Pantheon International PLC (PIN) Earnings Call Transcript

During the 6 months to 30th of November 2025, PIN's net asset value or NAV increased by 4.9%. Modest underlying valuation gains and investment income contributed 2.8% to the NAV. The majority of PIN's unhedged portfolio is U.S. dollar-denominated. Therefore, favorable currency movements added a further 2.2%. PIN has continued to buy back its own shares in order to capture value for shareholders. And during the period, PIN invested GBP 42.8 million in share buybacks. These added a further 1% to the NAV. The positive movements during the period were offset by expenses and taxes. The share price increased by 26.7% during the 6 months to the end of November, outperforming the MSCI World and FTSE All-Share indices over the same period. While still too wide in our view, the discount narrowed from 40% at the end of May 2025 to 28% at the end of November.

Generating NAV outperformance has been more challenging in recent years, especially given the exceptionally strong performance of the public markets. Nevertheless, we are focused on delivering the attractive returns that our shareholders expect from a private equity portfolio. As we discussed at the year-end, we have agreed a number of actions with the Board that are designed to improve long-term NAV performance and close the discount at which the shares trade. We have materially enhanced our analytical capabilities to give more insights into the underlying portfolio. We believe that this provides more granularity and transparency to the Board in order that they can make more informed strategic decisions. And for us, as manager, we can apply the learnings to ensure that we're maximizing the potential of the portfolio and investing in the right mix of assets. Finally, we believe that this more detailed information is helpful for investors and analysts to help them develop a greater understanding of the different elements that impact the performance of the underlying portfolio. PIN provides investors with a portfolio of growing private companies, which we achieve through a combination of funds and individual company investments. As at the 30th of November 2025, approximately 39% of PIN's portfolio was in invitation-only access-constrained primary funds. Around 53% of PIN's portfolio was invested directly in private companies. A key factor in assessing PIN's primary investment is always the strength of the private equity manager and their ability to outperform the public market. PIN's manager buyer list has been refined to concentrate capital with those demonstrating consistent first and second quartile performance. We also prioritize sector specialists with proven buy-and-build capability and repeatable operational value creation. We believe that ensuring that we invest only with and alongside leading private equity managers and that we maintain the right mix of direct company investments and primary funds in the portfolio are fundamental to achieving our objective of improving returns through cycles. Secondaries market continued to experience record transaction volumes in 2025. In the past, PIN has strategically sold assets in the secondary market as a tool through which to optimize its underlying portfolio. We intend to do this more actively in the future and when the timing is right to do so. This will allow us to reshape the portfolio in line with PIN's investment strategy objectives. We've also implemented a disciplined capital allocation policy as set out by the Chair previously. In addition to the share buybacks conducted during the period, we have committed GBP 92.6 million to 7 new investments. Finally, we have agreed with the Board a reduction in the management fee that PIN pays to Pantheon. The calculation of the fee has been simplified, and this will be in place from the 1st of June 2026.

Our prudent management of the balance sheet supports our activities. The measured use of leverage to reduce cash drag and enhance NAV growth is central to PIN's strategy. During the period, PIN refinanced and extended the tenure of its GBP 400 million revolving credit facility to October 2029 on improved commercial terms that compare favorably relative to our closest peers. PIN also has access to $150 million of private placement loan notes. As at 30 November 2025, PIN had GBP 120 million drawn down under the credit facility and GBP 113 million of sterling equivalent loan notes outstanding. Taken in conjunction with PIN's net available cash of GBP 24 million, PIN had a net debt position of 9.3% as at the period end. We believe that our net debt is at the prudent level. PIN's financing cover as at 30 November 2025 was 4.4x, and the undrawn coverage ratio was comfortable at 87%. We regularly stress test the balance sheet to ensure that PIN has sufficient financial resources and liquidity to withstand a variety of scenarios and market conditions as well as take advantage of share buybacks and new deal opportunities.

After a challenging few years, private equity demonstrated its resilience in 2025 and started to bounce back slowly. Private equity market transaction volumes ended the year strongly. Those deals occurred mostly at the larger end of the private equity market with some initial public offerings launching successfully. PIN focuses on the small and mid-market segment of private equity, which are well-established businesses that are typically sold to corporate buyers or larger private equity managers. So we do not rely on the public markets to exit the companies in PIN's portfolio. Nevertheless, high-profile large deals and a buoyant IPO market are helpful for driving positive sentiment, which filters down to the other parts of the market where PIN is more active. In addition, the smaller and midsized companies in PIN's portfolio are often acquisition targets for those larger managers seeking to deploy capital on behalf of their investors.

We are starting to see the early signs of this market recovery coming through to PIN's portfolio, while still below the long-term average, there has been an evident increase in exit volumes. The distribution rate improved from 12% to 15% during the 6-month period. PIN has continued its track record of being cash generative, generating net portfolio cash flow of GBP 83.1 million during the 6 months to 30 November 2025. This compares to GBP 45 million in the prior year. PIN's portfolio has been consistently cash generative and over the last 10 years has produced a total of GBP 1.5 billion of net cash.

We entered 2026 with a constructive outlook with momentum of private equity deal flows starting to build. We believe that maintaining an allocation to private equity remains a key component of a well-balanced portfolio. As we look ahead, we've agreed a clear strategic plan with the Board. And with these actions underway, we are confident that PIN is well positioned to deliver improved NAV progression over the medium term as our shareholders expect. With PIN, our aim is to offer a one-stop shop for investors wishing to access a wide and diversified range of private equity opportunities around the world. And since its inception in 1987, PIN has been and we believe continues to be one of the most accessible ways for investors of all types and sizes to do this.

If you have any questions or would like more information on PIN, please visit the website, follow PIN on LinkedIn or contact the team here at Pantheon.