Investec reiterates 'Buy' rating for Pantheon International on £200m share buyback launch

investmentweek.co.uk:

Jie Gong (left) and Helen Steers (right) are the co-managers of the Pantheon International trust.

On Thursday (3 August), the FTSE 250 private equity trust said it would commit up to £200m to invest in its own portfolio through buybacks in the current financial year to 31 May 2024, extending its capital allocation policy to dedicate a proportion of its net positive cash flow to buybacks.

In its annual financial report, the £1.4bn trust noted its discount to NAV had widened from 35% in May 2022 to 41% as at year end. According to Morningstar data, PIP's shares are up 4.5% since the announcement.

Pantheon International appoints co-lead manager to join Helen Steers

In a research note today (4 August), Investec analysts Alan Brierley and Ben Newell welcomed the revision to its capital allocation policy, noting that the £200m figure is greater than total listed private equity sector buybacks over the past five years.

They also said that over the past year, estimated total buybacks by the entire listed private equity sector sat at just £79m, or 0.7% of the market cap of the sector. Brierley and Newell had previously condemned the sector's dismissive stance to addressing widening discounts.

«Disappointingly, the listed private equity sector has historically been quick to dismiss share buybacks, alleging they do not work,» they wrote. 

In their note, the analysts commended a statement made by PIP chair John Singer, who said that he «believed the listed private equity sector has not kept up with the changing needs of its stakeholders and that there is a real opportunity now to do more to put shareholders' interests first».

Pantheon International NAV sees uplift but shares slump as discount widens

Brierley and Newell added