Pantheon International launches discount offensive

Pantheon International (PIN ) is stepping up its discount offensive, pledging steadier capital deployment and larger buybacks as part of the next stage of its strategy overhaul.

In an update last week, the £1.5bn private equity investment trust acknowledged that returns in the asset class can ‘vary dramatically’ through cycles, even while consistently outperforming public markets over the long term.

By adopting a ‘more consistent’ deployment approach, PIN hopes to ‘mitigate’ these fluctuations. In practice, this will mean investing capital more consistently through the cycle into both new investments and capital calls, while actively managing the impact on the balance sheet.

The update specified that PIN will continue to invest only with, and alongside, leading private equity managers, being careful to maintain the ‘right mix’ of direct company investments and primary funds in the portfolio.

Pantheon’s head of communications Vicki Bradley explained: ‘Previously, the amount of capital deployed, which was in turn a function of distributions received, was managed to achieve a target balance sheet position. Under the new approach, the amount of capital deployed will be kept relatively consistent regardless of distribution levels.

‘The resulting impact on the balance sheet will be managed through asset sales (to generate additional liquidity/reduce gearing) or by investing excess cash into liquid, yielding securities. Capital calls and cash paid on new investments would have fluctuated more under the old approach, whereas under the new approach, it should be held relatively constant.’

Bradley highlighted that the portfolio remains sufficiently cash generative to support both steady deployment and ongoing buybacks. Despite muted exit markets, she noted PIN generated £131m of net cash in the year to May 2025 – 3.5 times the prior year – and £1.5bn over the past decade.

Bigger buybacks and broadening the investor base

Following the completion of its £200m buyback programme in 2024, PIN introduced a capital allocation policy (CAP).

The board has since allocated more to buybacks than the formula required, spending £53.5m over the last financial year and earmarking a further £30m for the current year - of which £21.9m had been invested by mid-September.

To provide ‘greater flexibility’, the trust is now enhancing the policy so that 20% of gross distributions will flow into a buyback pool, to be deployed when the discount exceeds 20%.

The board will continue to manage cash and debt via its £400m revolving credit facility and $150m private placement notes, while approaching leverage with a ‘restricted appetite’. The update also specified that asset sales in the secondary market, used sparingly in the past, are expected to be deployed more actively when conditions allow.

Alongside balance sheet and deployment reforms, PIN is also looking to expand expand its audience, having identified advisers and high-net-worth individuals  as priority targets.

The trust has already launched a series of advertising campaigns to target these groups and said the results provided ‘valuable insights’. In addition, a new website will be launched in October along with a refreshed brand and messaging. 

Chair John Singer CBE said: ‘Over the past several months, the board has been working closely with our manager, Pantheon, on Step Three of our corporate strategy which aims to increase demand for PIN’s shares and narrow the discount at which they trade. The strategy leverages our key strengths of board proactivity and exceptional board-level PE experience.

‘We have developed an integrated corporate plan that will guide the underlying investment, gearing and marketing strategies for the trust. We are now ready to implement a number of tactical changes which we believe, when taken together, will further strengthen the company balance sheet and improve PIN’s long-term NAV performance.’

Shares in PIN have returned 56.2% over five years including dividends reinvested, versus a 79.3% net asset value (NAV) total return. As of yesterday, the trust’s discount stood at 34.5%.