January 2023 Monthly

We believe the outlook for calendar year 2023 will be driven by the same underlying factors that drove the latest full-year results, and which we reviewed in our note, FY’22 results: it is not just lionesses that roar. Over the past 35 years, through multiple cycles, PIP has delivered market-beating NAV returns, driven by the incremental operational, strategic and financial value PE adds to investee companies, and by the incremental value added by Pantheon, in resilient sectors. through its selection of high-quality managers and mature/profitable companies. Investee company gearing, and over-commitment are modest. Uplifts on exit proving the conservatism of the valuation approach continue.

• Investor presentation: Helen Steers provided a live presentation on PIN and the PE sector on 28 September 2022. Investors can see it in the archived section of Pantheon’s page, on www.investormeetcompany.com/. The presentation reiterated the growth and resilience that we have outlined in previous reports.
• November factsheet: The 0.5% valuation gains in the month were offset by adverse forex (-2.5%). For the 11th month out of the past 12, there was positive cashflow. Available finance was £560m vs. commitments (likely to be drawn over five years) of £848m (in December, a further $112.5m commitment was made).
• Valuation: PIN shares trade at a 43% discount to NAV, despite their long-term outperformance. We believe the “real” NAV is likely to be above the book value, given the uplifts to carrying value achieved on exits. PIN consistently sees material uplifts on exit realisations. Steady buybacks have been made through 2H’22.
• Risks: We note i) sentiment to the economic cycle (NAV rose every year in the 1990s’ recession and in FY’20), ii) adverse sentiment to illiquid and unquoted investments (PIN has permanent capital and proven exit uplifts), and iii) that sentiment to the sustained discount could be an issue. Short term, there can be FX volatility.
• Investment summary: PIN is in an attractive market, can pick the best part of that market, and has competitive operational advantages. Its manager and deal selection, and portfolio structuring, add value. To the end of November 2022, this delivered 12.3% annual NAV growth since inception in 1987. Corporate governance is strong, and the NAV is conservatively valued. Investors get liquid access to the global PE market. There are risks around the cycle, and illiquid and unquoted underlying assets. The discount appears anomalous with risk-adjusted returns.