Pantheon ramps up co-investments amid rising secondaries valuations

Pantheon International plc (PIP) chair Sir Laurie Magnus said the global private equity market continues to be competitive and valuations remain high.

Co-investments make up 25% of its portfolio value, up from 20% in June 2016, while the fund’s secondary investments make up 47%. It has tended to favour secondaries as fees and drawdowns have largely been collected and the money is put straight to work.

“Although PIP continues to emphasise secondary investments in its portfolio, its allocation to co-investments has increased gradually since it gained more opportunity to invest directly alongside selected managers in 2012,” the company said in its annual report.

“Co-investing is a cost-efficient means of gaining access to well-managed investments and, in combination with secondary investments, allows the company even greater flexibility to manage the maturity profile of its portfolio."

It stressed that its relationships with GPs were vital in the more competitive landscape, especially when securing co-investments.

PIP made £290.5m in new commitments over the 11-month period ending in May 2017, of which £150.6m was drawn at the time of purchase. There were six secondary transactions totalling £129.4m, 20 co-investments at £93.8m and 12 primary commitments.  

The firm added that its special situations portfolio, which had picked up assets in the energy sector following the collapse in the price of oil, had delivered a solid return.

The firm is also moving away from venture funds. Most of its growth has come from buyout and growth funds, with the LP describing the performance of its venture portfolio as disappointing.

“Venture now represents a relatively small portion of PIP's portfolio and continues to diminish through realisations, which we have accelerated from time to time through secondary disposals,” the company said.

During the 11 months to May 2017, PIP’s NAV per share climbed 16.9% to 2,189.9p.

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• Topics
• Fund-of-funds
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• Pantheon Ventures