Pantheon International (PIN ) has successfully completed a £150m tender offer as part of a ‘bold’ capital allocation strategy.

The £1.5bn listed private equity fund – which has traded at an average discount of 42% over the past year – has confirmed the results of its reverse auction tender, which offered shareholders an exit at price levels ranging from 280p to 315p, as it looked to return up to £150m to investors.

The tender cleared at a strike price of 305p per share, a 34% discount to the net asset value (NAV) of the fund as of 31 August. Numis analyst Ewan Lovett-Turner said the price, which was slightly below the top of the range, was ‘reassuring’ as it proved ‘investors are not looking for an exit at any price’.

In total, 49.18m shares will be repurchased at a strike price of 305p, with 48.15m tendered below strike price, which will be tendered in full. A further 7.34m shares were tendered at the strike price, of which 14.1% of those tendered will be accepted.

Under a reverse auction, shareholders can elect to tender some or all of their shares at price levels, in this case between 280p and 315p, at 2.5p increments. The strike price is then set at the discount at which the supply of stock from shareholders matches the overall value of the shares being redeemed, or £150m for PIN. Shares offered at a wider discount are redeemed in full, while those offered by shareholders at a tighter discount are not.

In response to the news, shares in the fund were up 0.94% at 303p, having closed at 300p yesterday. 

Investec analyst Ben Newell said the tender offer represents an uplift to NAV of 3.5% and was a ‘strong outcome for the company and its investors’. He added that it allowed all investors to ‘obtain liquidity for their positions at a price slightly higher than the recent trading level’.

The analyst applauded Pantheon’s board, which is shortlisted for Citywire’s Investment Trust Awards, for setting an example of how to use capital when trading at a material discount. 

Lovett-Turner agreed calling the board ‘a leader’ and said the capital allocation policy was ‘bold’.

The Numis analyst said the trust will benefit from a ‘more supportive shareholder register’ as those who were motivated to exit are likely to have taken the opportunity. This will have a positive impact on the second stage of the £200m capital allocation policy, that will see Pantheon buyback shares until May 2024 with the remaining £42.7m of cash.

John Singer, the private equity veteran and former Advent co-founder who became trust chair last October, said the sector had ‘not kept up with the changing needs of its stakeholders and that there is a real opportunity now to do more to put shareholders’ interest first’.