Long-term outperformance within private markets
Pantheon: Best Fund of Funds Manager – Since its inception in 1982, Pantheon has grown to become one of the pre-eminent global investors in private equity. Over the last five years, Pantheon’s firm-wide AUM has grown from USD33 billion to USD50.7 billion; including infrastructure, real assets and private debt. Of that USD50.7 billion, the firm oversees approximately USD25 billion of committed capital in PE primaries (as of March 2020), USD13.6 billion in PE secondaries, USD3.4 billion in co-investments and USD2 billion in private debt.
A central tenet of Pantheon’s investment philosophy is to capture long-term outperformance within private markets, over multiple vintage years, whilst applying careful risk management. “Our objective is avoiding losses and making steady incremental gains each year to generate very strong relative outperformance together with large absolute gains, which are very meaningful to our clients over longer time frames,” explains Paul Ward, Managing Partner.
Earlier this year, Pantheon reached a significant milestone when its AUM surpassed USD50 billion. As it moves into its fifth decade of investing in private markets, Pantheon offers strategies across all principal asset classes, with Private Debt the most recent strategy; something Ward describes as a “strategic milestone”.
“We bided our time when the private debt primary market got underway during the GFC and in its subsequent boom years as we wanted to enter with a differentiated approach. When we initiated our Private Debt platform, we focused on secondaries, which met that criterion,” comments Ward.
2020 has been challenging for all investment firms but with an emphasis on sectors including Technology, Healthcare and B2B services with recurring revenues, Pantheon has seen the managers it invests with navigate the year on an even keel. Overall, the industry has paid up for quality of earnings and secular growth over the last five to seven years “and that looks vindicated now, especially as Covid further accelerates trends that are supportive to these areas,” adds Ward.
Client communication has been a key priority since the firm moved to global remote working in mid-March and despite not being able to meet clients or GPs in person, it has still been able to open, and even close, new relationships. By broadcasting investment webcasts and holding live Q&A forums for its full suite of investment strategies, Pantheon has kept its investors in lockstep with portfolio performance and valuations. Moreover, it has remained in active fundraising mode, having initiated and closed important commingled strategies in addition to substantial separate accounts. “We are on track to double our total 2019 fundraising,” states Ward.
In terms of how Pantheon monitors risk in its primary and secondary portfolios, Ward notes that there has been a step change, compared to the GFC, in respect to GPs proactively providing good quality data to its investors, “which has eased the task of risk management in challenging circumstances. The quality of information coming through also enabled us to provide “flash valuation” forecasts to our clients just weeks after 31st March, rather than the two months-plus a full valuation generally takes.”
When asked what he feels is the most important aspect of Pantheon’s business that best reflects winning this year’s award, Ward refers to consistency. “Delivering consistent performance is our foremost priority but we never take our eyes off meeting the changing needs of our existing and future clients.”
Managing Partner, Pantheon
Paul Ward is Pantheon’s Managing Partner and is a member of the Partnership Board. Paul joined Pantheon from Lehman Brothers Private Equity Group, where he was Investment Director. Previously, he worked for Lehman Brothers Investment Bank in both New York and London on M&A and corporate finance advisory services. Paul is responsible for the leadership of the global Pantheon team, the firm’s governance and strategy execution and is Pantheon’s Accountable Executive for the firm’s signature to the UK Government’s Women in Finance Charter.