Pantheon Ventures, an investment manager which focuses on co-investing in strategies including private equity, infrastructure & real assets, private debt, and real estate, today announced its intention to raise £300m through the initial public offering (IPO) of a newly created fund called Pantheon Infrastructure, with one of its key target exposures being digital infrastructure.

Pantheon Infrastructure is launching its initial public offering (IPO) on the London Stock Exchange, under the symbol PINT, after releasing its Intention to Float. The new vehicle will invest in infrastructure assets, both yielding and growth. Geographically, Pantheon Infrastructure will focus on developed OECD markets, with the majority of its investments in Europe and North America. Specifically, the firm will target the infrastructure sectors of digital, renewables & energy efficiency, power & utilities, transport & logistics, and social.

Pantheon Infrastructure is targeting a capital raise of £300m, through the issuance of 300 million shares at a price of 100 pence per share. Indeed, Pantheon Infrastructure expects to publish an IPO prospectus in mid-October 2021 and complete its IPO in mid-November 2021. Finally, Investec Bank is acting as financial advisor and bookrunner to Pantheon Infrastructure.

Dgtl Infra notes that Pantheon Infrastructure’s potential IPO draws a number of similarities to the successful IPOs, earlier in 2021, from Digital 9 Infrastructure and Cordiant Digital Infrastructure.

Investment Profile and Strategy – Pantheon Infrastructure

Pantheon Infrastructure will make equity investments in private infrastructure assets alongside other private asset investment managers and institutional investors – meaning co-investments. Notably, the company will predominantly co-invest on a no management fee and no carried interest basis on the underlying assets.

Pantheon Infrastructure is targeting total returns on Net Asset Value (NAV) of between 8% and 10% per year, following the full investment of its initial public offering (IPO) net proceeds. As part of this total return, the firm has indicated that it will target an initial dividend yield of 2% for the year ending 2022, rising to 4% for the year ending 2023, and, thereafter, a progressive dividend.

Digital Infrastructure

Across the broader infrastructure sectors, Pantheon intends to take a diversified approach, with no single sector representing more than 40% of gross asset value (GAV). Therefore, in the medium-term, the firm targets a portfolio exposure to digital infrastructure of 20% to 35% of GAV. Indeed, digital infrastructure (alongside power & utilities) receives Pantheon’s largest target exposure weighting amongst all infrastructure sectors.

Pantheon Infrastructure defines its digital infrastructure opportunity set as including wireless towers, small cell networks, data centers, and fiber-optic networks. Indeed, the firm’s investments into these digital infrastructure sub-sectors will benefit from growth in demand for mobile data usage, cloud services, high-speed networks, the Internet of Things (IoT), and 5G.

Industry Trends

Pantheon Infrastructure highlights two data points which reinforce its conviction around digital infrastructure. Firstly, mobile data traffic is projected to increase sevenfold in the five-year period to 2022, equating to a 46% CAGR. Secondly, the global roll-out of 5G networks will be used by 11% of users, totaling 1.4 billion devices by 2023.

Investment Pipeline

At IPO, Pantheon Infrastructure has a pipeline of over £1bn in co-investment opportunities in active due diligence. Further, the company seeks to assemble a portfolio of 8 to 12 co-investments within 9 to 12 months of IPO.

Pantheon Ventures – Investment Manager Post-IPO

Since 2009, Pantheon has completed 155 infrastructure investments across primaries, secondaries, and co-investments alongside more than 50 asset sourcing partners. As of March 31, 2021, Pantheon Ventures has $49.4bn of assets under management (AUM). Additionally, Pantheon Ventures’ global infrastructure investment team manages $16.0bn in assets, which includes digital.

Since 2015, Pantheon Ventures has committed $2.7bn to 34 co-investment transactions, delivering a gross IRR of 18.5% and gross multiple on invested capital (MOIC) of 1.38x. The majority of Pantheon’s investments have been in operational brownfield projects or mixed portfolios with advanced pipelines of new-build projects.

Key Personnel

Post-IPO, Pantheon Infrastructure will be led by Richard Sem, a Partner and Head of Europe in Pantheon Ventures’ Global Infrastructure and Real Assets investment team. Also, Vagn Sørensen will be Chairman.

Richard Sem – Partner and Head of Europe

Richard Sem leads Pantheon Ventures’ European investment activity and team. He is a member of Pantheon’s Global Infrastructure and Real Assets Committee. Sem’s prior experience includes roles at InfraRed Capital Partners, HSBC, ABN AMRO, and BNP Paribas. Finally, he holds a BSc and MBA from Imperial College of Science, Technology and Medicine in London.

Vagn Sørensen – Chairman

Vagn Sørensen is a non-executive chairman and director of various listed and private companies. Presently, he is Chairman of Air Canada and FLSmidth & Co. Additionally, Sørensen is a director of CNH Industrial and Royal Caribbean Cruises. Finally, he has also been an advisor to EQT, a private equity fund, and Morgan Stanley’s investment bank.

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