Embed Size (px)
Citation preview
1
Tacoma Employees’ Retirement System Board Meeting February 12, 2015
2
Presenting to you today
Susan Long McAndrews, Partner (joined 2002, 20 years of private equity experience)
Susan is a member of Pantheon’s Partnership Board and also leads Pantheon’s North American primary fund
investment activity. Susan is a member of the International Investment Committee, the U.S. Regional Investment
Committee and the Global Infrastructure Committee. Prior to joining Pantheon, she was a principal at Capital Z
Partners in Asia, where she was responsible for executing investments in private equity funds and in fund
management companies. In addition, Susan was a director at Russell Investments from 1995 to 1998 in its private
equity group. Susan received a BA from the University of North Carolina at Chapel Hill in international studies and
Economics and an MA from Stanford University in international policy studies. Susan is based in San Francisco.
John Greenwood, Principal (joined 2010, 26 years of private equity experience)
John focuses on client services and business development activities in North America. John has spent over 25 years
in the Private Equity industry. Prior to joining Pantheon, John was the founder and Managing Director of TD Capital
Private Equity Investors – Canada’s leading fund of funds. John previously managed a direct investment business for
TD Capital and was a partner in an independent private equity fund. John started his career in the venture capital
group of Citibank Canada. John received an MBA from the University of Toronto and an BA from Trinity College,
University of Toronto.
3
> Introduction to Pantheon
> Why Private Equity?
> Global Investment Strategy & Process
Market Environment & Investment Strategy
Investment Process
> Separate Account Proposal for Tacoma
Agenda
4
Introduction to Pantheon
5
Investing in private markets assets for over 30 years
1 Pantheon International Participations PLC 2 As at 1st January 2015 3 As at 30th June 2014. This figure includes assets subject to discretionary or non-discretionary management, advice or those limited to a reporting function
6
Global capabilities
Chris Meads
Head of Investment
Helen Steers
Head of European Primaries
Susan Long McAndrews
Head of U.S. Primaries
Dennis McCrary
Head of Co-Investment
Elly Livingstone
Head of Global Secondaries
> TEAM: 31
> PE EXPERIENCE: 316 years
> LANGUAGES: 9
28 years
Nine U.S. funds
US$18.6bn AUM1
The Americas Europe Asia
> TEAM: 32
> PE EXPERIENCE: 378 years
> LANGUAGES: 13
33 years
Seven European funds
US$9.4bn AUM1
> TEAM: 9
> PE EXPERIENCE: 93 years
> LANGUAGES: 4
23 years
Six Asian funds
US$4.0bn AUM1
SEOUL
2014
BOGOTÁ
2014
2007
NEW YORK
1982
LONDON
1992
HONG KONG
1987
SAN FRANCISCO
As at 1st January 2015 1 As at 30th June 2014
7
2002 2010 1999
State Universities
Retirement
System of Illinois
Large Ohio
Public Pension
Plan
2004 2013 2000
Illinois Municipal
Retirement Fund
Large Florida Public
Pension Plan
District of Columbia
Retirement Board
Large Virginia
Pension Plan
Funds-of-funds investors2 Separate account investors1
Pantheon has managed 35 separate accounts,
of which 8 are actively committing capital
2010
Large California
Municipal Plan
2002 1999 > Fire & Police Employees' Retirement System of Baltimore
> California Teachers Association
> Carpenters Trust of Western Washington
> Chicago Teachers Retirement Fund
> City of Miami Fire Fighters’ and Police Officers’ Ret. Trust
> City of Norwalk Employees' Pension Fund
> City of San Jose Police and Fire Retirement Plan
> Employer's Warehousemen
> Employment Retirement Plan of NEA
> Fairfax County Uniformed Retirement System
> Kansas City Public Schools Retirement System
> Kern County Employees' Retirement Association
> Louisiana School Employees Retirement System
> Louisiana State Employees' Retirement Systems
> Merced County Employees' Retirement Association
> Metro Government of Nashville and Davidson County
> Office of Hawaiian Affairs – State of Hawaii
> Ohio Highway Patrol ERS
> Public School Ret. System of the City of St. Louis
> Shands Healthcare Pension Plan
> South Carolina Retirement Systems
> Tulare County Employees’ Retirement Association
> Ventura County Employees’ Retirement Association
Partnering with U.S. public pensions since 1998
1 This reflects all US public pension plans that are separate account investors. 2 This is a list of all US public pensions invested in Pantheon funds-of-funds who have given permission to Pantheon to disclose their names in
marketing materials. Inclusion in either list does not indicate a client’s approval of Pantheon or it’s services.
8
> Consistent first and second quartile performance1
> Significant public market outperformance
> Strong realized returns across investment cycles
Strong
track record
Pantheon: global leaders in private equity
> Investment strategy governed by macroeconomic viewpoint
> Thematic approach complemented by rigorous selection process
Thematic
strategy
> Established FoF manager with 72 investment professionals2
> International Investment Committee members average 20 years of private equity experience2
> US$32.2 billion in assets under management globally3
Deeply
Experienced
team
> Interests aligned through Pantheon commitment, management ownership and global carry pool
> Flexible offerings, tailored to meet individual client needs
> Long-standing client partnerships; clear communication and open dialogue
Client focus
1 Quartile data source: VentureXpert; data captured 15th August 2013 2 As at 1st January 2015 3 As at 30th June 2014. This figure includes assets subject to discretionary or non-discretionary management, advice or those limited to a reporting function
Past performance is not indicative of future results. Future performance is not guaranteed and loss of principal may occur
9
Why Private Equity?
10
5.6%
7.9%
12.3%
7.4%
0%
2%
4%
6%
8%
10%
12%
14%
Fixed Income Public Equity Private Equity Real Estate
Asset allocation in context of performance
1 Source: Private Equity Growth Capital Council, October 2014
Analysis is based on financial reports from over 150 US public pension funds. The analysis of pension fund investment returns is based on available 10-year return
data as of June 30, 2013 for each asset class. Using June 30th returns provides the largest sample size for all asset classes. Pension funds typically report returns for
private equity and other illiquid assets net of management fees and carry, while marketable securities can be reported net or gross of fees.
Past performance is not indicative of future results and loss of principal may occur.
Pension Fund Investment Return (10-year) by Asset Class1
Total Fund
Return 7.5%
11
Increasing allocations to private equity
U.S. Public Pension Funds’ Average
Private Equity Allocation
6.45% 6.36% 6.31%
6.79%
7.31% 7.49%
7.77% 7.52%
7.75%
8.45%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
2009 2010 2011 2012 2013
Average Current Allocation % Average Target Allocation %
Source: Preqin, November 2013.
12
Typical applications
> Providing seed and growth capital to developing
businesses
> Addressing succession issues and growth
capital needs in family-owned firms
> Seeks to unlock value in under-funded
subsidiaries of large corporations
> Reorganizing large multi-divisional corporations
to become more efficient / productive
> Seeks to restart growth via take-privates of
undervalued and undercapitalised publicly-
listed companies
Strong corporate governance model
> More frequent availability and detail of
information available to private equity
managers than in public markets
> Provides ability to influence and change
company management
> Can generate implied control premium
> Creates alignment of interests
> Operates over long-term investment horizon
> Operational improvements
> Organic and external growth
> Entry / exit timing – multiple exit routes
> Financial engineering
Private equity can drive value creation
How can private equity create value?
13
“Blind pool” commitment to a General Partner
+ Can provide access to top quartile managers
+ Facilitate consistent exposure across vintages
+ Allows strategic diversification by investment stage,
sector
- Initial management fees negatively impact interim NAVs
- Longer time horizon to distributions
Portfolio can be partly known and valued
+ Greater insight into portfolio composition at time of
commitment (for secondaries)
+ Initial fund fees and expenses already paid
+ Shorter time horizon to distributions
- Less strategic allocation flexibility
- Potential over diversification (for secondaries)
Primary Funds Opportunistic Funds
= Generally can produce a higher multiple on
invested capital than secondaries
= Generally can produce a higher internal rate of
return (IRR) than primaries
Time
Performance
(NAV +
distribution)
Primaries
Opportunistic
Funds
Primaries and secondaries / co-investments are
complementary strategies
For illustrative purposes. There is no guarantee that an investor will achieve such results
14
Global Investment Strategy & Process
15
Market Environment & Investment Strategy
16
U.S.: Thematic investment opportunities
Seek demonstrated value creation capabilities in all strategies
Pantheon’s opinion as of January 1st, 2015
Seek out sectors with favorable
growth characteristics
> Cautious approach to GDP-
correlated industries in the
current environment
> Growth tied to innovation,
population, or global markets
> Sub-sectors within energy,
healthcare, and technology
> Primarily accessed via
sector-focused managers
Capitalize on undervalued and
complex situations
> Managers acquire companies
that are overlooked because of
their perceived intricacies
> Trade complexity for attractive
entry valuations
> Operational skill sets and sector
expertise are critical to success
> Opportunistic across sectors
Re-industrialization provides private equity opportunities
> Re-shoring has driven growth in the manufacturing sector
> Significant investment in new capacity and technology will be
required
> Target chemicals, machinery and equipment, and services
subsectors
> Executable across stages
17
Europe: Many different market opportunities
Source: Pantheon Opinion; % of European deal value between 2011-13; PEInsight / Unquote – March 2014; 1DACH includes Germany, Austria and Switzerland 2 Central & Eastern Europe category also encompasses Russia and Turkey
14%
33%
4%
5%
17%
15%
Nordic
> Region notable for significant
number of high-quality
industrial and service
companies
> Market dominated by a
number of local players
> Management teams tend to be
high quality and have
international outlook
DACH1
> Tends to be dominated by
corporate spin-outs generally
backed by pan-European firms
> Family-owned business
succession drives mid-market
volume
> Industrial, export-orientated
companies are a key focus
UK and Ireland
> Largest and most mature
European PE market
> PE-friendly environment
> Deep PE infrastructure
> Pan-European and local
managers provide excellent
coverage
France
> Thriving mid-market focused PE
industry
> “Insiders’” market with limited
penetration by pan-European
firms
> Management teams very
accepting of PE
> Understanding of local culture
and industrial relations key to
success
4%
8%
CEE2
> Growing volume of
transactions
> Relatively faster-growing
economies
> Large number of small PE
firms
Southern Europe
> Italy, Spain and Portugal are
dominated by family-owned
businesses
> Tend to be “insiders” market,
small number of local managers
> Larger transactions tend to be
undertaken by pan-European
firms
18
Emerging Markets: A wide spectrum of thematic opportunities
EMERGING ASIA: 40-60%
AFRICA, MIDDLE EAST & TURKEY: 0-15%
North Africa
Turkey
Nigeria
Kenya
South Africa
CEE RUSSIA & CIS: 0-15%
Poland
Russia & CIS
Colombia & Peru
Brazil
Mexico
Argentina
LATAM: 25-35%
19
Pantheon portfolio continues to outperform
Past performance is not indicative of future results. Charts above show cost-weighted growth for individual primary buyout investments in PASIA III-VI, PEURO I-VII and PUSA IV-IX and are based upon data at 31st December 2013. Data includes financials made available by GPs for Pantheon’s buyout investments. Horizontal axis refers to calendar year. Earnings primarily refers to EBITDA (when EBITDA has not been
reported, Net Income has been used instead). Individual companies’ earnings growth rates are capped as +/- 100%. The figures are based on unaudited data. MSCI data sourced from
and calculated by Bloomberg. in July 2014.
15%
19%
16%
5%
0%
15%
8% 10%
8% 10%
13%
10%
-10%
-15%
13%
6%
-1%
3%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Earnings Growth (Buyout only) MSCI AC World - Earnings growth
20
Track-record of superior performance
Pantheon Global Select 2014 is a new product offering from Pantheon. Set forth below is Pantheon’s pro forma global primary performance, based upon the primary private equity investments of Pantheon’s
different regional fund vehicles and separate account clients.
Please note that this is hypothetical performance and no Pantheon fund or client has achieved the results in this hypothetical composite.
Data as at 30th June 2014
The measures for the pro forma performance of Pantheon Global Select 2014 include the primary investment results of different regional fund vehicles and separate account clients, as described below. So as to represent the period of time over
which a Pantheon primary fund of funds may commit its capital, Pantheon has created nominal pools of capital, representing three-year time periods, each pool comprising the primary investments made during such period measured by date of first
draw down and weighted in line with the Pantheon Global Select 2014 strategic allocations. In compiling the underlying investment results, within regional and fund stage allocations, where possible, all underlying investments are weighted equally
by vintage year and represent all primary fund commitments made by PEURO 91 pro forma, PEURO 94 pro forma, PEURO I–VII, PUSA I–IX, PUSA SFP IX, PASIA I–VI, PEAF VI, PEMF (Ex-Asia) and Emerging Market Investments made by
Pantheon on behalf of separate account clients from 1992–2012. The pro forma results presented herein do not represent actual historical results achieved by any client, but instead reflects illustrative results. Pro forma results, such as those
depicted above, have inherent limitations which are described more fully in “Limitations of Investment Performance Data and Pro Forma Data” in Section XV “Risk Factors” in the PPM and as such should not be relied on as an indication of what
actual performance would have been for the time period shown or may be in the future.
Net IRR. Net IRR is the annualized internal rate of return (“IRR”) as calculated for each of the pro forma pools described above based upon pro forma net monthly cash flows and pro forma residual NAV included in the last month. The measure
presented is net of a pro forma management fee to Pantheon, assumed to be the highest default rate with respect to Pooled Investors set forth in the Key Terms for the Program (i.e. an annual management fee of 55bps on aggregate capital
commitments). Commencing on the eighth anniversary of the end of the first accounting period and in respect of each year following, the Management Fee is reduced to 90% of the amount paid in the previous year. Nominal net performance has
been calculated without taking into account fund organizational and administrative expenses, which include expenses incurred in connection with the formation of and sale of interests in the fund, fees and expenses related to investment activity
and all fees and expenses related to the operation and administration of the fund, nor of cash inefficiencies that may exist within the actual funds. The deduction of such fees would decrease returns. Prospective investors should note that the
actual fee structures for the regional funds and separate account clients differed from that included in the pro forma presentation above and varied throughout the periods presented.
MSCI World PME. The notional IRRs for the MSCI World Index were calculated using the Public Market Equivalent (PME) methodology, whereby the Pantheon net cash flows are hypothetically invested in the index, assuming zero cost. The MSCI
World Index assumes reinvestment of all dividends after tax and is supplied by Bloomberg/MSCI.
In considering this performance prospective investors should bear in mind that past or expected performance is not necessarily indicative of future results and there can be no assurance that Global Select will achieve similar returns or that
expected returns will actually be achieved. Past performance is not indicative of future results. Future returns are not guaranteed, and a loss of principal may occur.
Average outperformance: 6.0%
Average Net IRR: 13.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Pro forma1992 - 1994
Pro forma1995 - 1997
Pro forma1998 - 2000
Pro forma2001 - 2003
Pro forma2004 - 2006
Pro forma2007 - 2009
Pro forma2010 - 2012
TOTAL1992-2012
Global Access MSCI World PME
21
Investment Process
22
Senior team with deep knowledge and experience
International Investment Committee
U.S. Investment
Committee
European
Investment
Committee
Asian
Investment
Committee
Emerging Markets
Investment
Committee
Global Secondary
Investment
Committee
Co-Investment
Committee
Global
Infrastructure
Committee
Susan Long
McAndrews
Brian Buenneke
Brett Johnson
Dennis McCrary
Helen Steers
Francesco di
Valmarana
Rob Wright
Alex Scott
Dushy Sivanithy
Chris Meads
Jie Gong
Andrew Lebus
Brian Lim
Alex Wilmerding
Brian Lim
Elly Livingstone
Jaime Londoño
Dushy Sivanithy
Maureen Downey1
Elly Livingstone
Andrew Lebus
Rudy Scarpa
Paul Ward1
Matt Garfunkle
Matt Jones
Nik Morandi
Dennis McCrary
Helen Steers
Paul Ward1
Jeff Miller
Alex Wilmerding
Erik Wong
Kathryn Leaf Wilmes
Andrea Echberg
Matt Garfunkle
Susan Long
McAndrews
Evan Corley
As at 1st January 2015 1 Observers
Helen Steers
Head of European Primaries
Private Equity years: 26
Pantheon years: 11
Elly Livingstone
Head of Global Secondaries
Private Equity years: 18
Pantheon years: 14
Susan Long McAndrews
Head of U.S. Primaries
Private Equity years: 20
Pantheon years: 13
Dennis McCrary
Head of Co-Investment
Private Equity years: 21
Pantheon years: 8
Chris Meads
Head of Investment
Private Equity years: 19
Pantheon years: 14
23
Disciplined investment process
> Complete initial subscription
documentation process
> Secure approval of Pantheon
Fund GP / Manager
> Finalise subscription
documentation
> Transfer subscription
documentation
> Correspondence with GP
> Assess and model company
financials
> Reference calls
> Legal, compliance and ESG
reviews
> Conduct portfolio company
meetings
> Investment recommendation
> Regional and global investment
committee approval
> Preliminary review of fund
information
> Face to face meeting with
manager
> Review and discussion by
investment team
> Agree on process and
staffing
> Review of fund due diligence
information
> Follow-on meetings with
manager and team
> Review and discussion by
investment team
> Advance notice given and
discussion with regional and
global investment committees
Reasons to decline
> GP franchise or governance
> Investment strategy issues
> Team depth and quality
> Alignment of carried interest, fee
structure and compensation &
incentives
Reasons to decline
> Portfolio performance issues
> Questionable GP value-add
> Fund legal structuring issues
> Team capabilities or commitment levels
> Unfavourable references
> ESG or compliance concerns
Reasons to decline
> Legal issues or structuring
issues
Source & screen Preliminary diligence Detailed diligence Commitment
24
Proprietary due diligence tools support thorough analysis
> Benchmark analysis of
each fund manager
against peer group
> Confirms optimal portfolio
fit is achieved
> Performance analysis on
unrealised and realised
companies
> Thorough appraisal of key
portfolio metrics
> Provides focus for further
due diligence
> Provides insight into how
managers create value
> Evaluates impact of leverage,
multiple arbitrage and
earnings growth
Peer group benchmarking Portfolio analysis tool Profit attribution
5%
19%
36%
6%
10%
7%
15%
2%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Write-Offs
>0.0x to <1.0x
1.0x
>1.0x to <3.0x
≥3.0x to <5.0x
≥5.0x
Number of CompaniesLabels indicate % of fund portfolio by cost
Realized Unrealized
90%
60%
40%
20%
10%
24%
52%
67%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fund I Fund II Fund III Fund IV Fund V
Investment StatusBy Cost
Realized Unrealized
Private Equity Fund
Value Creation AnalysisAs of March 31, 2010
REALIZED INVESTMENTS Investment Value Creation Attribution
Investment Fund
Initial Inv.
Date Status Cost
Total
Value
Value
Creation
(incl. Div.)
Company 1 Fund 1 Nov-03 R 369.1 984.8 615.7 416.8 113% (50.0) -14% 15.1 4% (62.9) -17% 50.5 14% - 0%
Company 2 Fund 1 Nov-03 R 214.5 450.7 236.2 79.2 34% (26.6) -11% 303.9 129% (24.6) -10% (95.7) -41% - 0%
Company 3 Fund 1 Jan-04 R 96.2 293.5 197.2 352.5 179% 22.5 11% (566.2) -287% (46.1) -23% 434.6 220% - 0%
Company 4 Fund 1 Apr-04 R 405.7 2,350.5 1,944.8 723.8 37% 867.6 45% (399.5) -21% (443.0) -23% 1,195.9 61% - 0%
Company 5 Fund 1 May-04 R 352.1 1,224.6 872.5 1,070.8 123% (164.6) -19% (1,015.5) -116% (160.0) -18% 1,141.9 131% - 0%
Company 6 Fund 1 Jul-04 R 82.3 526.0 443.6 217.1 49% 294.7 66% (225.3) -51% (75.9) -17% 233.1 53% - 0%
Company 7 Fund 1 Nov-04 R 163.0 579.4 416.4 (12.1) -3% 355.6 85% 142.0 34% (212.1) -51% 143.0 34% - 0%
Company 8 Fund 2 Dec-04 R 223.2 1,529.4 1,306.2 248.0 19% (261.1) -20% (59.9) -5% (102.2) -8% 1,481.5 113% - 0%
Company 9 Fund 2 Dec-04 R 116.4 859.6 743.2 1,190.2 160% (114.3) -15% (887.4) -119% (289.7) -39% 844.4 114% - 0%
Company 10 Fund 2 Apr-05 R 278.4 827.6 549.2 3,611.3 658% (532.9) -97% (413.6) -75% (298.2) -54% (1,817.5) -331% - 0%
Company 11 Fund 2 Jan-06 R 114.8 164.4 49.6 (5.2) -11% 212.3 428% (907.8) -1832% (234.6) -474% 984.9 1987% - 0%
Company 12 Fund 2 Feb-06 R 415.2 989.6 574.4 477.9 83% 240.3 42% (273.4) -48% (157.6) -27% 287.2 50% - 0%
Company 13 Fund 3 Aug-07 R 493.8 605.6 111.8 (49.8) -45% (115.6) -103% (26.8) -24% (40.0) -36% 344.0 308% (160.0) -143%
Dividend Proceeds FX Movement
Revenue
Growth
EBITDA Margin
Improvement
Debt
Paydown
Multiple
Expansion
11,385.6
3,324.6
8,320.6
727.6
(4,314.4)
2,146.9
5,227.9
160.0
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Capital Invested Revenue Growth EBITDA Margin Improvement
Debt Paydown Dividend Proceeds Multiple Expansion FX Movement Investment Value at Exit/Current
$-
$100
$200
$300
$400
$500
$600
Capital Invested Revenue Growth
EBITDA Margin Improvement
Debt Paydown Multiple Expansion
Investment Value at
Exit/Current
Company 1
3% 1% 0% 3%
13% 15%9%
16%10%
0%6% 7%7%
3%9%
14%
1%
17%
3%
4%
16%
27%
5%12%
49%
16%
21%
5%
21%
43%
89%
10%
12%
10%4%
18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fund II(16 deals)
Fund III(40 deals)
Fund IV(18 deals)
Fund V(27 deals)
Fund VI(29 deals)
Industry DiversificationBy Cost
Business Services Consumer EnergyEntertainment/Leisure Financial Services Healthcare
25
Deep quantitative research
Global Investment Team PhD-Level Quantitative
Research Team Portfolio Strategy Team
Insightful, relevant investment and technical research drives our
portfolio construction and performance
Investment Team Research
> Sector / Market studies > Healthcare
> Energy
> Mega Buyouts
> U.S. corporate profit margins
Quantitative Research Team
> Quantitative analysis > Performance indicators
> Exit uplift analysis
> Study in fund diversification
> Risk metrics in secondaries
Portfolio Strategy > Designs customized portfolios
> Agrees parameters and constraints
> Develops client investment roadmap
> Executes and monitors client roadmap
Quantitative Research Team area of focus & practical application
> Development of daily asset pricing models in private equity
Daily valuations in private equity
> Design of forecasting models for cash flows and NAVs in private equity
Risk Factor Model development
> Origination of replicating strategies in private equity
Development of Synthetic Private Equity Portfolio methodology
> Primary fund performance attribution using classification models
Evidence-based primary due diligence
> Tail-risk modelling for the purpose of risk management
Development of risk management framework and tools
26
Separate Account Proposal for Tacoma
27
Illustrative target strategic allocation
The ranges are indicative and serve as a target only. Pantheon will always retain flexibility to adapt allocations as required by market developments.
The logos above are examples of managers to which Pantheon has made previous commitments. This does not imply or guarantee that we will invest with these managers in the proposed
program
Asia 14%
Europe 25%
North America
56%
ROW 5%
Geographic Breakdown Mega
Buyout 6%
Large Buyout 18%
Mid Buyout 22%
Small Buyout 19%
Growth 10%
Venture Capital 10%
Special Situations
15%
Stage Breakdown
2015 13%
2016 27%
2017 25%
2018 24%
2019 11%
Vintage Breakdown
28
For illustration purposes only. Shows a hypothetical model portfolio based on the proposed weightings. The ranges are indicative and serve as a target only.
Pantheon will always retain flexibility to adapt allocations as required by market developments.
Global portfolio indicative roadmap
Commit 10% to secondaries and 10% to co-investments
TERS (Tacoma)
FUNDS BY STAGE
Buyout Venture Growth Special Situations
Small Medium Large Mega
Fund I $4.0
Fund I $4.2
Fund I $5.0
Fund I $5.1
Fund I $1.6
Fund I $4.5
Fund I $5.1
2015 2017 2016 2017 2015 2015 2015
Fund II $4.6
Fund II $4.4
Fund II $4.7
Fund II $1.6
Fund II $3.2
Fund II $5.0
2016 2017 2016 2016 2018 2015
Fund III $3.2
Fund III $4.2
Fund III $5.0
Fund III $1.6
Fund III $4.3
Fund III $4.2
2016 2017 2016 2016 2018 2016
Fund IV $4.3
Fund IV $4.2
Fund IV $4.2
Fund IV $1.9
Fund IV $4.2
Fund IV $4.2
2016 2018 2016 2016 2019 2017
Fund V $3.2
Fund V $4.2
Fund V $4.3
Fund V $2.0
Fund V $4.2
2017 2018 2017 2016 2018
Fund VI $4.6
Fund VI $4.2
Fund VI $5.0
Fund VI $1.6
Fund VI $4.2
2018 2018 2017 2016 2019
Fund VII $4.6
Fund VII $4.2
Fund VII $4.3
Fund VII $1.6
2019 2018 2018 2017
Fnd VIII $4.3
Fund VIII $1.6
2019 2017
Fund IX $1.6
2017
Fund X $1.8
43 Funds
2018 $160.0
# Funds
Europe 12
North America 23
Asia 5
ROW 2
Global 1
29
Legal Structure
Attributes
> Separate legal entity provides additional layer of limited liability protection to TERS
(depending on level of involvement)
> Ease of administration of (investment management, capital calls, distributions, etc.)
> Financial reporting (audit, compliance) administered by Pantheon - not TERS
> Pantheon can commit 1% alongside TERS
> TERS benefits from P4 fees
Multi-
Strategy
Platform
Manager
1
Manager
2
Manager
3 Secondary
Pantheon,
G.P.
Series Investments
Pantheon Access: P4
Co-
investment
Pooled vehicles
Each investor will
have own
compartment
TERS
30
Key terms
Management fee 36bps p.a on invested capital1for primaries2;
55bps p.a on committed capital3 for secondaries and co-investments
Carried interest /
incentive fee
No carried interest on primaries. 10% on secondary and co-investments
(subject to the preferred return and 100% catch-up)
Preferred return 8% per annum
Commitment period Generally up to 5 years
Pantheon commitment 1%
1Invested Capital is defined as cumulative drawn capital plus the unfunded portion of capital associated with invested deals as reported at quarter end;
attenuating years 8-12. Fees on invested capital are calculated quarterly in arrears. P4 Investors will not bear certain organizational or ordinary
operating / administrative expenses of their primary program. 2 This fee can be reduced if Pantheon achieves certain aggregate fundraising targets.
3Investors also pay expenses associated with secondaries and co-investment strategies.
Proposed key terms for Tacoma
31
Disclosure
This document and the information contained herein is the confidential and proprietary information of Pantheon; it may not be reproduced, provided or disclosed to
others, or used for any other purpose, without the prior written permission of Pantheon; and must be returned promptly upon request. This document is distributed
by Pantheon which is comprised of operating entities principally based in San Francisco, New York, London and Hong Kong. Pantheon Ventures Inc. and
Pantheon Ventures (US) LP are registered as investment advisors with the U.S. Securities and Exchange Commission. Pantheon Ventures (UK) LLP is authorised
and regulated by the Financial Conduct Authority (FCA) in the United Kingdom. Pantheon Ventures (HK) LLP is regulated by the Securities and Futures
Commission in Hong Kong. In Hong Kong, this document is distributed by a licensed representative of Affiliated Managers Group (Hong Kong) Limited, a
corporation licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities) regulated activity, on the basis that you are a Professional
Investor as defined in the Securities and Futures Ordinance. By accepting this document you acknowledge and agree that this material is provided for your use
only and that you will not distribute or otherwise make this material available to a person who is not a Professional Investor as defined in the Ordinance.
In Australia, this document and the information contained herein is intended only for wholesale clients under section 761G of the Corporations Act 2001 (Cth)
("Wholesale Clients "). By receiving this document you represent and warrant that you are a Wholesale Client. Pantheon Ventures (UK) LLP is exempt from the
requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) in relation to the provision of any financial product advice
regarding the financial products which are referred to in this document under ASIC Class Order 03/1099 and is regulated by the FCA under UK laws, which differ
from Australian laws.
In Europe and the United Kingdom, this document and the information contained herein is provided by Pantheon Ventures (UK) LLP solely to professional clients
or eligible counterparties for the purposes of the rules of the Financial Conduct Authority. In all other jurisdictions, this document is intended for institutional clients
and investors to whom this document can be lawfully distributed without any prior regulatory approval or action.
Nothing in this document constitutes an offer or solicitation to invest in a fund managed or advised by Pantheon or recommendation to purchase any security or
service. Nothing contained in this document is intended to constitute legal, tax, securities or investment advice. The general opinions and information contained in
this publication should not be acted or relied upon by any person without obtaining specific and relevant legal, tax, securities or investment advice. In general,
alternative investments such as private equity or infrastructure involve a high degree of risk, including potential loss of principal invested. These investments can
be highly illiquid, charge higher fees than other investments, and typically do not grow at an even rate of return and may decline in value. These investments are
not subject to the same regulatory requirements as registered investment products. In addition, past performance is not necessarily indicative of future results.
This presentation may include “forward-looking statements”. All projections, forecasts or related statements or expressions of opinion are forward-looking
statements. Although Pantheon believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct, and such forward-looking statements should not be regarded as a guarantee, prediction or definitive statement of fact or
probability. All information or discussion in these materials regarding funds managed/advised by Pantheon or its affiliates is qualified entirely by the terms and
provisions of the relevant private placement memorandum(s) and limited partnership agreement(s) for such fund(s).
Any reference to the title of “Partner” in these materials refers to such person’s capacity as a partner of Pantheon Ventures (UK) LLP. In addition, any reference to
the title of “Partner” for persons located in the United States refers to such person’s capacity as a limited partner of Pantheon Ventures (US) LP.
Copyright © Pantheon 2015. All rights reserved.
