Pantheon Infrastructure PLC

Good morning, everybody. So we're one minute over. I thought we'd kick off with the slide presentation around Pint's results for the period 31st of December 2024. Great to virtually see 20 or so of you on the call this morning. For those that do not know me, I'm Richard Sem. I am the PM for Pint. I'm a partner at Pantheon. I head up our infrastructure business here in Europe, and I'm a member of the Global Infrastructure and Real Assets Investment Committee. I'm supported on Pint specifically by Ben, who many of you know, and Seaway, a more recent and very valuable addition to the team. In terms of just format for today, probably similar to last time, we'll canter through pretty quickly. I'm going to present for about 30 minutes and then we will sort of open up for Q&A at the back end. So if you want to ask a question, please raise your hand at the end of the presentation. You've also got a Q&A button at the bottom of the screen, so please do ask a question. Clearly if you want to do that anonymously, there is a tick box to do that, but we'd clearly prefer that you tell us your name. So if we're not able to answer all the questions in the time available, we can come back to you. We've also, as you can see, got sort of a, we'll be providing a summary of kind of the recent highlights, our approach to infra. Ben will take you through sort of the financials and update on the portfolio. There's also a bunch of good material in the appendix around the market, our approach to sustainability, governance, and the wider Pantheon platform. So please, please do take a look in your own leisure. So let's start with a quick pint refresher. Our strategy remains consistent and unchanged since our IPO. We aim to create a portfolio of diversified infrastructure assets. We're looking to generate both returns over the long term through both yield and growth. We've got a very strong focus on the downside, particularly keen given the current macro and geopolitical backdrop. Currently, we're looking for highly contracted or regulated revenues trying to be insulated from sort of the GDP risk that we see out there right now. Infrastructure assets clearly demonstrate sort of higher stability than some of the more other subsectors out there. And we're always trying to deliver some form of inflation linkage where possible. We're targeting an 8 to 10 NAV return. We've tracked well above that in the period. We're looking for good dividend progression, so 4P target. Once we're fully invested, we paid 4.2P last year, and that represented a 5% increase on the prior year. We haven't made any decisions with respect to 2025 and will be seeking feedback from shareholders during the upcoming roadshow. Our model, as you know, is to hold assets for the medium term, typically five to seven years, and exiting those assets alongside the sponsors we've invested with. Our wider platform has been invested in private assets for about 40 years. We've got a scale platform, a little over 70 billion of assets under management. Infra represents about 23 billion of that, and we're invested across about 55, 60 sponsors. We've had significant growth since IPO. If you recall, we had about 16 billion of AUM at that point in time. So we've had a lot of traction with our flagship funds program, which is now in its fifth vintage. I think we bring a differentiated angle to infrastructure through our wider platform, unrivaled access to deal flow with those leading sponsors. The existing portfolio gives us great visibility invested in 1800 or so assets. And we increasingly tried to find ways of capturing that data and using that into our investment process and our asset allocation. So maybe just turning now to the track record. And now that we've got three years, we thought it was useful to kind of give you a side-by-side of how we've tracked. We're fully deployed into a portfolio of 13 high-quality infrastructure assets. We have not made further investments this year, just given the state of the discounts and the inability to raise equity and do not want to draw on our facility, given there's no site for new capital to come in. We're particularly pleased to have announced post the year end the maiden exit of our largest investment, Calpine. The dividend target there, we've increased to 4.2. And that second interim will be paid at the end of April. And we went ex-div last week. In terms of performance, we're particularly pleased to have delivered a 14.3% NAV total return. That's clearly well ahead of the 8% to 10% target return for the year, and a substantial increase on 10.4% last year when the portfolio was fully invested. That corresponds to a NAV increase of 118p. Now, that's clearly driven by underlying portfolio valuation increases, and Ben will be taking you through that shortly in some detail. We'll touch on earnings a little bit more within the presentation, but please just say that we've had very material top line growth of 21% and even greater EBITDA growth of about 36% across the portfolio. So again, that valuation backed up by strong earnings growth across the portfolio. The portfolio now sits at a multiple of 1.33 times. So that's the multiple on invested capital. As with previous reporting, this figure is kind of what we tried to do is net off the FX impacts. So this is really sort of free of any FX noise and is how we think about sort of an underlying deal currency money multiples. Maybe we can skip forward. I think many of you know our approach to the financials. So if we go forward to page 10, as before, like no changes in the portfolio. We've... We've seen the relative performance of assets see some fair value changes. So particularly with Calpine and Cyrus One, we've seen the North American exposures there increase from about 34% last year to 38% now. We've also had some very good performance from NBI and GD Towers. We've drawn about 6 million of additional capital, predominantly across Cyrus One, out of prior commitments as well. And you can see the strong diversification by sector, by sponsor as well within here. So that's a quick summary. I'd like to hand over to Ben now to take you through some of the details.

Thank you very much, Richard, and good morning. It's great to see so many of you and really excited to be talking about the pint results for 24. Just starting on this page, the NAV per share has increased by an aggregate 11.5p during the period. So adding back the 4.1p dividends that were paid during the period gives 15.6p gain or 14.6%, 14.3% on an income statement measure, as Richard mentioned, but then 14.6, including the 0.3%. benefit from share buybacks. The bulk of this, as you can imagine, has come from some fairly sizable fair value gains of 17.5p or around 80 million in sterling figures. We'll talk through those a bit later. We've got some detailed attribution. Portfolio FX was pretty much neutral. From a portfolio level, we were 1.1p down, but that was offset by 1.2p of gains on our FX hedging instruments. And the 2.2p of expenses are pretty much in line with expectations, noting that this does actually include the RCF commitment fee and the amortised upfront costs. We did do some buybacks during the year. They were quite modest. We invested 3.4 million sterling in our own share, so that was around 4 million repurchases, which added to 0.3p that I mentioned. We do explore the attribution of the full valuation a little later, but safe to say the portfolio is sitting very well at 532 million closing value. Moving on to the next page now. So this is our customary update on the balance sheet and capital allocation. We've slightly rejigged the formatting, but the message is familiar and unchanged. We have a very robust balance sheet with the RCF covering the majority of those commitments and buffers, many of which we don't feel are real world scenarios. But even accounting for them, that still gives some loose change of around £39 million. You know, we can't reiterate this enough. We're really maintaining a disciplined approach around the balance sheet. We still don't have that visibility on if and when markets will recover and therefore the ability to clear down any borrowings. What could potentially change that? Maybe some more visibility on the exact timing and quantum of the Calpine proceeds once that completion is sufficiently de-risked. And generally any further visibility on any other asset exits or portfolio cash flows. That could be the prompt for Pint to become or to go back into the waterfall for new deals that are coming through the committee. We're still seeing plenty of deal flow coming through. It's really upsetting to turn away opportunities. We probably could have done a separate whole deck on the opportunities that Pint could have transacted on in the last year. But like we say, we think it's first and foremost important to be maintaining that capital discipline. Looking now into the portfolio metrics, Richard gave a high level snapshot of how the earnings are progressing. But reporting via the previous year, and again, we've given the time series, given we have the three-year track record now, discount rates remain steady. There have been some ups and downs during the period, but they have had the effect of pretty much offsetting one another significantly. And gearing pretty much in line with previous years, a slight dip on a net debt to EV basis. And the hedge debt has ticked up slightly. This is a function of the underlying portfolio companies being able to term out some of their shorter term debt facilities and which lends itself to hedging. The bigger story is, again, those portfolio company metrics that we see on the bottom row here. So a reminder that we calculate these by taking points relative proportion of the underlying revenue, EBITDA or CAPEX, based on our shareholding in those assets. So we don't consolidate these positions as they're accounted for as minority holdings. To filter out the noise of FX, we do actually compare on a like-for-like, so we use a DEC24 spot rate. Naturally, it's really satisfying to see the growth. So 21% CAGR over the two years in terms of revenue, and that's translated to 36% CAGR in LTM EBITDA. So it's implying both larger and also more efficient businesses. I think it's testament also to the growth focus of these companies, which is also supported by The increased capex outlay that you're seeing. A reminder, again, if you need it, these are fully funded business plans. So they're fully funded up front, either with, well, with a combination of recycling of existing cash flows, with the debt facilities that we've got in place or the headroom that we have for existing equity commitments. Of course, that doesn't mean that companies aren't looking for new capital. We saw that in some quite high-profile examples. We saw with Vantage raising more equity. We also saw Cyrus One closing the warehousing facility during the period. So the themes that are driving this growth are very similar to before. We've seen a big growth in the Calpine earnings, as well as the digital earnings, which you've seen notably on data centers and also Fiverr businesses, which are now transitioning to network densification. We've also seen some really encouraging gains in terms of EBITDA from Prima Frio. That's really benefited from a significant recovery in performance after a fairly challenging early trading environment. Maybe moving to the next slide now, a bit of a dive into the portfolio. I'm not going to go through every single asset, but what we've included on the far right is again our relative assessment of performance. This is our assessment of how businesses are tracking. It's influenced by where sponsors say they're tracking relative to the long-term returns they identified at entry. I think, as I mentioned before, the themes are very similar to previously. I think broadly each position is tracking as it was at the interims. A reminder here that the MOICs, as Richard mentioned, also include the hedging component, so largely represent a local currency measure. You can see that Calpine is very much the biggest factor. So it's now sitting at around a 2.3 times moik. It was marked up at various points during the year and also most recently towards the end as the valuation moved slowly towards the valuation that was ultimately struck post-period end as part of the sales constellation. And that was announced on the 10th of Jan. We've got a very specific slide around this later on, so I won't dwell too much. another really strong outperformer has been cyrus one so this is again been driven by the ai story but it's probably worth mentioning here that the original thesis for all the dc deals that we did was around cloud demand so not not ai and an ai boom even though it's softened somewhat in the new year with the deep seek emergence and has been very much additive to performance rather than reliance for for achieving portfolio performance In terms of Cyrus One particularly, specifically, they've reported earnings that are well ahead of plan, bookings are ahead of plan. We do expect potentially some more outperformance once those facilities that they've contracted but haven't yet delivered are delivered. Again, to reiterate, deep-seek issues have not really impacted hyperscaler demand. We've got a pretty good exhibit around this, AI more generally in the annual report, which I'd really encourage you to look at, but More accurately, I think we just don't really expect any curtailment of the demand of the hyperscalers as things currently see. The limitation, if any, for data centers, so with Cyrus One as it is with Vantage, is going to be grid constraints. Both these companies, given their scale, are taking actions to mitigate this. So Cyrus One have appointed a chief power officer. KKR, the sponsor there, have now got a tie-up with ECP for co-locating demand. And on the Vantage side of things, they've entered into a strategic partnership to address grid constraints with VoltaGrid. A couple of others worth mentioning, NBI and Fejura, both ahead of plan operationally. NBI is expecting to complete its rollout of rural fibre next year. Fejura is now seeing the growth come through in those adjacent sectors, which were part of the original entry thesis. They've also just finalised the appointment of a new CEO for the next stage of their growth. So we see potential valuation upside on both those businesses. um the ones that i haven't mentioned generally moving in the right direction um naturally some periodic variations given the complexity of these companies and valuations aren't always linear movements but as i mentioned prima frio's had a very encouraging year um some slight softening in terms of the pipeline for xenobi they expect a slightly slower rollout of both their buses and network infrastructure projects but ultimately expect to get to the same end place It's probably also appropriate to touch upon the assets that are behind plan. So Cartier, we've mentioned a few times before, operationally it's become stabilised and management is now able to shift its focus on the growth initiatives. They've been rolling these out a bit slower than they expected at entry because of the consolidation that they've had to do given the crisis. Initial early challenges, but management do believe they'll be able to grow the business, albeit they no longer expect to hit the original entry case. Then there's a similar story for Global Connect. This remains below plan. The development of this company has been impacted by a retreat from fiber to the home, particularly in Germany. It means lower CapEx forecasts. It means likely a lower term in EBITDA. And ultimately, with the additional volatility in the NOC and the SEC, the principal currency's it operates in, there's some underperformance expected even when that deal exits. Probably final mention on this slide, it's worth mentioning that the mark for Vertical Bridge you'll see later on has come off slightly. The company is working through its balance sheets given the Verizon portfolio acquisition. They're working with a couple of potential strategic investors to speak for the full ticket for that. DB do still expect, that's Digital Bridge, do still expect some upside in those long-term returns here given the significant upleasing potential of that portfolio which is something that really excites them we do expect to know more about that um probably towards the end of q2 and early q3 next page now i won't dwell too much on it's a it's a different visual visualization of what you saw before it's a it's a favorite with some of our private markets clients noting that the relative bubble size is essentially reflective of the fair value proportion um Would note that the trajectory of some of the companies from a valuation perspective, it's not always linear. So although we do have a kind of general trend line, you can see the grays kind of sit at the bottom, the light greens in the middle and the darker greens at the top. It doesn't mean that there isn't potential runway for further valuation growth and upside expectations. On to page 17 now. So we first drew out this detailed attribution at the interims. It's something we will seek to repeat going forward. Again, we wouldn't suggest that this is a totally precise analysis. It's not always possible to be definitive about the precise movement attributable to certain elements because these are highly complex businesses with a lot of moving parts. But you can see the core movement of around 68 million equates to that unwind of around the 14% discount rate. Essentially, it's preservation of value through delivering earnings or revenues in line with forecast and maintaining those future forecasts that underpin long-term valuation expectations. Overlayed to that, we've got around 12 million of net outperformance. So each of the individual component drivers here that you can see reflect the net position. So really pleasing to see that additional growth coming through. We've seen around 3 million arising from actual, so that's in period, outperformance and earnings. That's after reflecting the fact that there's been a certain discount rate increase, which has been netted off by discount rate decreases. And again, that's consistent with the flat 13.6% discount rate. And then we've got around 15 million combined of improved forecast or increased terminal value assumptions. Calpine is again the main driver here, and this was largely crystallized as a function of the Constellation deal that was announced in Jan. That's notwithstanding the residual Constellation exposure, which we'll talk about. We also had, it's worth mentioning, we had a 5 million provision for a deferred tax provision. This is ultimately a product of the underlying investment performance across some of our U.S. assets. exceeding expectations and because of the structuring of some of those US vehicles not in tax blockers. So we thought it was important to make sure that we were accounting for what could hypothetically be an immediate realization to make sure that the tax is included there. And another thing to flag for the accounting hawks here. So the actual distributions of 21.3 million, this doesn't align perfectly with the income statement that you'll see in the accounts, which shows 33.1 million. The additional amount in the income statement relates to some historic gross distributions that we previously had to true up from Pint subsidiary PIHLP. Going forward, we'd expect those amounts to align as a result of this correction. Next page now, just looking at the projected cash flows. So we've recut these figures again. So distribution forecast based on latest sponsor information and the expectations we have from the Calpine disposal. So usual caveat supply, we don't control the purse strings, nothing's uncertain until it hits our account. And in particular, again, we'd flag that the nature of these businesses mean that we can't legislate for potential actions like M&A opportunities that could be around the corner. nor, it should be said, the share price performance of Constellation, which we'll touch upon later. That aside, I think the key story is that actual cash flows for 2024 materialised around 40% higher than we'd previously guided to this time last year. We give the full details of dividend cover in the annual report, but the cover figure has ended up around 0.7 times based on the 4.2p dividend accrued during 2024. We never officially stated the guidance last time. I think we gave people... this exhibit to come to that conclusion themselves but we can now say that the original guidance was around 0.5 times cover so again naturally really really happy to have exceeded that Near-term distributions, we're also now expecting to materialise higher than forecast, so a large swing factor here is going to be Calpine. The cash component of that deal is assumed before the end of the year. ECP have guided that providing the deal goes ahead as currently intended and planned. There'll be no income receipts. Thereafter, the remainder of those proceeds, if you recall, around 25% cash, 75% is cash. In locked up constellation stock, we can say no more than that, other than the fact that we'd expect them to materialize over the subsequent two years. Where we said no change, it means no material change. Of course, there are some minor variations day to day due to effects rates. But the big picture is no long term change to forecasts other than the Calpine ones. And again, I just stress that this does assume no reinvestment. Obviously, we would love to go in. reinvest those proceeds, but because the nature or the profile of what those potential deals look like remains uncertain, we're only factoring here what the existing portfolio looks like. Page 19, I think we'll skip over for now, but it's a good reference to give the full data of the underlying distributions. Again, you can see that Calpine, the main driver, but also some material cash kicked off from MBI and National Gas, which is encouraging. I think we'll turn now to the Calpine deal. So it's been a topic of significant excitement in the new year since the deal was announced by Constellation. I think it's safe to say Calpine's been a great story since day one of its investment. Obviously, the juice has been in the recent announcement, but it's been consistently performing ahead of the original entry expectations. But for those that don't know, on 10th of January, Constellation announced the acquisition of Calpine Corporation from ECP and their co-investors, including Pint. The deal was for a combination of cash, around 25%, and also Constellation stock, around 75% of the consideration. In total, it valued the equity of Calpine at $16.4 billion, and that was based on a 20-day trailing volume-weighted average price of CEG of around $238. Completion is expected to occur before the end of this year when the cash component will be paid. And then the subsequent stock will be granted subject to lockups over the next 18 months. Just to be clear, ECP will hold the stock in this vehicle, in the continuation vehicle that Pint's invested in. So Pint will not directly be holding the stock. It will create a combined fleet of around 60 gigawatts, principally a nuclear and gas-fired fleet, but with some renewables. Obviously, assuming all goes through as expected, the deal will expose Pint to a residual mark-to-market exposure in the CEG share price. The implied share price in the DEC24 valuation was pretty much around that, that they announced in the deal. Specifics are $238. We did always expect the exit of this deal wouldn't necessarily be clean in the sense it would be a single cash component. We knew that the public markets was probably going to be a big candidate to unlock the value here and that said it does mean that pints nav will be around 10 exposed to ceg and we've declared the full details of the sensitivity in the annual report we expect around a 0.5 p nav movement for every 10 shift in the ceg share price just a flag for those of you that were scouring the rns this morning there was actually a bit of an issue with the transposition from the annual report which meant it was saying 0.65 dollars or 0.5 pounds. It's not that sensitive. It's actually cents and pence. We do in time, we may look to hedge this exposure until the deal is complete. There's limited tools available. It's impractical or uneconomical to do a contingent trade because quite simply, we would need to be working with counterparties that are familiar enough with the deal to underwrite that risk. That said, as and when that completion risk falls away, we may decide to explore hedging options to minimize the exposure to what has been, it's safe to say, a pretty volatile position, particularly given the softening in The U.S. markets recently, given the issues with tariffs and then, I guess, looking back to two months, the emergence of DeSeek, there was a lot of softening in AI-related stocks. But that exposure is very much in addition to the significant cash yield that we're expecting towards the end of the year once the deal concludes. A reminder that the gains in this sector, they've come from a fundamental re-rating of the energy market sector in the US. So aggregate power demand is still expected to increase materially with both generative AI and also decarbonisation. But I think the big picture is that we were really pleased to have realised that first conditional sale, which we think is an important part of proving the thesis of Pint. It's clearly ahead of expectations, both from a return perspective and also from a timing one. With that, I think I may hand back to Richard to wrap up.

Thanks, Ben. So in the interest of time, I'll go across this very quickly. So we certainly referenced some of the content in this slide to you previously. This is an adaptation of something that we've got in the annual report. I'm very happy to pick over in more detail with you in your own time. But effectively, what we're seeing is an increasing segmentation, I think, in the market, a trification between renewables, core and core plus infrastructure. This is designed, you know, high level to sort of show the strengths and weaknesses of certain strategies. I think, you know, if you go across the bottom line there, that's where we think infrastructure, sort of core plus infrastructure sits. Certainly a recognition that the credentials of a core plus strategy we think should on balance be quite exciting given that current sort of macro and geopolitical backdrop. Certainly, we've seen sort of there are flip side benefits. So whilst we may not be as exposed to, say, energy prices, that has been sort of a downwards trend for a number of the renewables companies. The flip side is we won't necessarily benefit when the power prices increase, for example. I think as well, just diversification is a key benefit. We're not obliged to deploy into a single sector. So if we see valuation bubbles, we are able to navigate that and be able to invest across different subsectors. So maybe just moving to wrap up, key things we're focused on going forward. So just to remind you, Pint provides a truly global access point for diversified and resilient infrastructure assets. We've assembled this during both a period of macro uncertainty, but it's also performing very well during that period. The opportunity set to Ben's point earlier remains abundant. We have numerous deals that we are triaging and investing other capital with from other parts of the house. So the team remains busy. The pipeline remains full. And we hope at some point in the not too distant future that we can drop pint back into back into that waterfall. We're clearly delighted with performance. This is an excellent NAV return of 14.3% versus our 8% to 10% target. As Ben highlighted, that has been supported by very strong EBITDA performance. We've increased the dividend by 5%. We are approaching, as Ben demonstrated, with the expectation of cash flows to be one time covered going forwards based off some of the realizations we're getting from the portfolio. We have a robust balance sheet. We don't have any expensive debt that's holding us back. We've got no pressure to dispose of assets. And we've obviously got conservative risk buffers, which I think is testament to the risk management approach of institutions such as Pantheon. We've still got the firepower allocated to buybacks. I think there's been limited recent opportunity just due to sort of limited natural sellers, but we remain positioned to be able to increase the NAV through acquiring shares and investing further in the existing portfolio. And then finally, we can't stress enough the conditional realization of Calpine is taking significant sort of de-risking of the valuation of the portfolio. Clearly, we have that residual exposure to Constellation stock. But that sensitivity analysis you've got for SEG should be helpful sort of in the meantime. But I would remind you, the cash is locked up. The shares are locked up. for sort of approaching two years from today. So that takes us to the end of our presentation today. We will now flip to Q&A and I can see some of that Q&A has started to come through. So if you bear with me, if anybody does want to raise their hand, please do. But I can see we've got a number of questions come through. So I think the first question, given the current levels of macro uncertainty, what is your view on the resilience of a US recession? So maybe I'll... So maybe I'll take that question. So firstly, where do we see it? We've got almost half the team sitting in the US. We're executing on our US deal flow. We see, I think certainly we get all the investment bank research coming in. I think our views sort of align with theirs, which is we do expect a slowdown in the US. However, we've got a diversified portfolio. We've tried to avoid GDP linkage within the portfolio, which I think is important. We're underpinned by predominantly contracted or regulated cash flows. And so we see sort of strong resilience within the assets. And then finally, I guess, if the policies lead to increased inflation, increased rates or a slower reduction in those rates, And we do think the portfolio is well positioned given the weighted average discount rate of the portfolio investments and also sort of the long term nature of fixed rate debt that we've got within the portfolio. Next question for Cyrus1, do you have any concerns on hyperscaler demand given recent lease cancellations by Microsoft? Maybe Ben, do you want to take that one?

Yeah, sure. So there's been a bit of noise in the market about Microsoft cancelling leases. I think the first thing to clarify is that they're not actually cancelling leases materially, they're cancelling LOIs or kind of head to terms agreements. So there haven't been scenarios, certainly across the DCs that businesses that we're invested in, that we're seeing them retreating from those leases. And in any event, as a reminder, these terms are typically for 10 to 12 years. They're contractually binding in that sense. So to the extent there are walkaway provisions, they would come with termination provisions. But what we're seeing more generally, and I think we'd echo what we put in the annual report around AI more broadly, is that we're still seeing phenomenal demand for these facilities from most of the rest of the hyperscalers. They're all actually, I think most of them are... typically creating alliances with some of the large PE houses. I think we actually saw Microsoft themselves come up with an alliance with GIP. So, you know, they're taking their own steps to make sure they can have that security of supply. But I think the broad message that we're seeing from all of these operators is that You may have been having demand for AI up here. Cloud may have been here where you're probably going to end up is somewhere in the middle. And the natural kind of restraint on that is essentially access to grid capacity. So we think actually a bit of curtailment and a bit of softening in demand may well be beneficial for actually providing a bit of a reality check for a lot of these DC providers in terms of what they can manage to their hyperscalers. Next question. This is a three part one. Maybe the first part for you, Richard. What sort of IRRs are you seeing from the pipeline and which sectors in particular look attractive?

So we're looking at risk adjusted returns. So we're not focused quite as much maybe on headline IRR. And I think you need to look through the opportunity set. I think we're pretty much open to anything apart from sort of, I guess, leaning away from GDP linkage assets. We've typically leaned away from fiber to the home altnets, small fiber to the home altnets. The ones we've leaned into, such as, you know, if I use NBI as an example from a plant perspective or indeed a French rural fiber to the home business that we have on the wider Pantheon franchise, those sorts of assets have performed extremely well. Why? Because they've got a monopoly position. It is uneconomic for anyone to overbuild, whereas in main metropolitan centers, it's you do see a fair amount of overbuilding. You're seeing penetration levels in rural areas extremely high as kind of that last mile copper is several miles from the cabinet, whereas in major metropolitan cities, you may actually see quite high performance speeds from last mile copper. So to give you some examples of sort of how we need to sort of look through the subsectors to see the underlying dynamics of the deals. We've looked at a few airport deals recently. There's some pretty high profile deals in the press that a number of you will be familiar with. We have looked at all of those. We have not invested in any of them across our franchise, again, because of that GDP linkage. In terms of IRR specifically, again, it just depends on the risk-adjusted returns. We're confident that we can deliver our 8% to 10% return level off the existing portfolio based on that delta with the 13.6 weighted average discount rate. We've probably seen... or irrs move up a little bit and we might have seen some of that probably in the stated weighted average discount rates on core plus we haven't seen as quite as much movement um they're less sensitive to changes changes in discount rate the final thing to say here is really kind of in terms of the exit environment and we've got some market related data in the pack we are seeing um We are seeing infrastructure groups continue to deploy, albeit that some of the bid offers are maybe not quite as tight as they used to be. So M&A volumes are down. That means that the assets that are being sold are the assets that are, should we say, the more attractive assets, those that have that high value. contractual underpinning. And again, that's that's our focus. So I haven't given you a number on purpose, because it really depends on the sub sector and the underlying risk. Next question. National Gas and National Broadband Ireland have started to make distributions. Can you overview some of the operating highlights over the period? Ben, I think that's yours.

Yep, happy to take that one. So starting with National Gas, I mean, this is a business that is very much configured for providing a relatively dependable steady yield. And it was one of the reasons that we were attracted to it in the first place. And as a reminder, we're We've built a portfolio that is a combination of assets with high growth potential like those DCs and then also ones with a greater emphasis on yield. And that's very much with the dividend target that we have and we continue to be committed to. National Gas has been performing pretty well. I think the exciting thing that they've been working on in the background, well, first and foremost, they've been working on their submission to the regulator for the next funding, regulatory funding period, which starts 2026. They're expecting a final determination on that by the end of the year. The other thing that is of interest with this particular company in the background is the work that they're doing for the hydrogen backbone and the rollout of hydrogen in the UK sector. distribution network and that's called project union um they expect in time that will be funded through a rav based model um albeit at the moment uh that hasn't been finalized with off gem there's there's a few gating points i think the first one that we're looking at for this year will be a policy decision on blending um they've proven the ability of the network both the dnos have proven and and national gas is the operator of the um the methane transmission network have proven their ability to use existing infrastructure to take up to 20 hydrogen blend the ball is now in off gem and the government's court to make a decision on whether blending is a thing which we think will act as a stimulus and to hydrogen production um so so that's probably the key operating highlight there for nbi um the business here as a reminder this is a ppp it's a concession agreement with the Irish government. So NBI are rolling out rural broadband to around 600,000 homes in the island of Ireland. They get heavy subsidies for doing that. The key determinants for success of this business will be delivering the rollout on time and on budget. So making sure that they're compliant with the project agreement, which we're happy to confirm that they are. There was a few early setbacks earlier this year due to some of the storm damage, but nothing that the sponsor feel like that they can't absorb. The other determinant of value here will be the extent to which customers adopt the network and achieving the long term penetration rate assumptions that are baked into that investment case. And again, we're also quite happy to report that they're tracking ahead of expectations there. The thinking at entry had been more that it would be quite a back ended adoption curve. So it'd be quite flat. And then when the company can do kind of national level marketing and they can kind of move away from the development developer mindset would be when they'd see more of their penetration increase. They've actually seen a more gradual approach to where they hope their end point to be. So very encouraging on both fronts for both National Gas and also National Broadband Island.

Um, the next question was around, uh, most of the investments are tracking well, um, looking at the investments that are a little behind, would it be fair to assume they have some form of downside protection liquidation preference?

So, it wouldn't necessarily be fair to assume. I think that's a unique feature of certain deals that we've invested in, but not all of them. In terms of, I think, hopefully we've been fairly upfront about the investments that have had their challenges. I think Cartier had... A bit of a perfect storm in its first year. They were exposed on one particular contract to natural gas prices. They also lost a customer again because of the macro environment and where that particular customer felt they could make cost savings. And then they've also been impacted by milder winters. And again, that's quite seasonal. They had a fairly cold January and early Feb, which is beneficial for the business, but then a bit of a tailing off also in March. No particular preference structures on those businesses. And that in itself is reflecting the valuations of those companies. They do have other elements of downside protection, I guess, on Cartier. They do have quite long-term contracts and most of their customer base is quite sticky. I think where they've seen the challenge relative to the entry plan has been on actually delivering the level of what they saw at the time of entry as being quite high conviction growth, which hasn't transpired yet. Maybe one for you, Richard. Are we anticipating any investments that need further financing perhaps to fund M&A?

So as Ben pointed out, we invest in companies with fully funded business plans. So we make assumptions around M&A and organic build out of those portfolios. Clearly, things can change. But our base case is that we're fully funded. I'd bring out a key example for you. our data center investment with Digital Bridge. There was Silver Lake. We sort of came in and made a further investment in the company. A lot of that was through additional capitalization of the company. And Digital Bridge themselves brought in their fund as well to bring in additional capital. We had the ability, as we do with all of our investments, to preempt and to maintain our shareholding at the same level. Given our digital exposure, we chose not to. We saw a small markup off the back of that capital injection. So that's one example where there was additional capital to, should we say, take advantage of some of the growth opportunities in the data center market. But no, we are fully funded across all of our investments in a base case. I'm just wondering if we can lump some of these together. There's another question around the discount rate of 13.6 remaining unchanged, surprising given bond yields have increased. So if I take, maybe I can just take that. The bond, the UK Treasury, the UK gilt rather has increased by about 50 basis points, but the UK Treasury has actually fallen over the last year. So I think that's one factor. We're taking a blend of both US discount rates predominantly and US. European and UK. Secondly, we do see a small de-risking sometimes of discount rates through time as assets complete sort of major milestones. So one I might call out for you would be NBI, National Broadband Ireland completed its build, completed over 50% of its build out last year. I think we called that out probably in our quarterly results, last quarterly results. So that's a key milestone and you would expect from that delivery some form of de-risking. Next question, can you guide your investees weighted average cost of debt, I think, and their EVs? Again, Ben, I know we've provided some data on that previously.

Yeah, so we don't disclose the weighted average cost of debt because it's, as you can imagine, it moves around quite materially. It's something we could consider in the future. Similarly, EVs, we are always fighting the competing tensions between the need for listed markets disclosure, as we always work hard to try and deliver on in the reports. And then also principally what the sponsors that we invest alongside are happy for us to disclose, bearing in mind the model of these companies is to essentially create some commercial competitive tension when ultimately they're exiting. So what we've presented is we've done our best with those limitations, but generally speaking, EVs are not permitted for us to be directly disclosing.

And then I guess last question, I think if we've picked them all up and apologies if we've missed one, but I think we've got them all. How important are illicit comparables in your valuation process, e.g. US data center reads? Again, Ben, maybe you want to take that.

Yeah, so again, to repeat, we do not, Pantheon does not value the assets. We take the valuations that are given by the sponsors that we work with and the capital statements they provide us every quarter. We know, I think a good example in this respect is Calpine. We know that their valuation methodology has weightings to different components. So part of it is weighted to a pure DCF metric value. Part of it is weighted to where comps are trading. And ultimately, that's what gave the rise or contributed significantly to the rise that we saw over 2024 to the point where they ultimately locked in the value with Constellation. It's a similar story with some of the certainly the data centers and also the towers businesses. Again, there's. Typically, the majority of evaluation is underpinned by a DCF metric. But in some cases, we are aware that they do have a weighting to a component that might be either a multiple of earnings, again, benchmarking to, in some cases, listed comps or other similar price fundamentals.

So that wraps it up for today. Please do drop a line into Ben or myself if there's any questions that crop up as you digest the results further. I'm very happy to do follow-ups as and when. Thanks, everybody. Have a good day.