Secondary funds invest in already-established funds, acquiring interests from investors seeking liquidity. Pantheon was a pioneer of secondary investing and established Pantheon International Participations (PIP) in 1987, one of the world’s first dedicated secondary funds.
Pantheon is now among the largest investors in secondary transactions in the world, and has over US$6 billion in secondary assets under management.
Pantheon recently won the Private Equity News European Secondaries Firm of the Year 2011.
Pantheon aims to invest in diversified portfolios of appropriately priced, high quality private equity assets. This includes, but is not limited to:
> interests in private equity funds
> portfolios of direct company assets
> hybrid/mixed fund and direct portfolios
Among the features that characterise our investment strategy are:
> Portfolio diversification
> Global portfolios
> Focus on manager and asset quality
> Deal focus
> Synergies with our primary activities
Case Study: Structured transaction to limit downside risk
The transaction and deal structure
> Fund A has a limited amount of capital left to support existing portfolio
> Pantheon implemented a structured transaction where secondary funds provided additional capital in exchange for a preferred return (all cash returns from Fund A companies accrue to the Secondary Funds until a hurdle rate is achieved).
> The existing limited partners accepted dilution in order to optimise the returns from the fund.
The Pantheon Advantage
> Ability to do the legal and financial structuring of the transaction (including downside protection through preferred return).
> Ability to execute the deal smoothly and efficiently;
> Existing relationship with General Partner;
> No conflicts of interest, as Pantheon was not an investor in Fund A;
> Ability to analyse assets.> Information for secondary vendors