The bruised Pantheon International investment trust has sought bargains in the energy sector as it tries to turn recent market sell-offs to its advantage.
The investment trust, which invests in other private equity funds as well as underlying businesses, buys companies when asset prices look “depressed”, according to manager Andrew Lebus. The policy has brought the energy sector into focus following the dramatic fall in the price of oil.
Mr Lebus said: “We continue to be inquisitive because we think that the opportunities for those businesses to buy good assets at good prices is good at the moment, so we’ve been interested in providing capital to some of those businesses on favourable terms.”
He described the firms in question as “listed companies that have experienced considerable price depreciation”.
Pantheon itself has suffered from a sharp share price fall in recent weeks, resulting in a
further widening of its double-digit discount.
The trust is currently trading on a 28 per cent discount to NAV, according to Winterflood, which the broker said represents “very compelling value”.
“On this basis, and given the strength of the fund’s balance sheet, we would expect the board to continue to make active use of share buybacks,” Winterflood added.
Other recent activity in the portfolio saw Mr Lebus buy into a financial services company after the price of its underlying assets fell. A general offer was made to investors, giving those who were “fed up” with the fall in prices a way out.
The trust offered to buy up to £200m worth of the fund from its current investors, of which £50m was taken up.
“We were able to buy in after we could see how they had withstood very difficult times, and where we thought valuations would be restored to normalised levels over the next three to four years,” said Mr Lebus.
“There are certain things that we might do because we just think there’s likely to be a level of sentiment where we could strike lucky if we make an offer.”
In both cases, the acquisitions were made through a co-investment approach, in which Pantheon invests alongside other private equity funds.
The trust, which has £1.1bn in net assets, also uses primary and secondary approaches to deploy capital. Co-investments are expected to rise from around 18 per cent to 30 per cent of the portfolio in future, according to Winterflood.