Pantheon Infrastructure PLC

Good afternoon and welcome to the Pantheon Infrastructure PLC for your Results Investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Just simply type in your questions and press send. Before we begin, I would like to submit the following poll, and I would now like to hand you over to partner Richard Sem. Good afternoon to you.

Good afternoon, everybody, and thank you for joining us today. We are delighted to welcome you to the Pint 2025 Annual Results Investor Presentation. Over the session, Ben and I will take you through some of the highlights. We're going to dive into the portfolio with a focus on some of the recent liquidity events. And we're also going to take a run through the financial performance over the past year. And then clearly with the current market conditions, we're going to have a look at that and consider what the outlook might be for the year ahead. Then we're going to take some Q&A. With that, let's dive into the portfolio. So just a quick reminder in terms of what the strategy is of the business. So the strategy is to invest in a diversified portfolio of infrastructure assets, core plus assets, Western Europe, North America focus, looking to generate long term sustainable cash flows, looking for strong downside protection and making sure that we have assets that are underpinned by the regulatory or regulatory models such that we're not overexposed to any GDP risk at this stage. Investor case is clear. 8% to 10% is our total NAV return that we set out at the outset. We're delighted to have exceeded that once the portfolio was fully invested three years ago. We're looking to provide an element of dividend progression, and we'll touch on that later, and looking to realize our assets after a hold period of about five to seven years, so demonstrating the value within the portfolio. The wider Pantheon platform gives us a great place to be able to generate the deal flow that Pint has access to. The platform has almost 27 billion of assets under management. We're invested in over 2000 assets and we have limited partner advisory committee seats with about 100 of those funds or companies. So a great sourcing platform across those 60 sponsors. Over the page, maybe just sort of looking at a brief history of Pint since its launch at the back end of 2021. We fully invested the IPO proceeds and the proceeds from the sub-share within the first year of the IPO and a little bit thereafter for the sub-share. You can see there the 12, 13 assets that we invested in initially. We've seen that portfolio compound through time. And then interestingly, we've seen the realization of Calpine more recently with some of the proceeds coming in at the beginning of this year and being able to anticipate that and redeploy capital into Intersect. Again, we've only held that for a short period of time and have had some partial realization gains already quite attractive for that asset. So really demonstrating the platform that five or so, five to seven year hold and those realizations starting to come through. On the next slide, maybe just taking you through a little bit of the track record. So we've grown the portfolio to about 620 million invested. Steady progression, as you can see on the top left. Dividend progression. We said we'd deliver a progressive dividend. We grew that by 3.5% last year. Very strong, once fully invested, strong portfolio performance. So you can see there the 11% in 23, the 14.9 in 2024, and the 14.4 last year. So exceeding in every one of those years, once fully invested, that 8% to 10% target. NAV per share correspondingly increasing steadily to 130.4 pence. That's off the back of the valuation gains are off the back of a continued progression in our profitability or EBITDA. And we've continued to grow the assets, as you can see there, 1.54 times the invested capital. As we think about the portfolio and key figures, you can see how this is a scale proposition. We've got 2.4 gigawatts of renewables and energy efficiency assets. That's about three times what it was when we set out. So we've grown that through inorganic and organic capex. Equally, we've got about 29 gigawatts of generation capacity. We've got two and a half thousand electric buses leasing to some of the bus companies around the world. Again, we've grown that over two times since launch. Interesting fact, the 3.3 million homes that we've passed with fiber to provide sort of fiber connectivity, that's enough to stretch around the world nine and a half times. So again, just sort of demonstrating some of the scale. And to achieve that, we've got over 100 data centers invested across the platform. As we think about pint and how it's performed within the wider sector, I draw your attention to the NAV total returns of 45.9% over the course of the last three years. That clearly is market leading as we look at against the infrastructure AIC index and also the renewable energy. Energy Infrastructure Index. So doing very well from a NAV total performance perspective and equally from a share price perspective, almost a 60% gain over the last three years, admittedly from a low period. So that is a brief intro to Pint. What I'd like to do is hand over to Ben, who's going to take you through the portfolio.

Thanks a lot, Richard, and good afternoon, everybody. For those of you that don't know me, I'm Ben Perkins. I'm a principal in the infrastructure and real assets team at Pantheon. I joined shortly after IPO and helped with the day-to-day running of Pint. So to start with a look at the current portfolio composition, the main drivers over the last year have been the new investment into Intersect, as well as the valuation gains across Calpine. The impact of that has been to increase our exposure to North America relative to Europe and UK, and also to reduce our exposure to digital. So previously we were around 45% in aggregate, that's now below 40%. Looking at the bottom left here, really important to us that projects are underpinned by contracted revenues. I think that's more important now than ever, given the macro volatility and the geographic issues that are set to be encountered over the next year. We feel that this continues to be an important part of our underwriting, making sure that it provides that downside protection. Final notes on this page. We now work with 12 unique sponsors, the addition of Climate Adaptive Infrastructure, or CAI, through the work investing alongside on Intersect Power. That takes us up to 12. It's only Digital Bridge who we have more than one deal with. That's three. But very happy with how the portfolio composition has tracked. Looking now at the individual portfolio level assets. So perhaps starting with data centers, a really encouraging year again, growth driven principally by AI CapEx demand. So Cyrus One had its best year ever, around half a gigawatts worth of bookings. We also saw on Vantage the Stargate development that was announced. This is a JV between OpenAI and Oracle. That's around two and a half gigawatts of compute. So really encouraging tailwinds that we continue to seize upon there. In fibre, not a huge amount to report. NBI continues to track well. They're actually nearing the end of their intervention period, so this is around 560,000 homes in rural Ireland, and they're seeing really encouraging early uptake, so very high penetration relative to what they expected. Somewhat offsetting that on Delta Fiber, we've seen slightly higher overbuild than we'd expected during the underwriting phase. This has resulted in a more competitive environment, so it reduces the potential customers that they can take. That said, we're keenly following this company because one of the key areas where we expect to de-risk is the sale of around 200,000 homes shortly pending approval from the Dutch regulator. In the towers section, one thing to flag here is that prior to the interims and previous periods, we're now scoring vertical bridge below plan. Whilst operationally, the business continues to perform very well and has seen very encouraging integration of the project Thor portfolio, The bridging finance that was used to acquire that portfolio has taken longer to syndicate with ordinary equity. We're expecting a resolution on this sometime soon, but it has necessitated the mark being held flat over the last year, which is why you can see it's been scored below plan. Deutsche Funkturm, you'll notice this used to be GD Towers. It's the German business. Really happy with how this is tracking. They've de-risked a significant element of their book with the build-to-suit program that they've got with Telefonica and also the network modernization. Looking now at power and utilities, we've got a separate case study on Calpine, which I'm sure a lot of you are familiar with. But National Gas continues to perform very well. They had a very favourable outcome recently with the GT3 pricing control outcome with Ofgem. We're expecting a bit of upside from the valuation relating to that. They also recently announced their first hydrogen investment. So this is seen as integral for Calpine. providing the backbone hydrogen network in the future, which we expect to be delivered through a regulated model and really encouraging to have seen that. We're also expecting an imminent announcement from Ofgem that hydrogen blending up to 3% will be permitted across the gas distribution and transmission networks, which again will be seen as a great stimulus for hydrogen production and ultimately the creation of a backbone network. In less positive news, on Cartier Energy, you'll see that this asset has been written down to 0.8 times. The challenges here have been a multitude of issues. There was some exposure to natural gas prices. They didn't get the renewal of one key customer. And there's also been milder winters, which has not been good for a business that sells heat. And as a result, the company has decided to reduce its growth ambitions. The reduced growth prospects have now flowed through to the valuation, which has led to that right down to 0.8 times. In renewables, worth mentioning on Fejura, so this is our Dutch medium voltage transformer leasing business. This has been tracked from above plan to below plan, principally as a result of flat EBITDA growth over the year. We're expecting a bit of a bounce back imminently as the business seizes on an increased order book for the medium voltage transformers, as well as moving to the new energy solutions. This is behind the meter batteries, smart meters, and also rooftop solar. In the case of Zenobi, they continue to focus their rollout on battery storage as well as buses. This is one area of the portfolio that we think might actually set to fare more positively in the coming years with increased energy volatility flowing through to increase revenues. We've also got a separate case study on intercept power, so I won't touch upon that too much now. But finally, to wrap up on this, Prima Frio over the last year has performed pretty much in line with expectations. What we do have to flag on this is that the asset does remain acutely exposed to fuel costs. It's around 30% of its overhead are linked to the cost of diesel. Clearly in the current environment, to the extent that can't be passed on to customers, it could result in some pressure, some downward pressure on margins. Looking now specifically at Calpine, so we announced the realization or the conditional realization of Calpine last year. This was the sale to Constellation Corporation for a consideration of cash and Constellation shares. The deal we're happy to announce closed on the 7th of January this year. As a result of some structuring challenges, Pint, amongst other Pantheon clients, elected to take a distribution in kind. So this means we received slightly higher shares and slightly less cash, but that was done on a value neutral basis. At the year end, this was marked at a three times. This is based on a constellation energy share price of around $350. That has somewhat softened, and albeit the distribution in kind mechanism has meant that we now are able to actively pursue potential hedging initiatives. And now to look at Intersect, so the deal that we announced in September shortly before the interims and then not much longer after we announced a partial realisation, it's actually delivered around a two and a half P NAV per share uplift. We received in March, so shortly before we came to market, around $44 million in distribution. So this means we've already received about 1.2 times cost. We're also exposed here to the residual assets retained, which are called IPX power. So this is a more simplified pipeline of conventional grid scale renewables. So solar, some wind and battery storage. We're expecting the business now to focus on the delivery of that pipeline with the expectation of a full exit within the next 12 to 24 months. Look now at the cash flow projections. So happily able to report for the year dividend cover was 1.1 times. I think we've produced and provided this exhibit before. I think we would continue to make the case that given the concentration of the portfolio, and the level with which we're dependent on realizations this is clearly subject to change and previously we had guided to coverage based on receiving the calpine distributions in the year that did not happen we did not receive them until q1 this year but we were still 1.1 covered because we we received a number of distributions um ahead of time notably on gd towers and also for jura And a couple of other things to flag, obviously, the intersect proceeds were received ahead of time and again led to an increase in our 2026. And we're also seeing or we're also being guided by GPs now to potential delayed exits on Cyrus one because they feel the value creation opportunity is still substantial enough. And also Global Connect. So this is a business that had sounded out the market for a sale of its whole. And it's now expected to sell to result in a more piecemeal liquidity profile over the coming months, over the coming years, as a result of selling certain segments of the business as opposed to the whole business. Diving now into the key financials. So starting with a look across the discount rate. So one thing to flag here is that this is not an apples for apples comparison. So the 12.7% you see here is a reduction on the 13.6% last year, but that's a mechanical output. That's a mechanical impact of the fact that we have now stripped out the CEG element, which is a liquid exposure So that discount rate is only applied to the illiquid assets, which is the rest of the portfolio and the component that was based on the cash component of a cow pine sale. In terms of gearing, tracking pretty much in line with where we were previously. A slight increase here and also in terms of the hedge debt and the fixed debt. This is as a result of the refinancing that we saw across both Fejora and GD Towers. This resulted in the distributions that we saw last year, which were offsetting the reduced distributions from Calpine. So, again, we have a big focus on making sure that companies where they can mitigate interest rate exposure, again, in the potential environment of increasing interest rates, we think that's a good defensive approach and also a critical focus. Looking now on the bottom line, so the main story which comes out in both the top line growth and also the EBITDA is that these companies continue to grow very positively. It's the reason that we invested in them. We can see in terms of the case of EBITDA and turnover, We're now actually including the full year figures for Intersect Power, which we've now partially exited from. Again, we'll continue to produce and prepare these figures for investors because we think that it's the best yardstick for judging how the portfolio is performing. And we think it's an endorsement of the fact that we've seen that NAV return. One thing to flag also is capex. So this is a really big focus of us because ultimately high capex deployment is going to translate to improve performance in EBITDA going forward. A reminder that these businesses have fully funded business plans. That's through a combination of recycling cash flow that's generated on their operational footprint and also using the equity commitments that we've made, but haven't been called, as well as debt facilities. So really substantial CapEx outlays, and this is being principally driven by those data center investments, as well as Intersect Power. A look now at how that has evolved into NAV performance. So NAV per share increased 12.3p during the period. Adding back the dividend of 4.3p was a 16.6p net uplift. The majority of that is driven clearly by underlying fair value gains of 17.6p or around 80 million. Portfolio FX had a negative movement of about 0.9p, but that was more than offset by the hedge movements we saw of 1.9p. And finally, expenses of 2.1p, and that includes financing costs and broadly in line with expectations. So overall, now the portfolio is sitting where we think very positively at a closing value of 608 million. So in terms of capital allocation, this is materially shifted. The balance sheet position is materially shifted post year end. So we received around 70 million in aggregate across both Intercept Power and also Calpine. So total sources available to us, including the RCF and cash. is around 170 million. We still maintain a very, very conservative approach to liquidity management. So you can see those buffers and the FX buffers and also the co-investment buffers, which is spoken about before. We keep maintaining them as well as treating both our buyback programme and also those uncalled equity commitments as potential immediate calls. Even net of both of those things, that leaves us with roughly 80 million sterling to invest. Richard will talk through the pipeline later, but we're feeling pretty positive about the potential to deploy in potentially two assets, looking to upsize from our average ticket size, which is currently around 35 million sterling to around 40 million. Final thing to flag here is that we recently, just before the results, announced the extension of the RCF to 2029. We also benefited from a 20 bps reduction in the drawn margin. So really encouraging to see that continue to support from our lenders as well. And finally, a recap. So a look at the portfolio through a slightly different lens. We can see those really meaningful valuation gains from Intersect Power as a result of the announced sale, Calpine, partially driven by the performance of CEG, and also Vantage, significant de-risking of that business through the announcement of the Stargate. So you can see here how that's translating to those significant fair value gains. We also got very sizable distributions from Fejora and GD Towers, as I mentioned. complemented nicely by some distributions on NBI as well as National Gas. A provision was also taken, as I mentioned, on Cartier Energy. This was to reflect the lower growth prospects of the business and also therefore the lower assumed terminal value. But that remains the outlier. Again, every other asset apart from Cartier remains valued above cost. And again, it speaks to that significant outperformance on the NAV total return. With that, I'll hand back to Richard to cover the outlook. Thanks, Ben.