 2023, PIP had net available cash2 balances of £63m (31 May 2022: £227m). In addition to these cash balances, PIP also has access to a wholly undrawn £500m multi-currency revolving credit facility agreement ("loan facility") that expires in July 2027. Using exchange rates at 31 May 2023, the loan facility amounted to a sterling equivalent of £491m.

Therefore, the Company had £554m of available financing as at the period end (31 May 2022: £528m) which, along with the value of the private equity portfolio, provides comfortable cover of 3.7 times (31 May 2022: 4.0 times) relative to undrawn commitments for funds within their investment periods.

Another important measure is the undrawn coverage ratio, which is the ratio of available financing and 10% of private equity assets to undrawn commitments. The undrawn coverage ratio is a key indicator of the Company's ability to meet outstanding commitments, even in the event of a market downturn, and was 98% as at 31 May 2023 (31 May 2022: 108%)2.

Undrawn commitments by vintage1

1 Includes undrawn commitments attributable to the reference portfolio underlying the ALN.

2 Excludes outstanding commitments relating to funds outside their investment period (>13 years old), amounting to £48.2m as at 31 May 2023 and £57.1m as at 31 May 2022.

RISK MANAGEMENT AND PRINCIPAL RISKS

The Company is exposed to a variety of risks and uncertainties. The Board, through delegation to the Audit Committee, has undertaken a robust assessment and review of the principal risks facing PIP, together with a review of any new and emerging risks that may have arisen during the year to 31 May 2023, including those that would threaten its business model, future performance, solvency or liquidity. A summary of the risk management and internal control processebe found in the Statement on Corporate Governance in the full Annual Report.

Investment and strategy risk

Operational risk

RETAIL INVESTORS ADVISED BY INDEPENDENT FINANCIAL ADVISERS

The Company currently conducts its affairs so that its shares can be recommended by independent financial advisers to retail private investors in accordance with the FCA's rules in relation to non-mainstream investment products.

The shares are excluded from the FCA's restrictions which apply to non-mainstream investment products because they are shares in a UK-listed investment trust.

VIABILITY STATEMENT

Pursuant to provision 31 of the UK Corporate Governance Code 2018, and the AIC Code of Corporate Governance, the Board has assessed the viability of the Company over a three-year period from 31 May 2023. It has chosen this period as it falls within the Board's strategic planning horizon.

The Company invests in a portfolio of private equity assets that is diversified by geography, sector, stage, manager and vintage; it does so via both fund investments and by co-investing directly into companies alongside selected private equity managers. The Company invests significantly in the private equity secondaries market as this allows the Company to maintain a more mature portfolio profile that is naturally cash-generative in any particular year.

The Company seeks to maximise long-term capital growth by investing with top-tier private equity managers that are focused on generating outperformance against the broader private equity market. As an investment trust, the Company's permanent capital structure is well suited to investing in private equity, a long-term asset class. The Company's Manager has a long-standing culture that emphasises collaboration and accountability, facilitating open dialogue with underlying private equity managers that help the Company to anticipate market conditions and maintain a conservative approach to balance sheet management. The resilience of the Company, positioning of the portfolio and durability of the private equity market are detailed in the full Annual Report and Accounts 2023.

In making this statement, the Directors have reviewed the reports of the Investment Manager in relation to the resilience of the Company, taking account of its current position, the principal risks facing it in a low case scenario which considers the potential further impact of the ongoing geopolitical uncertainties as a result of the Russia-Ukraine conflict including the disruption to the global supply chain and increases in the cost of living as result of this conflict, persistent inflation, interest rate rises and the impact of climate change on PIP's portfolio, the effectiveness of any mitigating actions and the Company's risk appetite. The assessment also considers the impact of an "automatic" share buyback programme, the amount of which will be determined by net portfolio inflows and the prevailing level of discount.

As part of the assessment this also included a combined reverse stress test that analyses the factors that would have to simultaneously occur for the Company to be forced into a wind-down scenario where the Company's business model would no longer remain viable. These circumstances include a significant peak in the outstanding commitments called within a 12-month period, combined with a significant decline in the portfolio valuations and distributions. Overall, the reverse stress tests are sufficiently improbable as to provide a low likely risk of impact to the Company's viability and medium-term resilience.

Commitments to new funds are controlled relative to the Company's assets, and the Company's available liquid financial resources are managed to maintain a reasonable expectation of being able to finance the calls, which arise from such commitments, out of internally generated cash flow. The Company also has the ability to control capital allocation to co-investments and direct investments as a way of bringing in any immediate measures to ensure that the Company can cope with the liquidity implications of a worsening environment. In addition, the Company has put in place a revolving credit facility to ensure that it is able to finance such calls in the event that distributions received from investments in the period are insufficient to finance calls. The Board reviews the Company's financing arrangements at least quarterly to ensure that the Company is in a strong position to finance all outstanding commitments on existing investments as well as being able to finance new investments.

In reviewing the Company's viability, the Board has considered the Company's position with reference to its investment trust structure, its business model, its business objectives, the principal risks and uncertainties as detailed in the full Annual Report and Accounts 2023 and its present and expected financial position. In addition, the Board has also considered the Company's conservative approach to Balance Sheet management, which allows it to take advantage of significant investment opportunities, and the appropriateness of the Company's current investment objectives in the prevailing investment market and environment.

The Board regularly reviews the prospects for the Company's portfolio and the opportunities for new investment under a range of potential scenarios to ensure it can expect to be able to continue to finance its activities for the medium-term future. Based on its review, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over a three year period ending on 31 May 2026.

On behalf of the Board

John Singer CBE

2 August 2023

MANAGER'S REVIEW

Our Market

Taking advantage of market dislocation

Helen Steers and Jie Gong, Partners at Pantheon and co-managers of PIP, discuss how the private equity industry and PIP have navigated the ongoing global economic uncertainty and their expectations for the year ahead.

How would you describe the current environment for private equity?

The first six months of this year have been an extension of much of last year, in terms of continued concerns about inflation, interest rate rises and geopolitical turbulence. We have also witnessed some localised bank crises earlier this year although they were reasonably well contained.

However, compared with this time last year, we believe we are closer to a point of stabilisation. Inflation has shown signs of moderation in most develoeconomies, with the exception of the UK, and economists believe inflationary pressures are beginning to wane.

As a result, the pace of interest rate increases has slowed, and market observers are anticipating a peak for interest rates in the coming months.

On the other hand, the global economy is not out of the woods yet. The fundamental macro issues have not gone away and sticky inflation is likely to make the job of central banks more difficult in the future. While public markets have rebounded this year, the recovery has been led by a narrow band of large US-based tech companies, and it has not been broad-based. The IPO market has cracked open slightly in the USA but it is nowhere near back to normal.

Uncertainty is the biggest deterrent for deal making, because deal underwriting and pricing need a stable near-term outlook, otherwise a "wait and see" approach prevails. The largest exit route for private equity-backed companies is corporate M&A, but in general strategic buyers have remained on the sidelines with deal activity continuing to be subdued. Sales of small and mid-sized private equity-backed companies to larger private equity funds have also been dampened, for similar reasons. As a result, the volume of private equity exits has declined and distribution rates have been low. Combined with a reduction in fundraising activity, the result has been a slowdown in new deal investment activity.

According to Bain & Co1, buyout deals (which comprised the bulk of the private equity deal volume) amounted to US$202bn during the first half of 2023, down 58% year-on-year. In the first half of 2023, buyout realisations fell 65% year-on-year to US$131bn.

What does this mean for PIP, especially in the single-asset secondaries and co-investment strategies which PIP has increasingly shifted towards?

Private equity has historically outperformed public markets, and this outperformance is more pronounced in downturns. Research shows that between 2002 and 2022, upper quartile PE managers outperformed the Dow Jones Industrial Average by 890 basis points during bull markets, while this widened to 1,940 basis points in bear markets2. Vintage years like those of today have the advantage of a more favourable deployment environment both in terms of valuation and in terms of limiting competition, and therefore make good entry points for new investment.

This advantage applies across the board in all private equity strategies, but is especially the case for manager-led secondaries investments, because of the additional boost to the supply of such deals as a solution for the slower pace of private equity exits.

Manager-led secondaries are when the private equity managers themselves instigate deals in order to provide liquidity options for the investors in their funds. They can consist of either multi-asset portfolios or single-asset secondaries. Single-asset secondaries are attractive to investors like PIP because they are often "trophy" companies that the PE manager believes have significant runway for additional value uplift from a lengthened period of ownership by the same manager.

When successful, and with the correct alignment of interest between existing investors, the private equity manager, company management and the new investors, these types of transaction tend to have an attractive risk/return profile and can be of significant valuto all parties involved.

This type of secondaries transaction accounted for 48%3 of all secondary transactions in 2022, with the remainder being traditional fund sales.

See above for more information on manager-led secondaries.

Not all manager-led deals are created equal. With an increasingly large volume of deals entering the secondary market, much of it driven by liquidity generation needs, it relies on us to be extremely selective on asset quality, manager quality, as well as the alignment of interest between the manager and new investors.

The last point cannot be emphasised enough since it is a critical part of our investment structuring and deal underwriting decision. In addition, manager-led secondaries require significant expertise and resources to evaluate, and are frequently sourced on a proprietary basis through deep manager relationships.

Pantheon has a long track record in the secondaries market and our dedicated and experienced team gives us global scale and reach. The information advantage from knowledge of specific assets in the portfolio over a long time period gives us the opportunity to play a leading role in the structuring of the manager-led deals.

In our opinion, the supply and demand dynamics in the manager-led secondary market has created an unusually favourable buying opportunity, which we are leaning into, on a highly selective basis, and underwriting outsized investment returns.

Our co-investment flow during the Company's reporting period has remained robust. Even though there have been asset disposals resulting from stressed sellers from time to time at depressed pricing, the entry valuation on high quality assets in attractive and resilient sectors have generally held up without much downward adjustment. In addition, there have been more frequent follow-on investments in existing deals as companies pursue sizeable bolt-on acquisitions to consolidate fragmented markets, or for synergistic product or geographical expansion.

Sourced from the managers that we have backed on a primary basis, and typically without any fee or carried interest charged, co-investments are economically very advantageous as an investment strategy.

In addition, all our co-investment opportunities pass through a "double quality filter", since each opportunity has

first been evaluated by a private equity manager, who themselves have passed our rigorous manager selection hurdles. The opportunity is then subjected to our own detailed due diligence process, carried out by our dedicated co-investment team, who will confirm amongst other things that the deal is a good fit for the manager.

We both sit on Pantheon's Global Co-investment Committee and Helen sits on the International Investment Committee, therefore we have the advantage of reviewing all the direct deals that are being sourced via Pantheon's platform. We seek a distinct set of characteristics for assets as set out in the graphic in the Annual Report, and in addition place strong emphasis on pricing discipline. This leads to high selectivity: for reference, the typical approval rate in terms of number of deals - from pre-qualified deals entering into pipeline for our review to those completed - is between 10-15%. In 2022, that number was 12%.

Entry valuation has been the biggest reason for a deal to be screened out at the stage that it is brought to the investment committee, and this has been the case for many years.

1 Bain & Co, Stuck in Place: Private Equity Midyear Report 2023

2Source: Preqin Private Equity. Capital IQ as at 30 October 2022. ThomsonOne PE Buyout and Growth funds Index as at Q2 2022. Bull markets are defined as 2004-2006 and 2010-2019 and 2021. Bear markets are defined

as 2002-2003; 2007-2009, 2020 and year to 30 October 2022.

3 Source: Greenhill, Global Secondary Market Review, February 2023.

A notable recent development is the excitement about generative artificial intelligence ("generative AI"), billed by some as the catalyst for the next industrial revolution. What is your take on its risks and opportunities in relation to private equity?

Generative AI is arguably the most important technological evolution and disruptor of our time, which has not only dominated the public discourse this year but has been adopted already in a number of ways by enterprises for productivity and efficiency gains. We have seen its application in some portfolio companies, for example in customer interactions through chatbots based on predictive language models, or content generation in graphics for entertainment. The speed of adoption has been extremely fast compared with prior major disruptive technology. The intelligent use of technology is an important component we consider when we evaluate managers, and likewise a company's technology adoption and the risk of technology displacement are essential topics when we assess direct company investment evaluation. Given that we prefer asset-light, higher margin, less labour-intensive businesses, and are aware of not only the challenges, but also the opportunities presented by technology, we believe PIP is well positioned to benefit from generative AI applications.

PIP has a very little venture exposure at just 3% of NAV5, therefore the direct exposure to generative AI technology is limited, however we expect a wider spectrum of applications to come out of this area as significant tools for better productivity and efficiency are developed in the coming years. It is a topic that we exchange notes on regularly with our managers.

Speaking of technology, the biggest industry sector in PIP's portfolio is information technology, of which the largest sub-sector is IT software. Considering the magnitude of the software sector sell-off in public markets since 2022, do the current marks of these investments accurately reflect the current valuation?

The short answer to the question is yes, that the current marks are consistent with public market comparables.

The software positions in the PIP portfolio were almost all profitable businesses at entry and have performed well in terms of their revenue and earnings growth. The appropriate publicly listed comparables for them are the profitable listed software businesses, which represents only 40% of the overall listed software companies universe.

A few points to note: first, there is significant divergence in the pattern of sell-off between the profitable versus the unprofitable software businesses, as the aggressive rate hike in 2022 severely affected the valuation of unprofitable companies while there was a "flight to safety" to the profitable ones. Second, given the prevalence of unprofitable businesses in the overall sector (approximately 60% of the listed companies in the sector are unprofitable), using the sector comparables instead of the profitable subset would be a rather misguided proxy. Third, it is all about selection - in this case, the discipline of focusing on profitable, growing businesses.

Finally, what are your expectations for the year ahead?

With macroeconomic uncertainty extending into the second half of this year, we expect continued bumpiness in the external environment. However, the best private equity managers are able to take advantage of market disruption and capitalise on opportunities to add value to their existing portfolio companies, as well as seeking exciting new investments. PIP has been constructed to provide investors with an "all-weather" portfolio, which is reflected in the choice of sectors, with a weighting towards defensive and resilient areas, in the buyout-heavy composition of the portfolio, in the sensible level of portfolio diversification and the ability to flex investment pacing through the majority tilt towards direct company investments. The quality of the underlying companies, and the managers that PIP has selected, the experience in navigating challenging economic periods and the ability to effect change will all stand PIP in good stead to traverse this environment.

PIP is one of the longest established PE investment trusts listed on the London Stock Exchange and for 36 years, Pantheon has successfully steered it through multiple macroeconomic cycles and events while generating average NAV growth (net of all fees) of more than 12% per annum. While not complacent, we are confident that PIP has the necessary credentials to continue to achieve its aim of outperforming the public market benchmarks over the long term.

5 As at 31 May 2023.

PORTFOLIO AS AT 31 MAY 2023

Since its inception, PIP has been able to generate excellent returns while at the same time structuring its portfolio to minimise the risks typically associated with private equity investments. Our established portfolio of assets has been carefully selected, based on the strengths of our appointed private equity managers, actively monitored and diversified to reduce specific timing, regional and sector risks; and managed to maximise growth and liquidity over time.

Type and Region

Investment type1

Flexible approach to portfolio construction increases potential for outperformance.

Region1

Weighted towards the more developed private equity markets in the USA and Europe, while Asia and EM provide access to faster-growing economies.

Maturity and Stage

Stage4

Well-diversified with an emphasis on the buyout stages.

Maturity4

PIP's portfolio has a weighted average age of 4.8 years.

1Investment type and region charts are based upon underlying fund and company valuations. The charts exclude the portion of the reference portfolio attributable to the ALN.

2 EM is Emerging Markets.

3 Global category contains funds with no target allocation to any particular region equal to or exceeding 60%.

4 Fund stage and maturity charts are based upon underlying fund and company valuations. The charts exclude the portion of the reference portfolio attributable to the ALN.

PERFORMANCE

PIP's portfolio value has increased modestly over the period. Access to top-performing managers and a tilt towards resilient and high-growth sectors has helped PIP to withstand the current macroeconomic environment.

Private equity portfolio movements

PIP's portfolio generated returns of 3.5% during the year.1

Valuation movement by type3

Resilient portfolio performance despite the current challenging macroeconomic environment.

Manager-led secondaries were the highest performing segment of the portfolio, having been revalued after previously being held

at cost.

Valuation movements by stage3

Valuation gains in the buyout and special situations stages offset valuation losses in the venture and growth segments of the portfolio.

Valuation gains by region3

PIP's portfolio is weighted towards investments in the USA and Europe, which generated positive returns during the period.

1 Excluding returns attributable to the ALN share of the portfolio.

2 Amount drawn down at the time of commitment.

3 Portfolio returns include income, exclude gains and losses from foreign exchange movements, and look through underlying vehicle structures to the underlying funds. Portfolio returns exclude returns generated by the portion of the reference portfolio attributable to the ALN, and are calculated by dividing valuation gains by opening portfolio values.

Realisations

PIP's mature portfolio continued to generate distributions despite a subdued exit environment. Distributions have been incremental to returns, with mareflecting realisations at significant uplifts to carrying value.

Uplifts on exit realisations1

The value-weighted incremental average uplift on exit realisations in the year was 27%, consistent with our view that realisations can be significantly incremental to returns.

The method used to calculate the average uplift is to compare the value at exit with the value of the investment 12 months prior to exit. Since 2012, the weighted average uplift on exit is 31%.

Cost multiples on exit realisations1

The average cost multiple on exit realisations of the sample was 3.0 times, demonstrating value creation over the course of PIP's investment.

The average cost multiple on exit since 2012 is 3.0 times.

Exit realisations by sector and type

Realisation activity was strongest in the industrials and information technology sectors. Trade sales and secondary buyouts represented the most significant sources of exit activity during the year. The data in the sample provide coverage for 100% (for exit realisations by sector) and 100% (for exit realisations by type) of proceeds from exit realisations received during the period.

1See the Alternative Performance Measures section in the full Annual Report for sample calculations and disclosures

Net Portfolio Cash Flow

Net portfolio cash flow equals distributions less capital calls.

A continued focus on the portfolio's maturity profile means that PIP is well positioned to generate positive cash flows.

With a long-term average distribution rate of 20-25%, PIP's portfolio has been cash flow positive since 2010.

PIP's total net portfolio cash flow over the last ten years has been £1.7bn.

Distributions

With a weighted average fund maturity of 4.8 years at the end of the period (31 May 2022: 4.9 years), PIP's portfolio continued to generate cash.

PIP received £223m in proceeds from PIP's portfolio in the year to 31 May 2023 (year to 31 May 2022: £419m), equivalent to 10% of opening private equity assets (31 May 2022: 25%).

Quarterly Distribution Rates1

Although PIP's portfolio has continued to generate cash, there has been a slowdown in distributions during the period.

The challenging economic environment has impacted exit activity.

1 Distribution rate equals distributions in the period (annualised) divided by opening portfolio value.

Calls

PIP paid £155m to finance calls on undrawn commitments during the year (year to 31 May 2022: £187m).

Quarterly Call Rate1

The annualised call rate for the year to 31 May 2023 was equivalent to 21% of opening undrawn commitments (31 May 2022: 35%).

The decline in the call rate reflects the slowdown in deal activity during the period.

1 Call rate equals calls in the period (annualised) divided by opening undrawn commitments. All call figures exclude the acquisition cost of new secondary and co-investment transactions.

New Commitments

PIP committed £441m to 25 new investments during the year (31 May 2022: £496m, 70 new investments).

PIP invested in six manager-led secondaries (£154.9m). This included a US$112.5m (£93.5m) commitment to the Pantheon Secondary Opportunity Fund II, which is focused on manager-led secondaries.

In addition, PIP committed to eight primaries (£147.4m) and 11 co-investments (£138.5m).

Our investment process:

· Investment opportunities in companies and funds are originated via Pantheon's extensive and well-established platform.

· We invest with many of the best private equity managers who are able to identify and create value in their portfolio companies.

· Cash generated from the sale of those companies is returned to PIP and redeployed into new investment opportunities.

New Commitments by Investment Type

New commitments during the year were equally weighted across the three investment types, with each demonstrating attractive characteristics for overall portfolio construction.

New Commitments by Region

The majority of commitments made in the year were to opportunities in the developed US and European private equity markets.

New Commitments by Stage

Small and mid market buyout investment activity was robust during the period.

1Global consists of the US$112.5m (£93.5m) commitment to the Pantheon Secondary Opportunity Fund II ("PSOF II"), which is focused on manager-led secondaries.

2Generalist relates to a US$112.5m (£93.5m) commitment to the Pantheon Secondary Opportunity Fund II ("PSOF II"), which is focused on single-asset secondaries.

Buyout Analysis1

Revenue and EBITDA growth

Weighted average revenue and EBITDA growth of 21% and 15%, respectively, for PIP's sample buyout companies have consistently exceeded growth rates seen among companies that constitute the MSCI World index. Strong top-line performance, disciplined cost control, operational expertise and good earnings growth, together with an efficient use of capital, underpin the investment thesis of many private equity managers.

Valuation multiple

Accounting standards require private equity managers to value their portfolios at fair value. Public market movements can be reflected in valuations.

PIP's sample-weighted average Enterprise Value (EV)/EBITDA was 17.8 times compared to 16.2 times for the MSCI World index; and this should be considered in the context of the underlying growth rates for each.

PIP invests proportionately more in high-growth sectors such as mission-critical B2B information technology and healthcare, and these sectors tend to trade at a premium to other sectors.

Debt multiples

Venture, growth and buyout investments have differing leverage characteristics.

Average debt multiples for small/mid buyout investments, which represent the largest segment of PIP's buyout portfolio, are typically lower than debt levels in the large/mega-buyout segment.

The venture and growth portfolios have little or no reliance on leverage.

1The sample buyout figures for the 12 months to 31 December 2022 were calculated using all the information available to the Company. The figures are based on unaudited data. MSCI data was sourced from Bloomberg. See the Alternative Performance Measures section in the full Annual Reportfor sample calculations and disclosures.

2 Full buyout portfolio.

3 As at 31 December 2022.

4 Leverage buyout data sourced from Pitchbook's Leveraged Commentary & Data (LCD), 2022.

OTHER INFORMATION

 The Largest 50 Companies by Value1

1 The largest 50 companies table is based upon underlying company valuations at 31 March 2023 adjusted for known call and distributions to 31 May 2023, and includes the portion of the reference portfolio attributable to the ALN.

The Largest 50 Managers by Value

1 Refers to the regional exposure of funds.

2 Percentages look through underlying vehicle structures and exclude the portion of the reference portfolio attributable to the ALN.

3 The private equity manager does not permit the Company to disclose this information.

THE DIRECTORS

The Directors in office at the date of this report are:

John Singer CBE* (Chairman)

Mary Ann Sieghart* (Senior Independent Director)

David Melvin* (Audit Committee Chairman)

John Burgess*

Zoe Clements*

Dame Susan Owen DCB*

Rahul Welde*

* Independent of the Manager

EXTRACTS FROM THE DIRECTORS' REPORT

Share capital

The rights attaching to the Company's shares are set out in the Company's Articles of Association. Further details can be found in Note 15 of the financial statements.

Authorities given to the Directors at the AGM on 18 October 2022 to allot shares, disapply statutory pre-emption rights and buy back shares will expire at the forthcoming AGM. In order to take advantage of the investment opportunity offered by the discount to NAV on the shares, during the year  7,600,183 shares, representing 1.4% of the called-up share capital and a nominal value of £509,212.26, were bought back for an aggregate amount of £19,558,638 and subsequently cancelled. As at 31 May 2023, authority to buy back a further 78,872,351 shares remained.

As at 31 May 2023 and as at the date of this Report, the Company had shares in issue as shown in the table below, all of which were listed on the official list maintained by the Financial Conduct Authority ("FCA') and admitted to trading on the London Stock Exchange. No shares were held in Treasury at the year end.

Going Concern

The Company's business activities, together with the factors likely to affect its future development, performance, and financial position, are set out in the Strategic Report and Manager's Review.

The Directors have made an assessment of the going concern, taking into account both the Company's financial position at the Balance Sheet date and the expected performance of the Company, considering the recent banking crisis, the geopolitical uncertainties as a result of the Russia - Ukraine conflict, including the disruption to the global supply chain, the combination of rising inflation, interest rates and the impact of climate change driven by changes in regulations, using the information available up to the date of issue of the financial statements.

The Directors have also considered the Company's position with reference to its investment trust structure, its business model, its business objectives, the principal risks and uncertainties as detailed above and its present and projected financial position. The Directors have considered the impact of the intended one-off £200million share buyback in the year ending 31 May 2024 and the impact of a further "automatic" share buyback programme, the amount of which will be determined by net portfolio inflows and the prevailing level of discount. As part of the overall assessment, the Directors have taken into account the Manager's culture, which emphasises collaboration and accountability, the Manager's conservative approach to balance sheet management, and its emphasis on investing with underlying private equity managers that are focused on market outperformance.

At each Board meeting, the Directors review the Company's latest management accounts and other financial information. The Company's commitments to private equity investments are reviewed, together with its financial resources, including cash held and its borrowing capability. One-year cash flow scenarios are also presented and discussed at each meeting.

PIP's Balance Sheet is managed to ensure that the Company can finance its undrawn commitments, which are carefully controlled relative to its assets and available liquidity. This disciplined approach enables the Company to withstand periods of volatility such as those experienced as a result of the ongoing Russia-Ukraine conflict.

The Directors have considered downside liquidity modelling scenarios with varying degrees of decline in investment valuations, decreased investment distributions, and increased call rates, with the worst being an extreme downside scenario representing an impact to the portfolio that is worse than that experienced during the 2008-2009 global financial crisis.

In the event of a downside scenario, PIP can take steps to limit or mitigate the impact on the Balance Sheet, namely drawing on the credit facility and pausing on new commitments. In addition, subject to the prevailing market environment, it could raise additional credit or capital, and sell assets to increase liquidity and reduce outstanding commitments.

After due consideration of the Balance Sheet, activities of the Company, its assets, liabilities, commitments and financial resources, the Directors have concluded that the Company has adequate resources to continue in operation for at least 12 months from the approval of the financial statements for the year ended 31 May 2023. For this reason, they consider it appropriate to continue to adopt the going concern basis in preparing the financial statements.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations in accordance with FRS102. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

· Present a true and fair view of the financial position, financial performance and cash flows of the Company;

· Select suitable accounting policies in accordance with United Kingdom GAAP and then apply them consistently;

· Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· Make judgements and estimates that are reasonable and prudent;

· State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

· Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the Strategic Report, the Directors' Report, the Directors' Remuneration Report, the Corporate Governance Statement and the Report of the Audit Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules. The Directors have delegated responsibility to the Investment Manager for the maintenance and integrity of the Company's corporate and financial information included on the Company's website (www.piplc.com). Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed above, confirms that to the best of their knowledge:

· The financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

· The Strategic Report contained in the annual report and financial statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The UK Corporate Governance Code requires Directors to ensure that the Annual Report and financial statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit Committee advises on whether it considers that the Annual Report and financial statements fulfil these requirements. The process by which the Audit Committee has reached these conclusions is set in the full Annual Report. As a result, the Board has concluded that the Annual Report and financial statements for the year ended 31 May 2023, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Signed on behalf of the Board by

John Singer CBE

Chair

2 August 2023

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 May 2023 and period ended 31 May 2022 but is derived from those accounts. Statutory accounts for 2022 have been delivered to the Registrar of Companies, and those for 2023 will be delivered in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and financial statements at www.piplc.com.

INCOME STATEMENT

Year ended 31 May 2023

1 The Company does not have any income or expenses that are not included in the return for the year, therefore the return for the year is also the total comprehensive income for the year. 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").

All revenue and capital items in the above statement relate to continuing operations. No operations were acquired or discounted during 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 Notes below form part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

Year ended 31 May 2023

The Notes below form part of these financial statements.

BALANCE SHEET

As at 31 May 2023