PANTHEON
INFRASTRUCTURE PLC
ACCESS TO HIGH-QUALITY
GLOBALINFRASTRUCTURE ASSETS
ANNUAL REPORT 2023
Our purpose is to provide investors of all types with easy and
immediate access to a diversified portfolio of high‑quality
global infrastructure assets via a single vehicle, offering
both a regular dividend payment and targeting capital
growth.
This portfolio, which is diversified by sector and geography, is designed to generate sustainable,
attractive returns over the long term. We achieve this by targeting assets which have strong
environmental, social and governance (ESG) credentials, and underpin the transition to a low‑carbon
economy. We invest in private assets which we believe will benefit from strong downside protection
through inflation linkage and other defensive characteristics.
Pantheon Infrastructure Plc (the ‘Company’ or ‘PINT’) is a
closed‑ended investment company and an approved UK
investment trust, listed on thePremium Segment of the
London StockExchange’s Main Market.
PINT provides exposure to a global, diversified portfolio (the ‘Portfolio’) through direct co‑investments
in high‑quality infrastructure assets with strong defensive characteristics, typically benefiting from
contracted cash flows, inflation protection and conservative leverage profiles. PINT targets assets which
have strong sustainability credentials, which include projects that support the transition to a low‑carbon
economy. The Portfolio focuses on assets benefiting from long‑term secular tailwinds. The Company
is overseen by a Board of independent non‑executive Directors and managed by Pantheon Ventures
(UK) LLP (‘Pantheon’ or the 'Investment Manager'), a leading multi‑strategy investment manager
in infrastructure and real assets, private equity, private debt and real estate.
ABOUT US
PURPOSE
HIGHLIGHTS CONTENTS
At a glance as at 31 December 2023
1. This refers to the investment fair values or amounts committed as at 31 December 2023. Invested assets represent
those that have reached financial close and have been, or are in the process of, being funded, and may include amounts
reserved for follow‑on investments; and committed assets represent those which are announced and are subject to
final financial close. As at 31 December 2023, £471.7 million was invested and £15.7 million was committed but not yet
invested across 13 assets.
2. Total dividends declared in relation to the year ended 31 December 2023.
Strategic report
Highlights ................................................. 1
Why invest in PINT ..................................2
PINT at a glance ......................................6
Chair’s statement ....................................8
PINT investments .................................. 12
PINT timeline ..........................................19
Investment Manager’s report ..............20
Alternative Performance
Measures (APMs) ................................. 38
Investment policy ................................. 39
Q&A with the
Investment Manager ............................ 40
Our market .............................................. 42
Sector spotlight .................................... 46
Business model..................................... 48
Investment strategy .............................. 57
Responsible investing and ESG ...........58
S172(1) statement ................................. 63
Principal risks and uncertainties ........ 68
Viability statement ................................72
Governance
Board of Directors ................................. 74
Management team ................................76
Chair's introduction
to corporate governance ......................79
Audit and Risk Committee report ........85
Management Engagement
Committee report ................................90
Nomination Committee report ............92
ESG & Sustainability
Committee report. ................................ 94
Directors’ remuneration report ........... 96
Directors’ report .................................. 101
Directors’ responsibility
statement ..............................................105
Financial statements
Independent Auditor’s report ............ 107
Income statement ............................... 113
Statement of changes in equity .........114
Balance sheet .......................................115
Cash flow statement ........................... 116
Notes to the financial
statements .............................................117
Other information
AIFMD disclosures ............................... 136
Glossary ................................................ 138
Directors and advisers .......................140
£487m
1
Capital
committed
£504m
Net asset
value (NAV)
4p per share
Total dividends
2
£397m
Market cap
106.6p
NAV per share
10.4%
NAV Total Return
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
WHY
INVEST IN PINT
The Company is building
a global portfolio of
investments with blended
risk/return profiles,in
line withtargets across
deal types, sectors
and geographies for
diversification.
Pantheon, PINT’s Investment Manager, has a large
andglobal infrastructure network
PINT invests in infrastructure assets via co‑investments
alongside highly experienced general partner sponsors
(‘Sponsors’), typically without additional management fees or
carried interest leakage.
This is attractive for several reasons, including:
Unique opportunities
PINT provides investors with the opportunity to access
Pantheon’s substantial deal flow from its extensive network
of blue‑chip infrastructure investors. These opportunities
arise because Pantheon’s wider infrastructure platform
invests directly into Sponsors’ funds and secondary
transactions. As a trusted investor of scale, Pantheon then
gains access to Sponsors’ co‑investment deal flow.
Liquid access to illiquid markets
There are fewer public market infrastructure opportunities
to access private infrastructure assets, as infrastructure
companies often remain private for long periods of time
and are structured in longer‑term vehicles, which are
aimed at institutional investors only. Investing in PINT
provides immediate access to high‑quality co‑investment
infrastructure assets not normally accessible to public market
investors more broadly, both institutional and retail.
Portfolio construction
Pantheon uses co‑investments to select individual assets to
gain exposure to, and tilt the Portfolio, within the parameters
of PINT's investment policy, towards sectors based on the
Investment Manager’s view on relative value. This leads to the
creation of a global and diversified portfolio, with the ability to
focus on major investment and economic tailwinds.
Cost‑effective access
The use of co‑investments can reduce the overall expense
ratio and gross‑to‑net performance spread of a portfolio,
as most deals are offered with no ongoing management fee
or carried interest charged by the Sponsor.
Sponsorspecialisation
Pantheon, on behalf of PINT, is able to choose deals alongside
a Sponsor with a distinct edge who may be best placed to
create value in that particular sub‑sector.
ESG
Through the Investment Manager, PINT looks to partner
with Sponsors that have demonstrated strong capabilities
in managing ESG risks and will actively engage with the
Investment Manager where it identifies areas of concern.
Pantheon has developed a bespoke ESG due diligence
process, which utilises an in‑house tool (an ESG scorecard)
in addition to consultation with an external ESG specialist,
which utilises a range of different data ESG sources. For more
information, please refer to the ESG section on pages 58-62.
1. UNIQUE ACCESS TO PRIVATE
INFRASTRUCTURE CO-INVESTMENT ASSETS
2
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Infrastructure assets can offer reliable income
streamswith inflation protection
Infrastructure assets may provide embedded value and
downside protection across market cycles given the regulated
and contracted nature of many of the underlying cash flows.
Infrastructure assets may provide a range of attractive
investment attributes, including the following:
Stable cash flow profile
Infrastructure may provide a compelling, stable distribution
profile similar to traditional fixed income, but backed by
tangible assets. Infrastructure assets often offer reliable
income streams governed by regulation, hedges or long‑term
contracts with reputable counterparties.
Inflation hedge
Infrastructure investments can provide a natural hedge
to rising inflation, as many sub‑sectors have contracts
with explicit inflation linkage or implicit protection through
regulation or market position. The majority of PINT’s assets
benefit from such protection.
Embedded downside protection
The vital role that many infrastructure sub‑sectors play
in our daily lives can make them an innately defensive
investment. The tangible nature of infrastructure investments
can provide a basis for liquidation and recovery value in
downside cases. Furthermore, infrastructure investing
is generally focused on gaining exposure to assets in
a monopolistic or oligopolistic market which, with high
upfront costs, can be a barrier to entry for new participants.
Investments typically have long‑term contracts with
price escalators or inflation linkage with high‑quality
counterparties, which offer further downside protection.
Finally, high friction costs in certain sectors have been seen
to discourage customers from switching providers, which can
provide a stable and long‑term customer base.
Diversification
Infrastructure can be a valuable portfolio diversifier alongside
traditional and alternative investments. Historically, listed
infrastructure returns have been only moderately correlated
to traditional asset classes. The sub‑sectors within the
infrastructure universe and the drivers of such sub‑sector
returns tend not to be correlated with one another.
WHY
INVEST IN PINT
CONTINUED
2. FAVOURABLE DEFENSIVE
LONG-TERM CHARACTERISTICS
Infrastructure assets
combine a range of
attractive characteristics
for long‑term investors.
Distinctively,
infrastructure may
mitigate the adverse
effects of rising inflation
and may provide an
income‑generating
investment outside of
traditional fixed income.
3
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
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WHY
INVEST IN PINT
CONTINUED
PINT continues to develop
its diversified portfolio
across sectors that
benefit from secular
tailwinds.
Pantheon has taken, and continues to take, a disciplined
approach to PINT’s strategy to construct a globally
diversified portfolio with exposure across sub‑sectors
and geographies, while maintaining the flexibility to tilt
exposures based on opportunities which may present
compelling relative value. The Company has built a
global portfolio of investments with blended risk/return
profiles, in line with targets across deal types, sectors
and geographies for diversification. Please refer to
page 39 for more detail.
DIGITAL
INFRASTRUCTURE
44%
1
Data centres, fibre networks
and towers
POWER
& UTILITIES
27%
1
Energy utilities, water and
conventional power
RENEWABLES &
ENERGY EFFICIENCY
17%
1
Wind, solar, sustainable waste
and smart infrastructure
TRANSPORT
& LOGISTICS
9%
1
Ports, rail and road, airports
and e‑mobility
1. Proportion of NAV of £504 million at 31 December 2023. Includes assets which, at 31 December 2023, were invested, committed or in legal closing.
3. ACCESS TO
SECULAR TRENDS
44%
27%
17%
9%
3%
Digital Infrastructure | 44%
Power & Utilities | 27%
Renewables & Energy Efficiency | 17%
Transport & Logistics | 9%
Net working capital | 3%
4
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
WHY
INVEST IN PINT
CONTINUED
Targeting capital growth
and dividend returns.
The Company seeks to generate attractive risk‑adjusted
total returns for shareholders over the longer term.
This comprises capital growth with a progressive
dividend, through the acquisition of equity or
equity‑related investments in a diversified portfolio of
infrastructure assets with a primary focus on developed
OECD markets.
The Company targets a NAV Total Return per share
of 8-10% per annum.
1. Second interim dividend of 2p per share declared in relation to the year ended 31 December 2023. The Company is paying
a total dividend of 4p per share for the year ended 31 December 2023 and, thereafter, is targeting a progressive dividend.
4. PINT SEEKS TO GENERATE
ATTRACTIVE RISK-ADJUSTED RETURNS
£487m
Capital
committed
£504m
Net asset
value (NAV)
2p per share
Second interim
dividend per share
1
Calpine, The Geysers
5
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PINT
AT A GLANCE
Thirteen infrastructure
co‑investment assets
1
DIGITAL
INFRASTRUCTURE
POWER
& UTILITIES
RENEWABLES &
ENERGY EFFICIENCY
TRANSPORT
& LOGISTICS
1. Based on assets invested and committed at 31 December 2023.
2. Based on NAV of £504 million at 31 December 2023.
Geographic diversification
2
Sector diversification
2
34%
46%
17%
3%
44%
27%
9%
17%
3%
Europe
North America
UK
Net working capital
Digital Infrastructure
Power & Utilities
Renewables & Energy
Efficiency
Transport & Logistics
Net working capital
6
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PINT
AT A GLANCE
CONTINUED
North America
CyrusOne
Cartier Energy
Calpine
Vantage Data Centers
Vertical Bridge
United Kingdom
National Gas
Zenobē
Netherlands
Delta Fiber
Fudura
Nordic
GlobalConnect
Ireland
NBI
Spain
Primafrio
Germany/Austria
GD Towers
Key:
DIGITAL INFRASTRUCTURE
POWER & UTILITIES
RENEWABLES & ENERGY EFFICIENCY TRANSPORT & LOGISTICS
7
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Introduction
I am pleased to present the annual report for Pantheon
Infrastructure Plc for the year ended 31 December 2023. This
is the second annual report since the Company’s launch, and
it is pleasing to see the Company has now fully deployed its
funds into a diversified portfolio of high‑quality infrastructure
assets, generating dividends in line with, and NAV Total
Returns exceeding, its pre‑IPO target.
During the year, the Company’s NAV per share grew by
7.8% to 106.6p per share, with earnings per share of 10.4p.
Accounting for dividends of 3p per share paid in the year
to 31 December 2023, this represents a NAV Total Return
of 10.4% since 31 December 2022, or 10.7% after adjusting
for the positive NAV impact of share buybacks, which
exceeds the pre‑IPO target of an 8-10% NAV Total Return per
annum. Naturally, it is satisfying that the successful period
of deployment has been followed up with strong portfolio
performance.
Economic environment
The reporting period and subsequent months have continued
to be characterised by further economic uncertainty. Most
of the developed economies in which we invest have so far
avoided the recessions that were widely expected in the
first half of 2023, and market sentiment appears to foresee
a soft rather than hard landing. Furthermore, there have
been encouraging signs that central bank interventions have
begun to curtail inflation, with strong indications that we have
reached the interest rate peak, albeit one that policymakers
have indicated will endure well into 2024. Nevertheless,
the next twelve months will be characterised by important
elections across a number of key market jurisdictions that
might impact the future path of economic growth and interest
rates, and regardless of when they may drop again, it looks
likely that we have entered a new interest rate environment
compared to that we have been in for the past 15 years.
Investor sentiment and discount
management
With increased risk‑free rates, some investors have sought
to de‑risk their portfolios with a move to the perceived
safety of fixed income. Retail flows throughout the year were
particularly affected by the increased cost of living resulting
from high inflation and significantly higher mortgage servicing
costs, which reduced the levels of surplus cash available for
savings and investment.
In this environment, demand for the shares of listed
investment trusts as a whole, including the infrastructure
sector and PINT, has been subdued. As at 31 December 2023,
PINT’s shares traded at a discount of 21% to NAV, despite the
performance and valuations of the underlying assets being
robust.
We continue to believe that any share price discount
to NAV is unjustified, as an investment in PINT offers a
meaningful asset‑backed yield, as well as capital growth and
inflation protection that cannot be achieved by investment
in a fixed income alternative. The Portfolio continues to
perform robustly to varying economic and project‑specific
assumptions, including inflation, interest rates and valuation
discount rates, as evidenced by the sensitivity analysis
set out in the Investment Manager’s report on page 35.
As this demonstrates, portfolio diversification means the
Company does not carry material exposure to any single
sector‑specific risk.
The Board continues to focus on the current level of discount
and the impact it has on Shareholders' reported returns.
Having set out our views relating to discounts prior to the
launch of the Company, we were quick to react as the
discount widened. On 31 March 2023, the Board announced
the commencement of a programme to buy back shares up
to a total consideration of £10 million.
CHAIR’S
STATEMENT
Investing in infrastructure
has never been so
important.
“It is satisfying that the successful period of
deployment has been followed up with strong
portfolio performance.”
Vagn Sørensen
Chair, Pantheon Infrastructure Plc
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Investor sentiment and discount
management continued
As at 31 December 2023, the Company had repurchased
7.4 million shares for a total consideration of £5.8 million,
resulting in a NAV increase of 0.3p per share. Since that date,
the Company has repurchased a further 3.1 million shares for
a consideration of £2.6 million, resulting in a NAV increase of
0.1p per share. In total, the Company has now repurchased
10.5 million shares for £8.4 million since the buyback
programme was announced.
Despite the positive NAV impact of the buyback programme,
the Board remains acutely aware of the continued discount
to NAV at which the Company still trades, and continues to
believe that share buybacks represent an attractive use of
shareholders’ capital where surplus means are available.
Accordingly, the Board can confirm that an additional
£8.4 million has been allocated for further share buybacks,
to restore the total remaining programme commitment to
£10 million. The Board will continue to regularly monitor the
Company's approach to buybacks in consideration of the
prevailing share price discount to NAV and the Company's
available liquidity.
Portfolio deployment and performance
As at 31 December 2023, the Company had invested in or
committed to 13 assets totalling £487 million. The Company
announced three new investments during the year totalling
£96 million: European towers business, GD Towers, Nordic
fibre operator, GlobalConnect, and UK‑based battery storage
and electric bus fleet specialist, Zenobē.
When considered alongside the total amounts deployed to
and committed under the ongoing share buyback programme,
the Company has now fully deployed its net IPO and
subscription share proceeds. Whilst this clearly represents
a major success for the Company and its shareholders,
importantly it has been followed up with a period of strong
performance across the Portfolio, with fair valuation gains
translating to a higher NAV Total Return for the period versus
the pre‑IPO target.
The Company declared dividends totalling 4p per share
in relation to the year to 31 December 2023, and remains
committed to paying a progressive dividend, commencing
with the first interim dividend for 2024. The Board is
considering the dividend level for the current financial year
and will announce the level of the first interim dividend in
due course.
With all this considered, an investment into PINT continues
to give an immediate exposure to a high‑quality, established
and highly diversified portfolio. Further details of the Portfolio
Companies and their diversification can be found in the
Investment Manager’s report on page 12.
Revolving credit facility
The Board was pleased to announce on 7 June 2023
a £52.5 million increase to its existing £62.5 million
multi‑currency revolving credit facility (RCF), bringing the total
to £115 million. In addition, after the year end the Company
extended the term of the RCF by 15 months, effectively
resetting the tenor at three years with the same pricing and
terms.
The increase in and extension to the RCF provide the
Company with an enduring and flexible way to cover its risk
buffers and working capital needs. It also gives us additional
liquidity to increase diversification through further investment
in high‑quality infrastructure assets from PINT’s near‑term
investment pipeline, where we continue to see compelling
opportunities. However, such investment will only be
considered where it is materially accretive to shareholders
in light of the current cost of such borrowings, and
providing that the Company would not, as a result, become
inappropriately levered or the facility to be fully drawn.
CHAIR'S
STATEMENT
CONTINUED
£487 million
of assets invested or
committed
1
4p per share
total dividends
declared for the year
1. This refers to the capital committed to assets which were invested,
committed and in legal closing at 31 December 2023.
9
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Oversight of the investment process
andstrategy
Investment management is delegated to Pantheon by the
Board. Pantheon is responsible for reviewing, selecting
and executing investment opportunities for the Company.
However, it is a vital part of the Board’s responsibilities to
oversee these activities, to ensure the investment process is
robust, and that the investments made are consistent with the
aims, objectives and investment strategy of the Company.
To that end, the Board was delighted to join members of
Pantheon’s team on a site visit to Primafrio’s Head Office
and major distribution centre in Murcia, Spain, in June 2023.
Primafrio was the Company’s first investment commitment,
announced a few months after our launch, and it was very
pleasing to see the progress that it continues to make in the
development of existing and new distribution centres and
logistics infrastructure.
The Board, the Investment Manager and our corporate
brokers, Investec, met with senior representatives from both
Primafrio and Apollo, the Sponsor partner on the transaction.
The visit provided the Board with valuable insight into, and
assurance regarding, the Investment Manager’s robust
investment and underwriting processes, the strength of
relationships with Sponsors, and an example of the access
to the management teams of the Company’s underlying
assets accorded to the Investment Manager. The Board was
delighted to be able to extend this visibility to shareholders
when hosting the Company’s inaugural capital markets day
in November, covering key topics including market outlook,
Portfolio overview and introducing some of Pantheon’s key
Sponsor relationships. We look forward to hosting more of
these events in the future and welcome any suggestions on
future content.
Through our oversight, such as the Primafrio site visit and
regular meetings with the Investment Manager, the Board
maintains comfort in the investment process and the quality
of the Company’s portfolio. As evidenced by the continued
NAV growth, these businesses are in aggregate operating
solidly and executing in line with the business plans on which
our investments were based.
Strategy
As it has done since launch, the Company seeks to
generate attractive risk‑adjusted returns by constructing a
diversified portfolio of high‑quality assets across the global
infrastructure investment universe. The Company focuses
on assets that offer downside and inflation protection, which
is particularly relevant in the current market environment.
Leveraging Pantheon’s extensive 14‑year experience in
infrastructure investing and its c.$22 billion infrastructure
platform, PINT targets specific transactions that Pantheon
deems to be most attractive, notably opportunities in
businesses with strong operations and growth potential, in
sub‑sectors benefiting from long‑term positive trends and
managed by high‑quality Sponsors. I am delighted that this
approach to investment is now evident in the Portfolio that the
Company has assembled through the opportunities provided
by Pantheon.
Governance and sustainability
The Board takes its responsibilities to its shareholders, in
accordance with good governance standards, very seriously,
and we continually strive to improve our oversight of the
Company and its transparency. During the period, we have
had a particular focus on ESG matters and sustainability.
To ensure sufficient focus on these matters, we have
formally created a new ESG & Sustainability Committee,
which is chaired by Ms Finegan. Ms Finegan has been a
non‑executive Director of the Company since its launch and is
an experienced infrastructure asset management professional
with over 30 years of sector experience, performing a number
of other board and advisory roles with an emphasis on ESG
outcomes.
PINT’s ESG & Sustainability Committee has responsibility
for: agreeing, overseeing and monitoring the Company’s
ESG strategy; its ESG reporting and disclosure; its ESG risk
management (alongside the Audit and Risk Committee); and
ensuring effective stakeholder engagement.
Under the oversight of this committee, the Company
published its inaugural sustainability report on
19 September 2023, providing (among other things)
further insight into the sustainability characteristics of
PINT’s portfolio and relevant emissions data. The full
report can be found on the Company’s website:
www.pantheoninfrastructure.com and a summary
of the information can be found on page 58.
CHAIR'S
STATEMENT
CONTINUED
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Shareholder engagement
A major part of the Board’s purpose is to represent the
interests, needs and wishes of the Company’s shareholders.
We are committed to maintaining open channels of
communication and to engaging with shareholders in a
manner which they find most meaningful, in order to gain
an understanding of their views.
Shareholder meetings take place throughout the year
with the Investment Manager, but as Chair I believe it is
vitally important for the Board and I to hear views first
hand. Throughout the year, the Chair of the Audit and Risk
Committee and I offered meetings to a significant number of
shareholders representing a majority of the share register by
issued share capital. Several of them accepted our offer and
we met with investors representing more than one‑fifth of the
register.
Feedback from these meetings was overall very positive, and
the engagement from the Board was well received. Naturally,
shareholders were keen to see continued improvement and
we have endeavoured to respond to many of the issues raised,
such as: the share price discount to NAV (we have announced
a programme of buybacks); providing confidence in valuations
(we have continued to disclose valuation sensitivities);
and improved ESG and climate disclosures (we have since
published our sustainability report).
The Board always welcomes contact with shareholders, so
if there are matters you wish to raise with us or if you would
like a meeting, please feel free to contact us at the registered
office or via the Company Secretary using the details on
page 140.
Outlook
Infrastructure remains a key driver of economic growth, and
therefore the need for investment into new infrastructure
is arguably stronger than ever. Indeed, in the current
environment, private investment is especially needed, and
we believe will be ultimately rewarded, at a time where
governments are facing significant budget deficits and rising
debt levels.
The last six months or so have seen an even greater
international focus on decarbonisation. According to the
World Meteorological Organization, 2023 was the warmest
year on record, and the annual average global temperature
approached 1.5°C above pre‑industrial levels. The road
to net zero globally requires sustained and extraordinary
investment in new infrastructure. Private infrastructure has
demonstrated a necessary role in filling that gap, and we
believe it will continue to play an important part in funding
global infrastructure investments.
The market for infrastructure investment remains competitive,
and despite some recent signs of recovery, fundraising in
private markets was challenging in 2023. PINT’s strategy
continues to be to identify and target companies that are
set to benefit from key sectoral tailwinds, whilst exhibiting
defensive characteristics and delivering growth in real terms
across the economic cycle. Pantheon’s wide capability
to source new investments through its vast network and
established partnerships, as demonstrated since PINT’s
launch, is all the more crucial in current market conditions.
The Board remains optimistic about PINT’s future investment
opportunities and value creation potential.
With this in mind, and as already stated, we believe that
the current level of discount is unjustified, and represents
a compelling value opportunity for those seeking to invest
into a fully deployed and diversified portfolio of high‑quality
infrastructure assets.
Currently, it appears that much of the market is focusing
purely on yield from gilts and bonds without considering
prospects for capital appreciation. We continue to believe that
PINT’s strategy means it is well positioned for when investors
again start to recognise the importance of growth potential in
a well‑balanced investment strategy, and have been further
encouraged by the increased awareness relating to the
ongoing cost disclosures issues affecting AIFMs, which may
in time provide further buying stimulus in a market showing
signs of recovery. The Board is confident of the Manager’s
ability to continue to source new assets and to manage the
existing portfolio to deliver that growth. We also believe that
infrastructure assets will provide much‑needed resilience in
the current uncertain world.
Board composition
It is now over two years years since the Company’s launch,
and as Chair I have had no issues in committing the
necessary time to oversee the Company alongside my other
non‑executive roles. Nevertheless, mindful of the perception,
if not the reality, of my capacity to act as Chair, I intend to
step‑down at the Company's annual general meeting in 2025.
It has been an extremely enjoyable experience to serve as
Chair during such an exciting period for the Company, and
I look forward to supporting the rest of the Board in the
process to appoint my successor in the coming months,
which will be led by our Senior Independent Director (SID),
Ms Baldock.
Vagn Sørensen
Chair
2 April 2024
CHAIR'S
STATEMENT
CONTINUED
11
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PINT INVESTMENTS
EXISTING PORTFOLIO
TRANSPORT &
LOGISTICS
Primafrio
Specialised temperature‑controlled transportation
and logistics company in Europe primarily focused on
the export of fresh fruit and vegetables from Iberia to
Northern Europe.
Sector: Transport & Logistics
Geography: Europe
Sponsor: Apollo
Website: www.primafrio.com
Date of commitment: 21.03.2022
PINT NAV 31 December 2023: £47m
Investment thesis and value creationstrategy
1
•
Niche market leader providing an essential service to
resilient end markets. The company has demonstrated
strong organic growth over a 15+ year operating history,
including during major economic dislocations (2008-2009
global financial crisis and 2020-2021 Covid‑19).
The essential nature of Primafrio’s market and its operations
provide strong downside protection.
•
Value creation opportunities include inorganic growth,
strategic M&A, and continued investment in Primafrio’s cold
storage logistics infrastructure footprint.
DIGITAL
INFRASTRUCTURE
CyrusOne
Operates more than 50 high‑performance data centres
representing more than four million sq ft of capacity
across North America and Europe.
Sector: Digital: Data Centre
Geography: North America
Sponsor: KKR
Website: www.cyrusone.com
Date of commitment: 28.03.2022
PINT NAV 31 December 2023: £27m
Investment thesis and value creationstrategy
1
• Growth in data usage continues to drive data centre
demand. In particular, the hyperscale segment represents a
strong growth opportunity due to increasing cloud adoption
and increasingly data‑heavy technologies (5G, AI, gaming,
video streaming).
• Benefits from defensive characteristics such as long‑term
contracts with a largely investment grade credit quality
customer base, price escalators and limited historical
customer churn.
POWER &
UTILITIES
National
Gas
The owner and operator of the UK’s sole gas
transmission network, regulated by Ofgem, and an
independent, highly contracted metering business.
Sector: Power & Utilities: Gas Utility and Metering
Geography: UK
Sponsor: Macquarie
Website: www.nationalgas.com
Date of commitment: 28.03.2022
PINT NAV 31 December 2023: £47m
Investment thesis and value creationstrategy
1
• Stable inflation‑linked cash flows with returns positively
correlated to inflation, supported by tailwinds of the current
macroeconomic environment.
• Strong downside protection; regulatory framework allows
for the recovery of costs and a minimum return on capital.
The company also holds a monopolistic position through
sole ownership of the UK’s gas transmission network.
• Significant growth opportunity. The transmission system
will play a leading role in making the network ready for any
future transition from natural gas to hydrogen. It will support
the expansion of hydrogen’s role in the energy mix while
working closely with the government and Ofgem to maintain
security of supply.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion. Past performance is not indicative of future results. Future results are not guaranteed, and loss of principal may occur. Please refer to ‘Disclosure 1 – Investments’
towards the back of this report.
12
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
POWER &
UTILITIES
DIGITAL
INFRASTRUCTURE
DIGITAL
INFRASTRUCTURE
PINT INVESTMENTS
EXISTING PORTFOLIO
CONTINUED
Vertical
Bridge
The largest private owner and operator of towers and
other wireless infrastructure in the US, with more than
7,000 owned towers across the country.
Sector: Digital: Towers
Geography: North America
Sponsor: DigitalBridge
Website: www.verticalbridge.com
Date of commitment: 04.04.2022
PINT NAV 31 December 2023: £27m
Investment thesis and value creationstrategy
1
• Track record of organic and inorganic growth: since its
founding in 2014, Vertical Bridge has been one of the most
active acquirers and ‘build‑to‑suit’ developers amongst
tower companies, and expects to further accelerate these
activities.
• 5G build‑out supporting continued growth: US carrier
annual capex is forecast to increase by over 30% by 2025,
prioritising macro towers in the 5G rollout.
• Top‑tier management team and Sponsor: key members of
Vertical Bridge and DigitalBridge (including both CEOs) have
worked together since 2003, and have exceeded the original
Vertical Bridge business plan.
Delta
Fiber
Owner and operator of fixed telecom infrastructure in
the Netherlands, providing broadband, TV, telephone
and mobile services to retail and wholesale customers
over a predominantly fibre network.
Sector: Digital: Fibre
Geography: Europe
Sponsor: Stonepeak
Website: www.deltafibernederland.nl
Date of commitment: 26.04.2022
PINT NAV 31 December 2023: £25m
Investment thesis and value creationstrategy
1
• Opportunity to invest in high‑quality fibre network with high
barriers to entry as a regional leader in its core footprint of
suburban and rural areas with historically high penetration
and low churn rates.
• Well positioned to capitalise on extensive rollout
programme via first mover advantage in its core markets,
exhibited through its track record of fast build rates and
ramp up of construction capacity.
Cartier
Energy
Platform of eight district energy systems located across
the Northeast, Mid‑Atlantic and Midwest of the US.
Sector: Power & Utilities: District Heating
Geography: North America
Sponsor: Vauban
Website: Not available
Date of commitment: 23.05.2022
PINT NAV 31 December 2023: £31m
Investment thesis and value creationstrategy
1
• Gross margin structure underpinned by availability‑based
fixed capacity payments and consumption charges, and
pass‑through pricing mechanism limits commodity price
exposure providing robust downside protection.
• ‘Sticky’ customer base with an average relationship
tenure of ~15-20 years and ~10-12‑year average remaining
contractual life.
• Provides customers with a path to decarbonisation and
increased thermal efficiency.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion. Past performance is not indicative of future results. Future results are not guaranteed, and loss of principal may occur. Please refer to ‘Disclosure 1 – Investments’
towards the back of this report.
13
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
DIGITAL
INFRASTRUCTURE
POWER &
UTILITIES
PINT INVESTMENTS
EXISTING PORTFOLIO
CONTINUED
Calpine
Independent power producer with c.26GW of
principally gas‑fired generating capacity, including
c.770MW of operational renewables.
Sector: Power & Utilities: Electricity Generation
Geography: North America
Sponsor: ECP
Website: www.calpine.com
Date of commitment: 27.06.2022
PINT NAV 31 December 2023: £56m
Investment thesis and value creationstrategy
1
• Vital supplier to the US electricity grid, providing reliable
power generation capacity and playing an important role in
the energy transition as the US targets net zero carbon by
2050. Calpine benefits from highly predictable diversified
cash flows underpinned by contracts supported by a robust
hedging programme.
• Strong renewables development pipeline of solar and
battery storage projects, financeable through the cash
flows generated by existing assets, which are projected to
nearly triple its renewables power generation capacity over
the next five to six years.
Vantage
Data Centers
Leading provider of wholesale data centre
infrastructure to large enterprises and hyperscale
cloud providers.
Sector: Digital: Data Centre
Geography: North America
Sponsor: DigitalBridge
Website: www.vantage‑dc.com
Date of commitment: 01.07.2022
PINT NAV 31 December 2023: £26m
Investment thesis and value creationstrategy
1
• Secular data usage growth through increasing cloud
adoption and increasing data‑heavy technologies continues
to drive data centre demand.
• Strong growth pipeline from favourable existing
relationships with hyperscale customers.
• Downside protection from strong position in
supply‑constrained core geographies, long‑term contracts
with investment‑grade counterparties, and low churn due to
high switching costs and barriers to entry.
RENEWABLES &
ENERGY EFFICIENCY
Fudura
Dutch market‑leading owner and provider of
medium‑voltage electricity infrastructure to business
customers, with a focus on transformers, metering
devices and related data services.
Sector: Renewables & Energy Efficiency
Geography: Europe
Sponsor: DIF
Website: www.fudura.nl
Date of commitment: 25.07.2022
PINT NAV 31 December 2023: £46m
Investment thesis and value creationstrategy
1
•
Highly stable inflation‑linked cash flows from large
and diversified locked‑in customer base with long‑term
contracts, low churn and inflation protection.
•
Strong downside protection with a quasi‑monopoly
positioning in its core regional markets characterised by
high barriers to entry.
•
Energy efficiency and decarbonisation tailwinds driving
growth opportunities to broaden service offering to
customers including EV charging, solar panels, heat pumps
and battery storage.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion. Past performance is not indicative of future results. Future results are not guaranteed, and loss of principal may occur. Please refer to ‘Disclosure 1 – Investments’
towards the back of this report.
14
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PINT INVESTMENTS
EXISTING PORTFOLIO
CONTINUED
DIGITAL
INFRASTRUCTURE
National Broadband
Ireland ("NBI")
Fibre‑to‑the‑premises network developer and operator
working with the Irish Government to support the
rollout of the National Broadband Plan, targeting
connection to 560,000 rural homes.
Sector: Digital: Fibre
Geography: Ireland
Sponsor: Asterion
Website: www.nbi.ie
Date of commitment: 09.11.2022
PINT NAV 31 December 2023: £47m
Investment thesis and value creation strategy
1
• Stable cash flows with inflation protection expected through
the terms of the project agreement and the prices NBI can
charge to internet service providers for access.
• Downside protection through a unique positioning in the
intervention area (the franchise area granted by the Irish
Government) and a flexible government subsidy regime.
• Attractive macro trends including increased remote working,
demographics and growth in fibre broadband take‑up to
date underpin the long‑term commercial viability of the
network.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion. Past performance is not indicative of future results. Future results are not guaranteed, and loss of principal may occur. Please refer to ‘Disclosure 1 – Investments’
towards the back of this report.
15
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Transaction/company overview
•
In Q3 2022, DigitalBridge, alongside Brookfield Asset
Management, agreed to buy 51% of GD Towers from
Deutsche Telekom for a total enterprise value of
€17.5 billion, with PINT investing as part of the subsequent
co‑investment syndication process.
•
GD Towers has one of the largest tower and telecom
infrastructure networks in Western Europe with c.40,000
tower sites across Germany and Austria, making it the
market leader in Germany and second largest in Austria.
•
GD Towers’ high‑quality portfolio is supported by an
anchor tenancy agreement with Deutsche Telekom,
which has retained a 49% ownership stake in GD Towers.
Investment thesis and value
creationstrategy
1
•
Majority of cash flows are contracted and index‑linked,
offering strong downside protection in challenging
macroeconomic conditions.
•
Favourable market tailwinds from regulatory‑driven
5G coverage requirements with significant growth
opportunities.
•
Organic and inorganic growth opportunities arising from
other market participants, and numerous consolidation
opportunities in Europe.
ESG
2
•
Deutsche Telekom AG has a net zero carbon strategy
that is aligned with the Science Based Targets initiative
(SBTi) and has been highly rated by the Carbon Disclosure
Project.
•
The majority of power for the tower sites now comes from
renewable sources, with carbon offsetting arrangements
in place for any fossil fuel power consumption.
PINT INVESTMENTS
NEW INVESTMENTS
Sector: Digital: Towers
Geography: Europe
Sponsor: DigitalBridge
Website: Not available
Date of commitment: 31.01.2023
PINT NAV 31 December 2023: £38m
GD Towers
Largest tower operator and telecom
infrastructure network in Western Europe
with c.40,000 tower sites across Germany
and Austria.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion. Past performance is not indicative of future results. Future results are not
guaranteed, and loss of principal may occur. Please refer to ‘Disclosure 1 – Investments’ towards the back of this report.
2. Source: ERM. While DigitalBridge may consider ESG factors when making an investment decision, DigitalBridge does not pursue an ESG‑based investment
strategy or limit its investments to those that meet specific ESG criteria or standards. Any reference herein to environmental or social considerations is not
intended to qualify DigitalBridge’s duty to maximise risk‑adjusted returns.
DIGITAL INFRASTRUCTURE
GD Towers
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
16
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
Transaction/company overview
•
In Q4 2022, EQT Infrastructure III announced the sale of a
minority stake (15%) of its shareholding in GlobalConnect
(GC) to Mubadala. PINT invested alongside other
co‑investors following this transaction, while EQT retained
a majority (controlling) stake.
•
GC is a pan‑Nordic digital infrastructure platform with a
155,000 km fibre network and 17 (35,000 m²) data centres.
•
GC is a leading challenger and is well positioned to
increase its market share across verticals and geographies
given its blue‑chip customer base, one‑stop‑shop solution
and high barriers to entry.
Investment thesis and value
creationstrategy
1
•
Majority of cash flows are contracted and index‑linked,
offering downside protection in challenging
macroeconomic conditions.
•
Favourable market tailwinds from regulatory‑driven
5G coverage requirements with significant growth
opportunities and long‑term secured revenues, protecting
its market position.
•
Organic and inorganic growth opportunities arising from
rural fibre rollout, growing demand for larger bandwidth
and numerous consolidation opportunities.
ESG
•
In June 2023, GC was approved by the SBTi, committing to
reducing its absolute carbon emissions by 42% by 2030.
•
In 2022, GC raised €1 billion in ESG‑linked financing and
recently won an award for the sustainability‑linked loan
of the year in Europe.
•
Its sustainable data centres, powered by 100% green
energy, are achieving ~25% lower power usage than the
European average.
PINT INVESTMENTS
NEW INVESTMENTS
CONTINUED
GlobalConnect
Leading pan‑Nordic wholesale and retail
telecoms business with extensive fibre
network and data centre portfolio.
Sector: Digital: Fibre
Geography: Europe
Sponsor: EQT
Website: https://www.globalconnectgroup.com/
Date of commitment: 22.06.2023
PINT NAV 31 December 2023: £20m
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion. Past performance is not indicative of future results. Future results are not
guaranteed, and loss of principal may occur. Please refer to ‘Disclosure 1 – Investments’ towards the back of this report.
DIGITAL INFRASTRUCTURE
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
17
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
Transaction/company overview
•
Co‑investment alongside Infracapital in their 2023
equity raise to support Zenobē’s business plan growth.
Infracapital retained a co‑control stake alongside a new
investor (KKR), forming a strategic partnership to support
Zenobē’s expansion into North America, Europe and
Australasia.
•
Zenobē develops, finances, owns and operates electric
buses and transmission grid‑scale batteries, providing
turnkey service offerings to its customers.
•
Since Infracapital’s initial investment in 2020, Zenobē has
grown to establish itself as a market leader at the forefront
of these increasingly important industries in UK, Benelux,
Australia and New Zealand.
Investment thesis and value
creationstrategy
1
•
Substantial and growing market opportunity driven by
significant capex required to meet demand for EV charging
and electricity grid stability.
•
Market leader in core regions in a high‑growth sector with
attractive expansion opportunities.
•
Downside protection and inflation protection via
long‑term availability‑style contracts with high‑quality
counterparties.
ESG
2
•
In addition to providing electrification solutions for vehicle
fleet owners, Zenobē's batteries help balance the supply of
renewable energy to the grid.
•
By financing, designing, building and operating battery
systems, Zenobē is accelerating the switch to electric
vehicles and maximising the uptake of renewable energy.
•
Zenobē has committed to net zero value chain carbon
emissions by 2050 and was awarded the IJGlobal ESG
Award for Europe 2023.
PINT INVESTMENTS
NEW INVESTMENTS
CONTINUED
Sector: Renewables & Energy Efficiency
Geography: UK
Sponsor: Infracapital
Website: www.Zenobe.com
Date of commitment: 07.09.2023
PINT NAV 31 December 2023: £33m
Zenobē
Zenobē provides essential infrastructure
that contributes to international power and
transport sector decarbonisation targets.
1. There is no guarantee that the investment thesis will be achieved. Pantheon opinion. Past performance is not indicative of future results. Future results are not
guaranteed, and loss of principal may occur. Please refer to the slide titled ‘Disclosure 1 – Investments’ towards the back of this report.
2. Source: Infracapital and Zenobē. The information herein has been compiled by Pantheon based on information supplied to it by Infracapital and Zenobē. For the
avoidance of doubt, Pantheon is not acting on behalf of Infracapital in communicating any information set out herein.
RENEWABLES & ENERGY EFFICIENCY
Zenobē
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
18
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
PINT
TIMELINE
Raised
£400m gross
IPO proceeds
PINT hosts
maiden capital
markets day
Commitment of
€28.4m to Delta
Fiber – Dutch
fibre company
Commitment
of $30.2m to
Vertical Bridge
– US towers
company
Commitment
of $33.2m to
Vantage Data
Centers – North
American data
centre business
Commitment
of €47.0m to
Fudura – Dutch
electricity
infrastructure
provider
Commitment of
£35m to Zenobē
– UK battery
storage and
electric bus fleet
specialist
Declared first
interim dividend
for 2023 of 2p
per share, paid
on 27 October
2023
Paid first interim
dividend of
1p per share
Agreed extension
to existing £115m
RCF, resetting
maturity to
March 2027
Declared second
interim dividend
for 2023 of
2p per share,
payable on
23 April 2024
Paid second
interim dividend
of 1p per share
Board announces
£10m share
buyback
programme
Commitment of
$41.4m to Cartier
Energy – US
district energy
platform
Commitment
of $47.6m
to Primafrio
– European
transport &
logistics business
Commitment
of $32.3m to
CyrusOne –
North American
data centre
business
Commitment
of £39.6m to
National Gas –
UK regulated
gas transmission
network and
metering
business
Agreed £52.5m
increase to RCF,
bringing total to
£115m
Commitment
of €22.0m to
GlobalConnect
– Nordic fibre
networks
company
Raised £81m of
gross proceeds
through exercise
of subscriptions
shares
Commitment
of $55.4m to
Calpine – US
power generation
business
Commitment
of €52.7m
to National
Broadband
Ireland –
Irish digital
Infrastructure
company
Commitment of
€47.2m to GD
Towers – German
and Austrian
towers company
November 2021 June 2022April 2022 September 2022 November 2022 January 2023 June 2023 November 2023
March 2024May 2022
March 2022
July 2022 October 2022 March 2023 September 2023
Key:
DIGITAL INFRASTRUCTURE
RENEWABLES & ENERGY EFFICIENCY
POWER & UTILITIES
TRANSPORT & LOGISTICS
CORPORATE
19
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
Founded in 1982, Pantheon
has established itself as a
leading global multi‑strategy
investor in private equity,
infrastructure and real
assets, private debt and
realestate.
Pantheon’s infrastructure experience
Since 2009, Pantheon has completed 218 infrastructure
investments across primaries, secondaries and
co‑investments alongside more than 58 asset sourcing
partners, solidifying its position as one of the largest
managers investing in infrastructure. Total infrastructure
co‑investment and Sponsor relationships exceeded 50 as
of December 2023, including investments closed or in legal
closing. The global infrastructure investment team managed
c. $22 billion in AUM as at 30 September 2023.
1. As at 30 September 2023. This figure includes assets subject to discretionary
or non‑discretionary management or advice. Infrastructure AUM includes
all infrastructure and real asset programmes which have an allocation to
natural resources.
2. Performance data as of 30 September 2023. Past performance is not
indicative of future results. Future performance is not guaranteed and a
loss of principal may occur. Performance data includes all infrastructure
co‑investments approved by Pantheon’s Global Infrastructure and Real Assets
Committee (GIRAC) since 2015, when Pantheon established its infrastructure
co‑investment strategy. Notional net performance is based on an average
forecast annualised fee of 1.5% of NAV.
Pantheon
platform
128
Investment
professionals
$95bn
1
Funds under
management
>1,000
Institutional
investors globally
13
Global offices
Pantheon
private
infrastructure
$22bn
1
AUM
218
Investments
33
Investment
professionals
22 years
Average years'
experience of
Investment Committee
Pantheon
private
infrastructure
co‑investments
$4bn
Total
commitments
52
Total
investments
58+
Asset sourcing
partners
13.2%
Notional
net IRR
2
20
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Pantheon’s infrastructure experience
continued
Pantheon has extensive experience of and expertise in
primary, secondary and co‑investments, which are defined
as follows:
•
primary investments: involve a commitment to a newly
launched limited life fund managed by a Sponsor, seeking
to exit improved businesses in the later years of the fund
term at a profit;
•
secondary investments: traditionally involve the purchase
of an interest in an established private fund or a portfolio of
companies from an existing investor; and
•
co‑investments: afford the opportunity for investors to
invest alongside Sponsors in specific Portfolio Companies,
typically on a fee and carried interest‑free basis.
PINT focuses on gaining exposure to infrastructure assets via
co‑investments.
INVESTMENT
MANAGER'S REPORT
CONTINUED
1. As at 30 September 2023. This figure includes assets subject to discretionary
or non‑discretionary management or advice. Infrastructure AUM includes
all infrastructure and real asset programmes which have an allocation to
natural resources.
2. Pantheon internal data from 2015 to December 2023. Screened deal flow is
based on total value of transactions ($).
3. Total infrastructure co‑investment count and committed amount as of
December 2023, includes all Pantheon infrastructure co‑investments closed
or in legal closing.
4. Performance data as of 30 September 2023. Performance data includes all
consummated infrastructure co‑investments approved by GIRAC since 2015,
when Pantheon established its infrastructure co‑investment strategy.
$10bn
$88bn
$4bn
AUM in primary commitments
since 2009
1
Co‑investment opportunities
screened since 2015
2
Committed across
52 co‑investment assets
Pantheon primary
funds strategy
Sponsors require
co‑investment partner
Pantheon co‑investment
strategy
Committed across 52
co‑investment assets
3
• Pantheon develops long‑term
relationships with top tier
Sponsors by investing in their
underlying flagship funds.
• Sponsors consider Pantheon
to be a strategic partner, rather
than a direct competitor.
Sponsors may offer
co‑investments for the following
reasons:
• size of transaction;
• manage concentration limits;
• raise follow‑on capital; and
• strengthen investor
relationships.
• Access to co‑investment
assets, typically on a no‑fee,
no‑carry basis.
• Proven track record as a
valuable partner by providing
experience in complex deals;
speed and certainty of
deal execution within short
time frames.
• Co‑investment track record
has produced notional net IRR
to date of 13.2%
4
.
21
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PORTFOLIO
PINT is constructing a diversified global portfolio with
a focus on developed market OECD countries, with the
majority of exposure in Western Europe and North America.
Over the medium term, the Investment Manager expects,
in line with the initial prospectus, the composition of the
Portfolio to include investments in the following sub‑sectors:
Digital Infrastructure, Power & Utilities, Transport & Logistics,
Renewables & Energy Efficiency and Social & Other
Infrastructure.
In the year to 31 December 2023, the Company announced
three further investments, amounting to £96 million, with
a total of £487 million now invested or committed across
13 investments.
The Portfolio assembled is diversified across sectors
and geographies, and the Investment Manager believes
that it is well positioned to withstand any external market
challenges. The investments typically benefit from defensive
characteristics including long‑term contracted cash flows,
inflation protection and robust capital structures.
Seven investments are in Digital Infrastructure, representing
44% of NAV
1
, across the data centre, towers and fibre
sub‑sectors. Three investments, representing 27%, are in the
Power & Utilities sector including: gas transmission, district
heating and electricity generation. Two investments are in
Renewables & Energy Efficiency (17%) and the remaining
investment is in Transport & Logistics (9%). The largest
geographical exposure is in Europe (46%), with the remaining
exposure in North America (34%) and the UK (17%).
Net working capital reflects 3% of NAV.
INVESTMENT
MANAGER'S REPORT
CONTINUED
NAV pence per share movement
(Year to 31December2023)
NAV increased over the year by 7.7p per share (period to
31 December 2022: 0.9p per share), after adjusting for the
dividends paid of 3.0p per share over the year (period to
31 December 2022: 1.0p per share). The movement in the year
was principally driven by fair value gains of 12.0p per share
(period to 31 December 2022: 2.0p per share), partially offset
by foreign exchange movements of (3.0)p per share (period
to 31 December 2022: 2.1p per share), attributable to the
weakening of both EUR and USD during the year, which was
partially offset by a 2.6p per share movement from the foreign
exchange hedging programme (period to 31 December 2022:
(1.8)p per share).
Interest on cash deposits contributed 0.7p per share (period
to 31 December 2022: 0.4p per share), and share buybacks
contributed 0.3p per share (period to 31 December 2022: nil),
with a reduction of (1.9)p per share (period to 31 December
2022: (1.0)p per share) related to fund operating and financing
expenses, resulting in a closing NAV of 106.6p per share.
This excludes the impact of the second interim dividend of
2.0p per share, which is to be paid on 23 April 2024.
31 December
2022
Fair value
gains
Foreign
exchange
movement
Foreign
exchange
hedge
Finance
income
Expenses
1
Share
buybacks
Dividends
paid
31 December
2023
98.9p
12.0p
2.6p
0.7p
0.3p
(3.0)p
(1.9)p
(3.0)p
106.6p
1. Expenses include operating and capital expenses.
NAV Pence per share movement
22
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
CONTINUED
POWER &
UTILITIES
26GW
RENEWABLES &
ENERGY EFFICIENCY
67,000
DIGITAL
INFRASTRUCTURE
1,444,000
of electric generation capacity, including 729MW
of renewables, generating 111TWh annually
smart meters helping to reduce
domestic energy bills
homes connected
to high speed fibre
DIGITAL
INFRASTRUCTURE
94
RENEWABLES &
ENERGY EFFICIENCY
1,000
POWER &
UTILITIES
8
data centres providing
1,440MW of power capacity
electric buses supported, saving 66,000 tonnes
of CO
2
annually
district heating networks, with 96 km
of piping serving 190 buildings
Exposure to operational infrastructure assets
1. Figures represent the total infrastructure assets across PINT’s Portfolio Companies.
PORTFOLIO IN NUMBERS
1
23
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
CONTINUED
Exposure to operational infrastructure assets continued
1. Figures represent the total infrastructure assets across PINT’s Portfolio Companies.
RENEWABLES &
ENERGY EFFICIENCY
17,200
DIGITAL
INFRASTRUCTURE
416,000 km
TRANSPORT &
LOGISTICS
2,500
medium and high voltage
transformers
of fibre cable,
passing 2.9 million homes
temperature controlled trucks and 40,000 m²
of temperature controlled warehouse capacity
DIGITAL
INFRASTRUCTURE
51,000
POWER &
UTILITIES
7,630 km
RENEWABLES &
ENERGY EFFICIENCY
1,494MW
telecom towers of pressurised gas transmission pipes,
71 gas compressors and nine gas and LNG terminals
of battery energy storage capacity,
supporting the transition to net zero
PORTFOLIO IN NUMBERS
1
CONTINUED
24
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PORTFOLIO CONTINUED
Sector diversification (as at 31 December 2023)
4
Outer ring: total (invested
2
+ committed
3
)
Inner ring: invested and committed breakdown
Geographic diversification (as at 31 December 2023)
4
Outer ring: total (invested + committed)
Inner ring: invested
2
and committed
3
breakdown
1. Based on NAV of £504 million at 31 December 2023.
2. Invested amounts at 31 December 2023 totalled £471.7 million, representing the fair value of the Company’s funded investments in those sectors or geographies.
3. Committed but not yet invested amounts at 31 December 2023 totalled £15.7 million, representing cash held in respect of as yet undrawn commitments and/or deals in legal closing in those sectors or geographies. Undrawn commitments are a
feature of the Company’s investments and occur when completions are deferred due to commercial or regulatory approval processes, or where capital calls are intentionally staggered over time for follow‑on purposes, for example for capex or M&A
requirements.
4. Charts do not add up to 100.0% due to rounding
Digital Infrastructure | 43.9%
Invested | 41.8%
Committed | 2.1%
Power & Utilities | 26.7%
Invested | 26.7%
Committed | 0.0%
Renewables & Energy Efficiency | 16.6%
Invested | 15.7%
Committed | 0.9%
Transport & Logistics | 9.4%
Invested | 9.3%
Committed | 0.1%
Net working capital | 3.3%
Europe | 46.1%
Invested | 44.4%
Committed | 1.8%
North America | 34.0%
Invested | 33.2%
Committed | 0.8%
UK | 16.6%
Invested | 16.0%
Committed | 0.6%
Net working capital | 3.3%
The breakdown of the Company’s NAV
1
as at 31 December 2023 is shown below by reference to sector and geography. The breakdowns are shown relative to amounts invested
2
and committed
3
.
INVESTMENT
MANAGER'S REPORT
CONTINUED
25
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
CONTINUED
WEIGHTED AVERAGE
DISCOUNT RATE
WEIGHTED AVERAGE
GEARING
WEIGHTED AVERAGE
HEDGED DEBT
WEIGHTED
AVERAGE EBITDA
Weighted average discount rate of
13.6% is based on the discount rate of
each Portfolio Company investment
at 31 December 2023, weighted on an
investment fair value basis (excluding
undrawn commitments), across all
13 investments.
Weighted average gearing is calculated
by reference to the ratio of net debt
to enterprise value of each Portfolio
Company, weighted across all
13 investments.
Weighted average hedged debt
calculated by reference to ratio of
hedged debt relative to net debt of each
Portfolio Company.
Weighted average EBITDA is based on
the annual EBITDA of each Portfolio
Company at 31 December 2023, weighted
by PINT’s ownership of underlying
Portfolio Companies and converted to GBP
as necessary.
13.6% 36% 77% £60m
PORTFOLIO CONTINUED
Cartier Energy Zenobē
26
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Asset Region Sponsor
Portfolio
value
31 December
2022
(£m)
Drawn
(£m)
Distributions
(£m)
Asset
valuation
movement
(£m)
FX
movement
(£m)
Portfolio
value
31 December
2023
(£m)
Undrawn
commitments
31 December
2023
(£m)
Allocation of
foreign
exchange
hedge
movements
(£m)
Portfolio
total return
for the
year
(£m)
Primafrio Europe Apollo 40.4 0.1 — 7.5 (1.0) 47.0 0.5 1.0 7.5
CyrusOne North America KKR 22.8 — — 5.2 (1.4) 26.6 3.8 1.2 5.0
National Gas UK Macquarie — 40.8 — 6.6 — 47.4 — — 6.6
Vertical Bridge North America DigitalBridge 27.0 — — 1.9 (1.6) 27.3 — 1.4 1.7
Delta Fiber Europe Stonepeak 23.0 — — 3.2 (1.4) 24.8 1.5 — 1.8
Cartier Energy North America Vauban 34.8 — — (1.5) (2.0) 31.3 — 1.7 (1.8)
Calpine North America ECP 47.0 — (9.0) 21.0 (3.1) 55.9 — 2.8 20.7
Vantage Data Centers North America DigitalBridge 22.3 5.4 — — (1.4) 26.3 — 1.3 (0.1)
Fudura Europe DIF 41.3 — — 5.9 (1.0) 46.2 1.6 1.0 5.9
National Broadband Ireland Europe Asterion 42.8 1.0 — 4.6 (1.0) 47.4 2.9 1.1 4.7
GD Towers Europe DigitalBridge — 39.3 (1.0) 0.6 (0.9) 38.0 2.5 0.6 0.3
GlobalConnect Europe EQT — 19.0 — 1.1 0.2 20.3 — — 1.3
Zenobē UK Infracapital — 32.1 — 1.1 — 33.2 2.9 — 1.1
Grand Total 301.4 137.7 (10.0) 57.2 (14.6) 471.7 15.7 12.1 54.7
INVESTMENT
MANAGER'S REPORT
CONTINUED
Key:
DIGITAL INFRASTRUCTURE
RENEWABLES & ENERGY EFFICIENCY
POWER & UTILITIES
TRANSPORT & LOGISTICS
PORTFOLIO CONTINUED
27
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PERFORMANCE
Asset updates
INVESTMENT
MANAGER'S REPORT
CONTINUED
PRIMAFRIO
CYRUSONE
NATIONAL GAS
VERTICAL BRIDGE
Primafrio performed resiliently despite a
challenging trading environment. With a backdrop
of flat volumes arising from a weak macroeconomic
environment in key European markets, the company
has been able to continually grow revenue through
increasing market share and expanding into new
markets with new and existing clients. Whilst
margins have recently been impacted by high cost
inflation and fuel costs, the Company's valuation
has benefited from strong downside protection
afforded to Apollo and its co‑investors within the
transaction structure.
CyrusOne recovered initial capex backlogs and
earnings for the year were in line with the original
investment case. The company entered into a joint
venture with Kansai Electric Power Company during
the period, which is expected to unlock significant
opportunities in the Asian market, and AI‑based
computing is expected to provide significant further
tailwinds.
National Gas experienced no material deviations
from the original investment case, with the
operation of the existing regulated asset base on
track. The National Infrastructure Commission gave
its backing to a long‑term backbone hydrogen
network to aid the decarbonisation of heavy
industry. Furthermore, the government confirmed
its strategy to seek hydrogen blending up to 20%
across the existing network, following similar
moves on the continent. The recent successful
pilot project to run 100% hydrogen in repurposed
gas transmission assets was a world first and an
important step in support of hydrogen blending
across the network. Stakeholders are working
towards the first blending to align with the start of
scalable hydrogen production in 2026.
Vertical Bridge shifted priorities to its build‑to‑suit
(BTS) business given an unfavourable market for
tower portfolio acquisitions. The most notable
development to date is a joint venture announced
with Verizon for up to 3,000 BTS developments.
The company still sees some delays to rollout due
to carriers deferring capex spend given recent
macroeconomic headwinds, but longer term rollout
of increased coverage is not in doubt given 5G
coverage requirements. Furthermore, there have
been some recent positive signals in the M&A
market for acquiring existing tower portfolios, with
a number of transactions closing in the period and
an executable pipeline emerging for 2024, which is
now more in line with the original investment case
after a cooling off since late 2022.
DELTA FIBER
CARTIER ENERGY CALPINE
VANTAGE DATA CENTERS
Delta Fiber’s rollout is progressing on plan and it
expects to have completed activities by mid‑2025
on budget. Retail fibre adoption is tracking near
to plan with no changes to long‑term penetration
assumptions, and the company is seeking to
replicate a recently announced wholesale network
sharing agreement with Odido (formerly T-Mobile
Netherlands) with other internet service providers.
Cartier Energy had a challenging year after facing
a number of issues including the imperfect pass‑
through of energy costs, materially lower volumes
due to significant seasonality shifts, and the loss
of a key customer due to financial challenges.
However, the business is actively working on
converting its pipeline of shorter‑term “fill‑in”
opportunities as well as some capex initiatives
which were identified in the original investment
case.
Calpine continues to outperform its original
investment case due to materially higher short and
medium‑term profitability arising from sustained
higher spark spreads in its key markets. The
company continues to mitigate its exposure to
near‑term energy prices through proactive hedging
activities which lock in short‑term profitability.
Construction also commenced on its flagship Nova
battery storage project, as well as additional capex
deployment into both its existing renewables fleet
and new renewables opportunities. The company
was also awarded federal funding support for two
carbon capture and sequestration projects.
Vantage Data Centers sees increased opportunity
relative to the original investment case, principally
due to increased cloud and AI computing demands,
for which a significant additional primary equity
commitment was secured in Q4 2023 from both
Digital Bridge and technology focused private
equity investor Silver Lake. The company continues
to effectively navigate supply chain and grid
capacity challenges.
28
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
CONTINUED
FUDURA NATIONAL BROADBAND IRELAND GD TOWERS GLOBALCONNECT
Fudura has outperformed its original investment
case since entry. Higher profit margins have
resulted from undertaking higher complexity and
higher margin projects, and revenues from its
ancillary growth initiatives, including EV charging,
solar and batteries, are now ramping up.
National Broadband Ireland remains on track with
its rollout plan, which continues to stay on budget.
Final rollout is ahead of the revised contractual
targets that were set to address the impact of
Covid‑19 and the main deployment is expected to
be largely completed by the end of 2026. A large
number of internet service providers are now
signed up, which in turn is supporting adoption
by end users greater than foreseen in the original
investment case, with the resulting revenues
supporting the company’s profitability and liquidity
during construction.
GD Towers enjoyed good progress during the
year, with revenues and profits coming in largely
on track with the original investment case. The
business has been focused on implementing
several immediate and significant organisational
changes geared towards delivering process
efficiencies in its BTS programme. Along with
other efficiency programmes being explored, the
company anticipates several areas of potential
outperformance to the investment case, but until Q1
2024 will continue to be valued at cost.
GlobalConnect's management remain focused on
ensuring the optimal allocation of capital given the
varied markets it operates in, which has resulted in
a recent re‑emphasis back towards its core market
of fibre‑to‑the‑home opportunities in the Nordics.
The company also reached an important milestone
with more than one million homes passed.
ZENOBĒ
Zenobē has been busy since PINT's investment
was made in Q4 2023, with further project financing
secured for strategically important greenfield battery
projects in Scotland as part of a £750 million rollout
commitment in Scotland by 2026, as well as the
announcement of an all‑electric fleet replacement for
Oxfordshire County Council.
PERFORMANCE CONTINUED
Asset updates continued
29
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
CONTINUED
PERFORMANCE CONTINUED
Portfolio movement
During the year, the Portfolio generated underlying growth of £57.2 million, reflecting a 13.0% movement on the opening capital
invested, adjusted for capital calls and investments, but before adjusting for distributions totalling £10.0 million. Movements in
foreign currencies resulted in a foreign exchange loss of £14.6 million (offset at a company level by a foreign exchange hedging
gain of £12.1 million), resulting in a closing value of £471.7 million at 31 December 2023.
The Portfolio had a weighted average discount rate (WADR) of 13.6%
1
at the year end (31 December 2022: 14.2%).
Outlook
The Investment Manager remains confident about the
prospects of the Portfolio going forward. The tailwinds that
support the demand for new infrastructure, and the growth
opportunities that accompany it, remain strong across all the
sub‑sectors in which the Company is active.
From a valuation perspective, the Investment Manager has
seen limited evidence of any material downward trends across
the core‑plus infrastructure universe. The consensus amongst
Sponsors that the Investment Manager works with is that
the full extent of discount rate increases attributable to the
increased interest rate environment has now flowed through
to valuations. The volume of remaining dry‑powder in the
sector, coupled with a recovery in private markets fundraising
since H1 2023, and the core plus nature of the Company's
assets, continue to support a constructive valuation
environment.
Furthermore the Investment Manager continues to see
sustained transactional evidence of realised premiums to
holding valuations at exit, which adds in further long‑term
headroom and potential for outperformance. Specifically,
there continues to be increased appetite for assets with some
degree of inflation linkage and those that play a direct role in
the energy transition.
1. WADR of 13.6% is based on the discount rate or implied discount rate of each
completed investment at 31 December 2023, weighted on an investment fair
value basis (excluding undrawn commitments).
Portfolio value
31 December
2023
471.7
Foreign
exchange
movement
(14.6)
Asset
valuation
movement
57.2
Distributions
(10.0)
Capital
calls and
investments
137.7
Portfolio value
31 December
2022
301.4
Portfolio movement (£million)
30
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
CONTINUED
PERFORMANCE CONTINUED
Portfolio cash flows
Over the medium term, the Company expects the Portfolio
to generate cash flows both through distributions from its
investments and from investment exits, the latter becoming
realised in cash in due course through asset disposals. In
turn, these cash flows are expected to support both the
reinvestment of capital and a progressive dividend policy.
The Company’s investment approach is to invest in assets
with an expected hold period that is typically, but not always,
5-7 years, after which it is expected to realise value by exiting
positions according to the relevant Sponsor's time horizon.
Whilst the Company does expect some of its investments to
make distributions, cash generation is expected to be heavily
weighted towards the receipt of sale proceeds at the point
of investment exit, and in some cases no distributions are
forecast.
The Company maintains a long‑term forecast of both sources
of cash flow, which is derived from either the Investment
Manager's base case expectations or Sponsor updates where
available. The latest projection of the Company's cash flows
from the Portfolio is summarised opposite, as at 31 December
2023.
The projection is based on existing investments only and does
not factor in any potential for re‑investment of capital after
realisations, which accordingly accounts for the downward
trend of distributions after realisations occur.
Whilst these projections are intended to present a plausible
long‑term expectation of the Portfolio's cash flow generation,
there is no guarantee around the quantum or timing of
distributions or realisations, which remain dependent on
multiple factors including underlying asset performance,
exit timing, and long‑term FX rate assumptions. Accordingly
they should not be considered as guidance around financial
performance.
Estimated distributions Estimated realisations Estimated remaining investments
0
£50m
£100m
£150m
£200m
£250m 14
12
10
8
6
4
2
0
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Projected Portfolio cash flows (£million)
31
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PERFORMANCE CONTINUED
H2 2023 dividend
At IPO, the Company said it would target a NAV Total Return
of 8-10% p.a. following full investment of the IPO proceeds,
and an initial dividend of at least 2p per share for the first
financial period ended 31 December 2022, rising to 4p
per share for the year ended 31 December 2023, and a
progressive dividend thereafter. In line with this, the Board
recently declared the Company’s second interim dividend of
2p per share in respect of the year ended 31 December 2023,
which is due to be paid on 23 April 2024. This is in line with
the IPO target.
INVESTMENT
MANAGER'S REPORT
CONTINUED
Dividend cover
The Company has devised a measure to assess dividend
coverage by calculating the ratio of net cash flow to dividends
declared in respect of a given period. This is calculated
across the whole group, including the Company's subsidiary,
Pantheon Infrastructure Holdings LP (PIH LP), through which
the Company holds the majority of its investments.
Net cash flow for this purpose is calculated as income (the
sum of all income and capital distributions that are not related
to asset disposals, plus deposit interest income) plus disposal
profits (realised profits on disposal, or disposal proceeds
less original investment cost), less operating and financing
expenses incurred during the same period.
On this basis, the Company's dividend cover for 2022 and
2023 was 0.2x and 0.3x respectively, as detailed opposite.
As set out on the previous page, the Company expects
material progression in cash flows from the Portfolio as
realisations start to occur, which in turn is expected to flow
through to increased dividend coverage.
£m 2022 2023
Income 6.1 13.1
Disposal profits — —
Operating costs (4.6) (6.6)
Financing costs (0.0) (1.5)
Net cash flow for dividend cover 1.5 4.9
Dividend declared 9.6 18.9
Dividend cover 0.2x 0.3x
Cumulative dividend cover 0.2x 0.2x
32
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PERFORMANCE CONTINUED
Borrowings
In June 2023, the Company agreed a £52.5 million increase
to its existing £62.5 million three‑year multi‑currency RCF,
bringing the total to £115.0 million. As part of the increase,
the Company sought to diversify the lender group, with the
introduction of RBS International (RBSI), alongside Lloyds Bank
Corporate Markets plc ('Lloyds').
After the year end, the Company extended the term of
the RCF by 15 months, effectively resetting the tenor at
three years with the same pricing and terms. The enlarged
and extended RCF allows the Company to maintain liquidity
for unfunded commitments and working capital requirements
whilst minimising the inefficiencies of holding excessive cash.
The RCF, which is secured on the assets of the Company,
includes an uncommitted accordion feature, which will be
accessible, subject to approval, by additional lenders, and is
intended to increase over time in line with the Company’s NAV
progression.
Share buybacks
As at 31 December 2023, the Company had deployed
£5.8 million in buying back 7.4 million of its own shares, and
subsequent to the year end, spent a further £2.6 million in
buying back 3.1 million shares. Reacquired shares are held in
treasury and may be subsequently re‑issued if the Company's
shares return to trading at a premium to NAV. At the year end
the Company continued to make allowance for the remaining
£4.2 million of the £10 million originally allocated to share
buybacks, as part of its liquidity management as detailed on
the analysis presented opposite.
The Board continues to regularly assess the Company’s
optimal approach to capital allocation in light of its forecast
cash flows, dividend target and expectations of dividend
cover, and as detailed in the Chair's statement, has allocated
an additional £8.4 million for share buybacks.
INVESTMENT
MANAGER'S REPORT
CONTINUED
Cash and liquidity management
At the year end, the Company had total available liquidity of
£144.4 million (31 December 2022: £245.4 million), comprising
£29.4 million of cash (31 December 2022: £182.9 million)
and £115.0 million (31 December 2022: £62.5 million) of
undrawn RCF.
The Company maintains a policy to hold liquidity sufficient
to cover all investment commitments, including for share
buybacks, due in the next twelve months. At the year end, this
amount totalled £20.0 million.
In addition to this, the Company has adopted a risk‑based
policy to hold specific cash buffers in respect of potential
further liquidity requirements. These buffers include forecast
operating costs, dividend payments, FX hedge settlements
due (based on mark‑to‑market valuations), an allowance
for emergency co‑investment capital across the Portfolio,
allowances for FX movements on undrawn non‑GBP
commitments, and amounts held against potential movements
in the Company’s FX hedging positions (calculated relative to
notional amounts and contractual maturity). At the year end,
these amounts totalled £79.9 million.
The net balance after taking account of all these
considerations represents the funds available to the Company
for further investment. As at the year end, this stood at
£44.5 million (31 December 2022: £72.0 million).
£m
1
Sources
Cash & equivalents 29.4
RCF 115.0
Total (A) 144.4
Commitments
Undrawn investment commitments 15.7
Share buybacks 4.2
Total (B) 20.0
Buffers
Operating costs 8.5
Dividends 18.8
Co‑investment buffer 22.1
FX buffer on undrawn investment commitments
2.4
FX hedging buffer (see next page) 28.2
Total (C) 79.9
Available funds (= A - B - C) 44.5
1. Totals do not match due to rounding.
Ongoing charges
The Company’s ongoing charges figure is calculated in
accordance with the Association of Investment Companies
(AIC) recommended methodology and was 1.35% for the year
to 31 December 2023 (period to 31 December 2022: 1.02%).
The ongoing charges were lower in the period to 31 December
2022 as no management fee was paid on undeployed cash
until 75% of the net issue proceeds were deployed, which was
achieved in the quarter to 30 September 2022.
33
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
CONTINUED
PERFORMANCE CONTINUED
Foreign exchange impact
In order to limit the potential impact from material movements
in major foreign exchange rates on non‑local currency
investments, the Company has put in place a foreign
exchange hedging programme. The aim of this programme
is to reduce (rather than eliminate) the impact of movements
in foreign exchange rates on the Company’s NAV, and to
this end the Company has an internal policy to seek to limit
its unhedged exposure to 25% of NAV at any time. Hedging
is achieved through the execution of foreign exchange
hedging contracts relative to the ongoing non‑local currency
investment exposure. This is subject to, inter alia, market
liquidity and pricing for hedges, foreign exchange volatilities,
the composition of the Company’s portfolio and the
Company’s balance sheet.
The Company has entered into arrangements with six hedging
counterparties, all on an unsecured basis and subject only to
margin calls if pre‑specified credit limits are breached on an
individual counterparty (not aggregate) basis. Furthermore, in
line with the Investment Manager’s risk policies, the Company
has adopted a policy to maintain strict liquidity buffers
in relation to these hedging positions to protect against
extreme volatility‑driven margin requirements. Details of the
Company’s hedging positions and associated cash buffers are
set out in the table opposite.
The depreciation of USD and EUR resulted in a negative
foreign exchange movement in the year to 31 December 2023
of (£14.6) million (period to 31 December 2022, gain of £9.9
million), which was partially offset by a gain on the hedging
programme of £12.1 million (period to 31 December 2022, loss
of £8.5 million).
Hedge P&L Asset FX P&L Net movement
(4.0p)
(1.0p)
(2.0p)
(3.0p)
0.0p
1.0p
3.0p
2.0p
4.0p
Q1
2022
Q2
2022
Q3
2022
Q1
2023
Q4
2022
Q2
2023
Q3
2023
Q4
2023
0.0
(0.1)
(1.0)
(3.7)
(2.5)
(1.3)
(1.9)
(1.0)
(1.9)
1.1
3.5
3.0
1.0
1.0
2.0
1.5
Foreign exchange hedging – NAV impact (price per share)
Counterparty
EUR notional
(€m)
USD notional
($m)
Mark‑to‑market
(£m)
Buffer
(£m)
A — 76.1 (0.1) 8.4
B — 36.2 (0.4) 3.4
C 45.3 12.4 1.1 —
D 23.7 8.8 0.7 2.1
E 76.4 24.5 1.4 6.6
F 53.8 55.8 1.3 7.7
Total 199.2 213.8 3.9 28.2
34
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INVESTMENT
MANAGER'S REPORT
CONTINUED
ASSUMPTIONS AND
SENSITIVITIES
Introduction
The Portfolio valuation is the largest component of the
Company's NAV and is determined by valuations provided by
the underlying investment Sponsors. These valuations are
typically calculated on a discounted cash flow (DCF) basis,
which are subject to a variety of underlying assumptions that
are specific to the sector and characteristics of each Portfolio
Company, and are determined by the investment Sponsors.
The degree to which these long‑term assumptions change or
are adjusted has the potential to impact the Company’s NAV.
With this in mind, the Investment Manager has performed
a detailed analysis across the Portfolio to determine the
Company’s sensitivity to changes across a range of key
assumptions, which are presented on the following pages.
Macroeconomic
Discount rates
Discount rates are a measure of the relative risk of an
investment, and will typically comprise a risk‑free rate
component along with a sector or project‑specific equity risk
premium, which is determined relative to specific project risks
and benchmark transactions. In some cases, Sponsors use a
WACC‑based discount rate to derive an enterprise valuation
which is then adjusted by net debt to give an equity value. The
Company does not disclose individual discount rates but reports
its aggregated WADR, which at the year end was 13.6%.
Inflation
The extent to which a Portfolio Company’s existing revenues
and costs are expected to inflate, or escalate, also impacts
valuations. The escalation of revenues and costs is often
determined through contractual arrangements, with measures
including direct pass‑through of a local inflation measure,
fixed escalators, inflation linkage subject to escalation caps
and/or floors, or no indexation at all. Where revenues and/
or costs are directly linked to inflation, any changes to the
inflation assumptions determined by Sponsors will impact
on valuations. Sponsors typically utilise external economic
forecasts or central bank guidance for inflation assumptions.
Where revenues or costs are not contracted, escalation will be
determined by pricing power and therefore requires a greater
degree of judgement.
Interest rate
Interest rate assumptions impact valuations if a Portfolio
Company has an element of unhedged debt or expects
to drawdown on floating rate borrowing facilities within
its business plan. Where this is the case, Sponsors will
usually update valuations to reflect the latest projections for
long‑term interbank lending, swap or risk‑free rates.
(6.0)
(4.0) 4.0 6.0(2.0) 2.00
4.7
(4.4)
2.5(2.2)
2.1
(2.1)
Discount rate (+/- 0.5%)
Inflation (+/- 0.5%)
Interest rate (+/- 0.5%)
Pence per share
Negative correlation Positive correlation
PINT NAV sensitivities at 31 December 2023 (Macroeconomic)
35
PAN T H EON INFRASTRUCTURE PLC
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ASSUMPTIONS AND
SENSITIVITIES
CONTINUED
Performance
Earnings growth
Earnings growth assumptions represent a key valuation
assumption across the Portfolio. The most common earnings
measure used is EBITDA, however other variations include
Towers Cash Flow (towers) and Net Operating Income (data
centres). Earnings growth forecasts represent a key area of
judgement for Sponsors at the underwriting stage and usually
incorporate several factors, including long‑term assessments
of market growth, market share and the barriers to entry in the
sector, details of any high conviction opportunities and the
potential for customer churn.
Exit valuation
The Company’s stated business model is to invest in assets
with a typical hold period of 5-7 years, before realising
value through disposals, and recycling proceeds into new
investments.
Accordingly, the Company’s valuations are determined
by assumptions around the terminal value of a Portfolio
Company at the end of this 5-7 year period. Common methods
of determining exit valuations include the application of a
terminal earnings (EBITDA, Towers Cash Flow, Net Operating
Income etc.) multiple, or a DCF approach based on a
long‑term or even perpetual stream of cash flows discounted
at an assumed secondary purchaser IRR. The assumptions
around these methods are typically taken from comparable
recent transactions.
Exit timing
As with exit valuations, the assumptions around exit timing
also impact the valuation of investments. The main drivers
that feed in to this assumption are the duration of any capex
rollout plans, the time horizon of the Sponsor’s funds that are
invested alongside PINT, as well as the expectations around
longer‑term market growth trends.
Operational expenditure ('Opex')
Operating expenditure will impact the profitability of Portfolio
Companies, and increases that cannot be contractually
passed on to customers have the potential to impact
valuations. Sponsors also expect to achieve business
efficiencies and for Portfolio Companies to operate at
improved margins at increased business scale, and so the
extent to which such views are revised in their assumptions
will also impact valuations.
Capital expenditure ('Capex')
Determining capital expenditure is particularly critical for
businesses with significant growth or remedial plans, and
those that price offtake agreements around expected
construction costs. Whilst in some cases there may be the
ability to pass on increased input costs arising from capital
expenditure to customers, this is not always possible, so
Sponsors will usually incorporate a degree of contingency
in their capital expenditure assumptions, whilst also
mitigating the potential for cost increases through effective
sub‑contractor arrangements.
INVESTMENT
MANAGER'S REPORT
CONTINUED
(14.0)
(10.0) (6.0) (4.0) 4.0 6.0 10.0 14.0(2.0) 2.00
(12.0)
(8.0) 8.0 12.0
7.6
0.1
(8.6)
(5.3)
5.5
(1.4)
12.3
(12.4)
4.3
(4.3)
Earnings growth (+/- 10%)
Exit value (+/- 10%)
Exit timing (+/- 1 year)
Capex (+/- 10%)
Opex(+/- 10%)
Pence per share
Negative correlation Positive correlation
PINT NAV sensitivities at 31 December 2023 (Performance)
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PAN T H EON INFRASTRUCTURE PLC
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(4.0)
4.0(2.0) 2.00
2.7
1.7
0.6
0.1(0.1)
(2.5)
(1.7)
(2.5)
1.9
(1.9)
Energy volumes (+/- 10%)
M&A(+/- 10%)
Commodity prices (+/- 10%)
Fibre penetration (+/- 10%)
Hydrogen adoption (electric future/green gas future)
Pence per share
Negative correlation Positive correlation
ASSUMPTIONS AND
SENSITIVITIES
CONTINUED
Sector specific
Energy volumes
PINT is exposed to the level of energy volume consumption or
generation across some of its Power & Utilities investments.
Long‑term assumptions in this regard are typically based on
a combination of historic volumes, the ongoing availability/
efficiency of equipment and infrastructure and the presence
of any minimum offtake or “take‑or‑pay” provisions or
manufacturer availability guarantees.
Commodity prices
Commodity prices impact a number of the Company’s
investments that have long‑term exposure to wholesale
energy markets, through uncontracted revenues or imperfect
pass‑through of costs. As with other macroeconomic factors
such as inflation and interest rates, Sponsors will often utilise
external consultants to provide updated forecasts for such
prices for inclusion in long‑term cash flow/earnings forecasts.
Fibre penetration
Along with average revenue per unit (ARPU), fibre penetration
is one of the key long‑term inputs for a fibre business. The
penetration assumption is the degree to which a Portfolio
Company operating a fibre network assumes it will convert
the number of homes it passes into paying customers and
significantly impacts long‑term earnings forecasts. The long‑
term assumptions in this regard are specific to the geography
that the Portfolio Company operates in and the associated
market dynamics (e.g. transaction structure or location, or
any competitive advantage providing protections against
overbuild or churn risks).
Hydrogen adoption
PINT is exposed to future hydrogen policy through its Power
& Utilities investment in National Gas. The degree to which
hydrogen adoption is assumed in the UK as an alternative
energy source for domestic and industrial heating and
eventually transport and energy, impacts the valuation of the
investment. A range of potential outcomes for this adoption
exists, with the downside being low hydrogen adoption
though an "electric future" scenario and the upside being an
accelerated hydrogen adoption "green gas future" scenario.
M&A
A number of the Company’s investments, most notably in
the towers sector, include long‑term assumptions around
accretive M&A activities (i.e. the ability to acquire additional
towers at favourable pricing). Such assumptions are subject
to extensive due diligence and reflect very specific factors
to each transaction, including geographic location, current
ownership of M&A targets, potential acquisition synergies
and/or strategic benefits, and any relevant exclusivity
agreements.
INVESTMENT
MANAGER'S REPORT
CONTINUED
PINT NAV sensitivities at 31 December 2023 (Sector specific)
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PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PINT assesses its performance using a variety of measures that may not specifically be defined under FRS 102 and are therefore termed APMs. The APMs used may not be directly comparable
with those used by other companies. These APMs provide additional information as to how the Company has performed over the period and allow the Board, management and stakeholders to
compare its performance.
ALTERNATIVE PERFORMANCE
MEASURES (APMs)
APM Details Calculation Reconciliation to
FRS 102
How has PINT performed?
NAV Total Return Total return comprises the investment return
from the Portfolio and income from any cash
balances, net of management, operating
and finance costs. It also includes foreign
exchange movement and movement in the
fair value of derivatives and taxes.
It is calculated as the total
return of £49.6 million (period to
31 December 2022: £8.0 million), as shown
in the Income statement, as a percentage
of the opening NAV of £474.8 million
(31 December 2022: £392.1 million which
was based on the net IPO proceeds).
The calculation uses the
total comprehensive income
reported in the income
statement and net assets
reported in the balance sheet,
both being FRS 102 measures.
Total return for the year to
31 December 2023 was 10.4% (period to
31 December 2022: 2.1%).
Net asset value per
share
A measure of the NAV per share in the
Company.
It is calculated as the NAV divided by
the total number of shares in issue at the
balance sheet date.
The calculation uses FRS 102
measures and is set out in
Note 18 to the accounts.
NAV per share at 31 December 2023 was
106.6p per share (31 December 2022:
98.9p per share).
Annual distribution This measure reflects the dividends
distributed to shareholders in respect of each
year.
The dividend is measured on a pence per
share basis.
The calculation uses FRS
102 measures, set out in Note
9 to the accounts.
Second interim dividend of 2p per share
declared, to be paid on 23 April 2024,
which together with the dividend of
2p per share paid in October 2023
totals 4p per share for the year ended
31 December 2023. The Company
intends to continue paying dividends
on a semi‑annual basis in line with its
progressive dividend policy.
Investment value
and outstanding
commitments
A measure of the size of the investment
portfolio including the value of further
contracted future investments committed
by the Company.
It is calculated as the Portfolio asset
value plus the amount of contracted
commitments.
The Portfolio asset value
uses the FRS 102 measure
investments at fair value, set
out in Note 1. The value of
outstanding commitments
is set out in Note 21 to the
accounts.
The portfolio asset value at 31 December
2023 was £471.7 million (31 December
2022: £301.4 million).
Outstanding commitments at 31
December 2023 were £15.7 million (31
December 2022: £57.9 million)
38
PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
As stated in its prospectus, the Company invests in a
diversified portfolio of high‑quality operational infrastructure
assets which provide essential physical structures, systems
and/or services to allow economies and communities to
function effectively. The Company invests in both yielding and
growth infrastructure assets which the Manager believes offer
strong downside protection and typically offer strong inflation
protection.
The Company invests globally, with a primary focus on
developed OECD markets, with the majority of its investments
in Europe and North America. The Company’s portfolio is
diversified across infrastructure sectors.
In each case, the Manager invests where it believes it can
generate the most attractive risk‑adjusted returns.
The Company focuses on gaining exposure to infrastructure
assets via co‑investments alongside leading third‑party
private direct infrastructure asset investment managers who
are acting as general partner or manager of a fund in which
Pantheon, or any investment scheme, pooled investment
vehicle or portfolio fund managed by Pantheon, has invested
or may invest (‘Sponsors’). In doing so, the Company may
invest on its own or alongside other institutional clients of
the Manager.
The Company may also invest in other direct or single asset
investment opportunities originated by the Manager or by
other third‑party asset sourcing partners. The Company does
not invest in private funds targeting a diversified portfolio of
infrastructure investments.
Investment restrictions
The Company invests and manages its assets with the
objective of spreading risk and, in doing so, is subject to the
following investment restrictions, which are measured at the
time of investment:
•
no single portfolio investment will represent more than
15% of Gross Asset Value;
•
no more than 20% of Gross Asset Value will be invested in
investments where the underlying infrastructure asset is
located in a non‑OECD country; and
•
no more than 30% of Gross Asset Value will be invested
alongside funds or accounts of any single Sponsor
(other than Pantheon).
In addition, the Company does not invest in infrastructure
assets whose principal operations are in any of the following
sectors (each a ‘Restricted Sector’):
•
coal (including coal‑fired generation, transportation
and mining);
•
oil (including upstream, midstream and storage);
•
upstream gas;
•
nuclear energy; and
•
mining.
The Company may invest in infrastructure assets whose
principal operations are not in a Restricted Sector, but that
nonetheless have some exposure to a Restricted Sector
(for example, a diversified freight rail transportation asset
that has some exposure to the coal sector), provided that:
(i) no more than 15% of any such infrastructure asset’s total
revenues are derived from Restricted Sectors; (ii) no more
than 5% of total revenues across the Portfolio (measured on
a look‑through basis) will be so derived.
INVESTMENT
POLICY
DIGITAL
INFRASTRUCTURE
TRANSPORT &
LOGISTICS
RENEWABLES &
ENERGY EFFICIENCY
SOCIAL & OTHER
INFRASTRUCTURE
POWER &
UTILITIES
(including wireless towers, data
centres and fibre‑optic networks)
(including ports, rail, roads,
airports and logistics assets)
(including smart infrastructure, wind,
solar and sustainable waste)
(including education, healthcare,
government and community buildings)
(including transmission and distribution
networks, regulated utility companies
and efficient conventional power assets)
39
PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Q&A WITH THE
INVESTMENT MANAGER
Q
How has PINT performed in the
year, in shareholder return and NAV
terms?
Q
PINT is very active in the Digital
Infrastructure sector, with more
than 40% of its assets invested in
the sector – why are you so heavily
invested in the sector, and is this a
trend you expect to continue? What
are the risks associated with this
sector?
Q
What headwinds do you anticipate
for the infrastructure asset class
over the next year, and what are you
doing to mitigate them?
From a NAV perspective, we are very happy to have seen
performance come through during the year as the exciting
potential of PINT's portfolio has translated into fair value
gains. This NAV progression, in addition to the dividends paid
during the year, accounted for a NAV Total Return of 10.4%,
which is tracking above the original IPO target of 8-10% per
annum.
It is frustrating that PINT's share price return has not
progressed in the same manner. The Company continues
to be impacted by the wider market factors stemming
from the increased interest rate environment, most acutely
the outflows from retail and wealth managers, which
have resulted in the current share price discount to NAV.
We remain focused on maintaining the robust performance
of the Portfolio and retain full confidence that in time the
Company's share price will reflect NAV.
PINT remains committed to a long‑term allocation of around
35% in Digital Infrastructure, and the volume of transactions
done to date is a function of the high‑quality deal flow
we have seen across the fibre, towers and data centre
sub‑sectors. An increasingly connected world with a great
reliance on the sharing of data means the favourable tailwinds
in this sector are only likely to grow in time, which makes it an
incredibly exciting space to be investing in.
As with an investment in any specific sector, this has to be
done mindful of the apparent risks. Some of the factors that
have been considered during the process of investing in
PINT's digital assets include assessing prospective market
share and overbuild risk (fibre), the tenor of contracts with
customers (data centres and towers), access to power grid
capacity (data centres) and the ability to add additional
carriers to existing towers to increase tenancy ratios (towers).
We continue to be focused on the key risks around leverage,
effective management of interest rate and merchant price
exposures, and limiting exposure to GDP or demand‑based
risks. We think that speaks as much to what we consider to
be infrastructure risk as much as it reflects an approach to
mitigate risks in the current environment.
40
PAN T H EON INFRASTRUCTURE PLC
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Q&A WITH THE
INVESTMENT MANAGER
CONTINUED
Q
How are you going to continue to
generate returns in a higher interest
rate environment?
Q
Given the interest rate and economic
environment, what new strategies or
approaches are you considering to
meet your targets in terms of income
and total returns?
Q
How will the Company grow while the
share price trades at a discount to
NAV?
By investing in operating companies with favourable growth
potential, there is some degree of exposure to interest rate
risk (through capex facilities/RCFs which cannot be locked
down in the way the debt of a solely operating asset can be).
However, what we are seeing is that the companies PINT
invests in have broadly been very effective at passing on
these costs through their pricing models. More simplistically,
these companies maintain discipline through their capital
allocation and the returns for new projects or initiatives need
to make sense in the current environment. We are encouraged
to have seen this capital discipline maintained across the
Portfolio.
Given the positive NAV development we are seeing and the
overall Portfolio performance in what has been a challenging
macro environment, we do not see any immediate need to
change PINT’s approach. In fact, if anything, we think the
approach has been bolstered by the fact we are now seeing
investors place a greater emphasis on the need for capital
growth from their infrastructure allocations.
PINT's investment approach is to deliver NAV growth through
capital appreciation across its Portfolio. This is important
because as well as being a differentiator amongst a peer
group that has traditionally been predominantly income
focused, it means that the vehicle will naturally grow through
the passage of time, providing that investment objectives are
achieved. We believe that realising this NAV growth through
investment exits, then recycling proceeds into further growth
opportunities, presents a valid basis for the Company's
share price to return to a premium, providing opportunities
to materially increase the size of the Company through
additional equity issuances.
41
PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Infrastructure continues
to demonstrate resilience
against a challenging
macroeconomic backdrop.
Market growth
In 2023, AUM in the private infrastructure market grew to in
excess of $1 trillion, with a projected CAGR of ~11% between
2023 and 2027
1
. Against this backdrop, competition for
assets has intensified, with allocations to infrastructure
increasing and new participants entering the market in
specialised sub‑sectors. Increased competition in the market
has necessitated a focus on maintaining a disciplined and
selective investment approach.
Macro
Deterioration in the global macro economy has continued to
demonstrate the resilience of the infrastructure asset class.
Rising inflation, although directly benefiting those assets
with inflation linkage, led to central bank policy tightening
throughout 2023. However, Pantheon’s experience is that
any upward pressure on discount rates for infrastructure
asset valuations has largely been offset by valuation benefits
associated with inflation and other sector‑specific tailwinds.
OUR
MARKET
1. Source: Preqin Special Report – The Future of Alternatives in 2027.
Closed‑ended funds only; October 2022.
Key macro themes
01. Rising inflation
•
Peak inflation appears to have passed and, in most
developed economies, inflation rates are falling.
•
Contracted and inflation‑linked revenues can provide
protection during periods of rising inflation.
02. Rising energy prices
•
Energy markets have dramatically changed over the
past year or two, which has knock‑on effects for certain
types of infrastructure assets.
•
Power generation assets with merchant price exposure
should continue to see yield and valuation benefits.
•
Assets with pricing power will continue, where possible,
to pass on higher energy costs to customers.
•
Energy‑intensive infrastructure assets may experience
headwinds as a result of higher costs.
03. Interest rates
•
Increased bond yields have driven up risk‑free rates,
although transactional evidence is not showing any
significant increase in discount rates for core plus
assets, and yields now seem to have peaked.
•
Historic debt financing on favourable terms, hedging
and availability of longer‑term fixed debt have provided
a good degree of downside protection. Higher future
refinancing rates could lead to lower enterprise
valuations.
04. Foreign exchange
•
Although PINT’s foreign exchange risk is partly hedged,
USD strength will continue to benefit assets with
USD‑denominated revenue.
42
PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
96%
4%
2015 2016 2017 20192018 2020 2021 2022
2023
Social & Other Telecommunications
CAGR
4
+15%
Energy Infrastructure
Transport Renewables Power
351
371
429
576
553
574
755
893
1,043
2015
351
371
429
576
553
574
755
893
1,043
2016
Asia & RoW Europe
CAGR
4
+15%
North America
2017 20192018 2020 2021 2022
2023
2015
Capital raised
2016 2017 20192018 2020 2021 2022
2023
CAGR
+8%
82
103
100
128
136
129
173
235
151
OUR
MARKET
CONTINUED
Infrastructure market indicators
Upward trends in deal activity, recovering fundraising and improving investor sentiment provide a positive backdrop for future growth.
Deal activity by geography ($bn)
1
Deal activity by sector ($bn)
1
Infrastructure fundraising
($bn)
2
Investor sentiment for future allocations
3
Pantheon opinion. There is
no guarantee that these trends
will persist.
1. Source: Inframation, based
on greenfield and brownfield
transactions from 2015 to 2023.
2. Source: Preqin as of January
2024. Infrastructure fundraising
based on year capital was closed,
including funds which have not
held a final closing.
3. Source: Preqin Infrastructure
Global Report 2024.
4. CAGR is calculated on an
eight‑year period from 2015-2023.
Increase or
maintain | 96%
Decrease | 4%
43
PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
The way in which societies
and economies function
over time is changing, which
creates new long‑term
tailwinds for the sectors that
serve them.
PINT has constructed a portfolio in these growing markets
with favourable tailwinds which should provide sustainable
returns to shareholders.
OUR
MARKET
CONTINUED
Global changes
Urbanisation
Digitalisation
Smart cities
Telecommunications
Work from home
Decarbonisation
Population growth
Supply chain realignment
Key sector themes
POWER &
UTILITIES
RENEWABLES &
ENERGY EFFICIENCY
TRANSPORT &
LOGISTICS
DIGITAL
INFRASTRUCTURE
SOCIAL & OTHER
INFRASTRUCTURE
•
Sustained increase
in demand due
to global trends
requiring major
increase in data/
connectivity
(remote
working, gaming,
AI, streaming,
videos etc.).
•
Labour and
supply chain
shortages/issues
are impacting
certain build‑out
and development
projects.
•
The role of
hydrogen has
the potential to
be significant in
energy transition,
which impacts
utilities such as
gas transmission
and distribution
companies.
•
Revenues tend to
be inflation‑linked,
which is highly
beneficial in the
current market
environment.
•
High demand and
lack of supply in the
market has driven
asset prices up.
•
Governments and
supranational
organisations
globally are
prioritising
climate change
issues and clean
energy, leading to
tangible targets for
many organisations.
•
Infrastructure
supporting the
development
of energy
transition is still
under‑developed in
areas such as the
electric grid/EVs;
further investment
in this sector is in
high demand.
•
However, the
process to
build/transition
relevant assets is
comparatively slow.
•
Increased demand
for cleaner modes
of transport
in line with
aforementioned
global trends.
•
Growth in life
sciences, medical
services and
research, and an
ageing population
are driving demand
for infrastructure in
this sector.
•
Challenges include
the lack of tangible
current deal flow,
and limited relative
attractiveness due
to pricing, which
has meant PINT
has not made any
social infrastructure
investments to
date.
Pantheon opinion. There is no guarantee that these trends will persist.
44
PAN T H EON INFRASTRUCTURE PLC
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OUR
MARKET
CONTINUED
Towers
Small
cells
Grid
battery
storage
Electric
buses
Temperature
sensitive
logistics
Fibre
District
heating
Data
centres
Smart
meter
Hydrogen
transmission
Renewables
EV
charger
45
PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
SECTOR SPOTLIGHT
HYDROGEN
Introduction
Hydrogen is an abundant, energy‑dense and combustible
element which exists in gas form at temperatures above
-253˚C. Its properties give it the potential to displace
fossil fuels in a range of industrial processes and power
generation.
Some of its potential end uses include:
• Transport fuel – shipping, aviation, heavy vehicles
• Fertiliser production
• Plastics and chemical manufacturing
• Steel production
There is also ongoing consideration of hydrogen’s role in
heat and power generation, the viability of which continues
to be debated relative to the process efficiency compared
to other low‑carbon sources, such as renewable power
generation and district heating.
Production
Globally, approximately 95% of all hydrogen is produced
by the steam methane reforming (SMR) process. The SMR
process involves reacting fossil fuels (mainly natural gas)
with steam at high temperatures to produce hydrogen and
carbon monoxide. Without the addition of carbon capture
technology, carbon dioxide is released as a byproduct of
this process, creating what is commonly referred to as “grey
hydrogen”. There are a variety of other methods that seek to
reduce the carbon intensity of production, including:
• green hydrogen – typically produced through splitting
water by electrolysis using renewable power;
• blue hydrogen – produced from SMR with carbon
capture; and
• pink hydrogen – produced through splitting water by
electrolysis using power generated from nuclear power.
Role of hydrogen in energy transition
The International Energy Agency (IEA), in its latest Net
Zero Roadmap Update, estimates that hydrogen will be
responsible for c.4% of the emissions abatement in a
scenario where net zero emissions are achieved by 2050.
Emissions reduction by mitigation in the
net zero scenario, 2021-2050
1
This contribution implies an increase in demand for
hydrogen from around 100 million tonnes (Mt) today to
150Mt by 2030, increasing to 430Mt in 2050, all of which
will need to be produced from low‑carbon sources. The
significant contributors to this increase are transport (main
impact from 2035), industry (significant current demand
expected to grow as industrial processes are decarbonised)
and power generation (replacement of natural gas and
coal‑fired power generation).
Renewables | 32%
Electrification | 20%
Energy efficiency | 12%
CCUS | 8%
Behaviour and avoided
demand | 12%
Hydrogen | 4%
Other fuel shifts | 12%
Announced annual electrolyser manufacturing capacity
(GW) – % of NZE capacity
1
5%
6%
8%
19%
73%
Europe
China
North America
India
RoW
Unspecified
Gap to net zero emissions path
2021 2022 2023 2024 2030
1. Hydrogen – Analysis – IEA.
SECTOR SPOTLIGHT CONTINUED
HYDROGEN
•
Target to produce clean hydrogen at $1/kg by 2030.
•
Focus on regional networks near off‑takers.
•
H2Hubs – $7 billion of federal funding to support 3Mt
p.a. capacity.
10Mt by 2030
50Mt by 2050
•
Net Zero Hydrogen Fund – £240 million pathfinder
funding.
•
Low Carbon Hydrogen Agreement – Govt. backed
Contract‑for‑Difference (CfD).
•
Supporting "no regrets" transportation and storage.
2GW by 2025
10GW by 2030
•
REPowerEU – innovation funding and carbon CfDs.
•
EC regulation will require replacement of 40% grey
hydrogen with renewable hydrogen by 2025.
•
€6 billion Connecting Europe Facility funding for
cross‑border energy projects.
10Mt, 40GW
by 2030
•
Target to produce clean hydrogen at A$2/kg.
•
A$1.2 billion of investment to date, including seven
clean hydrogen hubs.
•
Australian mining company, Fortescue, is targeting
15Mt production by 2030.
Up to 10% of global
supply in 2050
Hydrogen infrastructure
Governments around the world have set targets for green
hydrogen production to support the decarbonisation of
industrial processes and transport.
The forecast increase in demand for low‑carbon
hydrogen and associated support schemes put in place
by governments has spurred investment across the value
chain by corporate and infrastructure investors into
electrolysis derived green hydrogen opportunities. The
IEA estimates that electrolyser manufacturing investments
announced to date will cover 73% of the total required
global capacity by 2030.
Currently, hydrogen projects in development typically have
limited visibility of long‑term offtake agreements at the
outset, making it difficult to assess the balance of risk and
reward. Some subsidy regimes, such as the Low Carbon
Hydrogen Agreement in the UK, can help to mitigate cash
flow uncertainty once a project is operational.
Transactions that involve the decarbonisation of an
existing asset can provide increased cash flow visibility
and downside protection if the transition to hydrogen is
delayed or the terms of supply/offtake agreements and
state support are initially unknown. In this respect, PINT
has invested in National Gas, a regulated utility which
owns and operates the gas transmission network in Great
Britain. Its current network supplies natural gas used in
power generation, industrial processes and by the 85%
of UK households that use gas‑fired heating. It connects
Great Britain to key gas import and export infrastructure
including onshore terminals for gas fields in the North Sea,
LNG terminals and interconnectors with Europe. National
Gas is working together with other key stakeholders,
including gas distribution networks, to develop a facility
from decommissioned assets which will carry out safety
and feasibility tests on hydrogen blending in existing gas
infrastructure. This will inform a broader project to upgrade
and repurpose the transmission network to carry hydrogen
from key production sites across Great Britain to industrial
clusters and distribution networks. The decision on
whether to proceed with hydrogen blending and undertake
related network investment will ultimately be made in
conjunction with regulator Ofgem, the Health & Safety
Executive and the UK government.
PINT approach
PINT’s approach to identifying investment opportunities
in hydrogen is focused on projects that demonstrate
characteristics aligned with traditional infrastructure
assets, namely with downside protection through a high
proportion of contractual or regulated cash flows that
feature some explicit or implicit link to inflation.
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Purpose
The Company has
builta global portfolio
ofinvestments with
blendedrisk/return
profiles,andset
targets across deal
types,sectorsand
geographies for
diversification.
Our co‑investment strategy differentiates us in the
listed infrastructure market.
BUSINESS
MODEL
What sets us apart Capturing secular growth
1
Deal
selectivity
Sponsor relationships drive strong
deal flow, allowing for highly selective
investment process.
DIGITAL
INFRASTRUCTURE
DIGITAL INFRASTRUCTURE
•
Growth in mobile data traffic
•
Growth in 5G connected devices
2
Diversification
Access to investments across sourcing
Sponsors, sectors and geographies.
RENEWABLES
& ENERGY
EFFICIENCY
RENEWABLES & ENERGY EFFICIENCY
•
Average cost reduction for solar/wind
•
Increasing global installed wind/
solar capacity
3
Sponsor
specialisation
Ability to choose deals alongside a
Sponsor with a distinct edge who may
be best placed to create value.
POWER &
UTILITIES
POWER & UTILITIES
•
US/Europe transitioning grids to
accommodate more renewable
energy
•
US coal power plant retirements
4
Fee efficient
Co‑investments typically offered with
no ongoing management fee/carried
interest charged by the Sponsors.
TRANSPORT
& LOGISTICS
TRANSPORT & LOGISTICS
•
Increased global trade
•
Higher e‑commerce penetration
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BUSINESS
MODEL
CONTINUED
8-10%
p.a.
NAV Total Return
per share
4p
per share
1
second year dividend,
progressive
thereafter
1. The Company is paying a dividend of 4p per share for the year ended 31 December 2023, and, thereafter, progressive.
PINT’s business model creates
value by allowing Pantheon, the
Investment Manager, to allocate
capital and invest on its behalf
alongside the Sponsors that it
believes have a distinct edge in
aparticular infrastructure sector.
Infrastructure assets
High‑quality infrastructure assets typically benefit from long‑term contractual cash flows,
positive correlation to inflation and exposure to secular changes in society.
Portfolio
Other Pantheon Funds (private)
Pantheon provides a broad sourcing network with
leading private asset investment managers and has
strong relationships with Sponsors it can leverage on
behalf of PINT.
Refer to the Investment Manager’s report for
more details.
PINT (public)
PINT has access to Pantheon’s deal sourcing platform.
Since PINT is publicly listed, any retail or
institutional investor is able to benefit from any
value it creates.
Vehicle
Investors
Shareholders
Investors in PINT can participate in a globally
diversified portfolio of infrastructure assets
alongside other leading private asset managers and
institutional investors.
How we create value Value creation
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BUSINESS
MODEL
CONTINUED
Background to co‑investments
There are broadly three routes to investing in private infrastructure assets:
Co‑investments
Co‑investments give investors the opportunity to invest
alongside Sponsors in specific Portfolio Companies.
Allocating to co‑investments can provide incremental
advantages to investors, including targeted deal
selection and fee‑efficient exposure to transactions
which are often offered by Sponsors on a no‑fee and
no‑carry basis.
Primaries
Primaries involve a commitment to a newly launched
limited life fund managed by a Sponsor who will build
a portfolio of private investments and seek to exit
improved businesses in the later years of the fund term
at a profit.
Secondaries
Secondaries traditionally involve the purchase of an
interest in an established private fund or a portfolio of
funds from an existing investor.
Sale process initiated Final bid submitted Deal signing
PINT’s investment policy is to gain exposure to infrastructure
assets via co‑investments. This can take the form of the
following types of transaction:
•
Co‑bid: partnering with a lead Sponsor to underwrite
a deal prior to final bid submission, requiring the need
for a sophisticated investor who can lead independent
due diligence on an asset.
•
Targeted syndication: following the signing of a deal,
a Sponsor will offer a select group of investors a portion
of the deal. This will typically comprise fewer than five
parties, who may have undertaken some early due
diligence on the transaction.
•
General syndication: following the signing of a deal,
a Sponsor will offer all of its existing fund investors the
opportunity to gain exposure to a transaction.
Co‑bid
Targeted
syndication
General
syndication
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BUSINESS
MODEL
CONTINUED
Background to co‑investments continued
Advantages of investing in infrastructure via co‑investments
Investing in co‑investments can be an attractive way to gain access to private infrastructure for several reasons, including:
Access
There are fewer public market opportunities
to access infrastructure assets, as
infrastructure companies tend to remain
private for longer periods of time. Therefore,
investing through co‑investments provides
access to assets not normally accessible by
public market investors.
Enhanced economics
The use of co‑investments can reduce
the overall expense ratio and gross‑to‑net
performance spread of a portfolio, as
most deals are offered with no ongoing
management fee or carried interest charged
by the Sponsor.
Alignment
The structure of co‑investments provides
significant alignment through the
incentivisation of both deal Sponsors, who
typically provide the majority of capital
through their primary fund vehicles, and
Portfolio Company management who are
typically tied in under long‑term incentive
programmes.
Portfolio
construction
Pantheon is able to utilise
co‑investments to select
individual assets to gain
exposure to, and tilt the
Portfolio towards, sectors
based on the Investment
Manager’s view on relative
value.
Diversification
Co‑investments enable a
portfolio to be constructed
that is diversified across
infrastructure sectors,
geographies, stages and
Sponsor.
Exposure to
nascentsectors
Co‑investments can provide
access to nascent and
emerging sectors that may
otherwise be underweight
or not be available within
primary or secondary
investment opportunities.
Sponsor
specialisation
Co‑investors have the ability
to choose deals alongside a
Sponsor with a distinct edge
who may be best placed
to create value.
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2015 2016 2017 20192018 2020 2021 2022
2023
CAGR
22%
4
5 5
8
10
14
12
12
18
BUSINESS
MODEL
CONTINUED
Pantheon’s investment
process
Sourcing and origination
In its role as Investment Manager to the Company, Pantheon is
responsible for the sourcing and execution of transactions on
behalf of PINT.
The Investment Manager’s sourcing leads to a wide array
of investment opportunities as Sponsors embrace new
transaction models and co‑investment appetite from investors
increases. Pantheon’s primary relationships and network of
Sponsors allow it to be a preferred co‑investor, screening
a high volume of proprietary transactions. Pantheon’s
ability to work with partners to provide capital solutions
in complex scenarios is expected to continue to generate
differentiated deal flow and allow it to acquire high‑quality
and difficult‑to‑access assets for the Company’s portfolio
and other Pantheon clients.
Co‑investment capital makes up a sizeable portion of the
infrastructure investment universe, and Pantheon continues
to see strong deal flow, with continued signs of growth. This
is driven by Sponsors continuing to see the wider franchise
benefit in offering their trusted partners co‑investment
deal flow, and in particular due to such Sponsors being
constrained by fund concentration limits. Such limits may
restrict the volume of capital many Sponsors can invest from
their funds in larger transactions, potentially restricting their
access to many deals unless they have access to additional
co‑investment capital.
Global sourcing and rigorous screening with highly selective conversion rate
Pantheon’s infrastructure co-investment
deal funnel, 2015-2023
Pantheon: annual infrastructure
co-investments screened ($bn):
Sourcing Screening Due diligence Approval Execution
Deals screened
Advanced diligence
Closed
$88bn
$8bn
$4.3bn
863 deals
82 deals
52 deals
5% conversion
rate
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BUSINESS
MODEL
CONTINUED
Pantheon’s investment
process continued
Sourcing Screening Due diligence Approval Execution
Screening
Screening is the first of three stages of the Pantheon
investment due diligence and approval process. This stage
involves preliminary due diligence of the opportunity, which
includes:
•
assessing the deal fit to fund strategy;
•
review potential returns profile;
•
explore risk factors;
•
determine manager track record;
•
understand transaction dynamics and sponsor alignment;
and
•
conduct fund/company overview.
Due diligence and underwriting
After Screening, due diligence will be undertaken as part of
the "Advanced Notice" stage, including:
•
review financial model and underlying assumptions;
•
review internal and company databases;
•
evaluate macro trends and sector themes/outlook and
review compatibility with assumptions; and
•
identify risks and mitigants.
Reasons to decline Reasons to decline Reasons to decline
•
Poor‑quality assets
•
Business/firm franchise issue
•
Lack of coverage
•
Overly competitive process
•
Limited Pantheon edge
•
Poor fit with portfolio strategy
•
ESG considerations
•
Asset‑related risk factors:
•
High debt levels
•
High purchase price
•
Commodity price risk
•
Concentration risk
•
Quality of assets/Sponsors
•
Lack of embedded value
•
Pricing disconnect
•
Legal considerations
•
Limited downside protection
•
Inconclusive references
•
Weak governance
•
ESG considerations
If a deal is approved at Advanced Notice stage, it will proceed
to the final investment committee stage, Investment Thesis.
Transactional and due diligence work undertaken ahead of
this includes:
•
benchmark performance;
•
extensive asset due diligence;
•
assess downside protection;
•
finalise financial model;
•
onsite manager visits;
•
ESG and climate change risk assessment;
•
tax due diligence;
•
conduct background checks/reference calls; and
•
complete “Investment Thesis” for submission to GIRAC.
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BUSINESS
MODEL
CONTINUED
Pantheon’s investment
process continued
Sourcing Screening Due diligence Approval Execution
Due diligence and underwriting continued
For co‑investments, the Company is typically entering the
acquisition at the same time as the Sponsor who sets the
valuation and enters at the same price, creating alignment
with the Company. The Sponsor provides its valuation
assumptions for the target asset and the Investment Manager
will seek to verify them, and either enter the deal at the same
return target as the Sponsor, or take a more conservative
view on some of the valuation assumptions which may result
in a lower base case return target. This process involves the
Investment Manager conducting its own independent review
of the valuation assumptions which includes, but is not limited
to, the following analysis as part of the Investment Thesis:
•
review of all due diligence material available, including
technical, market, legal, financial and tax, usually prepared
by third‑party independent consultants. Assumptions for
the valuation are driven from these reports;
•
consult with external market contacts to verify key
assumptions;
•
review financial model driving the valuation; and
•
conduct downside and upside sensitivities to prepare
a Pantheon base case that still meets relevant return
requirements.
The base case prepared during the investment process forms
the basis of the final Investment Thesis. The investment return
targets can be attributed to several key components of a
target business, which may include:
•
existing business: returns from the profitability of the
target’s existing assets/contracts;
•
organic growth: returns derived from initiatives to greater
utilise existing infrastructure, such as leasing further
antennae capacity on an existing tower installation or
supplying other energy products to existing clients of a
district heating business;
•
growth capital: returns generated from capital expenditure
initiatives, taking the form of expanding and/or upgrading
existing or developing new infrastructure. Such initiatives
will depend on the target company’s ability to source and
execute on a pipeline of growth opportunities;
•
capital structure: returns generated from optimising the
target’s debt structure in tandem with its growth trajectory;
•
M&A activity: returns generated from the increased scale
and efficiencies achieved through bolt‑on acquisition
activity;
•
operational efficiencies: increased returns generated
from reduced operating costs achievable through greater
business scale; and
•
multiple expansion: returns generated from delivering an
exit at an increased earnings multiple relative to the initial
entry valuation. An increased exit multiple would be in
keeping with the expectations to both increase the scale of
the target as well as reducing the risk profile over time.
The expected holding period for each co‑investment is
typically between five to seven years, however this does not
form the basis of any guaranteed exit timing or method from
the Sponsor. The final timing of a co‑investment exit will be a
function of business performance and economic conditions,
and accordingly this is sensitised during the underwriting
process to ensure any delays will not materially compromise
expected returns.
Several key financial metrics are used for analytical purposes,
including internal rate of return (IRR) and multiple on invested
capital (MOIC). IRR is the annual rate of growth that an
investment is expected to generate over its life, and MOIC
measures investment returns by comparing the total realised
value of an investment at the exit date relative to the initial
investment amount. The illustrative bridge chart on the next
page demonstrates the contributions to expected returns of
certain assumptions in a typical private market infrastructure
co‑investment transaction.
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Existing
business
Contracted and
in construction
Development
with exclusivity
High conviction
development pipeline
Operational
efficiencies of scale
Capital
structure
High
conviction M&A
Underwriting
base case
Additional
development pipeline
Additional
M&A
Sponsor base
case
Exit multiple
expansion
Further upside
potential
Sponsor upside
case
0.90
0.10
0.15
0.20
0.10
0.15
0.15 1.75
0.20
0.15
2.10
0.35
0.30 2.75
BUSINESS
MODEL
CONTINUED
Pantheon’s investment
process continued
Sourcing Screening Due diligence Approval Execution
Due diligence and underwriting continued
Illustrative MOIC composition
1
Approval and execution
The final path approval of a deal includes:
•
Presentation of final Investment Thesis
•
Approval by GIRAC
•
Allocation between Pantheon clients in line with investment
allocation policy
•
Funding ringfenced pending completion
Once a deal has been approved, it will move to legal closing
and execution, which involves:
•
Optimising deal structure
•
Review and negotiate agreements
•
Finalise reporting requirements
•
Negotiate preferential terms and rights
•
Execute transfer and payments
•
Implement hedging initiatives
1. Figures are based on illustrative returns for a hypothetical transaction.
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BUSINESS
MODEL
CONTINUED
The Company invests in infrastructure assets typically
through a co‑investment programme.
Valuations
The Company invests in infrastructure assets typically
through a co‑investment programme. In a typical
co‑investment the Company partakes in the investment
alongside a lead investor or a Sponsor. The Sponsor will
typically set up a co‑investment vehicle, subject to annual
statutory audits, that invests in the underlying infrastructure
investment and will issue a NAV and capital accounts on a
quarterly basis.
The Sponsor will usually own the majority of equity and have
significant or controlling influence in the asset. Accordingly,
Pantheon considers the Sponsor to be the responsible party
for preparing the valuation on behalf of the co‑investment
vehicle, and will largely rely upon the valuations prepared by
the Sponsor that have been prepared in‑line with relevant
accounting standards and IPEV guidelines.
In private market investing, the Sponsor is usually considered
to be the best party to determine the appropriate valuation
due to the following:
•
intimate knowledge of the underlying infrastructure
asset held in the SPV and its business financials and the
fundamental business environment in which it operates;
•
knowledge of the market environment in which
transactions of comparable companies take place; and
•
the Company’s economic interest in an investment as
a co‑investor is aligned with that of the Sponsor.
In private market transactions, the purchase cost of the
investment is an indication of its initial fair value and is
thereafter calibrated for subsequent events and changes in
valuation inputs. Infrastructure assets often display particular
characteristics allowing long‑term financial forecasts to be
prepared, which tends to result in a high prevalence of the use
of DCF methodology in the valuation.
In such cases, fair value is estimated by deriving the
present value of the expected cash flows generated by the
investment through the use of reasonable assumptions such
as appropriate discount rates to reflect the inherent risk of the
assets forming the investment.
Valuation governance
Pantheon operates a valuation committee, which is
independent of the investment and investor relations teams,
which ensures that there are robust governance, oversight
and process frameworks in place, guaranteeing compliance
with standards and consistent application of policy.
The valuation committee reviews and challenges the
valuations provided by the Sponsors and reviews the
accounting policies and valuations methodologies applied.
The valuation committee has responsibility for approving
investment valuations which determine the fair value of
the Portfolio, with input from the investment team who are
responsible for managing the Portfolio.
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The Company seeks
to generate attractive
risk‑adjusted total returns
for shareholders over the
long term, comprising
both capital growth and
aprogressive dividend.
Through the acquisition of equity or equity‑related
investments, PINT offers a diversified portfolio
of infrastructure assets with a primary focus on
developed OECD markets.
INVESTMENT
STRATEGY
Diversification
Value‑
creation
opportunities
Capturing
long‑term
growth
Inflation
protection
Resilient
cash flow
assets
Strong
ESG
characteristics
Global portfolio with exposure
to regions, sectors and sourcing
partners and the ability to tilt the
Portfolio over time to the best risk/
return opportunities.
Exposure to growth
dynamics within
infrastructure sub‑sectors
including the transition
to a net zero carbon
economy and the
digitalisation of social and
economic activity.
Emphasis on direct
infrastructure assets
with substantial
contracted cash flows
and conservative
leverage creates a
portfolio with downside
protection.
Assets where added value can
be created through operational
optimisation, incremental
expansion of a platform or industry
consolidation, utilising the skill set
and track record of Sponsors.
Natural hedge
against rising inflation
with certain assets
benefiting from
inflation protection.
Robust asset and
Sponsor ESG risk
assessment through
due diligence, ongoing
asset monitoring and
exclusion of high‑risk
ESG sectors from the
strategy, including coal,
oil, gas (upstream),
mining and nuclear.
Total
returns
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[PAGE]
[TITLE]
CONTINUED
Investing responsibly in infrastructure is central to PINT’s
business model. Sound ESG practices and operating
sustainably are integral to building a resilient infrastructure
business and creating long‑term value for our shareholders
and other stakeholders.
PINT is classified as Article 8 under the European Union’s
Sustainable Finance Disclosure Regulation (SFDR). To
support its promoted environmental/social characteristics,
PINT has adopted an investment policy which restricts
investments in specific excluded sectors, i.e. coal
(including coal‑fired generation, transportation and
mining), oil (including upstream, midstream and storage),
upstream gas, nuclear energy and mining.
PINT’s Board is ultimately responsible for its
sustainability and established its ESG & Sustainability
Committee in July 2023 to oversee and review its ESG &
Sustainability Policy, which can be found on PINT's website
(www.pantheoninfrastructure.com). The Committee is
chaired by Ms Finegan, an independent Non‑Executive
Director, and consists of PINT’s Board members along with
Pantheon’s Global Head of ESG. Full biographies of the Board
Committee members can be found on pages 74 to 75.
Looking ahead, the Company is aiming to improve data
collection, resulting in increased disclosures with the aim of
improving ESG performance of investments. The focus over
the next year will be very much on engagement with suppliers
and Sponsors to develop data collection and disclosure
in relation to Scope 1, 2 and 3 emissions and climate risk
assessments.
As Investment Manager, Pantheon is tasked with delivering
this ESG and Sustainability Policy day‑to‑day.
Pantheon’s group‑wide Sustainability Policy can be found on
Pantheon's website (www.pantheon.com). Its objective is to
ensure that material ESG considerations are appropriately
reflected in Pantheon’s pre and post‑investment processes.
Pantheon is rigorous in assessing and managing
sustainability‑related risks in its managed portfolio and
identifying opportunities. Pantheon believes this is crucial
to harnessing the potential for value creation, as well as in
protecting the interests and reputations of its firm and clients.
Equally, Pantheon is experienced in actively seeking
investments in opportunities arising from the development of
solutions to global sustainability challenges. These long‑term
trends are aligned with PINT’s strategy and investment
mandate.
An enhanced approach to
responsibleinvesting
The Board of PINT recognises that a focus on
environmental, social and governance (ESG) is an
important tool for risk mitigation and can lead to value
creation across the investment portfolio.
Adherence to ESG principles has been incorporated
in Pantheon’s pre and post‑investment processes for
many years and the Investment Manager will continue to
play an influential role in promoting ESG standards and
diversity and inclusion in private markets.
The Directors of PINT have full oversight of ESG matters
within PINT’s portfolio and fully support Pantheon’s
long‑standing commitment in this area.
RESPONSIBLE
INVESTING AND ESG
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RESPONSIBLE
INVESTING AND ESG
CONTINUED
Pantheon has deeply embedded ESG considerations into
its investment processes, from the initial screening of
opportunities, through due diligence and engagement and
post‑investment monitoring.
Pantheon’s focus recently has been on enhancing its
screening and due diligence on deals from an ESG
perspective. Pantheon has introduced a new approach to
ESG called TIES – which stands for Transparency, Integration,
Engagement and Solutions – as this encapsulates the strong
ties between Pantheon, the Sponsors and the Portfolio
Companies. As part of this, Pantheon recently developed
a proprietary ESG due diligence scorecard, incorporating
a range of topics including climate risk, reputational risk,
diversity, equity and inclusion (DEI) and biodiversity.
PINT’s focus on co‑investments provides the Investment
Manager with more control over ESG and enables Pantheon
to undertake ESG due diligence on Portfolio Companies prior
to investing.
Pantheon is committed to advocating for ESG practices across
the infrastructure industry through its participation in a variety
of industry initiatives and by using its position on advisory
boards worldwide to promote high ESG standards on behalf of
PINT among Sponsors and investee companies.
Transparency Integration
Enhanced transparency through improved
ESG practices
Integration of ESG screening, due diligence
and monitoring
Engagement Solutions
Consistent Sponsor, industry and investor
engagement leads to improved ESG outcomes
Developing Pantheon’s capability to
offer solutions that meet investors’ ESG
and sustainability requirements
Pantheon
TIES
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RESPONSIBLE
INVESTING AND ESG
CONTINUED
Pantheon’s enhanced ESG framework
Screening Due diligence Monitoring/engagement Reporting
ESG screening process applied to all
investment opportunities
ESG scorecard used to assess:
1. Private markets manager
2. Private markets fund
3. Single‑company deal
4. Multi‑company deal
Monitoring:
1. Private markets manager data collection
2. Portfolio Company data collection
Engagement:
1. Private markets manager: targeted
engagement based on scorecard
2. Industry: advocate for ESG best
practice through industry trade bodies
Focusing efforts on standardised ESG
reporting templates to align with:
1. SFDR metrics
2. ESG Data Convergence Initiative
metrics
3. Task Force on Climate‑related Financial
Disclosure requirements
In practice
Integrated into ESG due diligence
scorecard
In practice
ESG due diligence scorecard output
included in investment committee memos
In practice
Enhancing ESG data collection systems
Signatory of: ESG committee member of:
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
During the period, PINT’s 2022 sustainability report was released, which included detailed climate risk disclosures, guided by the recommendations of the Task Force for Climate‑related
Financial Disclosures (TCFD). The sustainability report set out how climate‑related risks are integrated into PINT’s governance, strategy, risk management and metrics and targets.
The Company looks forward to sharing PINT’s 2023 sustainability report, which will incorporate more detailed reporting in accordance with the TCFD recommendations. The table below
illustrates the progress made to date.
RESPONSIBLE
INVESTING AND ESG
CONTINUED
Area DIsclosures Reference Summary of progress
Governance
a) Describe the Board's oversight of
climate‑related risks and opportunities.
b) Describe management's role in assessing
and managing climate‑related risks and
opportunities.
•
Corporate governance:
page 79
•
Investment process: page 52
•
Responsible Investing & ESG:
page 58
•
ESG & Sustainability
Committee Report: page 94
•
PINT’s Board is ultimately responsible for its sustainability, and formally
established its ESG & Sustainability Committee in July 2023 to oversee and
review these activities as set out in the ESG and Sustainability Policy. PINT is
committed to sustainability throughout its supply chain. The appointment
of third parties is overseen by the PINT Board and reviewed annually at the
Management Engagement Committee.
•
Pantheon executes PINT’s strategy, makes investment decisions, monitors
climate‑related performance and reports to the Board on progress.
Strategy
a) Describe the climate‑related risks and
opportunities the organisation has identified
over the short, medium and long term.
b) Describe the impact of climate‑related risks
and opportunities on the organisation's
businesses, strategy and financial planning.
c) Describe the resilience of the organisation's
strategy, taking into consideration different
climate‑related scenarios, including a 2°C or
lower scenario.
•
Chair’s statement: page 8
•
Our market: page 42
•
Investment strategy: page 57
•
Principal risks and
uncertainties: page 68
•
Viability statement: page 72
•
PINT will not invest in infrastructure assets whose principal operations are in:
•
coal (including coal‑fired generation, transportation and mining);
•
oil (including upstream, midstream and storage);
•
upstream gas;
•
nuclear energy; and
•
mining.
•
Following climate risk assessments in 2022, the impact of climate related
drivers associated with both changing climatic conditions and the transition to a
low carbon economy have been considered. Pantheon has engaged an external
consultant to enable a more granular assessment of these risks.
Risk
management
a) Describe the organisation's processes for
identifying and assessing climate‑related
risks.
b) Describe the organisation's processes for
managing climate‑related risks.
c) Describe how processes for identifying,
assessing and managing climate‑related risks
are integrated into the organisation's overall
risk management.
•
Principal risks and
uncertainties: page 68
•
The Company has a comprehensive risk and governance framework to ensure
all risks, including ESG and climate‑related risks, are monitored and managed
with due care and diligence.
•
The Board exercises oversight of this framework, through its Audit and Risk
Committee, and ESG risks and opportunities are additionally considered by the
ESG & Sustainability Committee.
•
Based on the results of Pantheon’s scenario analysis assessment, 100% of
PINT’s portfolio is expected to see a neutral or positive transition impact. 87%
of PINT’s portfolio present an opportunity in the transition.
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
RESPONSIBLE
INVESTING AND ESG
CONTINUED
Area Disclosures Reference Summary of progress
Metrics and
targets
a) Disclose the metrics used by the organisation
to assess climate‑related risks and
opportunities in line with its strategy and risk
management process.
b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions,
and the related risks.
c) Describe the targets used by the organisation
to manage climate‑related risks and
opportunities and performance against
targets.
•
Responsible investing and
ESG: page 58
•
PINT has committed to report certain climate‑related metrics, as set out on
page 10 of its recent sustainability report, including:
•
GHG emissions data (tCO
2
e);
•
year of emissions;
•
carbon intensity (tCO
2
e/£m revenue); and
•
carbon footprint (tCO
2
e/£m NAV).
•
The Company is in the process of calculating its Scope 1, 2 and relevant Scope
3 emissions for the purposes of its upcoming TCFD reporting.
Looking ahead, the Company is aiming to improve data collection resulting in better disclosures and also improved ESG performance of investments. We acknowledge that as an investment
company without control of the underlying investee companies, we are heavily reliant on Pantheon and the Sponsors for the collection of data and delivery of any ESG objectives.
The focus over the next year will be very much on engagement with suppliers and Sponsors to develop the communication, data collection and disclosure. In particular:
1. Data and KPIs – increasing the capture of ESG data e.g. capturing actual Scope 1, 2 and 3 emissions rather than relying on estimates through increasing engagement with Sponsors;
2. Disclosures – we will review the TCFD product report which the Investment Manager is required to publish in the course of 2024. Additionally, we will monitor and keep up to date with the
development of the TNFD (“Taskforce on Nature‑related Financial Disclosures”);
3. Climate risk assessment – Pantheon is working on enhancing its transparency of climate‑related risk analysis and it assesses each individual investment and climate‑related risks
4. Supplier reporting – as a Company we are reliant on the service providers we have engaged and intend to collect more information and data on the ESG focussed policies they have in place,
as well as monitoring compliance reporting, with the aim of disclosing this information in the sustainability report.
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
S172(1)
STATEMENT
The overarching duty of
the Directors is to act
in good faith and in a
way that is most likely
to promote the success
of the Company, as set
out in section 172 of the
Companies Act 2006
(‘theAct’).
Directors’ duties
Overview
The Directors must take into consideration the interests of
the various stakeholders of the Company, the impact the
Company has on the community and the environment, take
a long‑term view on the consequences of the decisions they
make, and aim to maintain a reputation for high standards of
business conduct and fair treatment between the members
of the Company. Fulfilling this duty supports the Company in
achieving its investment strategy and making decisions in a
responsible and sustainable way.
During the year, the Directors consider, in good faith, that
they have acted in a way that would most likely promote the
long‑term success of PINT for the benefit of its members
as a whole, with due regard to the likely consequences of
any decisions in the long term, as well as the interests of
shareholders and other stakeholders, as required by the Act.
Overleaf, the Directors explain how they discharged these
duties.
Stakeholders and long-term decisions
PINT is an externally managed investment company
and does not have any employees or customers. Its key
stakeholders are its shareholders, the Investment Manager,
Sponsors, Portfolio Companies, service providers, lenders
and regulators. The Board considers the feedback from,
and views of, PINT’s stakeholders at every Board meeting,
and all discussions involve careful consideration of the
longer‑term consequences of any decisions and their impact
on stakeholders. Overleaf, we describe how we engage
with our stakeholders to understand their views, how they
are affected by the Board’s decisions, how their feedback
shapes decisions, and any outcomes. We also explain how
PINT fosters business relationships with suppliers, customers
and others, and maintains a reputation for high standards of
business conduct. PINT’s impact on the environment, and how
PINT and the Investment Manager approach ESG, is explained
in detail on pages 58 to 62.
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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ANNUAL REPORT 2023
Shareholders
Importance
Holding PINT’s shares offers investors a
liquid investment vehicle through which
they can obtain exposure to PINT’s portfolio
of infrastructure investments, therefore,
continued shareholder support and
engagement are critical to the business and
the delivery of PINT’s long‑term strategy.
Board engagement
The Board is committed to maintaining open channels of communication and to engaging with shareholders in a way they find most
meaningful, these include:
•
AGM
The Company will hold its second AGM on 20 June 2024 and welcomes and encourages shareholders to participate in the meeting.
Shareholders will have the opportunity to meet the Directors and the Investment Manager, ask questions and provide us with feedback.
The Board values the feedback and questions it receives and takes action or makes changes, as and when appropriate.
•
Publications
The annual report and half‑year reports are an opportunity for PINT to provide information and updates on the Company’s business model,
strategy, portfolio and financial position. Feedback and/or questions PINT receives from shareholders help the Company to evolve its
reporting, aiming to render the reports and updates more transparent and understandable.
•
Shareholder meetings
The Chair, the Board and Pantheon meet with shareholders throughout the year; the Investment Manager holds presentations for
institutional investors and analysts, and all shareholders are invited to join PINT’s capital markets day. The Company always responds to
communications from shareholders, and anyone wishing to communicate directly with the Board can contact the Company Secretary at:
pintcosec@linkgroup.co.uk or by writing to PINT’s registered office. Feedback from all meetings with shareholders is shared and discussed
with the Board and taken into account when taking decisions (examples are included on page 67).
•
Shareholder concerns
In the event that shareholders wish to raise issues or concerns, they are welcome to do so at any time by writing to the Chair or the SID at
PINT’s registered office. All Board members are also available to shareholders if they have concerns or questions.
•
Investor relations updates
At every Board meeting, the Directors receive updates from the Investment Manager and the Company’s broker on the Company’s trading
activity and share price performance, especially during periods when PINT’s shares are trading at a discount.
S172(1)
STATEMENT
CONTINUED
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
The Investment Manager
Importance
The Investment Manager’s performance
is critical for the Company to deliver its
investment strategy successfully and meet
its objective of providing shareholders with
attractive and consistent returns over the
long term.
Board engagement
Maintaining a close and constructive working relationship with the Investment Manager is crucial as the Board and the Investment Manager
both aim to achieve consistent, long‑term returns in line with the Company’s investment strategy. Important components in the collaboration
with the Investment Manager, representative of the Company’s culture, are:
•
encouraging an open discussion with the Investment Manager, including adopting a tone of constructive challenge;
•
the interests of the Company, shareholders and the Investment Manager are, for the most part, well aligned, and recognising any instances
where that might change;
•
thorough review of the Investment Manager’s performance, including adherence to the investment policy and strategy, and considering the
terms of engagement;
•
drawing on Directors’ individual experience and knowledge to support and challenge the Investment Manager in its monitoring of Portfolio
Companies and engagement with Sponsors; and
•
willingness to make the Directors’ experience available to support the Investment Manager in the long‑term development of its business,
recognising that the long‑term health of the Investment Manager’s business is in the interests of shareholders in the Company.
Sponsors/Portfolio Companies
Importance
PINT’s investment strategy is focused on
backing Sponsors who create sustainable
value in the underlying Portfolio Companies.
The Investment Manager has extensive
networks and relationships with Sponsors
globally, which gives the Company access to
attractive investment opportunities.
Board engagement
The Board receives updates at each scheduled Board meeting from the Investment Manager on specific investments, including regular
valuation reports and detailed portfolio and returns analyses. The Board also makes an active effort to better understand the Portfolio
Companies, and in 2023, the Directors undertook a site visit to Alhama de Murcia, headquarters of Primafrio, a European leader in logistics and
transport of temperature‑controlled goods. More details of Pantheon’s engagement with Sponsors and due diligence of Portfolio Companies
through the investment process and its investment strategies can be found on pages 52 to 55 and in the Investment Manager’s report.
Pantheon engages with Sponsors on a day‑to‑day basis. Details of how Pantheon carries out portfolio management, as well as information on
how Sponsors consistently transform companies to create long‑term value, can be found in the Investment Manager’s report on pages 12 to 18.
The Administrator, the Company Secretary, the Registrar, the Depositary and the Broker
Importance
In order to function as an investment trust
with a premium listing on the London Stock
Exchange, the Company relies on a diverse
range of advisers for support in meeting all its
relevant obligations.
Board engagement
The Board maintains regular contact with its key external providers and receives regular reports from them, both through Board and
Committee meetings, as well as outside the regular meeting cycle. Their advice, as well as their needs and views, are routinely taken into
account. The Board (through the Management Engagement Committee) formally assesses the performance, fees and continuing appointment
of key service providers to ensure that they continue to function at an acceptable level and are appropriately remunerated to deliver the
expected level of service.
S172(1)
STATEMENT
CONTINUED
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
The environment and society
Importance
The Board of PINT believes that sound ESG
practices and operating sustainably are
integral to building a resilient infrastructure
business and creating long‑term value for our
shareholders and other stakeholders. Investing
responsibly in infrastructure is central to PINT’s
business model.
Board engagement
The Board (through the ESG & Sustainability Committee) works closely with Pantheon and, despite the fact that its level of control over
investments is limited, seeks, through its Investment Manager and the Sponsors, to encourage and influence investee companies to improve
their ESG performance.
Full details of the Investment Manager’s approach to ESG can be found on pages 58 to 62. Details of the activities of the Company’s ESG &
Sustainability Committee can be found on pages 94 to 95, and PINT’s inaugural sustainability report for 2022 can be accessed on PINT’s
website at www.pantheoninfrastructure.com.
Lenders
Importance
Availability of funding is crucial to PINT’s ability
to take advantage of investment opportunities
as they arise, as well as to meet any future
unfunded commitments.
Board engagement
During the year, the Board decided to increase the RCF and engaged regularly with the Investment Manager throughout the process. More
details on the RCF increase can be found on page 33. The Company aims to demonstrate to its facility providers, Lloyds and RBSI, that it is a
well‑managed business, capable of consistently delivering long‑term returns. Regular dialogue between the Investment Manager and lenders
is crucial to supporting the Company’s relationship with them.
Regulators
Importance
The Company can only operate as an
investment trust and a premium listed company
if it conducts its affairs in compliance with
applicable rules and regulations. Regulators
such as the Financial Conduct Authority (FCA)
and the Financial Reporting Council (FRC) have
a legitimate interest in how PINT operates in
the market and treats its shareholders.
Board engagement
The Board regularly considers how it meets various regulatory and statutory obligations and how any governance decisions it makes can have
an impact on its stakeholders, both in the shorter and in the longer term. The Board receives reports from its third‑party providers, including
the Investment Manager and the Company Secretary, on the Company’s compliance and considers any inspections or reviews that are
commissioned by regulatory bodies.
S172(1)
STATEMENT
CONTINUED
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
S172(1)
STATEMENT
CONTINUED
The mechanisms for engaging with stakeholders are kept under review by the Directors and are discussed on a regular basis at Board meetings to ensure that they remain effective.
Examples of the Board’s principal decisions during the year, how the Board fulfilled its duties under section 172, and the related engagement activities, are set out below:
Principal decision Long‑term impact Stakeholder considerations
and engagement
Outcome
Increase in the RCF In line with its agreed approach to balance sheet
management, PINT increased its multi‑currency RCF
during the year. This provides additional flexibility to
manage PINT’s balance sheet to support continued NAV
growth.
Effective engagement with Lloyds and RBSI was key to
agreeing the increase to the facility. The Board considers
that the additional liquidity available for working capital, and
to support further investments in high‑quality infrastructure
assets from PINT’s near‑term investment pipeline, will help
support the Company’s growth while also maintaining a robust
balance sheet.
Following extensive discussions
by the Board throughout the
period, on 7 June 2023 PINT
announced that it had agreed an
increase to its multi‑currency RCF
of £52.5 million for an aggregate
commitment of £115 million with
Lloyds and RBSI.
Establishing a share
buyback programme
When the Company’s share price trades at a material
discount to NAV, the Board considers that share price to
undervalue PINT’s portfolio and prospects.
The Board considers that, in some circumstances, share
buybacks can be an attractive use of capital, which can
be balanced with retaining sufficient capital to access the
attractive pipeline of investment opportunities.
The Directors considered a number of factors when debating
the introduction of a buyback programme, including the
availability of funding; current investment opportunities;
market conditions; and the likely impact on future NAV
growth. The Board made its decision following hearing the
views of, and feedback from, shareholders, as well as the
advice of our broker and the Manager, because the Board
believes that seeking to address the discount is important to
the Company and our investors.
On 31 March 2023 the Company
announced the commencement of
a share buyback programme up to
a total consideration of £10 million.
By the end of December 2023, the
Company had purchased over 7
million shares.
Establishing an ESG &
Sustainability Committee
Sub‑committees of the Board enable greater focus to
be provided to areas judged to be of importance to the
long‑term success of the Company.
The Board recognises the importance of ESG to our
shareholders and other stakeholders. Based on feedback from
investors, and given the Directors’ appetite and keen focus on
ESG, the Board decided that a dedicated Committee would be
a more suitable approach of overseeing ESG matters.
On 10 July 2023 the Board
formally established an ESG &
Sustainability Committee of the
Company, chaired by Ms Finegan.
The report from the Committee
can be found on page 94.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
PRINCIPAL RISKS
AND UNCERTAINTIES
Integrity, objectivity
and accountability
are embedded in the
Company’s approach
torisk management.
Patrick O’Donnell Bourke
Chair of the Audit and Risk Committee
The Company is exposed to a variety of risks and
uncertainties and the Board is ultimately responsible for the
risk management of the Company. It seeks to achieve an
appropriate balance between mitigating risk and generating
long‑term sustainable risk‑adjusted returns for shareholders.
Integrity, objectivity and accountability are embedded in
the Company’s approach to risk management. The Board
exercises oversight of the risk framework, through its Audit
and Risk Committee, and has undertaken a robust assessment
and review of the principal risks facing the Company,
including those that would threaten its business model,
future performance, solvency or liquidity.
The Company is reliant on the risk management frameworks
of the Investment Manager and other key service providers,
as well as on the risk management operations of each
Portfolio Company. The Board manages risks through reports
from the Investment Manager and other service providers
and through regular updates on the operational and financial
performance of Portfolio Companies.
For each risk, and for emerging risks, the likelihood and
consequences are identified, and the management controls
and frequency of monitoring are confirmed and reviewed
during Audit and Risk Committee meetings. Please see on
the next page a summary of the principal risks and their
mitigation.
Risk management procedure
Monitoring and
reporting
Risk identification
and assessment
Control
and mitigation
Risk appetite
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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PAN T H EON INFRASTRUCTURE PLC
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PRINCIPAL RISKS
AND UNCERTAINTIES
CONTINUED
RISK DESCRIPTION OF RISK MITIGATION
Market conditions
Higher
•
Macroeconomic or market volatility, as the result of the Russian
invasion of Ukraine and the conflict in the Middle East, presents
a significant threat to the global economy, resulting in a potential
combination of high inflation, interest rates and uncertain supply
chains, which flows through to pricing, valuations and Portfolio
performance.
•
Change in foreign exchange rates may affect the value of the
Company's investments.
•
Recession in Europe, the US or the UK could impact the growth
prospects of one or more of the Portfolio Companies.
•
Rising inflation and interest rates may lead to higher financing
costs for a Portfolio Company, which could adversely impact
its profits.
•
Discount rates used in the valuation of investments may need to
increase in line with the interest rate environment.
•
The Company targets a diversified infrastructure programme with exposures across sectors and
geographies; historically, infrastructure sub‑sectors have exhibited low to moderate correlation of
returns relative to one another.
•
The Company monitors the impact of geopolitical trends on the overall Portfolio as well as on individual
sectors and companies.
•
The Company has a foreign exchange hedging programme in place.
•
Portfolio Companies could put in place inflation protection by seeking to include inflation adjustment
mechanisms in their contracts.
•
Certain Portfolio assets already provide inflation protection via contracted revenues linked to inflation.
•
Portfolio Companies could also put in place interest rate hedges.
•
Discount rates are reviewed regularly as part of quarterly valuations.
Political and
regulatory changes
Level
•
Political actions and regulatory changes may adversely impact the
operating and revenue structure of Portfolio Companies.
•
Complexity of government regulatory standards may result in
litigation/disputes over interpretation and enforceability.
•
The Company predominantly targets investments in North America, Europe and Australasia which have
broadly stable legal, political and regulatory regimes.
•
The Investment Manager conducts due diligence on the regulatory risks of a prospective Portfolio
Company to ensure protections in the underlying contracts are in place.
Operational
performance
Level
•
A fall in demand for the Portfolio Companies’ services or products
or an increase in their input costs. A Portfolio Company’s revenue
is exposed to market supply and demand forces. Falls in demand or
cost increases that are respectively below or above the levels used
in underlying valuation assumptions could lead to adverse financial
performance of the Portfolio Company.
•
The Investment Manager conducts sensitivity analysis and demand stress testing in its due diligence
for assets.
•
The Company co‑invests alongside experienced Sponsors who work closely with the management
teams of each Portfolio Company.
•
The investment strategy is to target assets that have the majority of their cash flows protected through
contractual structures, which limits demand risk.
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PRINCIPAL RISKS
AND UNCERTAINTIES
CONTINUED
RISK DESCRIPTION OF RISK MITIGATION
Returns target
Level
•
The Company may not meet its investment objective; this
could result in returns being materially lower than targeted and
dissatisfied investors.
•
The Investment Manager adheres to the investment policy and criteria when making
investment decisions.
•
The Board reviews the investment performance of the Company on a quarterly basis to ensure
adherence to the investment policy.
Investor sentiment
Higher
•
The Company's share price has fallen below its NAV, which is
currently preventing new equity capital raises. An inability to raise
new equity capital is inhibitive to scaling the Portfolio.
•
Alternative forms of capital such as debt can be considered.
•
Opportunistic sale of targeted existing assets.
•
The Company has put in place a share buyback programme and has been buying back shares.
•
The Investment Manager constantly targets new shareholders.
Lack of suitable
investment
opportunities
Level
•
Unavailability of appropriate investments to acquire due to
unfavourable deal terms.
•
Re‑investment risk which could arise from delayed redeployment
of any proceeds from the sale of assets.
•
The Board reviews investment guidelines and will make appropriate recommendations to shareholders
if it believes changes are needed.
•
The Investment Manager seeks to continue actively sourcing appropriate investments by engaging
with Sponsors and negotiate co‑investment rights when committing capital to the Sponsors’
underlying funds.
•
The demand and need for infrastructure should ensure continuing deal flow.
Liquidity
management,
including level
andcost of debt
Level
•
Failure to manage the Company’s liquidity position, including
cash and credit facilities, could result in insufficient liquidity to
pay dividends and operating expenses or to make new or support
existing investments.
•
High levels and cost of debt within the Company and/or the special
purpose vehicles which invest in the Portfolio Companies could
result in covenant breaches and/or increased volatility in the
Company’s NAV.
•
Regular reporting of current and projected liquidity, under both normal and stress conditions.
•
Liquidity availability is assessed during the allocation of new investment opportunities.
•
The Board and Investment Manager review Company debt levels and covenants, on a quarterly
basis, to ensure they stay within the leverage cap that has been established to limit exposure to
debt‑related risks.
•
Debt levels within Portfolio Companies are reviewed by the Investment Manager as part of
due diligence.
Portfolio
concentration risk
Reducing
•
Portfolio concentration risk in relation to exposure to individual
assets, operators, geographies and asset types. This could impact
NAV and ultimately affect the Company’s targeted rate of return.
•
The Board conducts quarterly reviews of the investment portfolio against the Company’s investment
policy and criteria.
•
Investment restrictions outlined in the investment policy are designed to reduce portfolio
concentration risk.
•
The Company currently has a balanced portfolio of 13 investments across the infrastructure sub‑sectors
it targets.
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PRINCIPAL RISKS
AND UNCERTAINTIES
CONTINUED
RISK DESCRIPTION OF RISK MITIGATION
Investment Manager
Level
•
An over‑reliance on the Investment Manager. A failure of the
Investment Manager to retain or recruit appropriately qualified
personnel, or put in place an appropriate succession plan,
may have a material adverse effect on the Company’s overall
performance.
•
The Board performs an ongoing review of the Investment Manager’s performance in addition to a formal
annual review.
•
Pantheon continues to invest in its talent and regularly considers succession planning.
Tax status
and legislation
Level
•
Failure to observe requirements to maintain investment trust tax
status in the UK.
•
Failure to understand tax risks when investing or divesting could
lead to tax exposure or financial loss.
•
The Board, through the Company Secretary, ensures that the Company meets the criteria to maintain
the current investment trust status of the Company.
•
The Board has engaged a third party to provide taxation advice and Pantheon’s investment process
incorporates the assessment of tax.
Third‑party
providers
Level
•
Poor performance by third‑party service providers could result in
an inability to perform key functions (e.g. reporting, record keeping
etc.) effectively. This could result in loss of Company information,
errors in published information or damage to its reputation.
•
The Board reviews and signs off contractual arrangements with all key service providers.
•
The Board reviews the performance of key service providers annually.
Cyber security
Level
•
Cyber security risk which could arise from reputational damage
from theft or loss of confidential data through cyber hacking.
•
The Audit and Risk Committee reviews service providers’ cyber security arrangements, controls
and business continuity processes to ensure any data loss is mitigated and reputational damage is
minimised.
Climate change
Level
•
Climate change causing physical and transition risks could impact
the financial performance of the Portfolio. Physical risks arising
from extreme weather events could impact the operations of a
Portfolio Company. In addition, transition risk in terms of policy,
legal, technological, market and reputation risks could negatively
impact the operations of the assets.
•
The Investment Manager conducts due diligence in relation to climate change matters before making
investment decisions.
•
The Company invests in assets with strong management teams that have a long track record of actively
managing physical risks such as maintenance schedules.
•
The Company has in place an ESG & Sustainability Policy, including taking account of sector exclusions.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
Period of assessment
Pursuant to provision 31 of the UK Corporate Governance
Code 2018, and the AIC Code of Corporate Governance,
the Board has assessed the viability of the Company over
a three‑year period from 31 December 2023. The Directors
consider that a three‑year period to December 2026 is
appropriate for assessing the Company’s viability. There is
greater predictability of the Company’s cash flows over that
time period and increased uncertainty surrounding economic,
political and regulatory changes over the longer term.
The Company has a diverse Portfolio of infrastructure
investments, expected to produce cash distributions which
cover costs, and eventually expected to cover the Company’s
dividend target as the Portfolio matures. The defensive
nature of the Portfolio and of the essential services that
the businesses in which the Company invests provide to
their customers, are being demonstrated in the current
climate, with infrastructure assets providing strong downside
protection across market cycles given the regulated and
highly contracted nature of cash flows, which typically offer
strong inflation protection.
Against this background, in making their assessment, the
Directors reviewed the reports of the Investment Manager in
relation to the resilience of the Company, taking account of
its current position, the principal risks facing it in a downside
scenario due to the geopolitical uncertainties as a result of
the Russia‑Ukraine and other conflicts, including disruption to
the supply chain and increases in the cost of living as a result,
inflationary expectations, interest rate rises and, the impact
of climate change on the Company’s portfolio. As discussed
in Note 1 to the financial statements, the effectiveness of any
mitigating actions and the Company’s risk appetite were also
considered as part of the various downside liquidity scenario
modelling carried out, after which the Directors came to their
conclusion as to the Company’s viability over the three year
period.
The Investment Manager considers the future cash
requirements of the Company before acquiring or funding
investments in Portfolio Companies. Furthermore, the Board
receives regular updates from the Investment Manager on the
Company’s cash and debt position, which allows the Board to
maintain its fiduciary responsibility to the shareholders and, if
required, limit funding for existing commitments.
The Board considered the Company’s viability over the three
year period based on a working capital model prepared by the
Investment Manager. The working capital model forecasts key
cash flow drivers such as capital deployment rate, investment
returns and operating expenses. In connection with the
preparation of the working capital model, no capital raises
were assumed to occur during the three‑year period.
The results of stress testing showed that the Company would
be able to withstand the impact of various scenarios occurring
over the three‑year period. The Directors also considered
the Company’s position with reference to its investment trust
structure, its business model, its business objectives, the
principal risks and uncertainties as detailed on pages 69 to 71
of this report and its present and projected financial position.
As part of the overall assessment, the Directors took into
account the Investment Manager’s culture, which emphasises
collaboration and accountability, the Investment Manager’s
conservative approach to balance sheet management, and
its emphasis on investing with underlying Sponsors that are
focused on generating outperformance.
To support their statement, the Directors also took into
account the nature of the Company’s business, including the
available liquidity, the potential of its portfolio of investments
to generate future income and capital proceeds, and the
ability of the Directors to minimise the level of cash outflows,
if necessary. Based on the above assessment, the Directors
have a reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they fall due
over the three‑year period to December 2026.
On behalf of the Board
Vagn Sørensen
Chair
2 April 2024
VIABILITY
STATEMENT
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GOVERNANCE
What’s in this section
Board of Directors ...................................................... 74
Management team...................................................76
Chair’s introduction to corporate governance .......79
Audit and Risk Committee report .............................85
Management Engagement Committee report.......90
Nomination Committee report .................................92
ESG & Sustainability Committee report..................94
Directors’ remuneration report ...............................96
Directors’ report ....................................................... 101
Directors’ responsibility statement ........................105
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Vagn Sørensen
Chair and Nomination Committee Chair
Appointed to the Board 4 October 2021
Mr Vagn Sørensen is an experienced non‑executive chair and
director of listed and private companies.
After attending Aarhus Business School and graduating with
a MSc degree in Economics and Business Administration,
Mr Sørensen began his career at Scandinavian Airlines
Systems in Sweden, rising through numerous positions in a
17‑year career before becoming Deputy CEO with special
responsibility for Denmark. Between 2001 and 2006, Mr
Sørensen served as President and Chief Executive Officer
for Austrian Airlines Group in Austria, a business with
approximately €2.5 billion of turnover, 8,000 employees and
listed on the Vienna Stock Exchange.
Mr Sørensen also served as Chair of the Association of
European Airlines in 2004. Since 1999, Mr Sørensen has
been a Tier 1 senior industrial adviser to EQT, a private
equity sponsor, and has been a non‑executive director or
chair of a number of their Portfolio Companies. Since 2008,
Mr Sørensen has been a senior adviser to Morgan Stanley
Investment Bank.
Mr Sørensen is currently Chair of Air Canada (since 2017)
and a non‑executive director of CNH Industrial and Royal
Caribbean Cruises. Previous non‑executive appointments
have included Chair of SSP Group (2006-2020), Chair of
Scandic Hotels AB (2007-2018), Chair of TDC A/S (2006-2017)
and Chair of FLSmidth & Co (2009-2022).
BOARD
OF DIRECTORS
Audit and Risk Committee Management Engagement Committee Nomination Committee
Remuneration Committee Disclosure Committee ESG & Sustainability Committee
C
Committee Chair
Anne Baldock
Senior Independent Director and Chair of the
RemunerationCommittee
Appointed to the Board 4 October 2021
Ms Anne Baldock is an experienced board member and lawyer
with over 30 years’ experience in the infrastructure sector.
Ms Baldock graduated in law from the London School of
Economics and was a qualified Solicitor in England and
Wales from 1984 to 2012. Ms Baldock was a Partner at
Allen & Overy LLP between 1990 and 2012, during which
time she was Managing Partner, Projects Group London
(1995-2007), member of the firm’s Global/Main Strategic
Board (2000-2006) and Global Head of Projects, Energy and
Infrastructure (2007-2012).
Notable transactions included the Second Severn Crossing,
Eurostar, the securitisation of a major UK water utility and
several major PPP projects in the UK and abroad.
Ms Baldock’s current roles include Senior Independent
Director and Chair of the Audit and Risk Committee for East
West Railway Company Limited (the Government‑owned
company constructing the new Oxford to Cambridge railway)
and non‑executive director of Electricity North West Limited.
Ms Baldock also serves as the Senior Independent Director,
as well as Chair of the Remuneration and Nomination
Committees, of the Restoration and Renewal Delivery
Authority Limited (the delivery body created by Parliament to
deal with the restoration of the Houses of Parliament). Among
her previous roles, Anne served as a non‑executive director of
Thames Tideway Tunnel, non‑executive director of Hydrogen
Group (AIM‑listed) and a Trustee of Cancer Research UK.
C C
C
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Andrea Finegan
Management Engagement Committee and ESG &
Sustainability Committee Chair
Appointed to the Board 4 October 2021
Ms Andrea Finegan is an experienced infrastructure asset
management professional with over 30 years of sector
experience.
After graduating from Loughborough University, Ms Finegan
held investment banking roles at Deutsche Bank and Barclays
Capital, before joining Hyder Investments as Head of the Deal
Closing Team. Between 1999 and 2007, Ms Finegan worked
at Innisfree Limited, the investment manager of an £8 billion
infrastructure asset portfolio, latterly as Board Director and
Head of Asset Management. Ms Finegan subsequently served
as Chief Operating Officer, ING Infrastructure Funds and Fund
Consultant to Climate Change Capital.
In 2012 Ms Finegan joined Greencoat Capital LLP for the
set up and launch of Greencoat UK Wind Plc, the renewable
infrastructure investment trust, then, in 2013, became
Chief Operating Officer until 2018, a position that included
structuring and launching another renewable energy
infrastructure fund listed on the London Stock Exchange and
Euronext Dublin (Greencoat Renewables Plc) and a number of
private markets solar energy funds.
Ms Finegan is currently Chair of the Valuation Committee of
Schroders Greencoat LLP, a role she has held since 2015, and
independent consultant to the board of Sequoia Economic
Infrastructure Income Fund Limited, working closely with the
ESG & Stakeholder Committee and the Risk Committee.
BOARD
OF DIRECTORS
CONTINUED
Patrick O’Donnell Bourke
Audit and Risk Committee Chair
Appointed to the Board 4 October 2021
Mr Patrick O’Donnell Bourke is an experienced board
member with more than 28 years of experience in energy and
infrastructure.
After graduating from Cambridge University, Mr O’Donnell
Bourke started his career at Peat Marwick, Chartered
Accountants (now KPMG) and qualified as a Chartered
Accountant. After that he held a variety of investment banking
positions at Hill Samuel and Barclays de Zoete Wedd. In
1995, he joined Powergen Plc, where he was responsible for
mergers and acquisitions before becoming Group Treasurer.
In 2000, Mr O’Donnell Bourke joined Viridian Group Plc as
Group Finance Director and later became Chief Executive,
appointed by the private equity shareholder following
take‑over in 2006.
In 2011, he joined John Laing Group, a specialist international
investor in, and manager of, greenfield infrastructure assets
where he served as CFO until his retirement in 2019. While
at John Laing, he was part of the team which launched the
John Laing Environmental Assets Fund on the London Stock
Exchange in 2014.
Mr O’Donnell Bourke currently serves as Chair of Ecofin US
Renewables Infrastructure Trust Plc and as Chair of the Audit
Committee of Harworth Group Plc (a leading UK regenerator
of land and property for development and investment).
Mr O’Donnell Bourke was previously Chair of the Audit and
Risk Committee at Calisen Plc (an owner and operator of
smart meters in the UK) and Chair of the Audit Committee
at Affinity Water.
C C
C
Audit and Risk Committee Management Engagement Committee Nomination Committee
Remuneration Committee Disclosure Committee ESG & Sustainability Committee
C
Committee Chair
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MANAGEMENT
TEAM
Kathryn Leaf
Partner and GIRAC member (joined 2008,
24 years of private markets experience)
Kathryn is a Partner and Global Head of Real
Assets, which includes infrastructure, real
estate and other real assets. Kathryn is a
member of Pantheon’s Partnership Board,
International Investment Committee, Global
Infrastructure and Real Assets Committee
and Real Estate Investment Committee.
Prior to joining Pantheon, Kathryn was with
GIC Special Investments, before which she
was responsible for direct investments at
Centre Partners, a New York‑based private
equity firm. Kathryn began her career in
Morgan Stanley's Investment Banking Division
where she pursued real estate investments.
Kathryn has a bachelor’s and a master’s
degree in modern languages from Oxford
University, and is based in San Francisco.
Andrea Echberg
Partner and GIRAC member (joined 2012,
26 years of private markets experience)
Andrea is a Partner and Head of Pantheon’s
Global Infrastructure and Real Assets Team.
Andrea is responsible for global infrastructure
and real assets investments covering primary,
secondary and co‑investments. Andrea is
a member of the International Investment
Committee and Global Infrastructure and
Real Assets Committee. Andrea has an
engineering industry background followed
by 21 years’ experience in the infrastructure
finance and investment sectors. Prior to
joining Pantheon, Andrea led infrastructure
direct and co‑investment teams for Société
Générale, Macquarie Capital and ABN AMRO,
delivering successful investments in both
brownfield operating and greenfield PPP
assets. Andrea has a BEng in mechanical
engineering from Imperial College of Science,
Technology and Medicine. Andrea is based
in London.
Richard Sem
Partner, manager of PINT and GIRAC member
(joined 2017, 28 years of private markets
experience)
Richard is a Partner and Head of Europe
in Pantheon’s Global Infrastructure and
Real Assets Investment Team where he
leads its European investment activity
and team. Richard is a member of the
Global Infrastructure and Real Assets
Committee. Richard has 28 years of
experience in infrastructure private equity,
corporate finance and project finance at
leading institutions including InfraRed Capital
Partners, HSBC, ABN AMRO and BNP Paribas.
Richard's experience spans investing in
primary, secondary, co‑investments and
direct‑investments across all infrastructure
sub‑sectors and global OECD markets.
Richard holds a BSc and MBA from Imperial
College of Science, Technology and
Medicine. Richard is based in London.
Paul Barr
Partner and GIRAC member (joined 2021,
20 years of private markets experience)
Paul is a Partner in Pantheon’s Global
Infrastructure and Real Assets
Investment Team and a member of the
Global Infrastructure and Real Assets
Committee. Paul worked previously at
GIC, from 2012, where he was Senior Vice
President, infrastructure with a global
remit focusing on primary, secondary and
co‑investment opportunities. Paul also has
expertise in infrastructure direct investing
and infrastructure debt transactions. Prior to
GIC, Paul worked at Challenger Infrastructure
and Macquarie Capital. Paul studied Business
at the University of Edinburgh. He is also a
CFA Charterholder, a Chartered Accountant,
and a Member of the Securities Institute.
Paul is based in San Francisco.
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MANAGEMENT
TEAM
CONTINUED
Evan Corley
Partner and GIRAC member (joined 2004,
20 years of private markets experience)
Evan is a Partner in Pantheon’s Global
Infrastructure and Real Assets Investment
Team and a member of Pantheon’s Global
Infrastructure and Real Assets Investment
Committee. Prior to joining Pantheon,
Evan held positions at Polaris Venture
Partners in Boston and JP Morgan in London.
Evan received a BS from Boston University’s
School of Management with a concentration
in finance and a minor in economics.
Evan is based in San Francisco.
Jérôme Duthu‑Bengtzon
Partner and GIRAC member (joined 2007,
19 years of private markets experience)
Jérôme is a member of Pantheon’s Global
Infrastructure and Real Assets Investment
Team where he focuses on the analysis,
evaluation and completion of infrastructure
and real assets transactions in Europe.
Jérôme is a member of Pantheon’s Global
Infrastructure and Real Assets Investment
Committee and ESG & Sustainability
Committee. Jérôme joined from Paris‑based
placement agent, Global Private Equity,
where he worked for over three years.
Jérôme holds an MSc in telecommunications
from ESIGELEC engineering school and
a Master in Business from the ESCP-EAP
European School of Management. Jérôme is
based in London.
Dinesh Ramasamy
Partner and GIRAC member (joined 2016,
14 years of private markets experience)
Dinesh is a Partner in Pantheon’s Global
Infrastructure and Real Assets Investment
Team where he focuses on the analysis,
evaluation and completion of infrastructure
and real asset investment opportunities in
the US. Prior to joining Pantheon, Dinesh was
a Vice President in Goldman Sachs’ Global
Natural Resources group where he executed
on a variety of M&A and capital markets
transactions across the infrastructure, power
and utilities sectors. Previously, Dinesh was in
the Power & Utilities group in the Investment
Banking Division at RBC in New York.
Dinesh holds a BS in Electrical and Computer
Engineering from Cornell University and
MBA from NYU’s Stern School of Business.
Dinesh is based in San Francisco.
Eimear Palmer
Partner and Global Head of ESG (joined 2022,
16 years of private markets experience)
Eimear is a Partner and Global Head of
ESG, with responsibility for overseeing
and developing Pantheon’s ESG strategy,
frameworks and range of initiatives. Eimear
chairs Pantheon’s ESG committee and is
a member of the International Investment
Committee. Prior to joining the firm, Eimear
worked for 14 years in private equity‑focused
ESG roles, including most recently as
Managing Director and Head of Responsible
Investment at Intermediate Capital Group.
Before that she worked at the Carlyle Group.
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MANAGEMENT
TEAM
CONTINUED
Ben Perkins
Principal (joined 2022, 16 years of private
market experience)
Ben is a Principal in Pantheon’s Global
Infrastructure & Real Assets team, where
he is focused on portfolio management
for PINT. Ben has previously worked in
investment management roles at Gravis
Capital Management, Hadrian's Wall
Capital and John Laing. Ben holds a BEng
(Hons) in Manufacturing and Mechanical
Engineering from the University of Warwick
and has completed all three levels of the CFA
qualification. Ben is based in London.
Farid Barekati
Vice President (joined 2020, 13 years of
private market experience)
Farid is a Vice President within Pantheon’s
Private Wealth team, where he has
operational oversight for the reporting,
valuation and external audit of Pantheon's UK
listed products including PINT. Prior to joining
Pantheon, Farid was the Financial Controller
for John Laing Capital Management,
responsible for their listed funds. He also
spent time in various finance and operations
roles within 3i Group plc, before moving to
their listed infrastructure fund. Farid holds
a BSc (Hons) in Accounting & Computing
from Oxford Brookes University and is a
qualified chartered accountant. Farid is
based in London.
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I am pleased to present our second corporate governance
report, in which we explain how we aim to meet and maintain
high standards of corporate governance, as PINT evolves
and matures as a listed company. As the Board, we are
accountable to our shareholders for the governance of the
Company’s affairs and effective leadership of the Company,
and we remain focused on PINT’s long‑term sustainable
success.
During the year, the Board continued to refine PINT’s
governance framework. We spent time discussing a long‑term
succession plan, which the Board believes is important to
have, even for a young company such as PINT. The succession
plan is set out on page 93. We also established a dedicated
ESG & Sustainability Committee, chaired by Ms Finegan
which reflects both the belief that sound ESG practices are
integral to building a resilient business, and the fact that the
evolving regulatory and best practice guidance requires the
additional focus a committee can bring. More on the work of
the Committee is on page 94. On the Company’s behalf, last
year the Investment Manager also issued PINT’s inaugural
annual sustainability report for 2022, in which the Board
committed to aiming to improve ESG data collection. This will,
the Directors believe, in time, result in better disclosures as
well as improved ESG performance of investments.
Statement of compliance
Throughout the year, PINT applied the principles of the AIC
Code of Corporate Governance (the ‘AIC Code’). By reporting
against the AIC Code, PINT meets the obligations of the
FRC’s UK Corporate Governance Code (the ‘UK Code’).
This means that we provide additional disclosures against
provisions of the AIC Code relevant to investment companies.
The AIC Code is available on the AIC website
(theaic.co.uk) and detailed explanations of how the Board
applies the principles of the AIC Code can be found
throughout this report. PINT’s purpose, culture and values are
described in the strategic report on pages 63 to 67.
Throughout the year ended 31 December 2023, the Company
complied with all principles and provisions of the AIC Code.
The Board of Directors
PINT is led by a Board of four independent non‑executive
Directors, who are responsible for promoting the long‑term
success of the Company, and generating sustainable,
attractive returns over the long term.
Biographies of the Directors, including how their skills and
experience fit PINT’s needs and strategic direction, and details
of their other directorships and significant commitments can
be found on pages 74 and 75. The Board seeks to ensure
that it has the appropriate balance of skills, experience, ages
and tenure among its members. The Directors possess a
wide range of business, financial and infrastructure expertise
relevant to the direction of the Company and this is shown
in more detail on page 83. Further details on the Board
composition and diversity can be found on page 81.
I am pleased to present
our second corporate
governance report, as
PINTevolves and matures
asa listed company.
Vagn Sørensen
Chair
2 April 2024
CHAIR’S INTRODUCTION
TO CORPORATE GOVERNANCE
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CHAIR’S INTRODUCTION
TO CORPORATE GOVERNANCE
CONTINUED
The Board of Directors continued
During the period, the Board satisfied itself that all Directors
did, and remain able to, commit sufficient time to discharge
their responsibilities effectively, taking into account their other
significant commitments.
The terms and conditions of the appointment of the
non‑executive Directors are set out in letters of appointment,
copies of which are available for inspection at the registered
office of the Company and will be available at the AGM. None
of the Directors has a contract of service with the Company.
Board responsibilities and relationship
withthe Investment Manager
There is a clear division of responsibilities between the Chair,
the Directors, the Investment Manager and the Company’s
other third‑party service providers. The role of the Board
is to promote the long‑term sustainable success of PINT,
generating value for our shareholders while having regard
to the interests of our other stakeholders, PINT’s reputation,
and the impact PINT might have on local communities and the
environment. The Board is responsible for the determination
and implementation of the Company’s investment policy and
for monitoring compliance with the Company’s objectives, it
also determines the parameters of the investment strategy
and risk management policies. The Manager’s role is to
implement the strategy, make investment decisions, and
manage the Company’s assets in line with PINT’s investment
objectives and policies and subject to certain investment
restrictions; the Manager can also exercise its judgement
and sets the investment and risk management strategies in
relation to currency exposure.
At each Board meeting, the Directors review the Company’s
performance against its strategy, the underlying investments
and their performance, asset allocation, gearing, cash
management, investment outlook, pipeline of new deals, peer
group performance, marketing, investor relations, any relevant
governance matters, and wider market conditions and trends.
The Directors also regularly consider share price and level
of premium or discount. There is an ongoing communication
between the Investment Manager and the Board outside
of the usual meeting cycle, and the Investment Manager
provides the Directors with the relevant management,
financial and regulatory information to facilitate the Board’s
decision making.
All of the Board’s responsibilities are set out in the schedule
of Matters Reserved for the Board, and certain duties are
delegated to the Board Committees. During the year, the
Board was supported by: the Audit and Risk Committee,
the Nomination Committee, the Management Engagement
Committee, the Remuneration Committee, the ESG &
Sustainability Committee and the Disclosure Committee.
Each of the Board Committees has its own terms of
reference, which are regularly reviewed and approved by
the Board, and clearly define the areas of responsibility.
The terms of reference, as well as Matters Reserved for
the Board, are available on the Company’s website
(www.pantheoninfrastructure.com). The reports on their
work are included in this report, except for the Disclosure
Committee, which meets on an ad hoc basis, when required
to oversee the disclosure of information by the Company
to meet its obligations under the Market Abuse Regulation
and the FCA’s Listing Rules and the Disclosure Guidance
and Transparency Rules.
Directors’ independence
In accordance with the Listing Rules that apply to
closed‑ended investment entities, and applying the
principles of the AIC Code, the Nomination Committee
reviewed the Directors’ independence and concluded that
all Board members remain independent in both character
and judgement.
Chair and Director tenure/re‑appointment
ofDirectors
Applying the principle of the AIC Code, the Board considered
setting a policy on tenure for the Chair and Directors. At
present, each of the Board members has only served on
the Board for two years, and, on page 93, we disclose our
succession plan for the Chair, who is likely to step down at
the 2025 AGM. Led by the SID, the Chair’s performance is
also evaluated by the other Directors every year, and the
results of the review inform the Directors’ recommendation
on his re‑election at PINT’s AGMs. Therefore, rather than set
specific limits on tenure, the Board believes that, at present, it
is appropriate to apply the principle of annual re‑election to all
Directors, including the Chair, and the Directors will reconsider
setting a formal policy on tenure in the future.
In line with that, all Directors will retire and stand for
re‑election at the Company’s AGM on 20 June 2024. The
individual performance of each Board member standing for
re‑election was reviewed (details of this year’s performance
review can be found on pages 82 to 84). and the Board’s
recommendation is that shareholders vote in favour of their
re‑elections at the AGM.
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CHAIR’S INTRODUCTION
TO CORPORATE GOVERNANCE
CONTINUED
Board diversity
The Listing Rules require PINT to report against set diversity targets for listed companies and
disclose whether they were met or not. The targets PINT is reporting against are as follows:
1. At least 40% of individuals on the Board are women;
2. At least one senior Board position is held by a woman; and
3. At least one individual on the Board should be from a minority ethnic background.
As at 31 December 2023 and as at the latest practicable date, PINT met the first two of
these three targets; PINT’s female representation on the Board is 50%, and one of the senior
positions, that of the SID, is held by Ms Baldock. None of the Directors identify as an ethnic
minority individual; two of our members are of White European ethnicity and two are White
British. In the Nomination Committee report on page 93, we explain how PINT approaches
diversity and how ethnic diversity on PINT’s Board will be addressed when we recruit for new
Board members and when the Board is next refreshed, likely to be later in 2024 or in 2025.
Board composition and diversity
1,2
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (SID and
Chair)
Men 2 50% 1
Women 2 50% 1
Not specified/prefer not to say — — —
1. The composition of the Board is shown at 31 December 2023.
2. PINT is an investment trust, therefore, additional reporting relating to executive management is not applicable to the
Company.
The information presented in the following tables was collected on a self‑reporting basis.
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (SID and
Chair)
White British or other White
(including minority groups) 4 100% 2
Mixed/multiple ethnic groups — — —
Asian/Asian British — — —
Black/African/Caribbean/Black British — — —
Other ethnic group, including Arab — — —
Not specified/prefer not to say — — —
Board and Committee meeting attendance
The Board and its Committees met on a regular basis during the year. In addition to scheduled
meetings, the Board meets on an ad hoc basis, outside the usual meeting cycle, whenever
important, urgent matters need to be reviewed, and acted on, by the Board. Directors’
attendance throughout 2023 is shown in the table below:
Board and Committee meeting attendance
Scheduled
Board
meetings
Audit
and Risk
Committee
meetings
Management
Engagement
Committee
meetings
Nomination
Committee
meetings
Remuneration
Committee
meetings
ESG &
Sustainability
Committee
meetings
Vagn Sørensen 6/6 3/3
3
1/1 2/2 1/1 2/2
Andrea Finegan 6/6 3/3 1/1 2/2 1/1 2/2
Patrick O’Donnell
Bourke 6/6 3/3 1/1 2/2 1/1 1/2
Anne Baldock 6/6 3/3 1/1 2/2 1/1 2/2
In addition to the above scheduled meetings, the Board also met five times on an ad hoc basis and convened two meetings
of the Disclosure Committee.
3. The membership of the Audit and Risk Committee (ARC) changed during the year. Vagn Sørensen now attends the
meetings of the ARC as an invited guest, rather than a member of the Committee.
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CHAIR’S INTRODUCTION
TO CORPORATE GOVERNANCE
CONTINUED
Company Secretary
The Board has direct access to the advice and services of
the Company Secretary, Link Company Matters Limited,
who is responsible for ensuring that Board and Committee
procedures are followed and that applicable regulations
are complied with. Directors regularly receive updates and
guidance on regulatory matters and governance best practice
from the Company Secretary, and have access to other
independent advisers, as necessary.
Board performance review
During the year, in order to review the effectiveness of the
Board, its Committees and individual Directors, the Directors
undertook an internal Board performance review. We first
used a tailored questionnaire, similar to the one used in
the previous year, in order to better understand any areas
of improvement or where more work was needed. The
evaluation considered: the Board’s composition, its size and
performance, Board and Committee meetings, the existing
governance framework and its effectiveness, the culture
and relationships at Board level and between PINT and
its Manager, as well as specific topics such as Directors’
independence, whether they continue to devote sufficient
time to PINT’s activities, oversight of the Manager and
engagement with our stakeholders. Results were collated and
analysed by the Company Secretary, considered by the Chair
and then discussed by the Board in a closed session, with
the performance of the Board Chair and Committee Chairs
reviewed by the SID and the relevant Directors.
The results of the evaluation process indicated that the
Board continued to be effective and there were no particular
concerns. Some of the conclusions the Directors reached
were:
•
the Board has sufficient depth of infrastructure experience;
•
the Board is currently of an appropriate size; however,
despite being a relatively young company, it is important
for the Directors to have a longer‑term view of the possible
changes to the Board. Future appointments will also be an
opportunity to add to the diversity of the Board, which the
Directors agreed was an important consideration. More
information on the succession plans can be found on page
93;
•
the Board and its Committees perform well and challenge,
where appropriate, the Investment Manager, refining
the processes and mechanisms to monitor investment
performance;
•
managing the share price discount to NAV, to the extent
possible, continued to be an important item on the Board’s
agenda; and
•
Boardroom culture encouraged open and constructive
debate.
The Board also considered any areas that presented an
opportunity for improvement, and agreed the following
actions:
•
a number of areas of strategic importance to the Company
will remain focus areas for the Board over the coming year,
these included discount management, focus on asset
valuations and risks facing the Company in the context of
prevailing market conditions;
•
the Board will continue to build its understanding of
shareholders’ views, invite questions and welcome
meetings with investors wanting to engage with the Board;
•
the Board will continue to work with the Investment
Manager to refine the reporting the Board receives to
facilitate better monitoring and oversight, especially in
areas of risk, compliance and reviews of third‑party service
providers;
•
the Board will continue to supplement its understanding
through regular training sessions and deep dives into
specific topics, such as updates on matters arising in
relevant infrastructure sectors, including wind or solar
power, investment allocation process of the Investment
Manager, and Pantheon’s ESG policies and how these are
managed in practice; and
•
focus on working to position the Company for future
growth.
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TO CORPORATE GOVERNANCE
CONTINUED
Board performance review continued
As part of the review, the Board also considered Directors’ skills and areas of expertise, the outcome of which is set out in the
skills matrix, as follows:
Vagn Sørensen
(Chair)
Anne Baldock
(SID & Chair of RemCo)
Patrick O’Donnell
Bourke
(Chair of ARC)
Andrea Finegan
(Chair of MEC & ESGCo)
Investment trust
UK corporate governance/listed plc
Fund management
Private equity
Infrastructure sector knowledge
Sustainability/ESG
Marketing, investor relations, other stakeholder management
Auditing and accounting
Capital markets, corporate finance
Risk management
Information technology and cyber security
Strategy
Key:
Expert Strong experience Some experience
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TO CORPORATE GOVERNANCE
CONTINUED
Board performance review continued
In future years, PINT will also report on how the actions were
addressed and implemented throughout the year.
Following the review, the Board concluded that all Directors
continued to contribute effectively and had the skills and
experience relevant to the leadership and direction of the
Company.
Conflicts of interest
The Articles of Association permit the Board to consider
and, if it sees fit, authorise situations where a Director has
an interest that conflicts, or could conflict, with the interests
of the Company. PINT has in place a formal procedure for
the Board to consider authorising any such conflicts, and
the Directors who have no interest in the matter would
decide whether to authorise the conflict and whether the
authorisation should be conditional or limited in any way. The
process in place for authorising potential conflicts of interest
has operated effectively during the year.
A register of potential conflicts is maintained by the Company
Secretary and is reviewed at each Board meeting, to ensure
that any authorised conflicts remain appropriate. Directors
always declare any change to the Board. The Directors also
comply with the statutory requirements regarding declarations
of any interest in an actual or proposed transaction or
arrangement with the Company.
Institutional investors – use of voting rights
The Company has delegated the exercise of its voting rights
in the underlying investments to the Investment Manager.
Pantheon would consult with the Board should there be any
corporate actions, where there either is a conflict of interest
between PINT and other Pantheon clients, or where, for any
reason, the proposed voting would be inconsistent with the
advice the Manager gave to its other clients.
Pantheon itself follows a policy of active ownership, and votes
on all matters for which it has voting authority.
Engagement with shareholders and
stakeholders
Two‑way communication with shareholders is very important
to the Board and the Investment Manager, and there
are a number of ways the Directors seek feedback from
investors. Details on how PINT engages with the Company’s
stakeholders, how the Board fulfils its duties and makes
decisions guided by the views of our shareholders and wider
stakeholders are on pages 63 to 67.
On behalf of the Board
Vagn Sørensen
Chair
2 April 2024
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I am pleased to present the
Audit and Risk Committee
report for the year ended
31December 2023.
Patrick O’Donnell Bourke
Audit and Risk Committee Chair
2 April 2024
Chair’s introduction
I am pleased to present the Audit and Risk Committee
(‘the Committee’, ‘the ARC’) report for the year ended
31 December 2023. The Committee aims to serve the interests
of our shareholders and other stakeholders through its
independent oversight of the financial reporting process,
including the financial statements, the internal controls and
risk management systems, monitoring compliance, as well as
the appointment and ongoing review of the quality of the work
and independence of PINT’s external Auditor. The Committee
recognises that, through its interactions with the Board,
the Manager and the external Auditor, it plays a key role in
facilitating a high‑quality audit, and is therefore important to
the Company, our investors and other stakeholders.
As a qualified Chartered Accountant, I have chaired the
Committee throughout the year, with Ms Baldock and
Ms Finegan serving as Committee members. The constitution
and performance of the ARC are reviewed on a regular basis,
and, during the year, the Committee made a decision that,
in line with the recommendations of the UK Code, the Chair
of the Board would step down from the Committee and join
our meetings as a guest, rather than a member. This reflects
best practice, but equally, the Committee still benefits from
Mr Sørensen’s experience and expertise. Notwithstanding
this change to the composition of the Committee, the Board
considers that, individually and collectively, the Committee
members are independent and appropriately experienced to
fulfil the role of the Committee, and the Committee possesses
the skills it needs, and has competence relevant to the
infrastructure sector.
Role of the Audit and Risk Committee
The Committee’s Terms of Reference, which set out its
responsibilities, are reviewed on a regular basis, and were
updated during the year to reflect the updated guidance of the
FRC’s Minimum Standard for Audit Committees.
The primary responsibilities of the ARC are:
•
to monitor the integrity of the financial statements, the
financial reporting process and the accounting policies of
the Company;
•
to provide advice on: whether the annual report and
accounts, taken as a whole, are fair, balanced and
understandable; whether suitable and appropriate
estimates and judgements have been made in respect of
areas which could have a material impact on the financial
statements; and whether such statements provide the
information necessary for shareholders to assess the
Company’s position and performance, business model and
strategy;
•
to review the effectiveness of the internal control
environment of the Company, including its service
providers, and its reporting processes and to monitor
adherence to best practice in corporate governance
and compliance with applicable regulatory and legal
requirements;
•
to advise the Board on the Company’s overall risk appetite,
tolerance and strategy and the principal and emerging
risks the Company is willing to take in order to meet its
long‑term objectives;
•
to review the Investment Manager’s compliance,
whistleblowing and fraud prevention procedures;
AUDIT
AND RISK COMMITTEE REPORT
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CONTINUED
Role of the Audit and Risk Committee
continued
•
to assess the Company’s emerging and principal risks
and monitor the Company’s risk management and internal
financial controls and to seek assurance regarding the risk
exposures of the Company and the effectiveness of risk
management and internal control systems;
•
to monitor, and prepare for, any developments to the legal
or regulatory landscape affecting the Company;
•
to make recommendations to the Board in relation to
the tender process, the appointment, re‑appointment
and removal of the external Auditor and to approve the
Auditor’s remuneration and terms of engagement, including
scope of work;
•
to review and monitor the Auditor’s independence and
objectivity and the effectiveness of the audit process; and
•
to provide a forum through which the Company’s Auditor
reports to the Board.
The ARC has direct access to the Auditor, Ernst & Young (EY),
and representatives of EY attend the relevant ARC meetings.
Main activities during the year
The Board and Committee meeting attendance table can be
found on page 81. Since our last report to shareholders, the
ARC has:
•
reviewed the half‑year and year‑end Portfolio valuations
and the Company’s NAV;
•
reviewed the Company’s financial statements for the half
year and year end and made formal recommendations to
the Board;
•
reviewed the Company’s going concern and viability
statements;
•
reviewed the internal controls and risk management
systems of the Company and its third‑party service
providers;
•
agreed the audit plan and fees with the Auditor, its
independent review of the condensed financial statements
for the six months ended 30 June 2023 and the audit of the
financial statements for the year ended 31 December 2023;
•
reviewed the risk matrix covering the Company’s key
investment and operating risks, including how they are
classified and mitigated, and requested changes on
how the risk report and matrix were reported on by the
Manager;
•
reviewed the whistleblowing policy together with the data
protection, fraud prevention and anti‑money laundering
policies of the Investment Manager (no incidents or risk
areas were reported during the year); and
•
reviewed compliance with the AIC Code and its own terms
of reference.
The significant issues relating to the Committee’s review of
the financial statements for the year ended 31 December 2023
were:
A. Valuation of assets
The Committee reviewed the basis of valuation of each of the
investments at 31 December 2023 prepared by the Investment
Manager from information provided by each relevant Sponsor.
This includes a review of the operational performance, recent
developments, financial updates, and key valuation drivers
for each asset. Questions raised by the Committee were
addressed by the Investment Manager. During the year, the
Committee also spent additional time understanding and
challenging, where appropriate, the valuation approach taken
for each investment. The Committee reviewed the Auditor’s
reporting on its testing of investment valuations, including
using its specialists. As a result, the Committee satisfied itself
that the Company’s portfolio was held at fair value.
B. Going concern and long‑term viability
The Committee assessed the Company’s resources to
continue in operation for at least twelve months from the
date of these financial statements and whether it remains
appropriate for PINT to continue to adopt the going concern
basis in preparing its financial statements. The Committee
also advised the Board on assessing the viability of the
Company over a three‑year period. These assessments
included a review of the Company’s financial position,
including its commitments, available liquid resources, ability
to draw on its RCF, as well as various downside cases that
assumed varying degrees of decline in investment valuations,
increases in operating costs, and weakening of GBP against
the EUR and USD (which may result in increased FX hedging
liabilities), and contemplated different risk factors relating
to cash flows. As a result, the Committee concluded that
the Company had adequate resources to continue in
operation and meet its liabilities as they fell due both for the
twelve months from the date of approval of these financial
statements, and over the subsequent two years. Related
going concern and long‑term viability disclosures are set out
on pages 72, 103 and Note 1 on page 117.
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AND RISK COMMITTEE REPORT
CONTINUED
C. Maintenance of investment trust status
The Investment Manager and Administrator reported to
the Committee to confirm continuing compliance with the
requirements for maintaining investment trust status. These
requirements were also discussed with the Auditor as part of
the audit process.
Internal controls
The ARC reviewed and updated, where appropriate, the
Company’s risk matrix. This document is reviewed, and
refined, by the ARC every six months and the Committee
is satisfied with the extent, frequency and quality of the
reporting of the Investment Manager’s monitoring to enable
the ARC to assess the degree of control of the Company and
how effectively risk is managed and mitigated. The ARC also
received reports on internal controls from the Company’s
relevant service providers.
No incidents of significant control failings or weaknesses were
identified during the year ended 31 December 2023, within
the Company or its third‑party suppliers.
The Company does not have an internal audit function as all of
its day‑to‑day operations are delegated to third parties, all of
whom have their own internal control procedures.
The Audit and Risk Committee discussed whether it would be
appropriate to establish an internal audit function, and agreed
that the existing system of monitoring and reporting by third
parties remained appropriate and sufficient. This decision will
be reviewed every year.
Internal control review
The Directors are responsible for the Company’s risk
management and systems of internal control and for reviewing
their effectiveness. In an ongoing process, in accordance with
the guidance provided by the FRC on risk management, the
Committee and the Board have processes and procedures in
place for identifying, evaluating and managing the risks faced
by the Company, and for reviewing internal control systems.
These processes have been in place throughout the year and
up to the date the financial statements were approved, and
the Board has carried out a robust review of internal controls
and risk management systems.
The risk management process and systems of internal control
are designed to manage, rather than eliminate, the risk of
failure to achieve the Company’s objectives and such systems
can only provide reasonable, rather than absolute, assurance
against material misstatement or loss.
Internal control assessment process
Regular risk assessments and reviews of internal controls and
the Company’s risk appetite are undertaken by the Board in
the context of the Company’s overall investment objective.
On behalf of the Board, the ARC undertook a robust
assessment and review of the emerging and principal
risks facing the Company. The review covered the key
business, operational, compliance and financial risks facing
the Company.
In arriving at its judgement as to the risks the Company faces,
the ARC considered the Company’s operations in light of the
following factors:
•
the nature and extent of risks which it regards as
acceptable for the Company to bear within its overall
business objective;
•
the threat of such risks becoming a reality;
•
the Company’s ability to reduce the incidence and impact
of risk on its performance;
•
the cost to the Company and benefits related to the review
of risk and associated controls of the Company; and
•
the extent to which third parties operate the relevant
controls.
Full details of the principal risks and uncertainties faced by the
Company can be found on pages 68 to 71.
Given the nature of the Company’s activities and the fact
that most functions are sub‑contracted, the Directors
obtain information from key third‑party suppliers regarding
the controls they operate. To enable the Board to make an
appropriate risk and control assessment, the information and
assurances sought from third parties include the following:
•
details of the control environment;
•
identification and evaluation of risks and control objectives;
•
assessment of communication procedures; and
•
assessment of control procedures operated.
There were no significant matters of concern identified in
the Board’s review of the internal controls of its third‑party
suppliers.
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CONTINUED
Internal control assessment process
continued
The key procedures which have been established to provide
effective internal financial controls are as follows:
•
the Company uses a third‑party provider of administration
and accounting services, as well as company secretarial
duties. Investment management is provided by Pantheon,
therefore, the duties of investment management and
accounting are segregated. The Company also uses a
third‑party Depositary. The procedures of the individual
parties are designed to complement one another;
•
the Directors define the duties and responsibilities of the
Company’s service providers and advisers in the terms of
their contracts. The appointment of key service providers
and advisers is conducted by the Board after consideration
of the quality of the parties involved; the Board, via the
MEC, monitors their ongoing performance and contractual
arrangements; and
•
the Board reviews detailed financial information produced
by the Investment Manager and the Administrator on a
regular basis.
Fair, balanced and understandable
As a result of the work performed, the ARC concluded that the
annual report for the year ended 31 December 2023, taken as
a whole, was fair, balanced and understandable and provided
the information necessary for shareholders to assess the
Company’s position and performance, business model and
strategy, and reported on these findings to the Board.
External audit
The ARC monitors and reviews the effectiveness of the
external audit process for the publication of the annual
report and makes recommendations to the Board on the
re‑appointment, remuneration and terms of engagement of
the Auditor.
Audit fees
The audit fees incurred were £150,000 for the audit of the
2023 financial statements (£135,000 in 2022). The ARC will
continue to monitor the level of audit fees closely.
Non‑audit fees/independence
andobjectivity of the Auditor
The ARC reviews the scope and nature of all proposed
non‑audit services, to ensure that the independence and
objectivity of the Auditor are safeguarded.
The Board’s policy is that non‑audit services may be carried
out by the Company’s Auditor unless there is a conflict of
interest or another provider is considered to have more
relevant experience.
Non‑audit services provided during the year ended
31 December 2023 related to EY’s review of the 2023 half‑year
report. The fee for that service was £35,000 (£35,000 in
2022), and made up 18.9% of the total fees paid to the Auditor.
The ARC believes that it is appropriate for the Company’s
Auditor to provide such services to the Company as these
services are audit related.
The ARC has received assurances from the Auditor that its
independence is not compromised by the supply of these
services.
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AND RISK COMMITTEE REPORT
CONTINUED
Effectiveness of external audit process
The ARC meets at least twice a year with the Auditor. The
Auditor provides a planning report in advance of the annual
audit, a report on the annual audit and a report on its review
of the half‑year financial statements. The ARC has an
opportunity to question and challenge the Auditor in respect
of each of these reports. In addition, at least once a year, the
ARC has an opportunity to discuss any aspect of the Auditor’s
work with the Auditor in the absence of the Investment
Manager. After each audit, the ARC reviews the audit process
and considers its effectiveness.
Appointment of the Auditor
The Board of PINT appointed EY as PINT’s first auditors in
2021.
A competitive tender must be carried out by the Company at
least every ten years. We are therefore required to carry out
a tender no later than in respect of the financial year ending
31 December 2031. Mr Matthew Price has served as the
lead audit partner since the IPO in 2021. Ethical standards
generally require the rotation of the lead audit partner every
five years for a listed client.
The Committee monitors the Company’s relationship with the
Auditor and has discussed and considered its independence
and objectivity. The Auditor also provides confirmation that
it is independent within the meaning of all regulatory and
professional requirements and that objectivity of the audit is
not impaired.
The Committee is therefore satisfied that EY remains
independent and will continue to monitor this position.
Taking into account the performance and effectiveness of
the Auditor and the confirmation of its independence, the
Committee has recommended to the Board that a resolution to
re‑appoint EY as the external Auditor be put to shareholders
at the forthcoming AGM. EY has confirmed its willingness to
continue in office.
Patrick O’Donnell Bourke
Audit and Risk Committee Chair
2 April 2024
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MANAGEMENT
ENGAGEMENT COMMITTEE REPORT
I chair the Management
Engagement Committee.
Given the size of the Board
and that all Directors are
independent, all Directors
are members of the
Committee.
Andrea Finegan
Chair of the Management Engagement Committee
2 April 2024
The Management Engagement Committee meets at least once
a year, or more often if required.
The role of the Committee
The principal duties of the Committee, set out in its terms of
reference, are to:
•
monitor and evaluate the Manager’s performance (and, if
necessary, provide appropriate guidance) and compliance
by the Investment Manager with the Investment
Management Agreement;
•
reasonably satisfy itself that the Investment Management
Agreement is fair and that the terms thereof comply with all
regulatory requirements, conform with market and industry
practice, are competitive and remain in the best interests of
shareholders;
•
reasonably satisfy itself that systems put in place by
the Investment Manager in respect of the Company
are adequate to meet relevant legal and regulatory
requirements;
•
reasonably satisfy itself that matters of compliance are
under proper review. Through the terms of the Investment
Management Agreement, the Company procures that
the Committee has direct access to the Investment
Manager’s compliance officers, and receives a report
from the Investment Manager each year confirming that
it has performed its obligations under the Investment
Management Agreement and has conducted the
Company’s affairs in compliance with the laws and
regulations applying to it;
•
regularly review the composition and performance
(including skills, knowledge and experience) of the key
personnel performing the services on behalf of the
Investment Manager and consider whether the continuing
appointment of the Investment Manager, on the terms of the
Investment Management Agreement, is in the interests of
shareholders as a whole, and make recommendations to the
Board thereon together with a statement of the reasons for
this view;
•
where relevant, consider nominations by the Investment
Manager for replacements of key executives, if, prior to the
termination of the agreement, such key executives should
die or otherwise become incapacitated or should retire,
resign or otherwise cease to provide the relevant services
to the Company;
•
consider and review the level and method of remuneration
of the Investment Manager pursuant to the terms of
the Investment Management Agreement, including the
methodology of calculation of the annual management
fee (which shall include a comparison of fees payable as
compared to the Company’s peer group management
arrangements);
•
consider the merit of obtaining, on a regular basis, an
independent appraisal of the Investment Manager’s
services;
•
consider the appointment or re‑appointment of the
Investment Manager and the level of fees and make
recommendations to the Board thereon;
•
review with the Investment Manager any material issues
arising from its work that the Investment Manager wishes to
bring to the attention of the Committee, whether privately
or otherwise; and
•
review the performance and services provided by
the Company’s other service providers (including the
Administrator, Depositary, Registrar and Company
Secretary) and consider whether the continuing
appointments of such service providers under the terms of
their agreements are in the interests of shareholders as a
whole, and make recommendations to the Board thereon
together with a statement of the reasons for its views.
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ENGAGEMENT COMMITTEE REPORT
CONTINUED
Main activities during the year
The Manager’s review
When reviewing the Investment Manager’s performance
in providing investment management and other services,
the Committee considered a number of different factors,
which included: the quality and continuity of Pantheon’s
team; Pantheon’s succession plans; sector and geographic
coverage; investment processes; performance and strategy.
The Committee also considered the Investment Manager’s
culture and evaluated the way in which the Investment
Manager’s partners, executives and other members of the
team are remunerated and incentivised. Furthermore, the
Committee reviewed the Investment Manager’s ESG strategy,
objectives and progress against ESG goals.
When reviewing the terms of the Investment Management
Agreement, the Committee also considered the remuneration
arrangements and the methodology underpinning the annual
management fee. In addition, the Committee also took into
account the Investment Manager’s ongoing commitment to
promote the Company and engage with its shareholders and
other key stakeholders. Following its review, the Committee
concluded that the continued appointment of the Investment
Manager remained in the best interests of PINT and its
shareholders.
Review of other third‑party service
providers
The Committee reviewed the services of: Hogan Lovells,
PINT’s legal adviser; BNP Paribas, PINT’s Depositary; Link
Alternative Fund Administrators, PINT’s Administrator; Link
Market Services, PINT’s Registrar; Link Company Matters
Limited, PINT’s Company Secretary; and Investec Bank plc,
PINT’s corporate broker and bookrunner. The Committee
concluded that all these appointments remained in the best
interests of PINT and all were recommended to the Board.
In 2023 the Committee also considered the performance
of PINT’s PR adviser, and upon a recommendation of the
Investment Manager, the Board agreed to appoint Lansons
Communications Holdings Limited as the Company’s new PR
services provider.
Andrea Finegan
Chair of the Management Engagement Committee
2 April 2024
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The role of the Committee
The principal duties of the Committee, as set out in its terms
of reference, are to;
•
review the balance, effectiveness and diversity of the
Board;
•
consider and formulate succession plans;
•
identify the skills and expertise needed to meet the
Company’s strategic goals, future challenges and
opportunities; and in doing so, identify, evaluate and
recommend individuals for new Board appointments;
•
consider and review the membership of the Board’s
Committees;
•
consider and review the performance and external
commitments of Board members;
•
assess the time commitment required for each Board
appointment and ensure that the current Directors have
sufficient time to fulfil their duties;
•
make recommendations on appointments and
re‑appointments of Directors to our shareholders; and
•
lead the Directors’ performance appraisal process and
consider the results thereof every year; details of the last
review are included on pages 82 to 84.
Appointments process
All Board appointments are subject to a formal, rigorous
and transparent process. The Company will seek to ensure
that any Board vacancies will be filled by the most qualified
candidates, based on objective criteria and merit in the
context of the skills, knowledge and experience needed to
support the Board’s longer‑term strategy and goals. Any
appointments will be made in line with the Board’s Diversity
Policy.
Main activities during the year
Board’s Diversity Policy
The Board fully supports diversity and inclusion at Board
level and recognises the benefits of diversity, including that
of gender, socio‑economic and ethnic background, cognitive
and personal strengths. During the year, the Board reviewed
and updated its Diversity Policy, which highlights the Board’s
commitment to ensuring that the Directors bring a wide
range of skills, knowledge, experience, backgrounds and
perspectives to the Board. The Committee decided to include
additional measurable objectives of the Policy, to specify that:
•
any advertising will state that applications from suitably
qualified candidates who would add to the Board’s diversity
would be especially welcome;
•
any recruitment agency used would be instructed
to include diverse candidates who have appropriate
transferable skills, identified through a search of a wide
pool of potential appointees; and
•
any shortlist will include candidates who, if appointed,
would add to the diversity of the Board.
Consequently, implementing these objectives, any shortlist
will include candidates who, if appointed, would add to the
diversity of the Board.
I chair the Nomination
Committee and, given
the size of the Board, all
Directors are its members.
Vagn Sørensen
Nomination Committee Chair
2 April 2024
NOMINATION
COMMITTEE REPORT
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NOMINATION
COMMITTEE REPORT
CONTINUED
Main activities during the year continued
Board diversity
The Board welcomed the changes to the Listing Rules which
incorporate the recommendations of the Hampton‑Alexander
and Parker Reviews. In line with the Listing Rules
requirements, PINT reports on certain diversity targets,
including having a least 40% female representation on the
Board, and having at least one senior Board role held by a
woman. As at 31 December 2023, PINT met two of three
targets, and more detail on this is included on page 81.
Succession planning
During the year, the Committee carefully considered
succession planning. Despite being a relatively young
company, and applying the principles of the Governance
Code, the Directors are agreed that having a longer‑term view
of possible Board changes is important. Whilst the Committee
agreed that, currently, the structure, size and composition
of the Board is balanced and appropriate, the Directors
recognise that there is room to improve the diversity of the
Board.
The Committee also reviewed the time required by each Board
member to fulfil their duties, including myself as the Chair
of the Board. Whilst I do not have any appointments other
than those disclosed in this annual report, and am able to
serve PINT to the best of my ability, after reflection, and upon
consultation with some of our shareholders, I am considering
stepping down as Chair, potentially at PINT’s Annual General
Meeting in 2025. I intend to allow our SID, Ms Baldock, ample
time to lead a search process for my successor and allow for a
thorough handover period.
With that in mind, the Committee intends to use the next
change to the Board, likely in late 2024 or the beginning of
2025, as an opportunity for the Board to consider a wide pool
of candidates from diverse backgrounds.
Vagn Sørensen
Nomination Committee Chair
2 April 2024
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
I chair the ESG &
Sustainability Committee,
and all Directors and
Pantheon’s Global Head
of ESG are members of the
Committee.
Andrea Finegan
Chair of the ESG & Sustainability Committee
2 April 2024
The role of the Committee
PINT’s Board believes that sound ESG practices and operating
sustainably are integral to building a resilient infrastructure
business and creating long‑term value for our shareholders
and other stakeholders. Last year, we therefore took the step
to establish a dedicated ESG & Sustainability Committee,
chaired by myself, to help better support the Board with its
focus on ESG, and create a dedicated forum for monitoring
and responding to evolving regulatory and best practice
guidance. The principal duties of the Committee, as set out in
its terms of reference, are to:
•
Agree and monitor the Company’s ESG strategy:
•
guide, supervise and support the Manager in drafting
and periodically reviewing the Company’s sustainability
and ESG strategy aligned with the Company’s business
objectives, industry best practice, and any applicable
regulations; and
•
oversee the implementation and monitoring of the
approved ESG strategy, ensuring it is effectively
integrated into the Company’s operations, investments,
and decision‑making processes by the Manager.
•
ESG reporting and disclosure:
•
review and approve the Company’s ESG disclosure
documents, including the Company’s annual
Sustainability Report (or relevant sections of such
other reports as may be produced), ESG metrics,
the Company’s ESG Policy, and other relevant
communications to stakeholders;
•
review the accuracy, completeness and transparency
of ESG reporting, adhering to recognised standards,
frameworks and guidelines; and
•
review, and receive updates on, the Company’s
continued compliance with the requirements of the
European Union’s Sustainable Finance Disclosure
Regulation (SFDR) as it relates to the Company
maintaining its classification as an Article 8 fund.
•
ESG risk management:
•
receive regular updates from the Investment Manager
on any pertinent developments on ESG‑related risks
and opportunities relating to the Company’s Portfolio
companies.
•
Stakeholder engagement:
•
monitor and review the Company’s stakeholder
engagement activities, including dialogue with
shareholders, investors and other relevant stakeholders;
and
•
promote effective communication and collaboration with
stakeholders including service providers on ESG‑related
matters, addressing their concerns and feedback
appropriately.
•
Work in conjunction with the ARC in relation to ESG
communications in the annual report, adherence to ESG
disclosure requirements and identification and mitigation
of risks relating to ESG, as well as opportunities related
to ESG.
ESG &
SUSTAINABILITY COMMITTEE REPORT
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PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
ESG &
SUSTAINABILITY COMMITTEE REPORT
CONTINUED
Main activities during the year
In July 2023, PINT’s Board formally constituted a separate
ESG & Sustainability Committee, reflecting both the belief
that sound ESG practices are integral to building a resilient
business and the fact that evolving regulatory and best
practice guidance on ESG matters require the additional focus
a committee brings.
The Committee worked on the Company’s initial ESG and
Sustainability Policy which complements and builds on the
Investment Manager’s ESG Policy. Work was also undertaken
in identifying future focus areas around improvement in data
capture and disclosures to allow improved reporting.
PINT is classified as Article 8 under SFDR, which means that
it is committed to enhanced reporting requirements and an
investment policy which restricts investments in specific
excluded sectors (coal, oil (upstream, midstream, storage),
gas (upstream), nuclear energy and mining).
Under SFDR, PINT also needs to make certain periodic
disclosures, and to satisfy that requirement, the Committee
together with Pantheon worked on the Company’s first
sustainability report for 2022, which includes an assessment
of PINT’s investments against set sustainability indicators.
The results of PINT’s investments’ ESG performance are
published in accordance with the requirements of Article
11 of the EU’s SFDR, and in accordance with the regulatory
technical standards set out in Commission Delegated
Regulation (EU) 2022/1288).
In 2022, PINT was not required to make disclosures under the
Task Force on Climate‑related Financial Disclosures (TCFD),
however, work commenced on this and a number of voluntary
disclosures were made. Preparations are underway towards
reporting fully against the TCFD categories of Governance,
Strategy, Risk Management and Metrics and Targets.
Looking ahead
As an investment company without control of the underlying
investee companies, PINT is reliant on Pantheon and the
Sponsors of each investee company for the collection of data
and delivery of any ESG objectives. Notwithstanding, PINT
is aiming to improve data collection, which, in turn, should
result in better disclosures, as well as an overall improvement
in ESG performance of PINT’s investments. Therefore, the
Committee’s and the Board’s focus in 2024 and further ahead
will be on the engagement with suppliers and Sponsors to
continue to develop the communication, data collection
and our disclosures. In time, the Committee intends to set
meaningful targets for PINT for the years ahead.
We look forward to engaging with our stakeholders on these
topics, as we remain committed to keeping their interests at
the centre of our decision making.
Andrea Finegan
Chair of the ESG & Sustainability Committee
2 April 2024
95
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
This Directors’
remunerationreport
for the year ended
31December2023,
has beenprepared in
accordance with the
requirements of the
Large and Medium‑sized
Companies and Groups
(Accounts and Reports)
(Amendment) Regulations
2013.
Anne Baldock
Remuneration
Committee Chair
2 April 2024
The law requires the Auditor to audit certain disclosures
contained within this report and these are indicated
accordingly. The Auditor’s opinion is included in its
independent Auditor’s report on pages 107 to 112.
The Directors’ Remuneration Policy (‘the Policy’) is required to
be put to shareholders’ vote at least once every three years,
any change to the Policy also requires shareholders’ approval.
The Policy is subject to a binding vote. A resolution to approve
the Policy was last proposed and approved by shareholders
at the AGM of the Company held on 30 March 2023, and the
Policy will apply until it is next put to shareholders for renewal
of that approval at the Company’s AGM in 2026, unless any
variations to the policy are proposed earlier. There are no
significant changes in the way that the Remuneration Policy
will be implemented in the course of the next financial year.
The annual remuneration report, which includes the
remuneration paid to Directors each year, is brought to
shareholders for approval at every Annual General Meeting,
therefore, an ordinary resolution to approve this remuneration
report will be put to members at the forthcoming AGM in
June 2024. The vote on the Directors’ remuneration Report is
an advisory vote.
Statement from the Chair
I am pleased to present the Directors’ remuneration report for
the year ended 31 December 2023. I chair the Remuneration
Committee and, given the size of the Board, all Directors are
members of the Committee.
The role of the Committee
The Company has no employees or executive Directors.
The Remuneration Committee determines and approves
Directors’ fees within an aggregate limit of £500,000
per annum, as set out in the Company’s Articles of
Association. No Director is involved in deciding his or her
own remuneration; remuneration of the Chair of the Board is
decided and approved by the Directors under the leadership
of the SID. More details on how the Committee makes those
decisions, and all the factors it takes into account, are set out
on page 97.
The principal duties of the Remuneration Committee are to:
•
determine, review, amend (where deemed needed) the
fees of: the Chair of the Board; the SID; Chairs of each
Committee; and those of the non‑executive Directors;
•
determine, review, amend (where deemed needed), and
agree the Policy and propose it to our shareholders for
approval at least every three years;
•
obtain reliable, up‑to‑date information about remuneration
in other companies of comparable scale and complexity
and market practice generally;
•
when authorising remuneration outcomes, exercise
independent judgement and discretion, taking account
of Company and individuals’ performance, and wider
circumstances;
•
report to the Board and PINT’s shareholders on the
Committee’s activities and decisions;
•
agree the Policy for authorising claims for expenses from
the Directors; and
•
establish the selection criteria, select, appoint and set the
Terms of Reference for any remuneration consultants who
might advise the Committee.
The Board and Committee meeting attendance table can be
found on page 81.
DIRECTORS’
REMUNERATION REPORT
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DIRECTORS’
REMUNERATION REPORT
CONTINUED
Directors’ fees
The Directors’ fees are reviewed annually. In its assessment,
the Committee considers a wide range of factors to make sure
that the Policy is aligned with PINT’s long‑term strategic goals
and the goal of promoting long‑term, sustainable success of
the Company, enabling PINT to attract, retain and motivate
Directors of the quality required to fulfil the responsibilities
of the Board. When reviewing the fees, the Committee also
has regard to the risk appetite of the Company; the time
required to be devoted to PINT’s affairs; whether all Directors
devoted sufficient time to PINT during the year under review;
whether the Board evaluation indicated that the Directors
fulfilled their roles, acted effectively and in the best interests
of PINT; and whether the scale and complexity of the business
added to the time commitments. The Committee also reviews
remuneration trends across the sector, any feedback received
from shareholders, as well as the level of support for the
remuneration report and Policy resolutions. In 2023, we held
PINT’s first AGM – shareholders cast over 98.98% of their
votes in favour of the Directors’ remuneration report, 0.02%
of the votes were cast against and ~0.008% of votes were
withheld. The current Policy was approved by shareholders at
the same meeting in 2023, with 99.98% of votes cast in favour,
0.02% votes against, and ~0.008% of votes withheld, showing
considerable shareholder support.
Following a review in late 2023, the Remuneration Committee
resolved to increase Directors’ fees by 5% (effective from
1 January 2024) for the year ending 31 December 2024. This is
the first fee increase since IPO in 2021 and since then, the
average annual CPI inflation was 7.3% in 2023 (RPI 9.7%) and
9.1% in 2022 (RPI 11.6%). The fees reflect the time Directors
spend on the affairs of the Company, and help PINT remain
competitive and in line with the market, as we prepare to
refresh the Board, and likely start to recruit in late 2024.
Expected fees
for year ending
31 December
2024
£
Fees for
year to
31 December
2023
£
Chair 57,750 55,000
Non‑Executive Director 42,000 40,000
Audit and Risk Committee
Chair 47,250 45,000
Remuneration of any new Board members would be set in line
with these fees.
The Remuneration Policy
The Board’s policy is that remuneration of non‑executive
Directors should reflect the experience of the Board as
a whole and is determined with reference to comparable
organisations and appointments. The level of remuneration
has been set in order to attract individuals of a calibre
appropriate to the future development of the Company and to
reflect the specific circumstances of the Company, the duties
and responsibilities of the Directors, and the value and amount
of time committed to the Company’s affairs.
The Chair does not participate in any discussions relating
to his own fee, which is determined by the other Directors
and led by the SID. Directors are entitled to be reimbursed
for any travel, hotel or other expenses properly incurred in
connection with their attendance at Director or shareholder
meetings or otherwise in connection with the discharge of
their duties as Directors. There are no performance conditions
of the remuneration; the Board does not believe that this is
appropriate for non‑executive Directors. Under the Company’s
Articles, PINT is permitted to provide pension or similar
benefits for its Directors; however, no pension schemes or
other similar arrangements have been established and none
of the Directors are entitled to any pension or similar benefits,
nor do they receive long‑term incentive schemes or share
options. PINT does not have a policy on termination payments
and no past Director has been compensated for loss of office
or otherwise. All Directors are subject to annual re‑election
and none of the Directors have a service contract with PINT.
Each directorship may be terminated by either party on three
months’ prior written notice. The fees for the Directors are
determined within the limits set out in the Company’s Articles
of Association, or any greater sum that may be determined by
ordinary resolution of the Company. Directors’ and Officers’
liability insurance cover is maintained by the Company on
behalf of the Directors.
Statement of implementation of the
Remuneration Policy in respect ofthe
financial year ending 31 December 2024
The Remuneration Committee intends to review Directors’ fees
in late 2024, when it will determine the fees effective from 1
January 2025. In the absence of unforeseen circumstances,
the Committee does not expect any other changes.
97
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DIRECTORS’
REMUNERATION REPORT
CONTINUED
Annual report on Directors’ remuneration (audited)
Directors’ fees for the year (audited)
Single total figure for each Director:
Fees Taxable expenses
2
Total3
Directors
2023
£
20221
£
2023
£
2022
£
2023
£
20221
£
Vagn Sørensen 55,000 67,128 596 — 55,596 67,128
Anne Baldock 40,000 48,821 — — 40,000 48,821
Andrea Finegan 40,000 48,821 1,352 — 41,352 48,821
Patrick O’Donnell Bourke 45,000 54,929 776 55 45,776 54,929
Total 180,000 219,693 2,724 55 182,724 219,748
1. The Company’s first annual report covered the period from 12 October 2021 to 31 December 2022, therefore, the 2022 figures also include the pro‑rated fees for the period 12 October 2021 to 31 December 2021. To date, there have been no increases
in Directors’ fees since IPO.
2. The Directors’ expenses related to travel and accommodation and were partly incurred in visiting an asset and the management team at Primafrio, as part of the Board’s oversight of the activities of the Investment Manager.
3. There are no variable elements of remuneration to disclose.
No sums were paid to any third parties in respect of Directors’ services and no sums were paid to any third parties in respect of advice from a remuneration adviser.
Company performance
In setting Directors’ remuneration, the Committee considers the relative size and performance of the Company. The table below sets out PINT’s total share price returns to ordinary shareholders
since launch, compared with the S&P Global Infrastructure Index over the same period. The S&P Global Infrastructure Index is used as a benchmark as its constituents are comparable in asset
type with the Company’s investment portfolio. For the year ended 31 December 2023, total shareholder return was (7.0)%, compared with the S&P Global Infrastructure Index return of 6.8%.
Three months Six months One year
IPO (Nov 21)
- 31 Dec 23
Share price (TSR) 11.0% 7.6% (7.0%) (15.4%)
FTSE All Share (TR) 3.2% 5.2% 7.9% 13.3%
S&P Global Infrastructure Index (TR) 10.9% 2.9% 6.8% 13.7%
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DIRECTORS’
REMUNERATION REPORT
CONTINUED
Directors’ interests (audited)
The Company’s Articles of Association do not require Directors to own shares in the Company. The interests of the Directors and any connected persons in the Ordinary Shares of the Company
at 31 December 2023 and 31 December 2022 were as follows:
Number of
Ordinary Shares
31 December
2023
Number of
Ordinary Shares
31 December
2022
Vagn Sørensen 146,680 120,000
Anne Baldock 50,000 30,000
Andrea Finegan 46,581 30,000
Patrick O’Donnell Bourke 60,000 60,000
There have been no changes in Directors’ interests between 31 December 2023 and the date of this report.
None of the Directors or any person connected with them had a material interest in the Company’s transactions, arrangements or agreements during the year.
Relative importance of spend on pay
2023
£
% change
from 2022
to 2023
20221
£
Total Directors’ fees1 180,000 — 219,6931
Total distribution to shareholders 14,303,000 198 4,800,000
Share buybacks 5,824,000 — —
1. The Company’s first annual report covered the period between 12 October 2021 to 31 December 2022. There have been no changes to remuneration and no increases in fees between the IPO in 2021 and the year ended 31 December 2023.
‘
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DIRECTORS’
REMUNERATION REPORT
CONTINUED
Annual percentage change in Directors’ fees
Directors’ fees remained unchanged between the Company’s IPO in November 2021 and 31 December 2023.
2023
£
% change in
from 2022
to 2023
20221
£
Vagn Sørensen 55,000 — 67,1281
Anne Baldock 40,000 — 48,8211
Andrea Finegan 40,000 — 48,821
1
Patrick O’Donnell Bourke 45,000 — 54,978
1
1. The Company’s first annual report covered the period between 12 October 2021 and 31 December 2022, therefore, the amounts for that first financial period also included the fees the Directors received between 12 October and 31 December 2021.
Approval
The Directors’ remuneration report was approved by the Board and signed on its behalf by:
Anne Baldock
Chair
2 April 2024
100
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
The Directors are pleased to present their report, together with the audited financial statements of the Company, for the year ended 31 December 2023.
The Corporate Governance statement, including the reports of the Board Committees, the Directors’ remuneration report, and the statement of Directors’ responsibilities form part of this report.
Some of the matters required to be included in the Directors’ report have instead been included in the strategic report, as the Board considers them to be of strategic importance. Therefore,
a review of the business of the Company, recent events and outlook can be found on pages 28 to 37 and information on our ESG reporting can be found on pages 58 to 62. Important events
affecting the Company and that occurred after 31 December 2023 are included in Note 25 to the financial statements.
Board of Directors
As at the date of this report, PINT is led by a Board of four non‑executive Directors, all of whom are considered to be independent. In line with the recommendations of the AIC Code, all
Directors will stand for re‑election at the forthcoming AGM. Directors’ biographies can be found on pages 74 and 75.
The general powers of the Directors are set out in PINT’s Articles of Association, which provide that the business of PINT shall be managed by the Board, which may exercise all the powers of
the Company, subject to any limitations imposed by applicable legislation, the Articles and any directions given by special resolution of the Company’s shareholders. Any amendments to the
Articles of Association must be made by special resolution at a general meeting of the shareholders.
The rules concerning the appointment and replacement of Directors are set out in the Company’s Articles of Association and in the Companies Act 2006. There are no agreements between the
Company and its Directors concerning any compensation for their loss of office that could occur because of a takeover bid.
Insurance and indemnity provisions
The Board has formalised arrangements under which the Directors, in the furtherance of their duties, may take independent professional advice at the Company’s expense. The Company has
put in place a Directors’ and Officers’ liability insurance policy which includes cover for legal expenses. Under the terms of appointment of each Director, the Company has agreed, subject to the
restrictions and limitations imposed by statute and by the Company’s Articles of Association, to indemnify each Director against all costs, expenses, losses and liabilities incurred in execution of
his/her office as Director or otherwise in relation to such office. Save for such indemnity provisions in the Company’s Articles of Association and in the Directors’ terms of appointment, there are
no qualifying third‑party indemnity provisions in force.
Share capital and voting rights
The rights attaching to the Company’s shares are set out in the Company’s Articles of Association. Further details can be found in Note 16 of the financial statements. As at 31 December 2023
and as at the date of this report, the Company’s share capital is as follows:
Share capital and voting rights
Number of
shares in
circulation
Voting rights
attached to
each share
Number of
shares held
in treasury
Total number
of shares in
issue (including
shares held
in treasury)
As at 31 December 2023 472,615,000 1 7,385,000 480,000,000
As at 2 April 2024 469,550,000 1 10,450,000 480,000,000
DIRECTORS’
REPORT
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PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
DIRECTORS’
REPORT
CONTINUED
Share capital and voting rights continued
There are no restrictions on the free transferability of the
shares, subject to compliance with applicable securities
laws and provisions in the Articles entitling the Board to
decline to register certain transfers in a limited number of
circumstances, such as where the transfer might cause
the Company to be subject to or operate in accordance
with applicable US laws. The powers of the Directors are
detailed in the Company’s Articles and are subject to relevant
legislation and, in certain circumstances (including in relation
to the issuing or buying back the Company of its shares), are
subject to the authority being given to the Directors by PINT’s
shareholders.
Prior to the Company’s listing on 13 October 2021, in
accordance with the Articles the Directors were authorised
to allot up to a maximum of two billion Ordinary and/or C
Shares and to disapply pre‑emption rights in respect of
those Ordinary and/or C shares, with the authority expiring
on 13 October 2024. To date, no shares have been allotted
under this authority, and the Directors propose to replace
this authority with a general authority to allot new shares
up to approximately 33.33% of the issued share capital of
the Company at PINT’s forthcoming AGM in June 2024. The
Directors will also propose a resolution to grant the Company
the authority to disapply pre‑emption rights, which would
enable the Board to issue Ordinary Shares for cash, without
pre‑emption rights applying, up to approximately 10% of the
Company’s issued share capital.
An authority to repurchase up to 14.99% of the Company’s
issued share capital to be held in treasury or for cancellation
was granted to the Directors on 30 March 2023. Given
a challenging period for many infrastructure investment
companies, and PINT’s shares trading at a material discount
to NAV, on 31 March 2023 the Board announced its intention
to commence a share buyback programme up to a total
consideration of £10 million.
The Directors considered that the share price at which the
Company’s Shares were trading materially undervalued
PINT’s portfolio and prospects, and in April 2023 begun
buying back shares. During 2023, the Company purchased a
total of 7,385,000 Ordinary Shares of 1p each (nominal value
of £73,850) at a total cost of £5.79 million (at a weighted
average price of £0.78 per share), representing c. 1.5% of the
Company’s issued share capital. All purchased shares are
kept in treasury. As at 31 December 2023, the Company had a
remaining authority to purchase a further 64,567,000 shares;
this authority will expire at the conclusion of the 2024 AGM,
and the Board intends to propose a resolution to renew this
authority at the forthcoming AGM in June 2024.
Dividends
On 21 March 2024, the Board declared a second interim
dividend of 2p per share for the year ended 31 December
2023, payable on 23 April 2024. A first interim dividend of 2p
per Ordinary Share was paid on 27 October 2023.
Financial risk management
Details in relation to the Company’s use of derivative financial
instruments, financial risk management objectives and
policies, including policies for hedging each major type of
forecasted transaction for which hedge accounting is used,
as well as the Company’s exposure to price, credit, liquidity,
or cash flow risk, are set out in Note 23 to the financial
statements.
Management
The Company entered into an Investment Management
Agreement with the Company’s Investment Manager,
Pantheon Ventures (UK), on 13 October 2021. Under this
agreement Pantheon was appointed as the Company’s
Alternative Investment Fund Manager (AIFM), and has been
approved as an AIFM by the FCA.
Pantheon Ventures (UK) is part of the Pantheon Group.
Affiliated Managers Group, Inc. (AMG), alongside senior
members of the Pantheon team, acquired the Pantheon
Group in 2010. The ownership structure, with Pantheon senior
management owning a meaningful share of the business,
provides a framework for long‑term succession and enables
Pantheon management to continue to direct the firm’s
day‑to‑day operations. AMG is a global asset management
company with equity investments in leading boutique
investment management firms.
Under the terms of the Investment Management Agreement,
Pantheon Ventures (UK) is the sole and exclusive
discretionary manager of all the assets of the Company
and to provide certain additional services in connection
with the management and administration of the Company’s
affairs, including monitoring the performance of, and giving
instructions on behalf of the Company to, other service
providers to the Company.
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DIRECTORS’
REPORT
CONTINUED
Management continued
The Investment Manager is entitled to a monthly management
fee at an annual rate of:
i. 1.0% of the part of the Company’s NAV up to and including
£750 million; and
ii. 0.9% of the part of such NAV in excess of £750 million.
The Investment Management Agreement is capable of being
terminated (without penalty to the Company) by either party
giving no less than twelve months’ notice in writing at any
time on or after the fourth anniversary of the admission of
the Ordinary Shares of the Company on the Main Market of
the London Stock Exchange and on the Official List of the
FCA as contemplated by the Company’s Prospectus dated
13 October 2021 (or at the Company’s option, by making a
payment in lieu of such notice).
The Investment Management Agreement is capable of being
terminated by the Company (without penalty to the Company)
immediately if, among other things, the Investment Manager
materially breaches its obligations (and cannot or does not
remedy the breach) or goes into liquidation. The Investment
Manager has the benefit of an indemnity from the Company in
respect of liabilities arising out of the proper performance of
its duties and compliance with instructions given to it by the
Board and an exclusion of liability save to the extent of any
fraud, gross negligence, wilful default, bad faith or knowing
violation of applicable laws. Pantheon Ventures (UK) sources,
evaluates and manages investments on the Company’s
behalf, allocating investments to the Company, in accordance
with Pantheon’s investment allocation policy, that are in line
with the strategy agreed with the Board and the Company’s
investment objective and policy.
Continuing appointment of the Investment
Manager
The Board keeps the performance of the Investment Manager
under continual review, and the MEC carries out an annual
review of the Investment Manager’s performance and the
terms of the Investment Management Agreement. A summary
of that review can be found on page 91. The investment
performance is satisfactory and the Investment Manager is
well placed to continue to manage the assets of the Company
according to the Company’s strategy, therefore, the Board is
of the opinion that Pantheon’s continued appointment remains
in the interests of the Company and its shareholders.
Going concern
The Company’s business activities, together with the factors
likely to affect its future development, performance and
position, including its financial position, are set out in the
strategic report and Investment Manager’s report. The
Directors have made an assessment of going concern, taking
into account both the Company’s financial position at the
balance sheet date and the expected performance of the
Company, using the information available up to the date of
issue of the financial statements.
Total available financing as at 31 December 2023 stood at
£144.4 million, comprising £29.4 million in available cash
balances and £115.0 million through the Company’s RCF,
which matures in March 2027. The Company maintains a
policy to hold liquidity sufficient to cover all future operating
and financial commitments due in the next twelve months.
This includes all forecast operating costs, anticipated
dividend payments, foreign exchange hedge settlements
due (based on mark‑to‑market valuations), and all unfunded
investment commitments which could be called during the
period as detailed in the Cash and liquidity management
section on page 33.
As part of the going concern review, the Directors considered
different downside scenarios and their potential impact on
PINT’s liquidity. The scenarios modelled included varying
degrees of decline in investment valuations and other
key drivers such as: a slower deployment rate; lower than
expected investment returns; higher than expected operating
expenses; and absence of equity capital raises, realisations
and distribution payments. The Company has several ways
in which it could limit or mitigate the impact these possible
developments could have on the balance sheet, including
drawing on the RCF, which includes the provision of additional
liquidity for working capital.
After due consideration of the activities of the Company,
its assets, liabilities, commitments and financial resources,
the Directors concluded that the Company has adequate
resources to continue in operation for at least twelve
months from the approval of the financial statements for the
year ended 31 December 2023. For this reason, the Board
considers it appropriate to continue to adopt the going
concern basis in preparing the financial statements.
Related party transactions
Related party transactions for the period can be found in Note
24 to the financial statements.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
DIRECTORS’
REPORT
CONTINUED
Substantial shareholdings
During 2023, the Company had received notification of the
following disclosable interests in the voting rights of the
Company:
Shareholders
Number of
shares held
% of total
voting rights
Rathbones Investment
Management Ltd 104,038,930 22.01%
Evelyn Partners Limited 47,277,733 10.00%
Quilter PLC 41,171,287 8.72%
Schroders Plc 27,045,000 5.72%
Close Asset Management
Limited 20,870,685 4.42%
These holdings may have changed since notified to the
Company because a notification of change is not required
until shareholders cross a regulatory threshold again. Since
the year end, the Company has been notified of the following
changes:
•
On 18 January 2024, Quilter Plc notified the Company
that it had reduced its shareholding to 34,456,287 shares
(7.28%);
•
On 18 January 2024, Schroders Plc notified the Company
that it had increased its shareholding to 47,728,179 shares
(10.12%); and
•
On 18 March 2024, Rathbones Investment Management Ltd
notified the Company that it decreased its shareholding to
98,365,856 (20.94%).
Greenhouse gas emissions and TCFD
All of PINT’s activities are outsourced to third parties. As
such, the Company does not have any physical assets,
property, employees or operations, nor does it generate any
greenhouse gas or other emissions or consume any energy
reportable under the Companies Act 2006 (strategic report
and Directors’ report) Regulations 2013 or the Companies
(Directors’ report) and Limited Liability Partnerships (energy
and carbon report) Regulations 2018, implementing the UK
Government’s policy on Streamlined Energy and Carbon
Reporting. Whilst PINT is exempt from complying with the
requirements of the Companies Act 2006 to produce a
Non‑Financial and Sustainability Information Statement or
report against the TCFD framework, the Company will soon
release its second annual sustainability report, which will
incorporate more detailed reporting in accordance with the
TCFD recommendations. More details can be found on page
61. Further details of the Investment Manager’s approach to
responsible investment practices and ESG standards can be
found in the strategic report on pages 58 to 62.
Modern Slavery Act
As an investment trust, PINT does not provide goods or
services in the normal course of business, nor does it have
employees, customers or turnover. Consequently, the
Company is not in scope of the Modern Slavery Act (the ‘Act’)
and is therefore not required to make a slavery or human
trafficking statement under the Act. Notwithstanding the fact
that the Company’s own supply chain consists predominantly
of professional advisers and service providers in the financial
services industry, and is considered to present a low risk of
modern slavery, the Company has a zero‑tolerance approach
to modern slavery and has adopted its own Modern Slavery
and Human Trafficking Statement which was approved by the
Board in May 2022 and is reviewed annually.
The MEC also monitors (by self‑assessment) the modern
slavery policies of PINT’s major suppliers. Pantheon’s Modern
Slavery Statement can be found on Pantheon’s website.
Political donations
The Company made no political donations during the year to
31 December 2023. The Company has in place an Anti‑Bribery
and Charitable & Political Donations Policy.
Listing Rule 9.8.4R
The Company confirms that there are no items which require
disclosure under Listing Rule 9.8.4R in respect of the year
ended 31 December 2023.
Annual General Meeting (AGM)
The Company’s AGM will be held on 20 June 2024. The
business to be proposed at the AGM will be set out in a
separate Notice of Meeting which will be published shortly.
Audit information
The Directors who held office at the date of approval of the
Directors’ report confirm that, so far as they are aware, there
is no relevant audit information of which the Company’s
Auditor is unaware; and each Director has taken all steps
that he or she ought to have taken as a Director to make
himself or herself aware of any relevant audit information
and to establish that the Company’s Auditor is aware of that
information.
Approval
The Directors’ report has been approved by the Board.
On behalf of the Board
Vagn Sørensen
Chair
2 April 2024
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable
laws and regulations. Company law requires the Directors to
prepare financial statements for each financial year. Under
that law they have elected to prepare the financial statements
in accordance with applicable law and UK Accounting
Standards (United Kingdom Generally Accepted Accounting
Practice). Under company law the Directors must not approve
the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company
as at the end of each financial year and of the profit or loss of
the Company for that period.
In preparing these financial statements, the Directors are
required to:
•
present a true and fair view of the financial position,
financial performance and cash flows of the Company;
•
select suitable accounting policies in accordance with FRS
102 and then apply them consistently;
•
present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
•
make judgements and estimates that are reasonable and
prudent;
•
state whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements; and
•
prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are also responsible for preparing the strategic
report, the Directors’ report, the Directors’ remuneration
report, the Corporate Governance Statement and the report
of the Audit and Risk Committee in accordance with the
Companies Act 2006 and applicable regulations, including
the requirements of the Listing Rules and the Disclosure
Guidance and Transparency Rules. The Directors have
delegated responsibility to the Investment Manager for the
maintenance and integrity of the Company’s corporate and
financial information included on the Company’s website
(www.pantheoninfrastructure.com). Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
Each of the Directors, whose names are listed on pages 74
and 75, confirms that to the best of his or her knowledge:
•
the financial statements, prepared in accordance with
applicable accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the
Company; and
•
the management report, which is incorporated in the
strategic report and Directors’ report, includes a fair review
of the development and performance of the business and
the position of the Company, together with a description of
the principal risks and uncertainties that it faces.
The UK Corporate Governance Code requires Directors
to ensure that the annual report and financial statements
are fair, balanced and understandable. In order to reach a
conclusion on this matter, the Board has requested that the
Audit and Risk Committee advises on whether it considers
that the annual report and financial statements fulfil these
requirements. The process by which the Audit and Risk
Committee has reached these conclusions is set out in
its report on pages 85 to 89. As a result, the Board has
concluded that the annual report and financial statements for
the year ended 31 December 2023, taken as a whole, are fair,
balanced and understandable and provide the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy.
Signed on behalf of the Board by
Vagn Sørensen
Chair
2 April 2024
DIRECTORS’
RESPONSIBILITY STATEMENT
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PAN T H EON INFRASTRUCTURE PLC
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
FINANCIAL STATEMENTS
Vertical Bridge
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
What’s in this section
Independent Auditor’s report ................................. 107
Income statement .................................................... 113
Statement of changes in equity ..............................114
Balance sheet ............................................................115
Cash flow statement ................................................ 116
Notes to the financial statements ........................... 117
Opinion
We have audited the financial statements of Pantheon Infrastructure Plc
(the ‘Company’) for the year ended 31 December 2023 which comprise
the Income statement, the Statement of changes in equity, the Balance
sheet, the Cash flow statement, and the related Notes 1 to 25 including
a summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and
United Kingdom Accounting Standards including FRS 102 ‘The Financial
Reporting Standard applicable in the UK and Republic of Ireland’ (United
Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
•
give a true and fair view of the Company’s affairs as at
31 December 2023 and of its profit for the year then ended;
•
have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
•
have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to public
interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The non‑audit services prohibited by the FRC’s Ethical Standard were not
provided to the Company and we remain independent of the Company in
conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors’
assessment of the Company’s ability to continue to adopt the going
concern basis of accounting included:
•
confirming our understanding of the Company’s going concern
assessment process and engaging with the Directors and the
Investment Manager to determine if all key factors were considered
in their assessment;
•
inspecting the Directors’ assessment of going concern, including the
Portfolio cash flow forecast for the period to 2 April 2025, which is
at least twelve months from the date the financial statements were
authorised for issue. In preparing the Portfolio cash flow forecast, the
Company has concluded that it is able to continue to meet its ongoing
costs as they fall due;
•
reviewing the factors and assumptions applied to the Portfolio cash
flow forecast and the liquidity assessment of the investment portfolio.
We considered the appropriateness of the methods used to calculate
the Portfolio cash flow forecast and the liquidity assessment and
determined, through testing of the methodology and calculations, that
the methods, inputs and assumptions utilised were appropriate to be
able to make an assessment for the Company;
•
inspecting the Directors’ assessment of the risk of breaching the
loan facility covenants as a result of a reduction in the value of the
Company’s portfolio. We recalculated the Company’s compliance with
loan facility covenants in the scenarios assessed by the Directors who
also performed reverse stress testing in order to identify what factors
would lead to the Company breaching the financial covenants;
•
considering the mitigating factors included in the Portfolio cash flow
forecasts and covenant calculations that are within the control of the
Company; and
•
reviewing the Company’s going concern disclosures included in the
annual report in order to assess that the disclosures were appropriate
and in conformity with the reporting standards.
INDEPENDENT
AUDITOR’S
REPORT
to the members of Pantheon
Infrastructure Plc
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
to the members of Pantheon
Infrastructure Plc
Conclusions relating to going concern continued
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may
cast significant doubt on the Company’s ability to continue as a going concern for the period to 2 April 2025.
In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation
to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company’s ability to continue as a going concern.
Overview of our audit approach
Key audit matters Risk of inaccurate valuation of investments
Materiality Overall materiality of £5.0 million (2022: £4.7 million) which represents 1% of shareholders’ funds
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the Company.
This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the Company and effectiveness
of controls, the potential impact of climate change and changes in the business environment when assessing the level of work to be performed. All audit
work was performed directly by the audit engagement team.
Climate change
Stakeholders are increasingly interested in how climate change will impact the Company. The Company has determined that the most significant
future impacts from climate change on its operations will be from changes in regulations that may adversely affect its underlying portfolio investments.
Its approach to managing climate and other ESG risks as part of managing investment risk is explained on pages 58 to 62 of the strategic report, which
form part of the “Other information,” rather than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted
solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or
otherwise appear to be materially misstated, in line with our responsibilities on “Other information”.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial statements as set out in Note 1
and, in conclusion, that there was no material impact from climate change on the financial statements. We also challenged the Directors’ considerations of
climate change in their assessment of going concern and viability and associated disclosures. Where considerations of climate change were relevant to our
assessment of going concern, these are described above.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to impact a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide
a separate opinion on these matters.
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INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
to the members of Pantheon
Infrastructure Plc
Key audit matters continued
Risk Our response to the risk
Key observations
communicated to the
Audit and Risk Committee
Risk of inaccurate valuation of
investments
Refer to the Audit and Risk Committee
report (page 86); Accounting policies
(page 118); and Note 10 of the financial
statements (page 125).
The investments amounted to
£471.7 million as at 31 December 2023
(2022: £301.4 million). Investments
represent 94% of the net asset value
(NAV) of the Company and consist of
unlisted investments in infrastructure
assets.
The valuation of the assets held in the
investment portfolio is the key driver of
the Company’s net asset value and total
return. Incorrect investment valuation
could have a significant impact on the
return generated for shareholders.
Investment income from the investment
portfolio is recognised as income within
Pantheon Infrastructure Holdings LP
(“PIH”), a wholly‑owned subsidiary
of the Company. As the Company’s
investment in PIH is held at fair value,
the income received by PIH from the
underlying investment portfolio is
reflected as a fair value gain in the
Company’s investment in PIH.
We attribute a higher risk of estimation
uncertainty to a portfolio of this nature
and deem the valuation of unlisted
investments at fair value to be a fraud
and significant audit risk.
We performed the following procedures:
We obtained an understanding of the Company’s processes and controls
surrounding investment valuation by performing walkthroughs to assess the
design and implementation of controls in place and attended the Investment
Manager’s year end valuation committee as an observer.
We obtained the most recent audited financial statements of the fund or
co‑investment vehicle in which the Company’s investment portfolio is held, and
reviewed the Auditor’s opinion to confirm that the underlying investment is held at
fair value in a manner consistent with FRS 102 and that there are no audit opinion
modifications which would affect the fair value of the investments.
We obtained the most recent audited financial statements of the fund or
co‑investment vehicle in which the Company’s investment portfolio is held and
compared the value of the investments to the value of the investment per the
capital statement in the same period, to check the retrospective accuracy of the
capital statements.
We obtained independent confirmation from the General Partner/Manager of
the fund or co‑investment vehicle in which the Company’s investment portfolio
is held of the Company’s capital committed, contributed and fair value as at the
valuation date.
We agreed a sample of calls and distributions to Call and Distribution Notices,
tracing payment and receipt to bank statements.
We reviewed valuation analyses prepared by the Investment Manager and
attended its year end valuation committee to understand the key movements
in the valuation models. With the assistance of our valuation specialists where
relevant, we assessed their appropriateness based on the nature of the asset and
our understanding of the markets in which they operate.
For new investments, we reviewed the closing documents to confirm the
purchase price paid and the Investment Manager’s internal due diligence
documents to confirm the due diligence process has been followed.
For a sample of investments, we engaged our internal valuation specialists to
review the inputs and major assumptions.
The results of our
procedures identified no
material misstatement
in relation to the risk of
inaccurate valuation of
investments.
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INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
to the members of Pantheon
Infrastructure Plc
Our application of materiality
We apply the concept of materiality in planning and performing the audit,
in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in
the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.
We determined materiality for the Company to be £5.0 million (2022:
£4.7 million), which is 1% of shareholders’ funds. We believe that
shareholders’ funds provide us with materiality aligned to the key measure
of the Company’s performance.
During the course of our audit, we reassessed initial materiality and made
no changes to the basis of calculation from our original assessment at the
planning stage.
Performance materiality
The application of materiality at the individual account or balance level.
It is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessments, together with our assessment
of the Company’s overall control environment, our judgement was that
performance materiality was 75% of our planning materiality, namely
£3.8 million (2022: £2.4 million). We set performance materiality at this
percentage due to our understanding of the control environment that
indicates a lower risk of misstatements, both corrected and uncorrected.
Reporting threshold
An amount below which identified misstatements are considered as being
clearly trivial.
We agreed with the Audit and Risk Committee that we would report to
them all uncorrected audit differences in excess of £0.3 million (2022:
£0.2 million), which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted reporting on
qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual
report, other than the financial statements and our Auditor’s report
thereon. The Directors are responsible for the other information contained
within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the
audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the Directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
•
the strategic report and Directors’ reports have been prepared in
accordance with applicable legal requirements.
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INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
to the members of Pantheon
Infrastructure Plc
•
the Directors’ statement on fair, balanced and understandable set out
on page 105;
•
the Board’s confirmation that it has carried out a robust assessment of
the emerging and principal risks set out on page 105;
•
the section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out
on page 87; and
•
the section describing the work of the Audit and Risk Committee set
out on page 85.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set
out on page 105, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend
to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an Auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
Matters on which we are required to report by
exception
In light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or Directors’ report.
We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if, in our
opinion:
•
adequate accounting records have not been kept, or returns adequate
for our audit have not been received from branches not visited by us; or
•
the financial statements and the part of the Directors’ remuneration
report to be audited are not in agreement with the accounting records
and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not
made; or
•
we have not received all the information and explanations we require
for our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern,
longer‑term viability and that part of the Corporate Governance Statement
relating to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our
knowledge obtained during the audit:
•
the Directors’ statement with regard to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 103;
•
the Directors’ explanation as to its assessment of the Company’s
prospects, the period this assessment covers and why the period is
appropriate set out on page 72;
•
the Directors’ statement on whether it has a reasonable expectation
that the Company will be able to continue in operation and meet its
liabilities set out on page 103;
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PAN T H EON INFRASTRUCTURE PLC
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INDEPENDENT
AUDITOR’S
REPORT
CONTINUED
to the members of Pantheon
Infrastructure Plc
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at
h t t p s : / / w w w . f r c . o r g . u k / a u d i t o r s r e s p o n s i b i l i t i e s . This description forms
part of our Auditor’s report.
Other matters we are required to address
Following the recommendation from the Audit and Risk Committee, we
were appointed by the Company on 4 August 2022 to audit the financial
statements for the period ended 31 December 2022 and subsequent
financial periods.
The period of total uninterrupted engagement including previous renewals
and re‑appointments is two years, covering the period from
31 December 2022 to 31 December 2023.
The audit opinion is consistent with the additional report to the Audit and
Risk Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an Auditor’s
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Matthew Price (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
2 April 2024
Explanation as to what extent the audit was
considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non‑compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not
detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the Company and
management.
•
We obtained an understanding of the legal and regulatory frameworks
that are applicable to the Company and determined that the most
significant are United Kingdom Generally Accepted Accounting
Practice, the Companies Act 2006, the Listing Rules, the UK Corporate
Governance Code, the Association of Investment Companies’ Code and
Statement of Recommended Practice, Section 1158 of the Corporation
Tax Act 2010 and The Companies (Miscellaneous Reporting)
Regulations 2018.
•
We understood how the Company is complying with those frameworks
through discussions with the Audit and Risk Committee and the
Company Secretary and a review of Board minutes and the Company’s
documented policies and procedures.
•
We assessed the susceptibility of the Company’s financial statements
to material misstatement, including how fraud might occur, by
considering the key risks impacting the financial statements. We
identified a fraud risk with respect to management override in relation
to the valuation of investments. Further discussion of our approach is
set out in the section on the key audit matters above.
•
Based on this understanding we designed our audit procedures
to identify non‑compliance with such laws and regulations. Our
procedures involved a review of the Company Secretary’s reporting
to the Directors with respect to the application of the documented
policies and procedures and review of the financial statements to
confirm compliance with the reporting requirements of the Company.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
INCOME
STATEMENT
For the year ended 31 December 2023
For the year ended 31 December 2023 9 September 2021 to 31 December 2022
Note
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Gain on investments at fair value
through profit or loss
1
10 — 44,298 44,298 — 19,592 19,592
Gains/(losses) on financial
instruments at fair value through
profit or loss 13 — 12,081 12,081 — (8,520) (8,520)
Foreign exchange gains on cash and
non‑portfolio assets — 77 77 — 5 5
Investment management fees 2 (4,939) — (4,939) (3,194) — (3,194)
Other expenses 3 (1,702) (157) (1,859) (1,360) (555) (1,915)
(Loss)/profit before financing and
taxation (6,641) 56,299 49,658 (4,554) 10,522 5,968
Finance income 5 3,109 — 3,109 2,096 — 2,096
Interest payable and similar expenses 6 (1,484) — (1,484) (36) — (36)
(Loss)/profit before taxation (5,016) 56,299 51,283 (2,494) 10,522 8,028
Taxation 7 (1,697) — (1,697) — — —
(Loss)/profit for the period,
being total comprehensive
income for the period (6,713) 56,299 49,586 (2,494) 10,522 8,028
Earnings per share –
basic and diluted 8 (1.40)p 11.79p 10.39p (0.58)p 2.45p 1.87p
1. Includes foreign exchange movements on investments.
The Company does not have any income or expense that is not included in the return for the year, therefore the return for the year is also the total
comprehensive income for the year. The supplementary revenue and capital columns are prepared under guidance published in the Statement of
Recommended Practice (SORP) issued by the Association of Investment Companies (AIC). The total column of the statement represents the Company’s
statement of total comprehensive income prepared in accordance with FRS 102.
All revenue and capital items in the above statement relate to continuing operations.
The Notes on pages 117 to 135 form part of these financial statements.
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STATEMENT
OF CHANGES
INEQUITY
For the year ended 31 December 2023
Movement for the year ended
31 December 2023 Note
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
1
£’000
Capital
reserve
1
£’000
Revenue
reserve
1
£’000
Total
£’000
Balance at 1 January 2023 4,800 79,449 382,484 10,522 (2,494) 474,761
Share issue costs — (187) — — — (187)
Ordinary Shares bought back and held
in treasury 16 — — (5,789) — — (5,789)
Share buyback costs — — (35) — — (35)
Dividends paid 9 — — (14,303) — — (14,303)
Profit/(loss) for the period — — — 56,299 (6,713) 49,586
Closing equity shareholders' funds 4,800 79,262 362,357 66,821 (9,207) 504,033
Movement for the period
9 September 2021 to 31 December 2022
Balance at 9 September 2021 — — — — — —
Share issue costs — (9,267) — — — (9,267)
Ordinary Shares issued 16 4,800 395,200 — — — 400,000
Subscription Shares issued
(subsequently converted to Ordinary
Shares) 16 — 80,800 — — — 80,800
Cancellation of share premium — (387,284) 387,28 4 — — —
Dividends paid 9 — — (4,800) — — (4,800)
Profit/(loss) for the period — — — 10,522 (2,494) 8,028
Closing equity shareholders’ funds 4,800 79,449 382,484 10,522 (2,494) 474,761
1. The capital redemption reserve, capital reserve and revenue reserve are all the Company’s distributable reserves. The capital redemption reserve arose from the cancellation of the Company’s share
premium account in 2022 and is a distributable reserve. The Company is also able to distribute realised gains from the capital reserve. As at 31 December 2023, there were £nil reserves available for
distribution from this reserve.
The Notes on pages 117 to 135 form part of these financial statements.
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BALANCE
SHEET
As at 31 December 2023
Note
31 December
2023
£’000
31 December
2022
£’000
Fixed assets
Investments at fair value 10 471,668 301,382
Debtors 11 609 740
Current assets
Derivative financial instruments 13 4,447 —
Debtors 11 817 959
Cash and cash equivalents 12 29,361 182,937
34,625 183,896
Creditors: amounts falling due within one year
Derivative financial instruments 13 — (1,983)
Other creditors 14 (2,309) (2,737)
(2,309) (4,720)
Net current assets 32,316 179,176
Total assets less current liabilities 504,593 481,298
Creditors: amounts falling due after one year
Derivative financial instruments 13 (560) (6,537)
Net assets 504,033 474,761
Capital and reserves
Called‑up share capital 16 4,800 4,800
Share premium 17 79,262 79,449
Capital redemption reserve 17 362,357 382,484
Capital reserve 17 66,821 10,522
Revenue reserve 17 (9,207) (2,494)
Total equity shareholders' funds 504,033 474,761
NAV per Ordinary Share 18 106.6p 98.9p
The financial statements were approved by the Board of Pantheon Infrastructure Plc on 2 April 2024 and were authorised for issue by:
Vagn Sørensen
Chair
Company Number: 13611678
The Notes on pages 117 to 135 form part of these financial statements.
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CASH FLOW
STATEMENT
For the year ended 31 December 2023
31 December
2023
£’000
31 December
2022
£’000
Cash flow from operating activities
Investment management fees paid (4,810) (1,994)
Operating expenses paid (1,403) (1,581)
Other cash payments (259) (110)
Net cash outflow from operating activities (6,472) (3,685)
Cash flow from investing activities
Purchase of investments (130,300) (283,031)
Return of capital 2,615 1,241
Derivative financial instruments loss on settlements (326) —
Net cash outflow from investing activities (128,011) (281,790)
Cash flow from financing activities
Share issue proceeds — 480,800
Share issue costs (187) (9,267)
Share buyback costs (5,619) —
Dividends paid (14,303) (4,800)
Loan facility arrangement fee (1,889) —
Loan facility commitment fee (620) —
Finance costs (2) (1)
Finance income 3,450 1,675
Net cash (outflow)/inflow from financing activities (19,170) 468,407
(Decrease)/increase in cash and cash equivalents in the period (153,653) 182,932
Cash and cash equivalents at the beginning of the period 182,937 —
Foreign exchange gains 77 5
Cash and cash equivalents at the end of the period 29,361 182,937
The Notes on pages 117 to 135 form part of these financial statements.
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NOTES TO THE
FINANCIAL
STATEMENTS
1. Accounting policies
Pantheon Infrastructure Plc (the ‘Company’) is a listed closed‑ended
investment company incorporated in England and Wales on
9 September 2021, with registered “company number” 13611678.
The Company began trading on 15 November 2021 when the Company’s
Ordinary Shares were admitted to trading on the London Stock Exchange.
The registered office of the Company is Link Company Matters Limited,
6th Floor, 65 Gresham Street, London, EC2V 7NQ.
A. Basis of preparation
The Company’s financial statements have been prepared in compliance
with FRS 102 as it applies to the financial statements of the Company for
the year ended 31 December 2023. They have been prepared under the
historical cost basis of accounting, modified to include the revaluation
of certain assets at fair value. They have also been prepared on the
assumption that approval as an investment trust will continue to be
granted. The Company’s audited financial statements are presented in
GBP and all values are rounded to the nearest thousand pounds (£’000)
except when indicated otherwise.
The financial statements have been prepared in accordance with the
SORP for the financial statements of investment trust companies and
venture capital trusts issued by the AIC in July 2022.
The financial statements comprise the results of the Company only.
The Company has control over two subsidiaries, further details of which
are given in Note 20. Where the Company owns a subsidiary that is
held as part of the investment portfolio, the Company excludes it from
consolidation. As the value of such subsidiaries to the Company is through
fair value rather than as the medium through which the group carries out
business, they are measured at fair value in accordance with 9.9C(a) of
FRS 102.
The Company was incorporated on 9 September 2021 and a set of
accounts to 31 December 2022 was filed, therefore the period from
9 September 2021 to 31 December 2022 has been presented as the
comparative. Thus the comparative information may not present a
representative comparative.
B. Going concern
The Directors have made an assessment of going concern, taking into
account the Company’s current performance and financial position as at
31 December 2023.
In addition, the Directors have assessed the outlook, which considers
the ongoing geopolitical uncertainties including disruption to global
supply chains, increases in the cost of living, persistent inflation,
interest rate rises and the impact of climate change on the Company’s
portfolio using the information available up to the date of issue of the
financial statements. The Directors have also considered the impact of
climate change on PINT's portfolio and have come to the conclusion that
there is no significant negative impact on the Company as a result of
climate change, during the going concern period.
In reaching this conclusion, the Board considered budgeted and projected
results of the business, including projected cash flows, various downside
modelling scenarios and the risks that could impact the Company’s
liquidity.
Having performed their assessment, the Directors considered it
appropriate to prepare the financial statements of the Company on a
going concern basis. The Company has sufficient financial resources and
liquidity, is well placed to manage business risks in the current economic
environment, and can continue operations for a period of at least twelve
months from the date of issue of these financial statements.
C. Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being investment in infrastructure to generate
investment returns while preserving capital. The financial information
used by the Directors and Investment Manager to allocate resources
and manage the Company presents the business as a single segment
comprising a diversified portfolio of infrastructure investments.
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
1. Accounting policies continued
D. Investments
The Company’s underlying assets comprise unlisted investments,
the majority of which are held through its subsidiary, Pantheon
Infrastructure Holdings LP (PIH LP) with one investment held directly.
While the Company operates a robust and consistent valuation process,
there is significant estimation uncertainty in the underlying asset
valuations which are estimated at a point in time. Accordingly, while
relevant information relating to but received after the measurement date is
considered, the Directors will only consider an adjustment to the financial
statements if it were to have a significant impact and is indicative of
conditions present at the measurement date.
The Company has fully adopted sections 11 and 12 of FRS 102. All
investments held by the Company are classified as ‘fair value through
profit or loss’. The Company’s business is investing in infrastructure assets
with a view to profiting from their total return in the form of interest,
dividends or increases in fair value. The investments are recognised at fair
value on initial recognition represented by the cost of acquisition and the
Company manages and evaluates the performance of its investments on a
fair value basis.
Upon initial recognition, investments held by the Company are classified
‘at fair value through profit or loss’. All gains and losses are allocated to
the capital column within the Income statement as ‘Gains on investments
held at fair value through profit or loss’. When a purchase or sale is made
under a contract, the terms of which require delivery within the time
frame of the relevant market, the investments concerned are recognised
or derecognised on the trade date. Subsequent to initial recognition,
investments are valued at fair value through profit or loss. The fair values
for the Company’s investments are established by the Directors after
discussion with the Investment Manager using valuation techniques in
accordance with the International Private Equity and Venture Capital
(IPEV) guidelines. Valuations are based on periodic valuations provided
by the Sponsors of the investments and recorded up to the measurement
date. Such valuations are necessarily dependent upon the reasonableness
of the valuations by the Sponsor of the underlying assets. In the absence
of contrary information the values are assumed to be reliable.
The Sponsor is usually the best placed party to determine the appropriate
valuation. The annual and quarterly reports received from the Sponsors
are reviewed by the Investment Manager to ensure consistency and
appropriateness of approach to reported valuations.
The basis of valuation for infrastructure assets provided by the Sponsors
depends on the nature of the underlying assets and will typically involve
a fair value approach in line with recognised accounting standards and
industry best practice guidelines such as IPEV. Infrastructure assets often
display particular characteristics which affect the valuation approach,
tending to result in a higher prevalence of discounted cash flows in the
valuation, where the fair value is estimated by deriving the present value
of the expected cash flows generated by the investment through the use
of reasonable assumptions such as appropriate discount rate(s) to reflect
the inherent risk of the asset(s) forming the investment.
The discounted cash flow basis requires assumptions to be made
regarding future cash flows, terminal value and the discount rate to be
applied to these cash flows. There is also consideration given to the
impact of wider megatrends such as the transition to a lower‑carbon
economy and climate change.
The fair value will generally reflect the latest valuations available from
the Sponsor which may not coincide with the Company’s reporting date.
In such cases the Investment Manager performs a roll forward from the
latest available valuation to the relevant reporting date. The roll forward
process takes consideration of the following factors:
i. transactions and foreign exchange movements in the intervening
period; and
ii. adjustments for expected performance of the investment in the
intervening period.
The process may also include, but not be limited to, in consultation with
the Sponsor, changes in multiples/discount rates, asset fundamentals (for
instance operating performance) and the macroeconomic environment.
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
1. Accounting policies continued
D. Investments continued
On an annual basis the Investment Manager receives annual audited
financial statements from the Sponsors of the asset. The Investment
Manager utilises the audited accounts to gain comfort that the underlying
infrastructure asset is fair valued in line with recognised accounting
standards and audited by a recognised auditor. This is in addition
to the analysis performed by the Investment Manager to determine
the reasonableness of the valuation and that it is appropriate to the
investment and performance thereof.
If the Sponsor does not provide audited financial statements, to the
extent that the Board of the Company or the Investment Manager deem it
appropriate, and it is possible to do in conjunction with the Sponsor, the
valuation of the underlying infrastructure asset is independently verified.
The scope of this verification is determined on a case‑by‑case basis and,
dependent on the asset, could include an independent valuation report
from a valuation provider engaged by the Investment Manager. The
Investment Manager then analyses the independent valuation report to
determine the reasonableness of the valuation and that it is appropriate
to the investment and performance thereof before presenting to the
Investment Manager’s Valuation Committee and the Board for approval.
E. Financial instruments
The Company makes investments and has commitments in currencies
other than GBP, its reporting currency, and accordingly, a significant
proportion of its investments and cash balances are in currencies
other than GBP. The Company uses forward foreign currency exchange
contracts to hedge foreign exchange risks associated with its underlying
investment activities. The contracts entered into by the Company
are denominated in the currency of the geographic area in which the
Company has significant exposure against its reporting currency.
Forward foreign currency exchange contracts are initially recognised and
subsequently measured at fair value.
The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data is available to measure fair
value, maximising the use of relevant observable inputs and minimising
the use of unobservable inputs significant to the fair value measurement
as a whole. The Company has elected not to apply hedge accounting and
therefore changes in the fair value of forward foreign currency exchange
contracts are recognised within the capital column of the Income
statement in the period in which they occur.
F. Income
Distributions receivable from investments are recognised on the
appropriate ex‑dividend date. Where no ex‑dividend date is quoted,
distributions are recognised when the Company’s right to receive payment
is established. Overseas dividends are gross of the appropriate rate of
withholding tax, with any withholding tax suffered being accounted for
separately.
Other income is accounted for on an accruals basis.
G. Expenses
All expenses are accounted for on an accruals basis. Expenses, including
investment management fees, are charged through the revenue account,
except expenses which are incidental to the acquisition or disposal of an
investment. These are treated as capital costs, separately identified, and
charged to the capital account of the Income statement.
H. Finance income
Finance income comprises interest received on funds invested into
deposit accounts. Finance income is accounted for on an accruals basis.
I. Finance costs
Finance costs consist of interest and other costs that the Company incurs
in connection with bank and other borrowings. Finance costs also include
the amortisation charge of arrangement fees or other costs associated
with the set‑up of borrowings; these are amortised over the period of
the loan. All other finance costs are expensed in the period in which
they occur.
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
1. Accounting policies continued
J. Taxation
Corporation tax is recognised in profit or loss except to the extent
that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Deferred tax is provided on temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The amount of deferred tax that is
provided is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates enacted or
substantially enacted at the period end date.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Company meets (and
intends to continue for the foreseeable future to meet) the conditions for
approval as an investment trust company, pursuant to sections 1158 and
1159 of the CTA.
Deferred tax assets are only recognised if it is considered more likely than
not that there will be suitable profits from which the future reversal of
timing differences can be deducted.
K. Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call
with banks and other short‑term highly liquid investments with original
maturities of three months or less at the date of placement, free of any
encumbrances, which are readily convertible into known amounts of cash
and subject to insignificant risk of changes in value.
L. Debtors
Trade and other debtors are initially recognised at transaction value.
Subsequent measurement is at the initially recognised value less any cash
payments from the debtor, and less provision or write off for doubtful
debts. A provision is made where there is objective evidence that the
Company will not be able to recover balances in full. Any adjustment is
recognised in profit or loss as an impairment gain or loss.
M. Creditors
Trade and other creditors are initially recognised at fair value and
subsequently held at amortised cost.
N. Interest-bearing loans and liabilities
All bank borrowings are initially recognised at transaction value net of
attributable transaction costs. After initial recognition, all bank borrowings
are measured at amortised cost using the effective interest method.
O. Dividends payable to shareholders
Equity dividends are recognised when they become legally payable.
Interim equity dividends are recognised when paid. Final equity
dividends are recognised when approved by shareholders at an Annual
General Meeting.
P. Share premium
The share premium account represents the accumulated premium paid
for shares issued above their nominal value less issue expenses. This is
a reserve forming part of the non‑distributable reserves. The following
items are taken to this reserve:
•
costs associated with the issue of equity; and
•
premium on the issue of shares.
Q. Capital redemption reserve
The capital redemption reserve represents cancelled share premium
less dividends paid from this reserve. This is a distributable reserve.
This reserve also includes the cost of acquiring the Company’s Ordinary
Shares if the Company is in a position to buy back shares.
R. Capital reserve
The following are accounted for in this reserve:
•
gains and losses on the realisation of investments;
•
unrealised gains and losses on investments;
•
gains and losses on foreign exchange forward contracts;
•
realised foreign exchange differences of a capital nature; and
•
expenses, together with related taxation effect, charged to this reserve
in accordance with the above policies.
The Company is able to distribute realised gains from this reserve.
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
1. Accounting policies continued
S. Revenue reserve
The revenue reserve represents the surplus of accumulated profits from the revenue column of the Income statement and is distributable.
T. Foreign exchange
The functional and presentational currency of the Company is GBP because it is the primary currency in the economic environment in which the Company
operates and, as a UK listed company, GBP is also its capital raising currency. Transactions denominated in foreign currencies are recorded in the local
currency at actual foreign exchange rates as at the date of transaction. Monetary assets and liabilities denominated in foreign currencies at the period
end are reported at the rates of foreign exchange prevailing at the period end. Any gain or loss arising from a change in exchange rates subsequent to
the date of the transaction is included as a foreign exchange gain or loss in the revenue or capital column of the Income statement depending on whether
the gain or loss is of a capital or revenue nature. For non‑monetary assets these are recognised as fair value adjustments.
U. Significant judgements, estimates and assumptions
The preparation of financial statements requires the Company and Investment Manager to make judgements, estimates and assumptions that affect
the reported amounts of investments at fair value at the financial reporting date and the reported fair value movements during the reporting period.
Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the
investments at fair value in future years. Details of how the fair values of infrastructure assets are estimated and any associated judgements applied are
provided in Note 22.
2. Investment management fees
Year ended 31 December 2023 Period ended 31 December 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment management fees 4,939 — 4,939 3,194 — 3,194
4,939 — 4,939 3,194 — 3,194
The Investment Manager is entitled to a quarterly management fee at an annual rate of:
•
1.0% of the part of the Company’s net asset value up to and including £750 million; and
•
0.9% of the part of such net asset value in excess of £750 million.
As at 31 December 2023, £1,329,000 (31 December 2022: £1,200,000) was owed for investment management fees.
The Investment Manager does not charge a performance fee.
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
3. Other expenses
Year ended 31 December 2023 Period ended 31 December 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Secretarial and accountancy services 215 — 215 201 — 201
Depositary services 77 — 77 74 — 74
Fees payable to the Company's Auditor for audit‑
related assurance services
– Initial accounts — — — 25 — 25
– Annual financial statements 150 — 150 135 — 135
Fees payable to the Company's Auditor for non‑audit
related assurance services
1
35 — 35 35 — 35
Directors' remuneration (see Note 4) 183 — 183 220 — 220
Employer's National Insurance 21 — 21 24 — 24
Legal and professional fees 102 151 253 186 534 720
VAT irrecoverable 367 — 367 9 — 9
Other fees 552 6 558 451 21 472
1,702 157 1,859 1,360 555 1,915
1. The non‑audit fees payable to the Auditor relate to the review of the Company’s June 2023 half‑yearly report.
4. Directors’ remuneration
A breakdown of Directors’ emoluments is provided in the Directors’ remuneration report on pages 96 to 100.
5. Finance income
Year ended
31 December
2023
£’000
Period ended
31 December
2022
£’000
Finance income 82 73
Bank interest 3,027 2,023
Total 3,109 2,096
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
6. Interest payable and similar expenses
Year ended
31 December
2023
£’000
Period ended
31 December
2022
£’000
Commitment fees payable on borrowings 913 22
Amortisation of loan facility arrangement fee 569 13
Bank interest expense 2 1
1,484 36
7. Taxation
Year ended 31 December 2023 Period ended 31 December 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Withholding tax deducted from investment distributions 1,697 — 1,697 — — —
Tax charge from investments
The tax charge for the year differs from the standard rate of corporation tax in the UK of 19% to 31 March 2023, rising to 25% from 1 April 2023, giving a
weighted average for the year of 23.5% (31 December 2022: 19%). The differences are explained below:
Year ended 31 December 2023 Period ended 31 December 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Net return before tax (5,016) 56,299 51,283 (2,494) 10,522 8,028
Tax at UK corporation tax rate at 23.5% (2022: 19%) (1,179) 13,230 12,051 (474) 1,999 1,525
Non‑taxable investment, derivative and currency gains — (13,230) (13,230) — (1,999) (1,999)
Carry forward management expenses 1,179 — 1,179 474 — 474
Withholding tax deducted from investment distributions 1,697 — 1,697 — — —
1,697 — 1,697 — — —
Factors that may affect future tax charges
The Company is an investment trust and is therefore not subject to tax on capital gains. Deferred tax is not provided on capital gains and losses arising on
the revaluation or disposal of investments because the Company meets (and intends to meet for the foreseeable future) the conditions for approval as an
investment trust. No deferred tax asset has been recognised in respect of excess management expenses and expenses in excess of taxable income as
they will only be recoverable to the extent that there is sufficient future taxable revenue.
As at 31 December 2023, excess management expenses are estimated to be in excess of £8.22 million (2022: £3.05 million).
At 31 December 2023, the Company had no unprovided deferred tax liabilities.
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
8. Earnings per share
Earnings per share (EPS) are calculated by dividing profit for the year
attributable to Ordinary Shareholders of the Company by the weighted
average number of Ordinary Shares in issue during the period. As there
are no dilutive instruments outstanding, both basic and diluted earnings
per share are shown below:
Year ended
31 December 2023 Revenue Capital Total
Earnings for the year
to 31 December 2023
(£'000) (6,713) 56,299 49,586
Weighted average
Ordinary Shares
(number) 477,411,877
Basic and diluted
earnings per share (1.40)p 11.79p 10.39p
Period 9 September 2021
to 31 December 2022 Revenue Capital Total
Earnings for the period
(£’000) (2,494) 10,522 8,028
Weighted average
Ordinary Shares
(number)
1
428,272,575
Basic and diluted
earnings per share
(0.58)p 2.45p 1.87p
There were no meaningful shareholders or corporate activity
between incorporation of the Company on 9 September 2021 and
16 November 2021, the IPO date, and therefore this period has not been
included for the purpose of calculating the weighted average number
of shares.
9. Dividends paid
Amounts recognised as distributions to equity holders in the year:
Year ended
31 December
2023
£’000
Period ended
31 December
2022
£’000
Second interim dividend for the period
ended 31 December 2022 of 1p (2022: nil)
per Ordinary Share 4,800 —
First interim dividend for the year ended
31 December 2023 of 2p (2022: 1p) per
Ordinary Share 9,503 4,800
14,303 4,800
On 21 March 2024 the Company declared a second interim dividend of 2p
per Ordinary Share, which will be paid on 23 April 2024.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
10. Investments
31 December
2023
£’000
31 December
2022
£’000
Cost brought forward 281,790 —
Opening unrealised appreciation on
investments held
– Unlisted investments 19,592 —
– Listed Investments — —
Valuation of investments brought forward 301,382 —
Movement in period:
Acquisitions at cost 128,603 281,790
Capital distributions – proceeds (2,615) —
Appreciation on investments held 44,298 19,592
Valuation of investments at period end 471,668 301,382
Cost at year end 407,778 281,790
Closing unrealised appreciation on
investments held
– Unlisted investments 63,890 19,592
– Listed investments — —
Valuation of investments at period end 471,668 301,382
11. Debtors
31 December
2023
£’000
31 December
2022
£’000
Other debtors – non‑current
1
609 740
Other debtors – current 698 486
Prepayments and accrued income 119 473
1,426 1,699
1. Relates to loan arrangement fees paid up front which are to be released to the Income
statement until the loan maturity date of 18 December 2025.
12. Cash and cash equivalents
31 December
2023
£’000
31 December
2022
£’000
Cash 11,649 26,670
Cash equivalents 17,712 156,267
29,361 182,937
Cash equivalents of £17,712,000 were held in a money market fund at
31 December 2023 (31 December 2022: £156,267,000).
13. Derivative financial instruments
Year ended
31 December
2023
£’000
Period ended
31 December
2022
£’000
At the beginning of the period (8,520) —
Unrealised gains/(losses) on derivative
financial instruments 12,407 (8,520)
At the end of the period 3,887 (8,520)
Realised loss on settlement of derivative
financial instruments (326) —
Total gain/(losses) on derivative financial
instruments at fair value through profit
or loss 12,081 (8,520)
The Company uses forward foreign exchange contracts to minimise
the effect of fluctuations in the value of the investment portfolio from
movements in exchange rates.
As at 31 December 2023, there were 20 contracts due to expire in
the next twelve months with a valuation of £4,447,000 (31 December
2022: three contracts valued at a liability of £1,983,000). The remaining
contracts due to expire after the twelve months following the period end
were valued as a liability of £560,000 (31 December 2022: £6,537,000
liability).
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
13. Derivative financial instruments continued
The fair value of these contracts is recorded in the Balance sheet.
No contracts are designated as hedging instruments and consequently
all changes in fair value are taken through profit or loss.
As at 31 December 2023, the notional amount of the forward foreign
exchange contracts held by the Company was £340.3 million
(31 December 2022: £278.9 million).
14. Other creditors
31 December
2023
£’000
31 December
2022
£’000
Investment management fees payable 1,329 1,200
Other creditors and accruals 980 1,537
2,309 2,737
15. Interest‑bearing loans and borrowings
31 December
2023
£’000
31 December
2022
£’000
Interest‑bearing loans and borrowings — —
Loan arrangement fee brought forward 1,087 —
Loan arrangement fee incurred in the
period
788 1,100
Loan arrangement fee amortised for the
period
(569) (13)
Loan arrangement fee carried forward 1,306 1,087
Total credit facility payable — —
The Company entered into a £62.5 million RCF with Lloyds Bank Corporate
Markets in December 2022. In June 2023, this was increased by £52.5
million, bringing the RCF total to £115 million. As part of the increase, the
Company sought to diversify the lender group through the introduction of
The Royal Bank of Scotland International Limited alongside Lloyds Bank
Corporate Markets.
The RCF is denominated in GBP, with the option to be utilised in other
major currencies. The rate of interest is the relevant currency benchmark
plus an initial margin of 2.85% per annum, reducing to 2.65% once certain
expansion thresholds have been met. A commitment fee of 1.00% per
annum is payable on undrawn amounts, and the tenor of the RCF as at
31 December 2023 was three years from December 2022. The facility is
secured against the assets held in the Company’s subsidiary, Pantheon
Infrastructure Holdings LP.
As at 31 December 2023 the RCF was undrawn.
Borrowing costs associated with the RCF are shown as interest payable
and similar expenses in Note 6 to these financial statements.
The loan arrangement fee of £1,306,000 carried forward at 31 December
2023 (2022: £1,087,000) is included within Debtors, Note 11 to these
financial statements.
The debt facility includes loan to value covenants. The Company has
complied with all covenants throughout the financial period.
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
16. Called‑up share capital
31 December 2023 31 December 2022
Allotted, called up and fully paid: Shares £’000 Shares £’000
Ordinary Shares of £0.01
Opening balance 480,000,000 4,800 — —
Ordinary Shares issued in the period — — 400,000,000 4,000
Conversion of Subscription Shares in the period — — 80,000,000 800
Closing balance 480,000,000 4,800 480,000,000 4,800
Subscription Shares of £0.01
Opening balance — — — —
Subscription Shares issued in the period — — 80,000,000 800
Conversion of Subscription Shares in the period — — (80,000,000) (800)
Closing balance — — — —
Treasury shares
Opening balance — — — —
Shares bought back in the year (7,385,000) (74) — —
Closing balance (7,385,000) (74) — —
Total Ordinary Share capital excluding treasury shares 472,615,000 4,726 480,000,000 4,800
During the year to 31 December 2023, 7,385,000 Ordinary Shares were bought back in the market, and are held in treasury (31 December 2022: nil) at a
total cost, including stamp duty, of £5,824,000.
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
17. Reserves
Year ended 31 December 2023
Share
premium
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
£’000
Opening balance 79,449 382,484 10,522 (2,494) 469,961
Ordinary Shares bought back and held in treasury — (5,824) — — (5,824)
Share issue costs (187) — — — (187)
Gains on financial instruments at fair value through profit or loss — — 12,081 — 12,081
Gains on investments at fair value through profit or loss — — 44,298 — 44,298
Foreign exchange differences on cash and non‑portfolio assets — — 77 — 77
Legal and professional expenses charged to capital — — (151) — (151)
Other fees — — (6) (6)
Revenue loss for the period — — — (6,713) (6,713)
Dividends in the period — (14,303) — — (14,303)
Closing balance 79,262 362,357 66,821 (9,207) 499,233
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
17. Reserves continued
Period ended 31 December 2022
Share
premium
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
£’000
Opening balance — — — — —
Ordinary Shares issued 395,200 — — — 395,200
Subscription Shares issued (subsequently converted to
Ordinary Shares)
80,800 — — — 80,800
Share issue costs (9,267) — — — (9,267)
Cancellation of share premium (387,284) 387,284 — — —
Losses on derivative financial instruments at fair value
through profit or loss — — (8,520) — (8,520)
Gains on investments at fair value through profit or loss — — 19,592 — 19,592
Foreign exchange gains on cash and cash equivalents — — 5 — 5
Legal and professional expenses charged to capital — — (534) — (534)
Other fees — — (21) — (21)
Loss for the period — — — (2,494) (2,494)
Interim dividend paid — (4,800) — — (4,800)
Closing balance 79,449 382,484 10,522 (2,494) 469,961
The Company is able to distribute realised gains from the capital reserve. As at 31 December 2023 there were £nil reserves available for distribution
from this reserve (31 December 2022: £nil).
18. Net asset value per share
NAV per share is calculated by dividing net assets in the Balance sheet attributable to ordinary equity holders of the Company by the number of Ordinary
Shares in issue less shares held in treasury at the end of the period. As there are no dilutive instruments outstanding, both basic and diluted NAV per
share are shown below:
31 December
2023
31 December
2022
Net assets attributable (£’000) 504,033 474,761
Ordinary Shares in issue excluding shares held in treasury 472,615,000 480,000,000
NAV per Ordinary Share 106.6p 98.9p
129
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
The General Partner for PIH LP is PIH GP. PIH GP was incorporated on
5 November 2021 with a registered address in the State of Delaware,
National Registered Agents, Inc., 209 Orange Street, Wilmington,
Delaware, 19801, and is wholly owned by the Company.
PIH GP is immaterial, it is therefore excluded from consolidation.
21. Contingencies, guarantees and financial
commitments
At 31 December 2023 there were capital commitments outstanding
of £15.7 million in respect of investments in infrastructure assets
(2022: £57.9 million). These commitments will be funded using the
Company’s financial resources.
The Company expects 100% of the capital commitments outstanding to be
called within the next twelve months.
22. Fair value
Fair value hierarchy
Financial assets are carried in the Balance sheet at their fair value or
approximation of fair value. The fair value is the amount at which the asset
could be sold in an orderly transaction between market participants, at the
measurement date, other than a forced liquidation sale.
The Company measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in making the
measurements. Categorisation within the hierarchy has been determined
on the basis of the lowest level input that is significant to the fair value
measurement of the relevant assets as follows:
Level 1: Quoted (unadjusted) market prices in active markets for identical
assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that
is significant to the fair value measurement is directly or indirectly
observable.
Level 3: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
19. Reconciliation of loss before financing costs and
taxation to net cash flows from operating activities
Year to
31 December
2023
£’000
9 September
2021 to
31 December
2022
£’000
Profit before financing costs and taxation 49,658 5,968
Gains on investments (44,298) (19,592)
Foreign exchange gains on cash and
borrowings (77) (5)
Decrease/(increase) in operating debtors 122 (182)
Increase in operating creditors 204 1,606
(Gains)/losses on financial instruments
at fair value through profit or loss (12,081) 8,520
Net cash flows used in operating
activities (6,472) (3,685)
20. Subsidiaries
The Company has two wholly‑owned subsidiaries. The Company has
ownership and control over these two entities and as such they are
deemed to be subsidiaries by the Board.
Pantheon Infrastructure Holdings LP (PIH LP) was incorporated on
5 November 2021 with a registered address in the State of Delaware,
National Registered Agents, Inc., 209 Orange Street, Wilmington,
Delaware, 19801, and is wholly owned by the Company.
The Company holds an investment in PIH LP. In accordance with FRS 102,
the Company is exempted from the requirement to consolidate PIH
LP on the grounds that its subsidiary is held exclusively with a view to
subsequent resale as it is considered part of an investment portfolio.
PIH LP holds a portfolio of investments that are measured at fair value.
The Company holds a 99.9% investment in PIH LP, with the remaining
holding being held by Pantheon Infrastructure Holdings GP LLC (PIH GP).
NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
130
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
22. Fair value continued
Fair value hierarchy continued
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred
between levels in the hierarchy by reassessing categorisation at the end of each reporting period.
Financial assets and liabilities at fair value through profit or loss at31December2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Investments — — 471,668 471,668
Derivatives – financial instruments — 3,887 — 3,887
— 3,887 471,668 475,555
Financial assets and liabilities at fair value through profit or loss at31December2022
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Investments — — 301,382 301,382
Derivatives – financial instruments — (8,520) — (8,520)
— (8,520) 301,382 292,862
The fair value of these investments and derivatives – financial instruments is recorded in the Balance sheet as at the year end.
There have been no transfers between Level 1 and Level 2 during the year, nor have there been any transfers between Level 2 and Level 3.
The carrying amount of all assets and liabilities, detailed within the Balance sheet, is considered to be the same as their fair value.
The majority of the assets held within Level 3 are valued on a discounted cash flow basis, hence, the valuations are sensitive to the discount rate
assumed for each asset. The assets are held through the Company's subsidiary, PIH LP, with one investment held directly. Other significant unobservable
inputs include the inflation rate assumption and the interest rate assumption used to project the future cash flows and the forecast cash flows
themselves. Increasing the discount rate used in the valuation of each asset by 0.5% would reduce the value of the Portfolio by £4.2 million (31 December
2022: £10.5 million). Decreasing the discount rate used in the valuation of each asset by 0.5% would increase the value of the Portfolio by £4.6 million (31
December 2022: £11.2 million). The WADR of the Portfolio at 31 December 2023 was 13.6% (31 December 2022: 14.2%).
The majority of assets held within Level 3 have revenues that are linked, partially linked or in some way correlated to inflation. The impact of increasing
the inflation rate assumption by 0.5% would increase the value of the Portfolio by £2.4 million (31 December 2022: £3.7 million). Decreasing the inflation
rate assumption used in the valuation of each asset by 0.5% would decrease the value of the Portfolio by £2.2 million (31 December 2022: £2.6 million).
131
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
22. Fair value continued
The valuations are sensitive to changes in interest rates. These comprise
a wide range of interest rates from short‑term deposit rates to
longer‑term borrowing rates across a broad range of debt products.
Increasing the interest rate assumption for each asset by 0.5% would
reduce the value of the Portfolio by £1.7 million (31 December 2022:
£5.9 million). Decreasing the interest rate assumption used in the valuation
of each asset by 0.5% would increase the value of the Portfolio by
£1.9 million (31 December 2022: £6.0 million). This calculation does not
take account of any offsetting factors which may be expected to prevail if
interest rates changed, including the impact of inflation discussed above.
23. Analysis of financial assets and liabilities
The primary investment objective of the Company is to seek to maximise
long‑term capital growth for its shareholders by investing in equity or
equity‑related investments in a diversified portfolio of infrastructure
assets. Investments are not restricted to a single market but are made
when the opportunity arises and on an international basis.
The Company’s financial instruments comprise securities and other
investments, cash balances and debtors and creditors that arise from
its operations, for example sales and purchases awaiting settlement and
debtors for accrued income.
The principal risks the Company faces in its portfolio management
activities are:
•
liquidity risk;
•
interest rate risk;
•
credit risk;
•
market price risk; and
•
foreign currency risk.
The Investment Manager monitors the financial risks affecting the
Company on a daily basis and the Directors regularly receive financial
information, which is used to identify and monitor risk.
In accordance with FRS 102, an analysis of financial assets and
liabilities, which identifies the risk to the Company of holding such
items, is given below.
Liquidity risk
Due to the nature of the Company’s investment policy, the largest
proportion of the portfolio is invested in unquoted securities, many of
which are less readily marketable than, for example, “blue‑chip” UK
equities. The Directors believe that the Company, as a closed‑end listed
fund with no fixed wind‑up date, is ideally suited to making long‑term
investments in instruments with limited marketability. The investments in
unquoted securities are monitored by the Board on a regular basis.
As a result, the Company may not be able to quickly liquidate its
investments at an amount close to their fair value in order to meet its
liquidity requirements, including the need to meet outstanding undrawn
commitments. The Company manages its liquid investments to ensure
sufficient cash is available to meet contractual commitments and also
seeks to have cash available to meet other short‑term financial needs.
As at 31 December 2023, liquidity risk was considered low given the cash
available to the Company and the headroom on its undrawn RCF.
31 December
2023
£’000
31 December
2022
£’000
Cash and cash equivalents 29,361 182,937
Current debtors 817 959
Other creditors (2,309) (2,737)
27,869 181,159
As at 31 December 2023, capital commitments outstanding totalled
£15.7 million (31 December 2022: £57.9 million), therefore liquid resources
available after commitments were £12.2 million (31 December 2022:
£184.8 million).
Interest rate risk
Interest rate movements may affect the level of income receivable on cash
deposits and interest payable on variable rate borrowings. Cash deposits
generally comprise overnight call or short‑term money market deposits
and earn interest at floating rates based on prevailing bank base rates.
Interest rate movements may affect the interest rate paid on financial
liabilities. Interest on RCF drawings is payable at an initial margin of 2.85%
above the relevant benchmark rate, reducing to 2.65% once certain
expansion thresholds have been met. As at 31 December 2023 the RCF
was fully undrawn.
NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
132
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STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
23. Analysis of financial assets and liabilities
continued
Interest rate risk continued
Increases or decreases in interest rates over the medium term may also
affect the discount rates at which investments are valued.
Credit risk
Credit risk is the risk that a counterparty will cause a financial loss to the
Company by failing to discharge its obligations to the Company when
they fall due.
All cash deposits are placed with approved counterparties, all of whom
have a credit rating of A- or above.
At the year end, the Company’s financial assets exposed to credit risk
amounted to the following:
31 December
2023
£’000
31 December
2022
£’000
Cash and cash equivalents 29,361 182,937
Market price risk
The fair value of future cash flows of a financial instrument held by the
Company may fluctuate due to changes in market prices of comparable
businesses. This market risk may comprise: currency risk, interest rate risk
and/or fair value risk. The Board of Directors reviews and agrees policies
for managing these risks. The Investment Manager assesses the exposure
to market risk when making each investment decision, and monitors
the overall level of market risk across all of the Investment Manager’s
investments on an ongoing basis.
The nature of the Company’s investments means that they are valued
by the Directors after due consideration of the most recent available
information.
If the Portfolio valuation at 31 December 2023 fell by 20%, with all other
variables held constant, this would have led to a reduction of £94.3 million
in the return before taxation. An increase of 20% would increase the return
before taxation by an equal and opposite amount.
Foreign exchange risk
The Company makes investments and has commitments in currencies
other than GBP, its reporting currency, and, accordingly, a significant
proportion of its investments and cash balances are in currencies other
than GBP. Therefore, the Company’s NAV is sensitive to movements in
foreign exchange rates.
The Investment Manager monitors the Company’s exposure to foreign
currencies and reports to the Board on a regular basis.
The Company uses derivative financial instruments such as forward
foreign currency contracts to manage the currency risks associated
with its underlying investment activities. Contracts entered into by the
Company are denominated in the foreign currency of the geographic
areas in which the Company has significant exposure against its reporting
currency. The contracts are used for hedging and the fair values thereof
are recorded in the Balance sheet as other financial liabilities held at fair
value. Unrealised gains and losses are taken to capital reserves.
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
23. Analysis of financial assets and liabilities continued
Foreign exchange risk continued
The table below sets out the Company’s foreign exchange exposure:
Foreign exchange risk
GBP
£’000
USD
1
£’000
EUR
1
£’000
Total
£’000
At 31 December 2023
Cash and cash equivalents 26,588 2,490 283 29,361
Investments held at fair value through profit or loss 80,598 239,228 151,842 471,668
Other debtors 1,426 — — 1,426
Other payables (2,309) — — (2,309)
Derivatives – financial assets — 2,253 1,634 3,887
106,303 243,971 153,759 504,033
Foreign exchange risk
GBP
£’000
USD
1
£’000
EUR
1
£’000
Total
£’000
At 31 December 2022
Cash and cash equivalents 181,987 828 122 182,937
Investments held at fair value through profit or loss — 217,282 84,100 301,382
Other debtors 1,699 — — 1,699
Other payables (2,737) — — (2,737)
Derivatives – financial liabilities (8,520) — — (8,520)
172,429 218,110 84,222 474,761
1. These values are expressed in GBP.
If there had been an increase/(decrease) in the GBP/USD exchange rate of 10%, it would have the effect of (decreasing)/increasing equity shareholders’
funds by £(24.4) million/£24.4 million (2022: £(6.8) million/£8.3 million), which includes the impact of the foreign currency exchange contracts to partially
offset the movement in value. The calculations are based on the financial assets and liabilities and the foreign exchange rate as at 31 December 2023
of 1.27479 GBP/USD (2022: 1.2029 GBP/USD).
If there had been an increase/(decrease) in the GBP/EUR exchange rate of 10%, it would have the effect of (decreasing)/increasing equity shareholders’
funds by £(15.4) million/£15.4 million (2022: £3.1 million/£(3.7) million), which includes the impact of the foreign currency exchange contracts to partially
offset the movement in value. The calculations are based on the financial assets and liabilities and the foreign exchange rate as at 31 December 2023
of 1.15403 GBP/EUR (2022: 1.1271 GBP/EUR).
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NOTES TO THE
FINANCIAL
STATEMENTS
CONTINUED
23. Analysis of financial assets and liabilities
continued
Managing capital
The Company’s equity comprises Ordinary Shares as described in Note
16. Capital is managed so as to maximise the return to shareholders while
maintaining a capital base that allows the Company to operate effectively
and sustain future development of the business.
The Company considers its capital to comprise called‑up share capital
and net available cash.
The Company’s capital requirement is reviewed regularly by the Board
of Directors.
24. Transactions with the Investment Manager
andrelatedparties
The amounts paid to the Investment Manager, together with the details of
the Investment Management Agreement, are disclosed in Note 2. The fees
paid to the Company’s Board are disclosed in the Directors’ remuneration
report on pages 96 to 100. There were no outstanding amounts due for
Directors’ fees as at 31 December 2023 (2022: £nil).
25. Post balance sheet events
Buybacks
Since the year end, the Company has bought back 3.1 million Ordinary
Shares at a total cost of £2.6 million.
Revolving credit facility
On 18 March 2024, the Company agreed an extension to its £115 million
RCF, resetting its maturity to March 2027.
135
PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
AIFMD
DISCLOSURES
The Company is an Alternative Investment Fund (AIF) for the purposes
of the Alternative Investment Fund Managers Directive
(Directive 2011/61/EU) (AIFMD), and the Investment Manager was
appointed as its Alternative Investment Fund Manager (AIFM) for the
purposes of the AIFMD. The Investment Manager is a ‘full scope’ AIFM for
the purposes of the AIFMD. The AIFMD requires certain disclosures to be
made in the annual report of the Company. Many of these disclosures are
already required by the Listing Rules and/or UK Accounting Standards,
and these continue to be presented in other sections of the annual report,
principally the strategic report, the Investment Manager’s report (pages
20 to 37) and the financial statements (pages 106 to 135). This section
completes the disclosures required by the AIFMD.
Assets subject to special arrangements
The Company holds no assets subject to special arrangements arising
from their illiquid nature.
Remuneration disclosure
The total number of staff of the Investment Manager as at
31 December 2023, including staff remunerated by affiliates of the
Investment Manager, was approximately 457, of whom 23 were senior
management or other members of staff whose actions have a material
impact on the risk profile of the Company (‘identified staff’). The total
remuneration paid by the Investment Manager and its affiliates to staff of
the Investment Manager in respect of the year ended 31 December 2023
attributable to work relating to the Company was as follows:
12 months to
31 December 2023
12 months to
31 December 2022
£’000 Fixed Variable Total Fixed Variable Total
Senior management 73 109 182 70 96 166
Staff 235 144 379 190 143 333
Total staff 308 254 562 260 238 499
Identified staff 42 58 100 44 61 105
No carried interest was paid in respect of the Company during the period.
The above disclosures reflect only that element of the individuals’
remuneration which is attributable to the activities of the Investment
Manager relating to the Company. It is not possible to attribute
remuneration paid to individual staff directly to any fund and hence
the above figures represent a notional approximation only calculated
by reference to the assets under management of the Company as a
proportion of the total assets under management of the Pantheon Group.
In determining the remuneration paid to its staff, the Investment Manager
takes into account a number of factors including the performance of the
Company, the Investment Manager and each individual member of staff.
These factors are considered over a multi‑year framework and include
whether staff have met the Investment Manager’s compliance standards.
In addition, the Investment Manager seeks to ensure that its remuneration
policies and practices align financial incentives for staff with the risks
undertaken and results achieved by investors, for example by ensuring
that a proportion of the variable income received by identified staff is
deferred for a period of at least three years.
Full details of the Pantheon Group’s remuneration policies and practices
for staff (which includes the Investment Manager’s staff) can be found at
www.pantheon.com.
The AIFMD requires the Investment Manager of the Company to set
leverage limits for the Company. For the purposes of the AIFMD, leverage
is any method by which the Company’s exposure is increased, whether
through the borrowing of cash or by the use of derivatives or by any other
means. The AIFMD requires leverage to be expressed as a ratio between
the Company’s exposure and its NAV and prescribes two methodologies,
the gross method and the commitment method (as set out in Commission
Delegated Regulation No. 231/2013), for calculating such exposure.
The following leverage limits have been set for the Company:
i. the maximum leverage of the Company calculated in accordance with
the gross method (under Article 7 of Commission Delegated Regulation
No.231/2013) is 450%; and
ii. the maximum leverage of the Company calculated in accordance with
the commitment method (under Article 8 of the AIFMD Regulation) is
450%.
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AIFMD
DISCLOSURES
Remuneration disclosure continued
Using the methodologies prescribed under the AIFMD, the Company’s
leverage as at 31 December 2023 is shown below:
Gross method
Commitment
method
Leverage ratio 202% 100%
There have been no changes to the maximum level of leverage which
the Investment Manager may employ on behalf of the Company during
the year to 31 December 2023. There are no collateral or asset reuse
arrangements in place as at the year end.
Risk profile and risk management
The principal risks to which the Company is exposed to and the approach
to managing those risks are set out in the strategic report (pages 68 to
71) and also in Note 23 to the financial statements (pages 132 to 135).
The investment restrictions which seek to mitigate some of those
principal risks in relation to the Company’s investment activities are set
out in the investment policy (page 39) and under ‘Board responsibilities
and relationship with the Investment Manager’ in the Statement on
Corporate Governance (page 79 to 84). Additionally, the individual
counterparty exposure limit for deposits with each of the Company’s
bank counterparties has been set at c.£135 million or the equivalent in
foreign currencies. The Investment Manager’s risk management system
incorporates regular review of the principal risks facing the Company and
the investment restrictions applicable to the Company. The Investment
Manager has established appropriate internal control processes to
mitigate the risks, including those described in the ‘Mitigation’ column
in the ‘Principal risks and uncertainties’ section of the strategic report
(pages 68 to 71). These investment restrictions were not exceeded in the
year to 31 December 2023.
Article 23(1) disclosures to investors
The AIFMD requires certain information to be made available to investors
in the Company before they invest and requires that material changes
to this information be disclosed in the annual report of the Company.
The information required to be disclosed is contained in the document
‘Information for Investors’, which is available on the Company’s website at
www.pantheoninfrastructure.com. There have been no material changes
to this information requiring disclosure.
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GLOSSARY
AGM
Annual General Meeting.
AIC
The Association of Investment Companies.
AIC Code
The AIC Code of Corporate Governance.
AIFM
Alternative Investment Fund Manager.
Approved investment trust company
An approved investment trust company is a corporate UK tax resident
which fulfils particular UK tax requirements and rules which include that
for the Company to undertake portfolio investment activity it must aim to
spread investment risk. In addition, the Company’s shares must be listed
on an approved stock exchange. The ‘approved’ status for an investment
trust must be authorised by the UK tax authorities and its key benefit is
that a portion of the profits of the Company, principally its capital profits,
are not taxable in the UK.
AUM
Assets under management are the total market value of investments
held under management by an individual or institution. When referring
to Pantheon’s AUM, this figure includes assets managed on a fully
discretionary basis.
Carbon Disclosure Project
A not‑for‑profit charity that runs the global disclosure system for investors,
companies, cities, states and regions to manage their environmental impacts.
Carried interest
Portion of realised investment gains payable to a Sponsor as a profit share.
Cloud
Cloud computing is the on‑demand availability of computer system
resources, especially data storage (cloud storage) and computing power,
without direct active management by the user.
Co‑investment
Direct shareholding in an investment by invitation alongside a Sponsor.
Commitment
The amount of capital that the Company agrees to contribute to an
investment when and as called by the Sponsor.
Company
Pantheon Infrastructure Plc or ‘PINT’.
DCF
Discounted Cash Flow.
Exit
Realisation of an investment, usually through trade sale, sale by public
offering (including IPO), or sale to a financial buyer.
Funds under management
Funds under management includes both assets under management and
assets under advisory (assets managed on a non‑discretionary basis and/
or advisory basis).
GHG
Greenhouse gas.
GIRAC
Pantheon’s Global Infrastructure and Real Assets Committee.
IEA
International Energy Agency.
Initial public offering (IPO)
The first offering by a company of its own shares to the public on a
regulated stock exchange.
Investment Manager
Pantheon Ventures (UK) LLP.
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GLOSSARY CONTINUED
Investment thesis
Pantheon’s final stage of approval for infrastructure co‑investments.
IPEV
International Private Equity and Venture Capital.
IRR
Internal rate of return is the annual rate of growth that an investment is
expected to generate over its life.
Multiple of invested capital (MOIC or cost multiple)
A common measure of private equity performance, MOIC is calculated
by dividing a fund’s cumulative distributions and residual value by the
paid‑in capital.
NAV Total Return
This is expressed as a percentage. It is calculated as the total return as
shown in the Income statement, as a percentage of the opening NAV.
Net asset value (NAV)
Amount by which the value of assets of a company exceeds its liabilities.
PIH LP
Pantheon Infrastructure Holdings LP.
Portfolio or operating company
A company that PINT invests in. These portfolio or operating companies in
turn own and operate infrastructure assets.
Primaries
Commitments made to private equity funds at the time such funds.
are formed.
RBS
Royal Bank of Scotland.
RCF
Revolving credit facility.
Science Based Targets
Science‑based targets provide companies with a clearly‑defined path to
reduce emissions in line with the Paris Agreement goals.
Secondaries
Purchase of existing private equity fund or company interests and
commitments from an investor seeking liquidity in such funds or
companies.
SFDR
Sustainable Finance Disclosure Regulation.
SMR
Steam methane reforming.
Sponsor or general partner
The entity managing a private equity fund that has been established as a
limited partnership.
TCFD
Task Force for Climate‑related Financial Disclosures.
Total return
This is expressed as a percentage. The denominator is the opening NAV,
net of the final dividend for the previous year, and adjusted (on a time
weighted average basis) to take into account any equity capital raised
or capital returned in the year. The numerator is total NAV growth and
dividends paid.
Total shareholder return
Return based on dividends paid plus share price movement in the period,
divided by the opening share price.
WADR
Weighted average discount rate based on each investment’s relative
proportion of Portfolio valuation.
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DIRECTORS
AND ADVISERS
Directors
Vagn Sørensen (Chair)
Anne Baldock
Andrea Finegan
Patrick O’Donnell Bourke
Investment Manager
Pantheon Ventures (UK) LLP
Authorised and regulated by the FCA
10 Finsbury Square
4th Floor
London
EC2A 1AF
Email: pint@pantheon.com
PINT website: www.pantheoninfrastructure.com
Pantheon website: www.pantheon.com
Secretary and registered office
Link Company Matters Limited
6th Floor, 65 Gresham Street
London
EC2V 7NQ
Telephone: +44 (0)333 300 1950
Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
Communications Adviser
Lansons Communications Holdings Limited
24a St John Street
London
EC1M 4AY
Broker
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
Depositary
BNP Paribas Trust Corporation UK Limited
10 Harewood Avenue
London
NW16 6AA
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Solicitors
Hogan Lovells International LLP
Atlantic House
Holborn Viaduct
London
EC1A 2FG
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PAN T H EON INFRASTRUCTURE PLC
ANNUAL REPORT 2023
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION
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Disclosure 1 – Investments
This annual report provides information about certain investments
made by PINT. It should NOT be regarded as a recommendation.
Pantheon makes no representation or forecast about the
performance, profitability or success of such investments.
You should not assume that future investments will be
profitable or will equal the performance of past recommendations.
The statements made reflect the views and opinions of Pantheon
as of the date of the investment analysis.
