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11 Nov 2011 07:00
11th November 2011
Pantheon International Participations PLC Interim Management Statement (Unaudited) for the Quarter Ended 30th September 2011
Pantheon International Participations PLC ("PIP" or the "Company") presents its interim management statement for the period from 1st July 2011 to 30th September 2011. This constitutes the Company's first interim management statement in the financial year ending 30th June 2012, as required by the UK Listing Authority's Disclosure and Transparency Rule 4.3.
The Company published an unaudited Net Asset Value ("NAV") as at 30th September 2011 on 27th October 2011. This interim management statement summarises the information as at 30th September 2011 and any further developments up to 10th November 2011.
Investment Objective
PIP's primary investment objective is to maximise capital growth by investing in a diversified portfolio of private equity funds and, occasionally, directly in private companies.
Valuations
PIP's valuation policy for private equity funds is based on the latest accounts produced by the managers of the funds in which PIP has holdings. In the case of the valuation as at 30th September 2011, the majority of valuations (accounting for circa 96% by value) are dated 30th June 2011. Within the portfolio's underlying fund investments, approximately 8% of PIP's portfolio value at 30th September 2011 was comprised of quoted investments. The quoted market holdings at the date of the latest fund accounts were reviewed and adjusted to the market value of those holdings at 30th September 2011, in accordance with the Company's valuation policy.
Cash Flow
During the quarter ended 30th September 2011, PIP received distributions from private equity assets of £39m and invested £14m through drawdowns on commitments to underlying private equity funds. Net cash inflow, which was £25m in the quarter, has now been positive for eight consecutive quarters.
New Commitments and Share Buybacks
PIP made no new commitments in the quarter ended 30th September 2011. For any new investment commitments, the Company currently intends to emphasise opportunities in the secondary market. The fundamentals driving the secondary market remain compelling but the Company will continue to adopt a cautious approach to new investments given the difficult market outlook.
The growth in cash resources, resulting from continued strong cash generation through realisations, has increased the Company's capacity to acquire its own shares when, in the December quarter, secondary market activity is expected to be slower. The Board has tabled a resolution for the AGM and a separate class meeting of redeemable shareholders on 22nd November 2011 to provide shareholders with an opportunity to vote on a proposed change of the Articles which would increase the Company's flexibility to buy its own shares by increasing the duration of the quarterly trading periods specified in the Articles.
In the view of both the Board and the Manager, the current discount to the 30th September NAV per share of approximately 44% (as at market close on 9th November 2011) does not reflect the high quality of the portfolio and the strength of the Company's balance sheet.
In August 2011, PIP bought back 940,000 redeemable shares for £6.4m, representing an average purchase price of 683p (a 38% discount to the 30th June adjusted NAV per share). These redeemable shares were held in treasury at 30th September 2011. The value and number of shares held in treasury were excluded from the NAV calculation resulting in an uplift to NAV per share of 6.3p.
After the quarter end, on 28th October 2011, the Company bought back 400,000 ordinary shares at a price of 640p per share (a 44% discount to the 30th September NAV per share) for cancellation. At the same time, the Company announced that all 940,000 redeemable shares previously held in treasury had been cancelled with immediate effect. Following this cancellation, the number of ordinary and redeemable shares in issue is 37,121,013 and 37,033,534 respectively, none of which are held in treasury. The redeemable share figure also takes into account the drawdown of redeemable shares on 24th August 2011, as explained later in this statement.
The Board will consider further targeted share buybacks as a means of enhancing NAV per share. As the Company's shares trade at such a historically high discount, this will be an investment priority in the currently prevailing market conditions.
Cash Balance and Remaining Facilities
As at 30th September 2011, PIP had cash balances equivalent to a total of £44m.
In addition, the Company's multi-currency revolving credit facility agreement (the "Bank Loan Facility"), comprising an $82m US dollar facility and a €57m euro facility, was completely undrawn. The Bank Loan Facility expires in June 2015.
Based on exchange rates at 30th September 2011, PIP's total available liquid financing capacity stood at £145m.
Drawdown of Redeemable Shares and Repayment of Loan Notes
On 24th August 2011 the Company drew down on commitments to subscribe £100.5m for new redeemable shares of £0.01 each in the capital of the Company from the institutions with whom the Company had entered into standby subscription agreements under which those institutions could be called upon by the Company to subscribe for new redeemable shares in the Company ("Standby Commitments"). Simultaneously, the Company repaid £100.5m of outstanding unsecured subordinated loan notes ("Loan Notes") held by those institutions.
These actions effectively exchanged the full balance of the Loan Notes for new redeemable shares. Based on the adjusted NAV per share of 1,104.12p¹ at 30th June 2011, the Company issued 9,102,279 new redeemable shares.
As announced on 28th September 2011, the Company has terminated all the remaining unutilised Standby Commitments amounting to £49.5m with effect from 30th September 2011. The majority of these agreements were due to expire at the end of 2011.
Outstanding Commitments
Outstanding commitments to investments, which are likely to be called over several years, stood at £229m at 30th September 2011, calculated using exchange rates at that date.
Performance
The Company's ordinary share price decreased by 14.1% to 613.0p during the quarter, whilst the Company's redeemable share price decreased by 9.9% to 640.0p. Between 30th September 2011 and the market close on 9th November 2011, the share price of the ordinary shares increased to 650p and the share price of the redeemable shares decreased to 630p. The NAV per share at 30th September 2011 of 1,151.7p represented an increase of approximately 4.3% on the adjusted NAV per share at 30th June 2011¹.
Total Return Performance Since 1 Year 3 Years 5 Years 10 Years Inception % % p.a. % p.a. % p.a. % p.a. NAV per share 22.0 (0.1) 7.0 6.4 11.7 Share price 5.2 (3.2) (5.5) 2.5 9.4 FTSE All-Share Index Total (4.4) 6.0 0.8 4.8 7.3Return MSCI World (Sterling) Total (3.3) 4.9 1.9 3.6 5.9Return
PIP was launched on 18th September 1987. £1,000 invested at inception, assuming reinvestment of dividends, capital repayments and cash flow from warrants, would have been worth approximately £8,670 at 30th September 2011.
General Information 30/09/2011 30/06/2011 Change NAV per share 1,151.7p 1,104.1p 4.3% Ordinary share price 613.0p 714.0p (14.1%) Redeemable share price 640.0p 710.0p (9.9%) Net assets £858.7m £733.1m 17.1% Outstanding commitments £229.1m £242.8m (5.6%)
Other than as described above the Board is not aware of any events during the period from 30th September 2011 to the date of this statement which would have a material impact on the financial position of the Company.
¹ The adjusted NAV per share at 30th June 2011 of 1,104.12p excluded a derivative asset ("Standby Asset") relating to the Company's Standby Commitments. The Board was advised by the Company's auditors that these agreements needed to be included as an asset in the Company's accounts at 30th June 2011 in order to be compliant with FRS 26. The Board considers that the best measure of the Company's economic value to shareholders at 30th June 2011 was the adjusted NAV per share. Due to the drawdown of £100.5m of the Standby Commitments in August 2011, and the cancellation of the remaining Standby Commitments in September 2011, the Standby Asset was eliminated with effect from 30th September 2011 and therefore is no longer held on the balance sheet.
Tom BartlamChairman11th November 2011
The views, information and data in this announcement should not be deemed as a financial promotion or recommendation. Shareholders are advised that this statement is unaudited.
ENDS
For more information please visit PIP's website at www.pipplc.com or contact:
Andrew Lebus or Alexis Barling
Pantheon
020 7484 6200
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of this announcement.
XLON