June 2021 Monthly

The April performance report showed strong NAV progression (up 2.4%, after March’s +3.8%). PIP is managed very conservatively, which we believe served it well through the 2020 market disruption. At end-April 2021, nearly uniquely in the sector, its cash/facilities (£478m) largely covered undrawn commitments (£520m), giving a good risk/reward balance. In the 11 May video, Helen Steers expanded on why PIP has chosen technology and tech-enabled businesses as one focus for investment. The discussion also covered ESG, PIP’s resilience through COVID-19, PE returns, PIP’s flexible mandate, and its risk-reward balance

• April report: The End-Apr’21 report noted valuation gains added 2.2% to NAV and investment income 0.1%. The FX impact was +0.2% and expenses/taxes were
  -0.1%. PE assets were £1,667m, available resources were cash (£195m) and facilities ($270m, €102m), and undrawn commitments were £520m. The five-year TSR is 109%.
• Hardman Talks video: In addition to the points above, Helen Steers noted the performance since inception (now 11.8% NAV p.a. growth since inception, generating more than twice the return of the FTSE All-Share over five and 10 years) and how PIP aims to be market-leading on transparency.
• Valuation: PIP shares trade at a 20% discount to NAV, despite their long-term outperformance. We believe the “real” NAV is likely to be above the book value on the accounting date, as the company consistently reports uplifts on realisation. PIP re-invests returns for superior capital growth and pays no dividend.
• 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 (PIP has permanent capital and proven exit uplifts), and iii) sentiment to the sustained discount could be an issue. Short term, there can be FX volatility.
• Investment summary: PIP is in an attractive market, can pick the best part of that market, and has competitive operational advantages. Its manager selection and portfolio structuring have added value. This has delivered a 14.1% p.a. NAV total return over the past five years. Corporate governance is strong, and the NAV is conservatively valued. Investors get liquid access to the whole PE market. There are risks around the cycle, and illiquid and unquoted underlying assets, but these, against the historical returns, make the current discount to NAV an anomaly.