Net Asset Value(s)
12th August 2011
PANTHEON INTERNATIONAL PARTICIPATIONS PLC
NET ASSET VALUE AT 30th June 2011
The Board of Pantheon International Participations PLC ("PIP"), the quoted
private equity fund-of-funds investment trust, today announces an unaudited
adjusted net asset value ("NAV") per share of 1,104.12p at 30th June 2011
(1,052.44p at 31st March 2011), an increase of approximately 5% per share.
The adjusted NAV per share of 1,104.12p excludes a derivative asset ("Standby
Asset") relating to the Company's standby subscription agreements with certain
institutions under which those institutions can be called upon by the Company
to subscribe for new redeemable shares in the Company ("Standby Commitments").
The directors have been advised by the Company's auditors that these agreements
need to be included as an asset in the Company's accounts in order to be
compliant with FRS 26. The Board considers that the best measure of the
Company's economic value to shareholders is the adjusted NAV per share which is
directly comparable to previously published NAV per share. Further details of
this accounting issue have been provided later in this announcement.
The unaudited adjusted net assets attributable to ordinary shareholders and
redeemable shareholders increased by £34.4m in the quarter from £698.7m to £
733.1m. Gains of £32m were made in the quarter from reported valuation uplifts
in the portfolio. These uplifts were mainly driven by the Company's mature
venture portfolio and buy-out funds based in the USA and Asia. Realisations in
the quarter also contributed to the increase in value. Gains from movements in
exchange rates totalled £3m. Interest and expenses, net of income, totalled
approximately £1m.
New Secondary Commitments
As announced in June 2011, PIP committed to a large proprietary secondary
transaction alongside other Pantheon clients. PIP's commitment, which amounted
to approximately £24m, consisted of a high quality global portfolio of 25 funds
with over 400 underlying companies. The portfolio, which had an acquisition
cost to PIP of £18.8m, and was 79% funded at acquisition, was purchased at a
discount relative to September 2010 valuations.
Cash Flow
During the quarter ended 30th June 2011, PIP received distributions from
private equity assets of £41.8m and invested £18.6m through drawdowns on
commitments to underlying private equity funds. Overall the Company has
continued to see positive net cash inflows from investments. Net cash inflow
was £23.2m before the acquisition cost of the new secondary transaction.
Realisation Activity
The Company has continued to experience an increase in year on year realisation
activity. In many cases, distributions received by PIP have been highly
profitable. Examples of distributions in the quarter include (see note 1):
* Plexxikon, a US-based biotechnology company, which was acquired by Daiichi
Sankyo Company, a Japanese global pharmaceutical company, for US$805m
up-front, with near-term milestone payments associated with the approval of
PLX4032, an oral cancer drug, totalling an additional US$130m. PIP held
Plexxikon through Alta Partners and Pacven Walden V. The exit generated an
uplift of approximately 200% on the value of PIP's holding in Plexxikon.
The distributions received by PIP relating to Plexxikon amounted to £3.7m.
* Aalborg Industries, a global market leader in marine and land-based energy
and environmental solutions, was acquired by Alfa Laval, a specialist in
heat transfer, centrifugal separation and fluid handling. PIP held Aalborg
Industries through Altor Capital 2003. The distribution received by PIP
relating to Aalborg Industries amounted to £0.8m.
* SLV Group, a provider of innovative lighting products and systems in
Europe, was sold by HgCapital. The exit generated a substantial multiple
and uplift to carrying value. The distribution received by PIP relating to
SLV Group amounted to £1.2m.
In addition to distributions received in the quarter, the Company received news
of exits for a number of portfolio companies which are likely to generate
significant distributions in the coming quarters. These exits included:
* In May 2011 Nordic Capital announced an agreement to sell Nycomed, a
privately-owned pharmaceutical company, to Takeda Pharmaceutical Company
Limited for €9.6 bn on a cash-free, debt-free basis. PIP holds Nycomed via
Avista Capital Partners and Nordic Capital V and VI, and the exit should
generate an approximate 35% uplift on the value of PIP's holding.
* In May 2011 Yandex, the leading internet company in Russia, operating the
most popular search engine and the most visited website in Russia, held an
initial public offering on Nasdaq raising approximately US$1.4bn. Baring
Vostok sold 10% of their holdings via this IPO. PIP holds Yandex through
Baring Vostok III and IV.
Call Activity
In addition to the new secondary commitments, the Company continued to invest
through calls from its undrawn commitments. Examples of calls in the quarter
include:
* Hutton Collins invested in mezzanine and equity financing to support Duke
Street's acquisition of Wagamama from Lion Capital. Wagamama is a chain of
Japanese-style noodle bars. The business has expanded significantly over
recent years and expects to continue this growth, both in the UK and
internationally. The call paid by PIP relating to Wagamama amounted to £
2.4m.
* Barclays Private Equity acquired a majority stake in The Mill, an
award-winning video content business for global brands and advertising
agencies. The Mill is best known for producing sophisticated digital visual
effects for major brands including Nike, T-Mobile and Sony. Barclays
Private Equity's funding will be used to support the company's continued
organic growth, opportunities in adjacent markets and further expansion
into emerging economies. The call paid by PIP relating to The Mill amounted
to £0.9m.
* Genstar Capital Partners acquired MW Industries, a US manufacturer of
highly engineered springs, specialty fasteners and other precision
components. Genstar's executive network of operating professionals in the
industrials sector will play a key role in achieving further growth for MW
Industries. The call paid by PIP relating to MW Industries amounted to £
0.8m.
Outstanding Commitments
Outstanding commitments to investments, which are likely to be called over
several years, stood at £242.8m at 30th June 2011, calculated using exchange
rates at that date.
Sample Underlying Portfolio Performance
The manager, Pantheon, has reviewed the largest 50 buyout funds and direct
investments to provide sample underlying company-level analysis of the
portfolio performance as at, and for the year to, 31st December 2010. The
companies within the sampled funds accounted for approximately 50% of the value
of the buyout and direct portfolio at 31st December 2010. The figures for 31st
December 2009 are extracted from the analysis of the largest 50 buyout funds
and direct investments disclosed in the 2010 Annual Report and Accounts.
Sample Weighted Average Company Data 31st December 2010 31st December 2009
(see note 2)
Sample Net Debt / EBITDA:
Small/Mid Buyout 3.2x 3.4x
Large/Mega Buyout/Direct 4.4x 4.3x
Top 50 Buyout Funds & Directs 3.7x 3.9x
Sample Enterprise Value / EBITDA:
Top 50 Buyout Funds & Directs 9.5x 9.5x
Sample Revenue Growth:
Top 50 Buyout Funds & Directs 11% 3%
Sample EBITDA Growth:
Top 50 Buyout Funds & Directs 22% 6%
* Leverage multiples are at reasonable levels and remain below the multiples
associated with the peak of the buyout market.
* Companies continued to see revenues and earnings growth. The high rate of
EBITDA growth, which is nearly double that of revenue, supports the view
that private equity managers, in general, have been successful in driving
cost efficiencies within their portfolio companies.
Cash Balance and Remaining Facilities
As at 30th June 2011, PIP had settled cash balances equivalent to a total of £
27.6m.
Loan Facility
As previously announced, in June 2011 the Company entered into a new
multi-currency revolving credit facility agreement ("New Loan Facility"),
replacing its previous multi-currency revolving credit facility agreement that
was due to expire in May 2012. The New Loan Facility comprises $82m and €57m
(down from $117.4m and €85.9m in the previous facility) and remained undrawn at
30th June 2011.
Drawdown of Redeemable Shares and Repayment of Loan Notes
On 22nd July 2011, PIP announced that it would draw down commitments to
subscribe for £100.5m of new redeemable shares of £0.01 each in the capital of
the Company ("New Redeemable Shares") from the institutions with whom the
Company has entered into the Standby Commitments. Simultaneously the Company
will repay £100.5m of outstanding unsecured subordinated loan notes ("Loan
Notes") held by those institutions. These actions will effectively exchange the
full balance of the Loan Notes for the New Redeemable Shares. Following these
actions the Company will have £49.5m of Standby Commitments remaining undrawn.
The Board does not currently expect to utilise the remaining £49.5m of Standby
Commitments.
Based on the adjusted NAV per share of 1,104.12p at 30th June 2011, the Company
will issue 9,102,279 New Redeemable Shares. The Company intends to complete the
issue of the New Redeemable Shares and the repayment of the Loan Notes on 24th
August 2011. The Company has submitted an application for the New Redeemable
Shares to be admitted to the Official List of the United Kingdom Listing
Authority and to be admitted to trading on the London Stock Exchange plc's main
market for listed securities ("Admission"). It is expected that the Admission
will become effective, and that dealings in the New Redeemable Shares will
commence, on 24th August 2011.
Based on exchange rates at 30th June 2011, PIP's total available liquid
financing capacity stood at approximately £180m, comprising £27.6m of settled
cash balances, £102.5m of unutilised bank loan facilities and £49.5m of
unutilised standby financing.
Foreign Exchange Exposure
At 30th June 2011, the value of the private equity investment assets stood at £
810m. Of the private equity investment assets at PIP's holding level, 68% were
represented by funds reporting values denominated in US dollars, 25%
denominated in euros, 6% denominated in sterling and 1% denominated in other
currencies. Of the 68% of investment assets denominated in US dollars,
approximately 5% are invested in funds investing mainly in Europe and
approximately 10% in funds investing mainly in Asia. In addition to the funds
reporting values denominated in sterling, many of the euro-denominated funds
have investments in the UK.
Valuation Policy
PIP's valuation policy for private equity funds is based on the latest accounts
produced by the managers of the funds in which PIP has holdings. In the case of
the valuation as at 30th June 2011, the majority of valuations (accounting for
circa 96% by value) are dated 31st March 2011. Private equity funds may contain
a proportion of quoted shares from time to time, for example where the
underlying company investments have been taken public but the holdings have not
yet been sold. The quoted market holdings at the date of the latest fund
accounts are reviewed and compared with the value of those holdings at the year
end. If there has been a material movement in the value of these holdings, the
valuation is adjusted to reflect this.
Accounting Treatment under FRS 26 of the Standby Agreements
The Standby Commitments were entered into by PIP between 2005 and 2008. Under
the terms of the Standby Commitments, certain institutions agreed to subscribe
an aggregate amount of £150m for new redeemable shares in the Company when
called upon by the Company to do so at a subscription price equal to the
prevailing NAV per share at the time of subscription.
FRS 26 requires that the Standby Commitments are treated as a derivative and
valued as an asset accordingly. At 30th June 2011 an asset of £53.5m,
representing 80.6p per share, was recognised on the balance sheet, as the
difference between the quoted price of the redeemable shares and the adjusted
NAV per share multiplied by the number of redeemable shares that would be
issued (at adjusted NAV per share) assuming a full drawdown of £150m under the
Standby Commitments. The Company will be required to make a prior year
adjustment to the 2010 report and accounts to adjust for the Standby Asset in
the balance sheet as at 30th June 2010. The utilisation (such as that which
will take place on the 24th August in respect of £100.5m of the £150m standby
facility) or expiry of Standby Commitments will lead to a reversal of the asset
in the accounts at such times.
The adjusted NAV per share, which excludes the Standby Asset, is directly
comparable to NAV per share as previously published by the Company. It is the
Board's view that the adjusted NAV per share of 1,104.12p reflects the best
measure of the Company's economic value.
Note 1
Distribution and call amounts included in this announcement as examples refer
to the distribution or call which relates to the discussed company. The
distribution or call amount may include small amounts relating to other
companies or items.
Note 2
The sample buyout figures were calculated from the companies, where information
was available, within the largest 50 buyout funds and direct investments in
PIP's portfolio as at 31st December 2010. This sample provided coverage of
approximately 50% of PIP's buyout and direct investment exposure. The revenue
and EBITDA figures were based upon the year to 31st December 2010, or where not
available, the closest annual period disclosed. The net debt and enterprise
value figures were based upon 31st December 2010 underlying valuations, or the
closest period end disclosed. The underlying company data was weighted by NAV
to calculate an average. Individual company revenue and EBITDA growth figures
were capped at +1000% and -1000% to avoid large distortions from movements
relative to a small denominator. The methodology for the figures to 31st
December 2009, which is largely consistent with the methodology above, has been
disclosed in PIP's 2010 Annual Report and Accounts (for the period ended
30th June 2010).
Ends
NOTES
PIP
Pantheon International Participations ("PIP") is a London quoted investment
trust, managed by Pantheon, one of the longest-established international
private equity fund-of-funds manager, investing in both primary funds and
secondary transactions. With investments in private equity funds, covering late
stage buyouts to early stage technology, PIP enables individuals as well as
institutions to gain access to a substantial portfolio of unquoted companies in
the USA, the UK, Continental Europe and Asia, within funds managed by
experienced private equity managers. PIP may occasionally acquire direct
holdings in unquoted companies, usually where a vendor is seeking to sell a
combined portfolio of funds and direct holdings. PIP's investment policy also
extends to investing directly in companies where there is a private equity
manager well known to the Company investing on the same terms.
Pantheon
Pantheon has been active in private equity since 1982 and is now one of the
world's leading private equity fund-of-funds managers, with £15.1 billion under
management (as at 31st March 2011). Pantheon has offices in London, San
Francisco, New York and Hong Kong, and has made investments in over 1,000 funds
globally.
For more information please visit PIP's website at www.pipplc.com or contact:
Andrew Lebus or Alexis Barling
Pantheon
020 7484 6200
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of this announcement.
Registered office: Beaufort House, 51 New North Road, Exeter, Devon EX4 4EP.
Incorporated in England number: 2147984.
An investment company under section 833 of the Companies Act 2006. Managed by
Pantheon Ventures (UK) LLP.