Pantheon International (LSE:PIN) — Annual Results

0:01 Good morning, ladies and gentlemen, and welcome to the PANTHEON INTERNATIONAL PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it is appropriate to do so.

0:30 Before we begin, as usual, we would just like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to Helen Steers. Helen, good morning. Good morning, and good morning to everybody who's joined the webinar this morning. Welcome and thank you very much for your interest in PANTHEON INTERNATIONAL PLC or PIP, for short. My name is Helen Steers. I'm a partner at PANTHEON, and I'm the co lead portfolio manager for PIP. I've been at PANTHEON about twenty years now and, managing PIP for about the last five years. So I have a brief, presentation, which I'll go through this morning and, then very happy to take questions. So this morning, I'm going to go through a bit of an introduction, you know, what is PIP, what are the highlights. I'll talk about PIP's portfolio, the value in the portfolio, and then our financial results because we... Our year end is 05/31/2024, so we've just published our, annual results. I'll talk about our cash and financial position and then wrap it all up and take questions.

1:41 So first of all, who is PIP? What is PIP? Why is it important? PIP essentially makes private equity publicly available. So private equity, as you know, is the investment in unlisted companies. Private equity has actually outperformed public equities over the long term. And I think as as many people would know, public markets are actually shrinking in terms of the number of companies you can invest in on public markets. Public markets, although growing by market cap, have fewer investment opportunities. And the companies available tend to be much larger, and somewhat slower growing. And, actually, particularly with the magnificent seven, you can see the concentration of public markets. Now in order to get access to the broadest possible universe, of investment opportunities, people find nowadays they need access to private companies. And this has been something that institutional investors have been, have been very heavily involved with for for decades now.

2:42 But through vehicles such as PIP, individual investors, are actually able to get access to the private company universe. PIP has been around for a long time, thirty seven years. It was launched in 1987, and it's a globally diversified, private equity trust. And over the years, it has evolved, and I'll be talking about some of those, evolutions. Because it's closed on the stock exchange, there is daily liquidity. So unlike in a traditional private equity fund where you're tied up, locked in for ten to fifteen years, with PIP, you you actually have daily access to buy and sell the shares. I'll give a bit of an update later on on the portfolio, but it's important to stress that having been, what's commonly known as a as a fund of funds in the past, we are now moving much more to a direct company portfolio.

3:36 So now over half of the portfolio, in fact, 54%, is actually direct company investments. And these are complemented by, a fund portfolio, where we need to get access to certain types of private companies through funds rather than directly. It's a very prudently managed private investment trust, around thirty seven years. It's been around for all sorts of different market environments and economic cycles. And it's managed, by PANTHEON, always been managed by PANTHEON since the beginning and overseen by a completely independent board which numbers, four private equity veterans, on the board. So PINP had a very active year, in the year ended 05/31/2024, with a number of very key pieces of corporate strategy, that were executed.

4:31 So first of all, I think as probably people will be aware, we executed, a very large buyback. We committed to invest up to 200,000,000, in our own portfolio by buying back shares at what turned out to be a very attractive, discount. And that was our commitment, when we came out with our annual results last year. We executed on that. We actually invested a 197,000,000, during that financial year and we've continued to buy back shares. And the idea of that was to essentially acquire, our own portfolio at a very big discount, and to capture that value, for shareholders. We also committed to an ongoing capital allocation policy and that was announced, at the end of the financial year, beginning of this financial year.

5:23 And there we committed to buy back, continue to buy back shares if the discount remains wide. And it's linked actually to the distributions that we get from our portfolio. In addition to all of that, we also committed to enhancing our marketing efforts. We believe that PIP is a very, attractive stock to hold, but we need to broaden our investor base. And therefore, we need to do a great deal more education, supply more more information about private equity in general and about PIP in particular. And we've recently engaged a marketing agency, in fact, that's going to help us much more with our messaging and will also help us to target more investors in the future. So we're very excited, about that.

6:13 And, you know, lots of interesting things to look forward to in this, this new financial year. But turning back to the portfolio. Now the portfolio has shifted over time. As I mentioned at the beginning, it used to be a funds portfolio. If you've looked at it ten or fifteen years ago, it would have been predominantly a fund of funds. We now have 54% of the portfolio, which is invested directly into private companies. Now that's partly through co investments where we invest in a company alongside one of our favorite managers when the investment is is made. And that's because often a manager, will find an attractive opportunity, but doesn't have enough, equity available from their own fund. And therefore, they will invite in, a trusted long term reference investor like PANTHEON into the deal.

7:04 So that's co investments. We have another, 20%, which is, into manager led secondaries, where essentially these are the trophy assets, from certain managers' funds, which they would like to continue to hold, and we enable them to do that. So overall, 54% in directs. We have a legacy portfolio of about 11% in fund secondaries, which is solely solely liquidating, distributing. And then we have about 35% in primary funds where they... These are very much hard to access invitation only funds, which even institutional investors struggle to get access to. You'll see on the second pie chart, the PIP essentially focuses on the buyout sector. So this is not a venture, not a venture vehicle. We've got 72% in buyouts with a leaning towards small and mid market buyouts. And this is why typically you're buying a business from an entrepreneur, a founder. It's being owned by private equity for the first time, and there's a great deal of value creation that can be done.

8:09 Also, small mid market buyouts when you come to exit them in sort of five or six years time, usually, you're exiting these businesses to a strategic buyer. That's our primary exit route. Second exit route is actually to secondary, secondary buyers, so another private equity fund. We're not reliant on the IPO market. Historically, for PIP, IPOs have accounted for about 10% of our exits. So, that's quite comforting when you're, thinking about the ups and downs of the IPO market. I should stress that this is, a global portfolio with a weighting towards The US, which is the deepest, most sophisticated market in the world, and then a good chunk in Europe, about 31, with a bias towards Northern Europe. So we very much like, the Nordic Region, Benelux, Germany.

9:00 These are areas which have created very good returns for us in the past. We've got about 6%, in The UK. Overall, our portfolio is is is more than 75% US dollar denominated. And then finally, and maybe, quite importantly, in terms of company sectors, we have a leaning towards what we see as the most defensive resilient industry sectors. So 33% in information technology and, 20% in health care. And these are sectors which are being driven by long term secular trends such as digitalization and automation information technology, and, aging populations, in health care. And when I talk about information technology, I often say this is rather boring tech. This is not cutting edge stuff. These are profitable businesses and they're often doing what sounds like rather mundane things like providing accounting software, payroll software, human resources software, cybersecurity.

9:59 But these are the sorts of software packages that enterprises can't do without, And therefore, great visibility on earnings, lots of recurring revenue, and the ability to to pass through inflationary price rises. Healthcare, you know, a a big range of different sectors there, but everything from sort of devices in in all the way through to health care services. And talking about consumer, I said that we prefer the more resilient sectors. So within consumer, we've got very little that's in consumer discretionary. We're really biased towards consumer services and consumer staples. And I think overall, what's quite interesting about PINP is that we invest directly into the opportunities which are shown to us by by PANTHEON. We sit on the PANTHEON platform. Therefore, we have access to a broad range of investment opportunities.

10:51 But we've got the ability to to pick our opportunities to to to really control the deployment and to control the types of deals and the types of managers that we want to work with. So just moving, ahead, I mentioned the fact that, you know, if you looked at PIP, you know, more than ten years ago, would have been a 100% funds. We're now 54% funds, 54% direct, 46% funds, and the direction of travel there is more directs and and and fewer funds since the fund secondary part of the portfolio will be will be rolling off. As a result, our portfolio is actually becoming more concentrated. So you can see there that as of '34... End of end of last financial year, we had 513 companies accounting for 80% of our net asset value, and that's come down from almost a thousand companies.

11:43 And the weighted average life of the portfolio has also come down to around about the five year mark, which is a sweet spot for cash generation in a private equity portfolio.

11:55 We're actually very proud of our portfolio and it's delivered really good returns over the last five years. And that's continued actually even in the last financial year despite all the macroeconomic challenges that we all know about. So maybe just starting on the right hand side here, if you look through the portfolio, you drill all the way through and you look at the revenue growth and the EBITDA growth at the company level, you'll see there that our five year annualized per annum growth rate for revenue is 17%, EBITDA is 19%. And in the last financial year, this was very much in line with the five year average. And you can see there that we've outpaced the growth of the MSCI World, at that company level. And that's a function not only of the sectors that we're we're investing in, which are high growth but resilient sectors, but also the fact that private equity is very hands on, operationally focused where, our private equity managers are working extremely hard with the portfolio companies to increase their profitability, and to to really create great resilient businesses for the future.

13:03 And talking of resilience, you can see that our loss ratio, which includes not only capital lost, but also capital impaired, so anything under cost has been what I think of as being actually remarkably low. So if you look at all the investments that we've made over the last ten years, the aggregate cost is about £4,500,000,000. We've only actually lost or have impaired value of about 102,000,000. So that's a 2.3% loss ratio. And then I guess the proof of the pudding is is, you know, when we exit the businesses, we've continued to exit at, very good cost multiples. So, in the latest year, that was, three times, and the holding multiple in the current portfolio is 1.6.

13:48 So you can see that there is a potential to almost double, on exit, the, the value of those companies.

13:59 And talking about exits, you know, something that we we stress again and again is the fact that we believe actually that the portfolio continues to be undervalued. And the reason I say that is because when we exit a business, on average, we are seeing a pretty substantial uplift on exit. In the last financial year, that was a 20% uplift. So we... In terms of the cash we received, on average, it was 20% more than the last, understood valuation of of the company. And over the last, you know, ten to twelve years, in fact, since 2012, that's hovered between sort of 20 to 30% with an outlier in 2022. So very much in line with our past experience. And that, I think, is a measure of the fact that we have a huge amount of confidence in our underlying valuations.

14:50 Because when we get the cash, which is the ultimate proof of the value of the businesses, on average, that value... That cash is 20% ahead ahead of the value. The annual cost multiple, as I mentioned, you know, it's an average of three times. Actually, in 2024, the average cost multiple on exit was 3.2 times. So we are... We're pretty pleased with that in a in a more difficult exit environment. And you can see that, the annual distribution rate, has dropped. That's really a function of the slow m and a market. Normally, we would see, an annual distribution rate of an average of between 2025%. In the last year, it was 8%. And actually in 2023, it was it was 10%.

15:36 This is really a function of the... This sort of lower lower M and A environment, which I'll talk about on the next slide.

15:46 Actually, a few slides time. In the meantime, let's talk about results. So, for the year ended 05/31/2024, NAV per share growth was 6.1%, which we thought was a, was a was a good result again given the macroeconomic environment. And in fact, over the last ten years, that annualized NAV growth has been 13.5%. So, very, very, very decent level of, of NAV growth. The share price actually has performed even better. So, over the last, twelve months, the May 31, the share price, moved by, 20%. So again, quite pleased with that and pleased with our performance in our in our peer group.

16:34 And you can see that our long term annualized performance over one, three, five, and ten years and our inception since inception returns. And you can see there that, you know, we've we've delivered these very attractive long term returns, which are significantly, ahead of the, of the public markets.

16:54 And then just drilling into, that NAV per share movement over the last year, I mentioned that it was 6.1% over the year. And the contribution there was not only from the share buybacks, which, contributed 4.7%. And, you know, just to remind everybody, that was a way of buying our own portfolio at a very significant discount and getting that, accretion of value, straight away into the portfolio. But we also had valuation gains in the portfolio of 5%. So the underlying portfolio performed actually pretty well. We were negatively affected though by foreign exchange. I said that earlier in... Earlier on in the presentation, I said that 75% of our portfolio is US dollar denominated.

17:42 The pound strengthened against the dollar during this period, and therefore, we we had a foreign exchange impact. Over time and, you know, we have been going for more than three decades, we have seen that that actually evens out over the over the longer term. And we don't hedge. It's quite difficult to hedge currency in in the private equity world. If we look at the valuation movements by stage, you'll see there that all all types actually of of investment contributed.

18:16 Even the venture part of the portfolio, which is very small. It's only 4% of what we do, but it's nice to see the turnaround there in the venture space after a more difficult 2023. And you'll see that the buyouts have continued to deliver good, good rates of return there. And actually, it's not on the slide, but if we looked by type, so by secondary, current investment, and primary, all of those types contributed as did, all the different, regions.

18:50 So the year end was May 31. Since then, we have published, our NAVs, for June and July, and you can see here the latest results, which are the annualized performance as of July 31. I should stress that these numbers are still based very much on March underlying valuations, as they were at the year end. So we're waiting for the June 30 valuations to come through. You can see here that there's been a small amount of of negative downdraft, again, due to, foreign exchange impact. Otherwise, not really too much to report, so far in this financial year. We've remained active there in terms of investments. So not only doing the share buybacks, but also making new commitments to new, to new funds, and, new investments and, new single asset secondaries.

19:45 So I showed earlier a slide with the distribution rates. I'm showing also the slide here with the core rates, and they're really two sort of two sides of the same same coin. So over the last twenty four months, we've had a very slow m and a environment, which has affected private equity, but it's also affected sort of general, m and a business. People often ask me why, you know, this is this is this is, being the case. Our view is really that the uncertainty in markets over the last two years have contributed to the slowdown in m and a. So that it's really quite difficult to price a company and to conclude a transaction when you've got a lot of macroeconomic uncertainty and a concern about inflation, interest rates, and then all the geopolitical concerns on top of that. Somebody pointed out to me this week that over the course of 2024, over half the world's population will be going to the polls, including The United States, and, of course, The UK earlier this year.

20:44 So that that has contributed to this sort of uncertainty, which has meant that it's more difficult to get transactions finalized, and to get transactions closed. And this is manifested in, a lower rate of exits, which has manifested itself in a lower rate of distributions, not just for PIP, but for the whole of the private equity sector. And then on the other side of the coin, in terms of core rates, which is really a measure of new deal activity, that's also been pretty slow. So we've seen, you know, almost record low core rates as well as record low distribution rates. Now we're starting to see a change in that environment. There's a lot more activity going on. So when we talk to our private equity managers, we can see there's many more companies on the exit ramp and there are many more multilateral discussions going on. So processes going on to sell businesses, whereas a year ago, there were more sort of bilateral discussions. And if they fell over, then that that company was taken off the market.

21:44 And I think it's important to say that with private equity, that the managers are not compelled to sell the businesses. So if they don't get the price they want, but the company's doing well and you've seen the the average rates of revenue and EBITDA growth in our portfolio, then a private equity manager will hold on to those businesses so that they can, continue to benefit from the growth for for another few months or another another year. And, you know, that... That's why I think, yes, we do look at distributional core rates, and it is important. But what's really important is looking to see at the... You know, what the health is actually of the underlying portfolio. Now turning back to distributions and calls, this then results obviously in our net portfolio cash flow. And you can see that the paper is still generating cash overall. So we're still in a net, cash flow positive, scenario. Over the last ten years, we've generated about 1,600,000,000 of cash, so around a 160,000,000 a year. So it is a cash generative portfolio. And once the exit environment picks up, we would expect to see, you know, many more exits, resulting in more distributions coming back to the portfolio.

22:54 And, you know, if you talk about cash, it's obviously important then to talk about, the balance sheet. The balance sheet's in very good shape. We have a small amount, of net debt. It's under, it's under 9% at the moment, as you can see on the chart. The board has made a commitment that they would not want to see a net debt to NAV ratio of more than sort of the 10 to 15% level. That actually puts us in a good position versus our peer group as well. And it's important to say that the debt that we have that we put in place was as a result of the the refinancing that we did last year where we completely refinanced our revolving credit facility.

23:40 We replaced three lenders, one of whom is Credit Suisse, with five lenders, and we did that on on good terms. And then we put in place a $150,000,000 private placement, which we placed with five very high quality North American institutions. And that's much longer term, capital and actually at a much lower cost, than our our CF. So we feel that PIP is actually in a in a very good position. We have a portion of this long term debt from a 150,000,000, and then we have an RCF which we can draw upon to really bridge sort of calls and distributions. And at the moment, we, you know, we have 382,000,000 of that RCF, which is undrawn. And the RCF is denominated in dollars and euros to match our underlying commitments.

24:35 You know, just turning to the sort of commitment side of it, you know, looking at our coverage ratios. So, you know, portfolio and available financing, 2,500,000,000. We have undrawn commitments, which are those commitments that we've made to funds that have been... That that not yet been drawn. And those those take into account funds which are up to thirteen years old. So really quite long in the tooth, some of them, and you would not expect some of those commitments to be drawn. So if you take the ratio of the 2,480,000,000 versus $7,735, that's a financing cover of 3.9 times, which we feel extremely comfortable with. And our undrawn coverage ratio is close to 90%.

25:21 So that's the available financing plus the amount of distributions that we would normally expect to have in a year, and that's 90% covering the undrawn, which we would not expect to get all drawn in one particular year. It's probably worth saying that not only have we probably been quite prudent in estimating those commitments, but there's also... There are also all sorts of protections in place to stop managers calling large amounts of capital in the space of twelve months. And, typically, a manager would not be able to call even in a actively investing fund more than 40% of the commitments. So overall, you know, we feel in an extremely good, prudent position on the balance sheet, and that gives us the confidence, to to go forward with our investment program.

26:11 So a few words on the board. So as I mentioned a little bit earlier, we have a board which is completely independent from the manager. There's nobody from the manager that sits on the board. The directors have a very wide range of skills, ranging from private equity to, to to... We have a senior civil servant on... Ex senior civil servant on the board as well, people who are experts in media and marketing. And importantly, four out of the seven directors are private equity veterans. So they've been working in this market for a very long period of time and, provide us with a huge amount of, both challenge, but also guidance, which is is really important for us. In terms of changes to the board, nothing really in this financial year, but David Melvin will retire from the board because he's reached the end of his term.

27:05 He'll retire at the AGM, And Zoe Clements is the audit chair designate who will take David's place. And the board is starting to look for new NE... NEDs, and and that was actually announced in the annual report as well. Really important to say that the board has significant skin in the game. So all the board members own shares in PIP, and some actually own very large numbers of shares. Overall, as of August 29, this is probably a little bit out of date now, the directors own 5,000,000 shares. That's quite a considerable amount of capital they've they've they've invested in PIP. In addition, PANTHEON partners and associates, also own shares in PIP. We're only allowed to report on the partners holdings.

28:00 14 PANTHEON partners own 1,500,000 shares in, in PIP, but it is much more widely held amongst nonpartners at at PANTHEON. And that really brings me to the conclusion. So PIP has been around for a long period of time, almost four four decades actually. Over that period, has produced, what we think of as being extremely strong long term performance. So annualized NAV per share growth, over the last ten years of thirteen point five percent, and since inception of almost 12%. So we think of that as being, you know, very, very good performance. And it's been achieved through a well diversified global portfolio that really gives investors, you know, whether they're large institutional investors or individual investors, a slice of the, high performing, high growth, exciting private company universe.

29:00 We continue to believe that there is very good evidence in our portfolio of embedded value. I talked at some length about the uplifts that we see upon exit and also this sort of holding multiple 1.6 versus the the exit multiple. And we think of it as a... As an extremely good way to hold private equity. You know, it's cost effective. It's liquid, and it's suitable not only for the, the institutional investor base that we have, but also for our individual investors. And overall, managed, by PANTHEON and managed in a responsible and, sustainable way. And with that, I'm very happy now to to take any questions. Perfect, Helen. That's great. If I may just jump back in there. And thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions that were submitted already, I would just like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can all be accessed via your investor dashboard.

30:07 Helen, we've received a number of questions from investors that were both pre submitted ahead of today's event as well as those that have made their way through throughout your presentation this morning as well. So perhaps if we dive straight into it, the first question that we have here reads as follows. How do you answer the concerns some of the valuations of PE in general are overinflated? Well, it is it is a perennial question. And, you know, I think there was there was quite a bit of concern, probably more like sort of two or three years ago when, you know, valuations went up and then and then, you know, there were the, the downdrafts in public markets. I think, you you know, if you go back to the slide here that I showed with the, the uplifts on exit, I think that's really the proof of the pudding here because when we exit, our businesses, typically, we're getting more cash than the last, understood valuation of that particular business. So, for us, the fact that we're able to do this on a continuous basis and, you know, as I mentioned, we've been measuring this metric now since 2012, and you can see there on the top left hand side, you know, the... These these average uplifts on exit.

31:19 To me, that is the ultimate proof. It's the cash that you receive versus the value in the portfolio. And then you can see the the, cost multiples on exit. So, you know, on average, we're getting this this three times, cost multiple. And on average in the portfolio, as I showed earlier on in the presentation, the companies are are held at a 1.6 time 1.6 times cost multiple. So that we believe there's a lot of embedded value there. And therefore, you know, investors maybe should should should look at these sorts of statistics. And then probably the ultimate, I suppose, indication of how much, you know, I suppose confidence we have in our evaluations is is looking at the big buyback that we did last year where, you know, we were buying essentially a portfolio that we knew extremely well at what we saw as being an incredibly attractive discount and then with this sort of embedded value on top of it. So, you know, putting that amount of money into our own shares, I think, showed that we we really do eat our own cooking.

32:20 Perfect. Thanks, Helen. The next question that we have here asks, is it fair to characterize your manager led secondary strategy as best assets, best managers, best alignment? That... That's actually very much the way that we see it. On the manager led secondaries where essentially these are, trophy assets that the private equity managers really want to hang on to, but they're getting pressure from their limited partners and their traditional funds to to return capital because everybody is finding the distributions have been quite slow. So they're being asked to return capital, but they've got their eye on the ultimate prize, which is the ultimate value of a particular company in the portfolio. And, you know, because of the alignment of interest in private equity, they're looking at that ultimate carried interest, which is a function of the of the profits they're going to create on that particular company.

33:13 Therefore, they want to hold that company for longer. So, the way they can do that is by creating, a new vehicle, you know, we call it a continuation fund. We roll the, the trophy asset into this particular vehicle. The investors that desperately need the cash can sell and can can get liquidity,

33:35 And, new investors like ourselves can come in and help the manager to hold these businesses for longer and to really, be able to create, that ultimate, value, in the portfolio company. Now, you know, we we have a tremendous amount of deal flow in this particular area of secondaries. We are a specialized secondary player as as a as a whole. We do get a lot of deal flow. We're able to pick the deals we want to do. So we are able to pick the companies. We're able to pick the managers that we want to to work with, and we're able to shape the terms and conditions in those particular deals. So I don't think, actually, it's too much of a stretch to say that we, you know, we are trying to invest in the best assets, you know, and the right sectors we want to invest in, working with the, you know, the right managers with the right alignment of interest.

34:27 Perfect. Thank you. In fiscal year twenty twenty four, you invested a higher percentage into growth and venture and more into primary funds compared to the current portfolio construction. Are you planning to increase the share in these sectors, or did you just see better opportunities?

34:43 That's a great question, actually. And I think what I would say overall is in any particular year, the commitments to the different investment types might might vary a little bit. But the overall, aims you saw on one of my earlier slides is to have around about a third of the portfolio in primaries. And then, the rest is being made up of secondaries and current investments. And over time, that secondary part of the portfolio will shift much more to these single asset secondaries that I just talked about, in terms of the trophy assets. So over time, you'd expect to see that 54% in directs actually increasing. Now in any particular year, it is a function of the types of investments, the types of deals that we're seeing. And in the last financial year, we had a number of our favorite, venture managers come back to market. And, you know, these venture managers are invitation only, access constrained, and, you know, basically, they are one and done in terms of the the closings before they've

35:45 even really launched. So we had the opportunity to recommit to these managers, and we took that we took that opportunity. So, venture and growth was really a function of those opportunities that we saw during the year. We did carry on with the other investment types, but it might look just a little bit, skewed because of those particular opportunities that we saw.

36:08 Perfect. Just turning, to the next question that we have here, which asks, in the latest annual report, you show a case study in which you said, that you partially exited, the position. How do you choose to exit in such a case as opposed to run, your winners? Yeah. That's a great question, actually. So I think, first of all, what I should say is that, when we exit a business, we're doing so always in partnership with our private equity managers. So when it's a co investment, when the company comes up for exit, we will very rarely take an independent decision versus our manager because the manager knows knows most about the company. They are... They're on the board of the company. They know what the prospects of the company are, and therefore, we will be joined at the hip with the manager. And we will... Just as we entered the company on exactly the same terms and conditions as the manager, we will exit the company as well on the same terms and conditions and at the same time.

37:05 So we're very much joined at the hip on things like co investments, also with the manager led secondaries that I just talked about. When it comes to fund investments, the manager will choose the right time to divest of a company, and we will usually go alongside that manager. Now in the case, I think, of the company that we're talking about, you know, we had the opportunity there alongside the manager to partially exit the business. And I think from memory, I I think we made, close to probably a 5.7, 5.8 times, multiple of cost on that particular exit and, an IRR in high seventies. So we chose to partially exit alongside the manager and then to retain a small stake to take advantage of the next sort of phase of growth, of that particular business. So it's,

37:55 it is a very finely judged type of decision. But, normally, what we're doing is we are going in alongside the managers and taking really their guidance as to the right the right thing to be doing here because they know the company is the best, and therefore, we can benefit, actually from their insights and their... Actually, their their knowledge of the business and its prospects.

38:21 Thanks, Ellen. Is the share buyback scheme achieving what you expect, and what is your ultimate goal with it? Yes. That's that's that's another great question. I mean, if I look back at the last year, the very large buyback that we did, you know, absolutely did what we wanted to achieve, which was essentially capturing that value for shareholders. So we always said at the time that doing, buybacks and even a very large buyback was not a silver bullet to to cure all the ills of of, you know, sort of discounts in the sector, but it certainly enabled us to capture that value that was sitting on the table. So for us, it felt almost like a no brainer to do that buyback, particularly the sorts of discounts that we were seeing, in the middle of last year.

39:07 So going forward, you know, we have committed to the ongoing capital allocation policy whereby, you know, when the discount is high, you know, and there is value to be had there for shareholders and we've got the cash flow coming in, we can, dedicate part of that cash flow to doing share buybacks. So I think in terms of, capturing that value for shareholders, it's done what we've we've wanted it to do. In terms of affecting the discount, I mean, the share price did perform very well last year, so the discount did come in somewhat. But, as I think everybody on this call will will appreciate, you know, discounts in the private equity sector, it's a it's a it's a sector wide issue. And I think we all have to work as a sector, indeed, our chairman has said, in order to increase education, information, reporting transparency so that the entire sector really can be rerated. And we will certainly be doing our part in terms of getting the information out there, you know, and providing that education on the sector. So in fact, sessions like this are really helpful where I can do things like talk about value in the portfolio and performance of the portfolio because I think that will help to give confidence, you know, in the in the overall sort of metrics and the value creation of this sector.

40:28 Perfect. Thank you. And perhaps just turning to one final question here. How do you check slash control the valuation of the underlying companies in the funds where you're invested? Is this outside of your control? Thank you. So the the valuations, that we, base PIPS results on, are very much based on the valuations that we get from the underlying managers. And that's why there's always this lag because we have to wait for the valuations to come through from the the managers. Two things about the value... The the the manager's valuations. First of all, you know, these are audited usually on an annual basis. So the, the managers themselves have audited accounts.

41:15 So there is... There are checks and balances there. There are often valuation committees as well. Myself, I've sat on some valuation committees for managers so that there is some outside scrutiny even on sort of an ongoing basis. But I think the third biggest thing is really looking at the, at the sort of what I would call the valuation philosophy of the managers. So managers are inherently conservative, and I know that that may come as a bit of a surprise, to people. But private equity managers are not incentivized to write up their companies aggressively. The reason I say that is because they're not paid on the unrealized valuations in their portfolio. They're paid a management fee, which is actually based, first of all, on the commitments in their funds. And then after the investment period is based on the cost of those particular deals, not on the value. So their management fee is not based on value.

42:10 And then they only get that famous carried interest performance fee when the companies are exited and the cash comes back, and that's on a whole fund basis. So they can't sort of sell one company at a tremendous, you know, realized value and then have a load of duds in the portfolio. They would not get that carried interest in in that particular case. So the managers are very much, I would say, focused on that ultimate price, you know, on that ultimate value that's going to be created. In the interim, if they aggressively write up valuations one quarter and then have to downgrade them the next quarter, they've actually got quite a lot of explaining to do to their limited partners. So what you will find very typically in private equity, there's been a lot of commentary about this, is the valuations end up by being smoothed.

42:59 So, they end up by being smoothed, on the way up. So the valuations in private equity tend not to follow the public markets. They tend to be under the public market valuations. And equally, if there are big shocks in the public market, you... You'll find that that's not translated sort of dollar for dollar or pound for pound, into the private markets. All... Also worth resaying that private equity managers don't have to sell their businesses at any point in time. So if public markets are coming off, and valuations are down, they don't have to sell the businesses. So they can wait until there's a better environment, until they've, they've managed to add another sort of set of double digit revenue growth and EBITDA growth to their businesses and then sell at that point. So rather a long answer to the question, I'm afraid. But, there is... First of there is scrutiny, on valuations. There's scrutiny from outside auditors, but also from the limited partners such as ourselves.

43:59 And then looking at incentivization and motivation, there's really no incentive to aggressively write up these, businesses beyond where they they should be in terms of fair value. I hope that helps.

44:13 Perfect, Helen. That's great. And thank you very much, indeed for answering all of those questions that came in from investors. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But, Helen, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Thanks very much. And, a big thank you to everybody that's been listening in this morning and for all the questions that you've submitted. It's really important for us to to have your questions, to engage with people, and to understand what's on people's minds.

44:59 I hope that the presentation this morning, has been helpful. Please never hesitate to get in touch with

45:06 us. You know, all our details are on the website. If you have any questions or if you'd like to know more about anything, you know you know you know where to find us, we'd be very happy to help. And, you know, maybe just a final concluding words on on PIP. You know, we continue to be very excited about the portfolio, about its prospects. We think that after, you know, two years of relatively muted, m and a that we are seeing some interesting things, happening in the portfolio. And, you know, we hope to be able to continue to report good news to you, our shareholders. So thank you very much again.

45:43 Helen, that's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of PANTHEON INTERNATIONAL PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning

46:10 to you all.