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Pantheon Group: A pillar of strength

This year Pantheon Group has been celebrating its 35th anniversary. It is testament to the drive and determination to evolve the business model in response to changing market dynamics that has helped Pantheon stand the test of time to become, arguably, one of the most important global private equity, infrastructure and real assets fund investors.

One only has to consider the numbers: 450 investors; 200 staff across six global offices; USD36.9 billion of AUM (as of 30 June, 2017), with USD21.5 billion committed in PE primaries and USD11.1 billion in PE secondaries; USD 2.4 billion committed to global private equity co-investments; and USD4.8 billion committed to infrastructure and real assets since it launched a dedicated strategy in 2009.

Factor in that it has 9,000-plus GPs in its database and hundreds of deals under its belt and one quickly gets a sense of the size of Pantheon. 

Speaking with Private Equity Wire, Amanda McCrystal (pictured), Pantheon’s Global Head of Marketing, says that part of its long-term success is down to an ability to stay on top of change and be responsive to change. 

“As financial cycles come and go, your model needs to evolve constantly because investor portfolios need to adapt. A low interest rate, low yielding marketplace requires you to adapt to shifting investor needs. An ability to understand the market dynamics and to be tuned in to the changing needs of clients has been a key factor in my view,” says McCrystal. 

Panoramic view

Operating in the fund investing universe as a fund-of-funds expert has allowed Pantheon to gain a hugely panoramic perspective on the marketplace; crucial to adopting to change referred to above. It has many different clients in many different markets and many different GP relationships across a wide range of strategies; from venture to growth to small- through large and mega-cap buyouts. This puts Pantheon in a very good position “to keep our finger on the pulse of how things are evolving in global markets”, says McCrystal. 

Such is the deep level of partnership that Pantheon has built with its LPs that some of its first clients from the very early days are still, to this day, committing significant volumes of capital. They trust that Pantheon will be well placed to spot future market trends and come to them with a solution; hence why, in this perniciously low rate environment Pantheon has enjoyed strong growth on its infrastructure and real assets platform.

“We have to think ahead as to what the likely consequences of a shifting macroeconomic environment might be. When a client walks through the door you can’t then react. You need to be prepared in advance for that eventuality and be positioned accordingly. 

“That requires being quite nimble and having a good macroeconomic outlook on the market. I think the secret to our longevity has been by being close to the market, close to our clients and close to our GPs,” remarks McCrystal.

A year of milestones

As well as celebrating its 35th anniversary, Pantheon has enjoyed reaching two other milestones in 2017: it has been 30 years since it floated Pantheon International Plc (PIP), and 25 years since it opened its Hong Kong office. PIP is the longest established global private equity fund of funds listed on the London Stock Exchange, having floated back in 1987.

To reflect these three milestones, Pantheon has developed a new corporate identity, built upon the three pillars that McCrystal refers to above: its people, its GPs and its clients. Moreover, the three pillars of the Pantheon brand reflect the firm’s three core investment strategies – PE, infrastructure and real assets – and its three core investment regions – the US, Asia and Europe.

Gender Diversity

One of the defining characteristics of Pantheon is the level of gender diversity. It is every bit a 21st Century forward-looking institution. Women hold some 46 per cent of global leadership positions at Pantheon, but this is not a marketing initiative, or an attempt to be ‘in vogue’. Gender diversity has been at the heart of the firm since day one.

“It is so embedded in the culture of Pantheon,” says McCrystal. “It is a natural dynamic and always has been because one of our original founders was Carol Kennedy, who set up Pantheon with Rhoddy Swire. Interestingly, when clients come to visit us they want to learn how to create that kind of culture. We are very proud of it but the reality is, it’s not something we’ve had to specifically focus on. It is just a part of our DNA.”

Another big area of focus for Pantheon, which has also become a focal point in the industry, is ESG investing. Pantheon was one of the first signatories to the UN Principles of Responsible Investing (PRI). Where it can add value, it engages with its GPs to promote the values of ESG investing.

It is, says McCrystal, one of many important topics “that we discuss with GPs. It is fair to say that across the board, gender diversity and more broadly ESG considerations, are becoming core parts of the agenda within the funds industry, whereas five years ago that was far less so. 

“This year, the theme of diversity has really picked up momentum. It is spurring financial firms, and PE firms in particular, to really start to engage with this. There are lots of networking groups and associations like Level 20 of which Helen Steers (a partner at Pantheon) is a co-founder of. There are far more opportunities these days for young women to make use of networks to learn from a wide variety of women in leadership positions within the financial industry. I think that will be fundamental in encouraging women to pursue careers in the private equity industry as we move forward.”

PE secondary trends

Pantheon made its first PE secondary transaction back in 1988 and in 2000, launched its first global secondary FoFs. It currently runs five global secondary funds with USD11.1 billion in committed capital. 

As one would expect with any part of the private equity market, secondaries has gone through various stages of evolution. Over the last 12 months, one example of this has been GP-led secondaries, which has become a much more active practice. 

“We’ve also seen structured secondaries, of which GP-led secondaries form a part,” explains McCrystal. “These are more complex transactions. The market has moved on from being a one-size-fits-all plain vanilla transactional market of LP stakes changing hands. Now, it requires one to have more M&A skills, and more creative deal making skills to determine what works best for the GP and the LP. 

“Also, the time pressure to submit bids to transact on deals has compressed significantly. This means you really need to know the market and you have to be very precise on your pricing. There is no margin for error if you’re going to be successful in being selected as a partner to these transactions.”

Infrastructure growth

Pantheon constantly monitors those GPs it is interested in partnering with and regularly tests its pricing “so that we are in a good place to submit what we feel are compelling bids. You often only get one opportunity so it’s important we thoroughly test the bids that we intend to submit,” adds McCrystal.

Looking ahead, Pantheon’s dedicated infrastructure platform will be a key strategy for future growth, specifically as relates to infrastructure secondaries, which is still quite a nascent market. 

This is another example of how Pantheon keeps moving forward as an investment firm. 

“We aim to spot the evolution in the market and when its dynamics begin to shift. We were one of the first to open up the infrastructure secondaries market. You need to have a team that thoroughly understands the nuances of transacting in the infrastructure and real assets business. We have an extremely capable and competent team of people with many years’ experience in that market.  

“We are very pleased with the momentum we’ve seen in this side of the business and we are pleased to have had the support of LPs in all of our key markets. We hope that will continue in the future,” concludes McCrystal.


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