Pantheon International PLC (PIP) said it believes investor concerns about the private equity sector are “excessive” as its portfolio held up in the first half of its financial year but its share price widened to a 42% discount to net asset value (NAV).
The FTSE 250 investment trust's NAV per share grew 4% to 469.5p in the six months to end-November 2022, up 11.5% over one year or 18.8% over three years.
Net assets increased to £2.49bn at the half-year stage from £2.43bn at the end of May.
The share price decreased by 8.5%, with the discount to NAV growing in line with the wider listed private equity sector, despite the NAV relative performance outperforming the total return of the FTSE All-Share and MSCI World indices.
Excluding currency effects, the portfolio valuation remained roughly flat at 0.9% against the ongoing market volatility in the backdrop, with an average 33% uplift from portfolio exits demonstrating the embedded value in the portfolio.
Chair John Singer said: “PIP's portfolio has held up well during the period and we continue to see resilient underlying earnings performance, and strong uplifts being achieved when our portfolio companies are sold.
“Disappointingly this has not been reflected in PIP's share price and we believe that the concerns, which are being reflected in PIP's share price, are excessive.
“Whatever the future holds, we believe that PIP, which in its more than 35 years has lived through more economic cycles and world events than almost any other private equity investment trust, is in good hands.”
The trust’s lead manager Helen Steers, also a partner at Pantheon, said: “We believe that PIP's carefully diversified investment approach and robust financial position will serve it well through uncertainty. We will remain cautious and highly selective, but we believe that PIP will continue to benefit from the access that it has to exciting private company investments through Pantheon's vast, global platform.”
PIP noted that its portfolio is tilted towards small/mid-market buyouts, which it said are attractive because there are a number of techniques that managers can implement to help the companies in this stage to grow and investments in this sector typically benefit from multiple exit routes.
On the outlook, the company noted that while it is difficult to predict what is yet to come, evidence suggests that private equity outperformance tends to be even greater during lower public market return periods.
It said this is a testament to the "super active" private equity model, with the hands-on approach of its managers expected to become more important than ever through 2023 and beyond.
Overall assets under management in the global private equity market are forecast to grow 10.2% on a compound annual basis from 2021 to reach US$7.6tn in 2027.