Pantheon International (LSE:PIN) — Interim Results

0:00 Good morning, and welcome to the PANTHEON INTERNATIONAL PLC Investor Presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Just click Q and A, type your question and press send. Company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Helen Steers, PANTHEON PLC. Good morning. Thank you very much for this opportunity to present to you today. And I will be speaking to... Today about PANTHEON INTERNATIONAL PLC or PIP for short, which is a specialist private equity investment trust.

0:48 I've got a short presentation and then very happy to take questions.

0:53 So just going to the... Skipping over the usual disclaimers. So first of all, what what is PIP? So PIP is a specialist private equity investment trust, and essentially all private equity is is equity investments but in unlisted companies. Now PIP has been around for a long time. It was floated on the London Stock Exchange in 1987, so it's got an extremely long history getting on for thirty seven years of investing in private companies around the world. Now why private equity? Private companies actually account for many more investment opportunities than public companies. And over the last twenty years, in fact, the public company universe has actually been shrinking in terms of the number of companies. And what we tend to find is that private equity gives you access to these smaller, faster growing companies, which tend to be in growth sectors of the economy. And I'll talk a little bit about that when we go through PIP's portfolio.

1:55 Now PIP is an actively managed investment trust, and it provides this access to a global portfolio, a ready made portfolio of private companies. And because it's listed, it's entirely liquid, which means that you can buy and sell shares in PIP just as you would in any other public company. Probably worth saying that PIP has evolved over the last few years. I'll talk a little bit about that during the presentation. But whereas it started out life as a fund to funds type vehicle, it's now well over 50% invested directly into companies, which provides a little bit more granularity and texture in the portfolio. It's a very prudently managed vehicle. You know, we've been doing this for a very long period of time with, therefore, a well constructed balance sheet. And again, I'll talk about that during the presentation.

2:46 And really in terms of the way that it's been put together, the the portfolio is what we would call an all weather portfolio. So it's not cyclical, and it's really been constructed to be able to be resistant and resilient to all sorts of different macroeconomic environments. It's overseen by an independent board, completely independent. There's nobody from the manager, PANTHEON, who sits on the board of PIP. And the board of PIP consists of seven people, four of whom are private equity veterans specialists in the field, which is is very helpful in terms of guidance for ourselves as the manager, but also I think in terms of representing you, the shareholders. So over the last thirty six years, thirty seven years almost, PIP has navigated a wide variety of different macroeconomic environments and has produced NAV performance and a share performance, which is ahead of public markets.

3:44 So I'll now go through the highlights. We've just published our six month interim results, which... For the period which ended 11/30/2023. I'll give you the interim results, but I'll also go through the more recent sort of monthly results as well. And I'll start on the right hand side of this chart because this period was extremely active for PIP in terms of the corporate activity. So first of all, last summer, we decided to launch a £200,000,000 share buyback program. And this was primarily to take advantage of what we saw as a... As an incredible opportunity to pick up shares... PIP shares at a at a very large discount. And, essentially, it was investing in our own portfolio at what was then a a discount in excess of 35%.

4:37 So we launched a tender offer, reverse tender offer, which was concluded in October. And as part of that tender offer, we we basically picked up a £150,000,000 worth of PIP shares, and that resulted in a direct sort of risk free NAV accretion per share of 3.8%. So not only did that represent great value for investors, but I think it also demonstrated the faith that we have, in those underlying valuations. And that faith has really been borne out really since the tender offer by the uplifts valuation gains that we've seen in the portfolio. So also during the period, we renegotiated our credit facility. So we had a £500,000,000 credit facility last year, but it it was provided by Credit Suisse.

5:26 And we all know what what happened with Credit Suisse last year. So for us, it was imperative to replace that RCF with a new RCF pretty much in the same terms and conditions, but with three lenders actually replacing Credit Suisse. So that that was done as well during the period. And after the period end, we also agreed a private placement, a $150,000,000 worth of loan notes with with staggered maturity profiles five, seven, and ten years. And we placed those loan notes with some highly sophisticated North American insurance, companies. So that has provided, a great degree of of, certainty for us with our capital structure going forward. And once we'd drawn down on the loan notes, we then reimbursed, the outstanding amount on the on the RCF.

6:19 So the whole point of doing the RCF refinancing and the private placement has really been to put PIP on an extremely solid footing in terms of its financial structure going forward. And in the whole process, we've expanded the number of lenders from three to 10. So a much more secure footing. On the left hand side here, you can see the highlights for the for the half year. So a 3.1% NAV per share increase for the half year and that takes us to a 13.8% average NAV per share growth over the last ten years. And that's actually in excess of our since inception return, which is closer to 12%. So an improving NAV per share picture. The share...

7:05 Shares actually respond... Share price responded very well indeed to all this corporate activity. The share price changed by just over 8% in the half year. And actually, a calendar year basis, the share price was up by about 20%. So I'm just gonna take a glass of water.

7:25 So PIP really continues with its strong performance both on a NAV per share basis, but also importantly for shareholders on a share price basis. Now if we go to the portfolio construction of PIP. So this is now at 11/30/2023, and it really shows a snapshot of all the different metrics that we that we follow that constitute our portfolio construction. Importantly, on the left hand side, you can see what I was saying earlier that PIP is now over half direct. So 54% of NAV is is invested directly in companies either through co investments or through single asset secondaries. And that's a part of the of the portfolio which is increasing.

8:14 The fund part of the portfolio, that's the 34%, which is primaries, is... Has has been a little bit more concentrated. So we've reduced the number of managers there to really just focus on these top quartile access constraint invitation only funds, which even institutional investors find very difficult to access. And the part of the portfolio which has been shrinking is the fund secondary part of the portfolio. That's the little yellow, pale yellow segment. Now that that has been shrinking really because we find that the opportunities we can see in single asset secondaries really outpace those in the broader sort of fund secondary environment. When we invest in a portfolio of funds, you're essentially picking up a very long tail of small, of small positions, and that really adds to the diversification of PIP. PIP is already well diversified, so we don't need to pick up this long... These long tails of of small positions.

9:12 In terms of stage, you'll note that PIP is very much a buyout portfolio. It's over 70% invested in buyouts. The venture part of the portfolio is only 3%, and that's actually deliberate, really because the venture part of the portfolio tends to be the most volatile, part in terms of performance. So we are invested there with some of the very best venture managers in the world, but that performance will move around, from period to period. The buyout part of the part of the portfolio is actually pretty stable, and we have tilted the buyouts towards smaller mid market buyouts, which is where we see the most value. This is the least efficient part of the market. There tends to be less competition for these deals.

9:58 The companies are less, highly leveraged, and they have many more options for exit. So these companies are typically exited to trade buyers, strategic buyers. That's our biggest exit route. Second biggest exit route is selling our companies to other private equity funds, and last of all is the IPO route. So historically, only 10% of our exits have been through IPO. That's important because it means that we're not reliant on IPOs as a... As an exit route. Now third pie chart shows the global diversification of PIP. So this is a global portfolio with just over half of the portfolio invested in The US, which is the largest, deepest, broadest private equity market in the world. And it's also where we find, a lot of very good specialist managers, particularly sector specialists, which is important for us because we are directing the portfolio more towards certain industry sectors.

10:54 You'll see there's a good chunk there in Europe as well with a with a tilt towards Northern Europe and a small allocation to to Asia and to and to global markets. In terms of sector, we'd be moving the portfolio much more into these much more resilient industry sectors that can ride out different macroeconomic periods. So I said right at the beginning that PIP is an all weather portfolio, and here you'll see that over half of the portfolio is invested in information technology and health care, respectively. So, we view those as sectors that are really almost indifferent to the macroeconomic environment. A lot of the information technology is in... Is enterprise software, things like accounting software, payroll software, cybersecurity software. And these are the sorts of products and services that SMEs need no matter what the environment is like. They also happen to be very resilient and very, very visible in terms of their revenues and earnings. So very much a focus for PIP. Second biggest sector is health care, health care products and services. And this is a sector which is really benefiting from aging demographics in the Western world.

12:13 So producing the types of services and products which aging populations need. So we have areas there such as in health care services such as cataract surgery clinics, physiotherapy clinics, chains of orthodontic clinics as well. Plus plus on the product side, everything that goes towards sort of helping aging populations. We've got very little in the portfolio which is pure biotech. So again, trying to keep to that resilient part of the portfolio. You 'll see that consumer is the third largest sector, but this is very much consumer staples and consumer services. So we've really tilted the portfolio away from consumer discretionary. If you'd been an investor in PIP ten years ago, the biggest sector at that time was consumer discretionary.

13:02 So quite a big change there over the last ten years. And on industrials, which is the last sector I'll talk about, this is very much asset light industrial. So things like business and consulting services. So not your heavy heavy industrial services. And through all of this, the idea is to put together a portfolio which is is is well situated for almost any macroeconomic environment.

13:31 So just talking a little bit about how the portfolio has moved over the last ten years. I've mentioned some of this already, but we've moved from being a funder funds to to being now more than half in directs, and you'll see that in the bar chart on the left hand side of this chart. We've also actively managed the portfolio to become more concentrated. So not just because of going towards more direct investments, but also by concentrating the primary funds a little bit more. So there you'll see that PIP is still well diversified, but instead of 80% of the net asset value being being concentrated in over 900 companies, we're now down to 520 companies accounting for 80% of the NAV. And the direction of travel there is is clear.

14:17 Weighted average life of the portfolio is also important to us because we like to keep the maturity profile around five years since that is really the peak cash generation moment in a private equity portfolio. Now we're able to do all of this because PIP actually directly manages its portfolio construction. It's not tied into a series of PANTHEON funder funds. And therefore, it can really select where it invests, and it can control things like deployment and exposure to different sectors, different geographies, and different stages of investment.

14:54 I talked about strength and resilience. This slide really demonstrates that. On the right hand side of the chart, you can see our annualized revenue and EBITDA growth. That's for the five year period from 2019 to 2023. And you can see there that we've had an 18% per annum revenue growth and a 19% per annum EBITDA growth. Now if you looked at the last six months, so for this this interim result period, the results are very similar similar, an annualized revenue growth of 18% and an annualized EBITDA growth rate of 18% as well. And you'll see that that is far ahead of the equivalent for the MSCI, which we find very pleasing. And I think it it just demonstrates the fact that this portfolio is invested in growth subsegments of the portfolio.

15:47 It's also pleasing to note that almost 90% of our buyout and growth company investments are EBITDA positive. And this again is because of the fact that we are tilted towards these more mature types of businesses, and we have very little that is focused on the venture part of the spectrum. Another interesting statistic which we we like to talk about is the loss ratio. So for the last ten years, our loss ratio is only 2.4%. And just to define the loss ratio, that consists not just of capital, which is lost because a company has gone gone bust, but also impaired capital. So that's where we might have to write down a company to point nine or point eight times cost for for a variety of reasons. So that's both capital lost and capital impaired over the entire cost of the investment.

16:38 So we view that as being a very low low level. And if we took it back fifteen years to take into account the aftermath of the great financial crisis, that number would be 2.9%. So still a very low loss ratio. And I think a testament to the fact that this is an all weather portfolio, but also the quality of the underlying businesses with that revenue and EBITDA growth. And the fact that these companies are actively managed because it's mostly a buyout portfolio, the private equity managers who look after those

17:09 companies are actively managing those businesses on a on a daily basis. Now in terms of exits, we continue to see a good uplift to the last holding value. And you'll see here on this slide that in the six month period, that uplift, so the cash that we received versus the last full holding valuation for each of the underlying businesses that exits the portfolio, that uplift in the six months was 17%. And our average uplift since 2012 has been 30%. So, you know, we view that as a very good result in a more difficult exit in... Environment. And our average exit multiple, which I I I skipped over in the previous page, but that's around three times. And in the period, it was 2.5 times. So again, a good a good result there despite a relatively slow m and a environment.

18:10 Our distribution rate, and that's on the top right hand side, was was low. It's around 9%, and our historic average has been about 23%. So you can see there the impact of a slower m and a environment, and that really has has impacted the entire private equity sector. We are starting to see some green green shoots. So there are companies on the exit ramp. And if you look in the the press and sort of the chatter around private equity is that the exit environment is is improving. So we hope to be able to reflect that in our numbers in the future. Just moving on then to the half year results. So these are results for the six months to the 11/30/2023.

18:56 And you'll see here that in the in the in the data at the bottom actually that most of the valuations here were still at September, so did not yet reflect December valuations. So relatively stale stale valuations here, lagged valuations. And there you'll see that the performance over the six month period was 3.1% NAV per share growth. As I mentioned earlier, over ten years, that's now close to nudging 14% and since inception 12%. Share price has done well over the six month and actually even better over an annual basis. And you'll see this since inception returns there. So strong outperformance both on a NAV per share basis, but also on a share price basis versus the FTSE and the MSCI world, which we tend to view as as our best benchmark given the fact that we do have a global portfolio. So attractive returns over the long time, and we think of these as being sort of improving returns as well over the the shorter term.

20:08 Now in that six month period, if we sort of drill down a little bit, you'll see on the right hand side we've reported there on how each segment in the portfolio has performed. The buyout part of the portfolio continued to post steady steady gains. Venture was marginally negative, but as I mentioned earlier, this is only 3% of the portfolio. And in fact, the performance was better than in the full year that we reported on as of November 31. On the left hand side, you can see the NAV per share movement for the period. You'll see there the positive contribution from the share buybacks. That was 3.8% NAV per share growth. We had valuation gains in the period, which again we were pleased about given the macroeconomic environment and a headwind there from foreign exchange.

20:58 So, you know, as as you've seen, this is a global portfolio. It's about 77% US dollar denominated. So clearly, we have exposure to the US dollar. And as the dollar strengthens or weakens, we either have a tailwind or a headwind. And in this particular period, we had a headwind from foreign exchange. Now over time, and we have been doing this for, you know, for for more than thirty five, thirty six years, we find that the foreign exchange pluses and minuses balance out over time. And it's very difficult to hedge in the private equity world. People have tried. It's difficult because you don't know your cash flows with with precision, and you don't know the timing of those cash flows. So we don't we don't hedge. But that will have an impact on the NAV per share movement in various different periods.

21:48 Now I mentioned performance, sort of more recent performance. So this is the annualized performance as of 02/29/2024. So this is now a nine month period, and it's mostly based now actually on valuations since December. So we've got about 40% at December and a good chunk of probably about another sort of 20%, which is post December between the public companies which we mark to market. These are companies which have gone public. We don't invest in public companies, and that accounts for just over 7% of the portfolio plus recent investments. And we've still got about 50% of the portfolio dated as of September. So those December valuations have not yet come through in this most recent reporting period.

22:41 But on the right hand side, you can see the NAV per share progression for that nine month period. So we've now got share buybacks accounting for 4.2% NAV per share growth because in addition to the tender offer, we've been in the market buying back our our shares on a on a continuous basis. And you can see, you know, 3.1% valuation gains there from from the portfolio itself. So good good performance there. Still some headwinds from foreign exchange, but adding up overall to a 4.7% NAV per share progression in the period. So we're pleased about this. We're pleased about the NAV performance. Clearly, the shares are still trading at a large discount in excess of 30%, which we think is unwarranted given the quality of the portfolio.

23:34 And as you can see, these sort of continue valuation gains and the fact that we continue to exit companies from the portfolio at these at these healthy uplifts to the last valuation. I'll now go on to talk a little bit about cash flow and about the balance sheet. So just on this slide, talking about the cash flow, you can see on the top left hand side here, as I mentioned earlier, the distribution environment has been muted. It's the same right across the private equity sector, and that's really a function of the m and a environment, which has been very slow for the last fifteen to eighteen months. The call rate has also been muted. That's on the right hand side. It's really at historical lows, and that's really just the other side of the coin. Clearly, if there are fewer exits, there's also fewer deals being inked, and that reflects in a in a lower call call rate.

24:32 Despite the lower distribution rate, we have still seen positive net cash flow from the portfolio during the period. And in that six month period, it was £30,000,000. But importantly, to look over the longer ten year period, and there you can see that PIP's portfolio is very cash generative. We have generated £1,700,000,000 worth of cash since 2014. So an average of about a 170,000,000 per annum. So a very cash cash generative portfolio. And that takes us nicely onto the balance sheet. So the balance sheet is in very good shape. You'll see on the left hand side there that against a NAV of close to £2,300,000,000, we have a small amount of leverage, around about a 130,000,000.

25:21 So that represents a net debt to NAV of around 5.6%. So a very prudent level of debt. And as I mentioned earlier, this is long term debt with stack of maturities with a set of very sophisticated lenders. On the right hand side, you can see our coverage ratios. So as of February 29, we had undrawn commitments of around £700,000,000. Now that includes all the commitments to funds that we've made all the way up to those that are thirteen years old. And as as you probably know, private equity funds that are older than ten years generally draw extremely low levels of capital. So we do not expect probably about...

26:12 Well, you know, probably around forty, forty five million not to be drawn at all, I would say, in those undrawn commitments. So we probably, you know, overestimated the undrawn commitments. And despite that, you'll see that we've gotten in excess of 100% coverage ratio of those undrawn commitments and a financing cover ratio of 4.1 times. So very, very solid, prudently managed balance sheet, which actually gives us confidence to carry on with our investment program, which has included these these share buybacks as well as continuing to invest in new private equity opportunities. Now quick word on the board. I mentioned at the beginning that we have a highly experienced and very active board.

27:02 Out of seven members, four of them have deep private equity experience. John Singer, the chair, was actually one of the managing partners of Advent International, probably one of the most successful global buyout funds. And he's been a very active chair and very much in dialogue with our with our shareholders. But we have other very well qualified members of the board who are actively engaged in the way that PIP is managed and actually have skin in the game as well. So you'll see here that the direct... All the directors own shares, and between them, they own 3,700,000 shares, which is around, £12,000,000 worth of investment. So, they are very much aligned, with the interests of shareholders.

27:49 As are, the professionals at PANTHEON, We can't report for compliance reasons on the entire holding of all PANTHEON employees. But PANTHEON partners, 18 of us, hold around 1,800,000 shares, which again translates into a very large level of commitment and alignment with our shareholders.

28:15 So that really brings me towards the end of the presentation here. This last this last slide lays out the since inception performance of PIP. So you'll see there since inception, we've shown an annualized NAV per share growth of close to 12%. The NAV per share growth has actually been improving over the last few years, and over the last ten years, it's been closer to 14%. And just to remind everybody that this is all net of fees. All the performance numbers that we've shown in this presentation are all net of all fees and costs and expenses. So we think of that as as a as a good performance over this period of time, and you can see there the outperformance in the chart over the FTSE, which is in blue, and the MSC... Oh, MSC World total return, sterling terms, in dark dark bluish black.

29:15 So it's a good outperformance. The share price, you can see there in pale yellow, is still trading at a at a at a very wide discount. NAV is around 30% at the moment. And both ourselves, the manager, and the board are very much focused on that discount. So having done the very large buyback last year, which I think demonstrates not only the investment opportunity, but also the the willingness to take take action and and show that we do believe in the underlying NAV. We are continuing, and we have been continuing to buy shares in the market. It's a very high quality portfolio. I hope I've been able to give you some sense of that over the last thirty minutes.

30:00 Actively managed because PIP is able to invest directly into the opportunities which are shown to it by PANTHEON, the manager. And that means it's got control over the portfolios. So control in the way that capital is invested and control

30:14 over deployment rates. We've got strong evidence of embedded value that's demonstrated by these continued uplifts over the last holding value and by these these these large multiples to cost that we can share over a very long period of time. We think of PIP as being really an ideal way for a very wide range of investors to access the private equity asset class, not not just individual investors, but we have a very large number of institutional investors who view this as a cost effective effective and very liquid way to top up their private equity allocation. And, you know, leave leave the best to last. PIV is managed in a highly responsible fashion.

31:01 PANTHEON is one of the leaders in ESG and responsible investing in the world. It was the second private equity signatory to the UNPRI back in 2007 and has embedded ESG principles in its investment due diligence and its monitoring work ever since then and has been a a real pioneer, I think, in spreading word on on ESG and responsible investing in the private equity world. So I will draw it to close there. It was half an hour in and very happy to take questions from the audience now. Fantastic. Helen, thank you very much indeed for your presentation. Ladies and gentlemen, do please continue to submit your questions just using that Q and A tab situated on the right hand corner of your screen. We We just want the team to take a few moments to review those questions submitted today. I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. And as you can see, we've had a number of questions both submitted throughout today's presentation and pre submitted. And thank you to all the investors who have submitted those. Perhaps if I may just start with the first one, which reads as follows.

32:09 Manager led secondaries become a meaningful portion of the portfolio. Could you talk a bit about the attractions of this part of the market? Are the fees comparable to co investment? And can you give some examples of portfolio companies, so sort of three three in one then? I'm happy to repeat those as Okay. We go I'll try I'll try and address all of those. So, yes, prep... So so single asset secondaries, GP led secondaries have have definitely been an increasing part of the portfolio. You can see that in my portfolio pie charts. And we think of this as an... As a really interesting part of the market. And just to remind listeners what what these are, this is where you've got an existing private equity fund where the manager might have an older an older fund with maybe one or two assets left in it. And they are getting pressure from their limited partners in the fund to get on and liquidate the fund and sell the last companies and return that capital to investors.

33:12 Now quite often, they will have a crown jewel left in in that fund, and they will not want to sell that business because they can see the path to further growth. They don't want to sell the business. And because they are motivated by their carried interest at the end of the day, they are motivate... Motivated by optimizing... Really sort of optimizing that that level of of return from that particular company. So in that circumstance, we can approach the private equity manager, suggest that we put together a new vehicle where we roll the old asset from the older fund into this new into this new vehicle. And the limited partners that are desperate to have cash back can have the cashback. The limited partners who would like to roll into the new deal can do that. And we insist that the private equity manager also rolls into

34:09 the new deal. So they have to roll in their manager commitment that they've already sort of signed up to, you know, for that particular deal into the new deal and also their accumulated carried interest. So the alignment of interest here is really, really important. We will then reset the economics and also set sort of the performance hurdles for that particular deal. And the idea there is to give that company another, you know, two or three years to grow and then to achieve the sort of exit the private equity manager believes they can get for it. And frequently, the the fees will be conditional, in fact, always be conditional on the exit characteristics of that particular deal. So the interests are aligned.

34:55 The fees and carry vary very much from deal to deal. It's very much done on a bespoke basis, so it's difficult to give an overall guidance as to what those would be. But, you know, overall, you know, we are looking from both the co investments and the single asset secondaries for, you know, net returns of sort of, you know, 20 to 25% is what we're looking for from individual assets.

35:20 In terms of individual deals, I think we can... You know, in the presentation, there are some examples later on, so we can we can talk about those. But typically, these will be in our sectors of preference. So there'll be an area such as information technology, enterprise software, health care. So they'll really mirror our overall sector preferences at at PIP, and they will be with the top managers. So managers that we invest with somewhere on the PANTHEON platform as a primary and managers that we've got a great deal of experience of working with. So the advantage of single asset secondaries versus co investments is that these assets the manager already owns. So they're kind of a known quantity. So we we think of it as as having lower risk. The downside is you have to pay some sort of a fee or carried interest, whereas on co investments, these are brand new deals. The manager is owning those those companies for the first time.

36:14 We go in at the same time and on exactly the same terms and conditions as the manager, And we generally, 90, 95% of cases, were not paying any fees or carried interest. So I hope that answers the question. Sorry. That was a very long answer, but it was a it was a complicated question. So thank you. Three three in one. So thank you, Helen. Next one we've got here. If manager led secondary transactions increase because sponsors don't have other exit routes, how do you ensure that you don't end up with companies that are hard to sell? Yeah. That's a great question, actually. So it it all comes down to selection. So, yes, private equity managers are looking at this as a liquidity route, as a path to liquidity, where they're getting pressure from their limited partners. And that's why we've had so much deal flow really over the last two or threes in this three years in the sector.

37:03 But we have a very low approval rate.

37:08 It's between 1012% at the moment. So we can really pick those deals where we think these really are the crown jewels. These are companies, the private equity managers absolutely do not want to sell. And that's because they are motivated by their payoff at the end of the day. So we feel that we can use this sort of double filter that we've referred to quite often. We look at the quality of the manager. We then look very deeply at the quality of the asset. We do exhaustive due diligence ourselves on the actual asset. And then very importantly, as I mentioned in the answer to the previous question, we make sure that we are completely aligned with the private equity manager. So if they say they think they're gonna be able to make three times the money on this next phase of growth of the particular company, we will hold them to that and make sure that their economics are tied to those those sorts of levels of performance that we're aiming for.

38:05 Fantastic. Thank you. Next one we've got here. You increased portfolio concentration in recent years. Are you continuing with this effort? Are you in a steady state now? What are your long term targets? So I think it's probably important to say there that the board has not set any long term targets. But I think that it's it's it's relatively straightforward to see the direction of travel. We already have the co investment part of the pie, which is about a third of the pie. The secondary part of the pie is being tilted away from these highly diversified fund secondaries towards more of these single asset secondaries. So I think over time, you will see that direct part of the portfolio continue to increase as the fund secondaries diminish, and those are funds, and the single assets increase.

38:57 So the direction of travel is there, but the target has not been set by the board. Thank you very much. Distributions in 2023 have been relatively low. Are you concerned from a liquidity perspective? Do you see the trend improving this year?

39:12 That's a great question. And as I mentioned during the presentation, you know, we've had a a very muted m and a environment for the last fifteen to eighteen months. And we think that's because of general confidence in the broader macroeconomic environment. And that's really held up all types of m and a, so not just m and a involving private equity players. What we're seeing now is is a degree of confidence coming back into the market. So with inflation leveling leveling off, with interest rates leveling leveling off, that is giving a bit more confidence to both buyers and sellers. And as I mentioned, we are seeing more companies now coming onto the exit ramp. And I think, you know, if you look at some of the some of the the sort of the the the chatter in in some of the the quoted private equity managers or some some of our peers, a lot of people are talking about the exit environment improving. Now that's yet to come through in the numbers, but we are hopeful that we're seeing the green shoots there.

40:20 As to the liquidity question, we feel quite confident. As I mentioned, the the the distribution rate has been low, but the call rates have also been low. And that has enabled us to actually continue to demonstrate positive net cash flow even in

40:37 a more difficult environment. So because PIP is a well invested portfolio, well well diversified with, you know, mature companies in there, we'll always we'll always be getting distributions that we can then offset against our calls. So we're we're not we're not concerned at all about that. And if you look at our balance sheet, you know, we've got a very strong balance sheet with... Particularly with the actions that we undertook last year. So we feel very confident about our overall sort of financial situation. Thank you very much indeed. Do you generally back first time funds, do you wait until a sponsor has a longer term track record?

41:17 That's a good question. The short answer is very rarely first time funds. We might invest in a first time fund where it's a set of people that we know. So not first time investors, people that might be a... It might be a spin out from another group that we know well and where we've had time to get to know the team and where we can do all our usual sort of attribution analysis. So in the portfolio, we do have some examples of first time first time funds, but not first time managers. So for example, Summa, you know, spun out of Altor. Altor actually spun out of Industry Capital. So so there are the... And and we still invest with Industry Capital, actually. So IK, Altor, and Summa are all in PIP's portfolio.

42:07 So I think the the the key here is having confidence in the individuals and in the organization. But in general, it's it's not really a part of the market that we tend to target. Thank you. Do you believe that private equity will continue to provide alpha over the listed markets on a five year basis?

42:27 Yes. We do. We believe that private equity has a number of advantages over public equities. These companies are actively managed. As you can see, we've got a majority of buyouts in the portfolio, and that means that the managers control those businesses, and they can actively add operational value. So a good private equity manager, and there's obviously a spread of of different qualities of manager, but a good private equity manager will be able to unleash their portfolio management experts on their on their companies. And this will range from everything from supply chain, you know, procurement experts all the way up to digital marketing experts. And their whole, their whole aim here is to increase the operational performance of these businesses, so both organically through increasing revenues and earnings, but also inorganically. And, you know, a classic part of a private equity playbook is buying a good platform company and then adding to that platform by making accretive acquisitions.

43:32 So you'll see that repeated again and again in our portfolio. You know, for example, I mentioned a little bit earlier, we've got a company. We've got a a chain of orthodontic clinics, an American business in the portfolio rather imaginatively called Smile Doctors. And this is an orthodontic business, which was... Is a platform, but where there is an active ongoing acquisition program where individual orthodontics clinics, you know, usually with an individual practitioner are being bought up and then combined in this this overall business. That gives all sorts of economies of scale. It means that, you know, purchasing from the likes of Invisalign, you know, much more much more favorable purchasing conditions.

44:18 There's, you know, marketing that can be done. There's shared services. So the the whole is more valuable than than the addition of all the the the the small businesses. So, yes, we do believe that private equity will continue to outperform public equity because of the advantages it's got on its side and the fact that it's looking at, you know, longer term business plans. It's not dependent on sort of quarter by quarter movements. Thank you. Next question we've got here from Martin. Thank you, Martin. As PIP shifts increasingly towards direct investments, will it become more of a competitor to its fund investment managers and thereby suffer the poor access to direct investment opportunities?

45:00 Well, that's that's an excellent question. The answer is no. We will not become an independent direct investor. So we're very much a partner to our private equity managers. You know, we invest alongside them in the co investments. We help them with liquidity solutions when it comes to these single asset secondaries, and we invest in their funds on a on a primary basis. It may not always be PIP that's investing in a fund. It may be somewhere else on the PANTHEON platform, but PIP then benefits from those PANTHEON relationships and can co invest and source those those secondaries. But we don't compete with our managers. We're very, very conscious of what was was mentioned by the by the by the person there that, you know, if we start going into competition with our managers, they will not be showing us their attractive co investments. So we are a partner to our private equity managers and not a competitor.

45:57 Thank you. And I think probably time for one more. And p trust do typically trade at a sizable discount, which must be frustrating. The buybacks assist, but do you see a longer term strategy to minimize this? The discount is incredibly frustrating. It's frustrating for us. It's also frustrating for all the other private equity, enlisted private equity structures that are out there. So it's it's something that we are trying to tackle more generally, not just through the buybacks, which, you know, again, we've been doing for investment purposes because they are highly accretive to NAV per share, but also to demonstrate that faith that we have in in the value of the, you know, the value of the portfolio. But we are doing other things alongside it.

46:42 So we're stepping up our marketing. You know, sessions like this, you know, we... Obviously, we would like to continue doing and doing more of, you know, more PR. We changed our PR agency a couple of years ago, and that's been quite fruitful in terms of getting us in front of the media a little bit more. But also, you know, stimulating demand for the shares. So we have a big program of marketing, and we're also talking to, you know, our peers in the field about doing more education about private equity because we we feel that it's often a poorly understood investment segment. So we feel that, you know, as an industry, we need to do more of that. So through the industry associations, which we're a member of, and also through through sessions like this, we think it's really important to get the stories out there.

47:30 Fantastic. Helen, thank you indeed for asking those questions you can from investors. Of course, the company review all questions, any further questions submitted, and we'll publish those responses on the investor meet company platform. Before redirecting investors to provide you with their feedback, which is particularly important to you and the company, Helen, could I just ask you for a few closing comments, if I may? Yes. Well, first of all, I'd like to say thank you to everybody for participating today and giving up your time this morning and also for your questions, which have been have been great questions and and very stimulating. So so thank you for all of that. And really just to leave you with the thought that, you know, private equity is a very actively managed asset class. It's able to direct capital into some of the most attractive and high growth segments of of industry that we think that PIP is a really

48:21 good way of accessing the private equity asset class in a relatively low risk way. You've seen our our results, but also measures such as our loss ratio, which which might have been surprising to certain people because it is a low loss ratio. So we think of PIP as being a a great way to access what we see as being in an expanding asset class and much which we... One which we believe will continue to outperform public markets. So thank you again for your attention today. And any further questions, please please let us know. Fantastic, Helen. Thank you for updating investors today. Can I please ask investors not to close the session? She's now automatically be redirected to provide your feedback, and all of the team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure it was greatly valued by the company. On behalf of the management team of PANTHEON INTERNATIONAL PLC, we'd like to thank you for joining today's presentation, and good morning to you all.