9th Mar 2016 10:52
LONDON (Alliance News) - Pantheon International PLC, a London-listed private equity investment trust, on Wednesday said the "disappointing" performance of its share price in the first half of its financial year was "impacted" by discounts to net asset value across the sector driven by uncertainty in financial markets.
The company said its net asset value per share rose by 8.2% in the six months ended December 31, 2015, outperforming the FTSE All-Share, which fell by 2.0%, and the MSCI World, which rose by 3.3%.
The discount at which the trust's shares traded to its net asset value widened to 21% from 17% over the course of the half. Against the NAV per share increase of 8.2% to 1,657.50 pence, the trust's share price increased by just 3.4% over the six months to 1,315.0p on December 31.
Shares in Pantheon were up 0.7% at 1,238.00 pence on Wednesday morning.
Pantheon said its private equity portfolio performed "positively" during the half, generating investment returns of 2.9% before accounting for currency movements. Foreign exchange gains added 6.1%, primarily driven by the appreciation of the dollar. These gains were offset by expenses and taxes of 0.8%.
Its focus remains primarily on the consumer, information technology and healthcare sectors, with the majority of Pantheon's portfolio invested in companies based in North America and Europe. Returns were driven by US and European buyout portfolios in the half, Pantheon said.
"While both Asian and energy funds were impacted by a fall in the Chinese public markets and a drop in the oil price respectively, the impact on the portfolio as a whole was limited. The diversification of our portfolio and disciplined approach to investing only with high quality managers who have a strong track record mean that we are not overexposed to a downturn in any one sub-sector," Chairman Tom Bartlam said.
Pantheon warned that "uncertainty" about the UK's looming referendum over whether to remain in the EU "may lead" to increased volatility in the exchange rates between sterling and the currencies in which company assets are denominated.
"Consequently, as a substantial majority of our assets are denominated in US dollars and euros, there may be greater volatility in the company's reported NAV over the next few months," the chairman added.
Pantheon has "substantial financial strength" to take advantage of "more favourable" pricing conditions as they occur, Bartlam said, whether in the secondaries market or through primary commitments and co-investment activity. He said the company's mature portfolio will continue to generate "considerable distributions even if at a reduced level".
"Thus, any slowdown in the rate of distributions from our portfolio is unlikely to constrain the company's ability to deploy capital in order to take full advantage of a cheaper investment environment. However, the opportunity to do so will neither appear immediately, nor in all areas of the market simultaneously. Therefore, the pace of transactions in the first six months of 2016 may be slower. Nevertheless, we believe that we will be able to deploy capital in attractive investment opportunities in the second half of the company's financial year," Bartlam said.
Its mature portfolio generated distributions of GBP148 million, equivalent to an annualised rate of 34% of opening portfolio assets, in the first half. "Private equity exit activity in 2015 was supported by attractive pricing driven by public market valuations and demand from strategic buyers for mature assets," Bartlam said.
Pantheon made 24 new investment commitments in the half, amounting to GBP121.9 million. "The majority of new investments were made to US large buyout and growth equity funds, reflecting greater investment opportunities in the region," Bartlam said. Since the end of the half, Pantheon has committed a further GBP74.7 million.
By Samuel Agini; [email protected]; @samuelagini
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