Pantheon Infrastructure PLC (56N.F) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Pantheon Infrastructure PLC Half Year Results Investor Presentation. [Operator Instructions]. The company may not be in a position to answer every question received during the meeting itself. However, the company can review the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. [Voting]

I'd now like to hand you over to partner, Richard Sem. Good afternoon to you, sir.

Good afternoon. Hello, everybody. For those of you that don't know me, my name is Richard Sem. I am the PM for PINT. I'm a partner in our Pantheon business, and I head up our infrastructure business here in Europe. I also sit on our Global Infrastructure and Real Assets Investment Committee, which means I oversee the deployment into the various different infrastructure strategies that we run. I'm supported on today's call by Ben, who many of you know, and [indiscernible] is also a very valuable member of the team. So just maybe a quick outline of what we're going to cover today. So usual format, which should be done in about 30 minutes or so. We'll provide a summary of the recent highlights for the business. We're going to talk a little bit about our approach to infrastructure. Then I'll cover financials and give you an update on the portfolio. We're also pretty excited that we've made a commitment to Intersect Power. This is a renewables power business in the U.S., and I'll spend some time on that a little bit later on. And then as you heard in the introduction, we're going to leave some time for Q&A at the end. So please do submit a question on the right-hand side there. So you'll all be, I think, familiar with the strategy at PINT. Our aim is to create a globally diversified portfolio of infrastructure assets, looking to generate attractive returns over the long term through both growth and yield. We continue to target assets that are essential to everyday life and those that benefit from either long-term contracts or regulated revenues. What we're trying to do is really find assets that have -- can provide stability of cash flows. Given the macro uncertainty, we also want to make sure that we've got strong inflation protection or escalation mechanisms to protect the value of our assets. We believe that this provides a robust downside protection in light of both the stickier inflation environment that we're in and also, I think, the elevated recessionary risk and general uncertainty we have in the world. Moving us along to kind of the investment case. So look, we're targeting an 8% to 10% NAV total return. We are very excited to have tracked above that for the last 2 full years and also now for this first half year. In terms of dividend, a 3.5% increase for the period with 2.173p as our first interim dividend. We remain on course to fully -- we fully covered this year with the significant Calpine proceeds, about $35 million expected in Q4. Our model, as you know, is to hold assets for the medium term. We typically have about a 5- to 7-year holding period. And so we'd expect to see a couple of assets realizing every year given the scale of the portfolio we have now. In terms of our wider platform, so [ third box ] along, $25 billion -- almost $25 billion of AUM, just under 2,000 assets, and we invest alongside 60 or so sponsors. That's a lot of growth since when we launched. So when we launched PINT, we had about $16 billion of AUM. So you can see a lot of traction with our wider business. PINT is also able to access this wider platform and continues to benefit from this wider allocation to deal flow from these leading sponsors. The existing portfolio also provides us with an amazing opportunity to data mine the various subsectors within our portfolio and looking to find more and more ways in which we can feed this into our investment monitoring, our origination and our asset allocation. And obviously, with this team, we offer both speed, certainty of execution for the sponsors that we work for. So a few key highlights, our track record for PINT, it's been a relatively short period since launch, almost 4 years ago now. You can see the progression across some of the key metrics. Again, as I said, strong half year for the year -- strong half -- first half for the year. We're committed to 13 assets. We are looking to recycle the proceeds from Calpine with that GBP 30 million commitment into Intersect Power. We announced that at the beginning of last week. It's also great to see our share price discount narrowing, and we'll talk about that in a minute. Another key -- another key milestone for us was the admission to the FTSE 250 in June. The dividend target was increased to just over 4p, 4.34p for the year with that first interim due to be paid at the end of October. We've seen our NAV increase to 122.7p. And we've also seen that the backed off that middle chart there, the GBP 78 million of EBITDA. So seeing strong kind of 18% EBITDA year-on-year growth across the portfolio. The portfolio now sits at a 1.42 metric -- multiple rather, as a metric that we've been targeting and communicating to investors. Think of that as a net multiple on invested capital. So really sort of stripping out any of the FX noise. So really just looking at the underlying deal currency money multiple. We wanted to, I think, take a minute just to think a little bit about our share price performance for the period. It's clearly been a very challenging period for the sector at large. So very pleased to see kind of this re-rating of these core plus growth infrastructure strategies. You can see that in the share price here. We have now been consistently trading as one of the narrowest discounts across the whole infrastructure, the infra and renewable subsector. So very pleased to see that coming through, both in terms of performance but also in terms of shareholder returns. And you can see the table down the bottom of the page there with some really strong performance on a 1-year and 3-year basis. So just in terms of our co-investment approach, I think as you'll recall, some of the key factors here, we team with the sponsors that we work with. We give access to our investors to deal flow that is strongly aligned with those sponsors and with other pools of capital that we manage enhanced returns because we are not suffering any underlying fees at the company or asset level, just the fees at the underlying fund level. We had really strong portfolio construction being able to really sort of try to pick the best risk-adjusted returns we can find within the portfolio as a whole. Nice strong diversification and exposure to some pretty exciting investment sectors and subsectors, which we'll talk about in a minute. So with that, I'd like to hand over to Ben, who will take us through our portfolio.

Thank you very much, Richard, and good afternoon, everyone. It's great to be here again talking to the PINT results. To kick off with the portfolio overview as we were at 30th of June. Reality is that there's not been a huge deal of change here since the year-end because PINT has not made any divestments or new investments. So what you see is effectively the recalibration arising from fair value movements. We still maintain a good balance between Europe and North America. The intention was very deliberately set to target assets in those geographies at IPO. From a sector perspective, again, remain pretty unchanged. You can see the largest exposures to digital, but we set that out between the 3 unique subsectors of Fiber, Towers and Data Centers. We remain heavily concentrated on contracted revenue. So this is the majority of revenues of each of the underlying companies. It's definitely our focus. It provides a lot of downside protection with the residual GDP linkage being to the Primafrio investment that we made and then the related linkage into national gas. And then we maintain that roster of 11 sponsors. So 13 deals, 11 unique sponsors, that will soon change the composition of this chart will happily assume change once we finalize the investment into Intersect Power that Richard has mentioned and that will appear in the portfolio overview for the year-end. Look now at how the NAV has moved during the period, so a 4.6p gain. That's net of the second interim dividend that was paid in relation to 2024 that was declared and paid in April of 2.1p. Fair value gains of 7.4p or around GBP 35 million in aggregate, we'll go through some of those drivers. Safe to say there's been a significant contribution from Calpine specifically where the mark-to-market has gone on the Constellation Energy share price. And as usual, the impact of our FX hedging means we're only marginally exposed to foreign exchange currency movements, you can see there's been a net 0.3p gain during this period. That's effectively just pockets of unhedged exposure. But generally speaking, we mitigate FX movements through the hedging. And then expenses and financing costs pretty much in line with expectations. Only other thing I'd mention here, you can see the GBP 4.8 million distribution on the bottom chart, it's a GBP 4.8 million cash that came from distribution from underlying project company distributions during half 1. The first half of the year tends to be pretty quiet. Most of our distributions come through in Q3 or Q4. As Richard mentioned, we've got good line in sight to the first component of the Calpine disposal coming in, in December, and that will be, we expect moving PINT to a position of full dividend coverage. Look, now is a familiar slide, but with potentially unfamiliar figures, this is how we think about our capital allocation and the sources being cash and the available on-hand liquidity through the RCF, net of our commitments and our cash process, which we have a very institutional approach to. The key figure being that an increase in the commitment. So we announced the deal to -- into Intersect Power last Tuesday. Richard is going to talk you through the deal and the pipeline in more detail later on. But now in effect, that figure that's been hovering around GBP 30 million to GBP 35 million over the last year of funds -- notional funds available to invest has now been deployed. A key thing to bear in mind with this analysis is that this is a snapshot in time. It gives no bearing to the imminent cash flow receipts we're expecting to receive not just from the Calpine realization, but also from some of the other assets that are distributing income during the period. So whilst that GBP 3 million figure might look low, we expect that to significantly increase as and when we receive those distributions that's even allowing for the imminent first interim dividend, which will be paid in October. And the expectation is that the Intersect Power deal will be funded partially by cash. So our net cash position after allowing for the dividend is around [ GBP 14 million ]. The balance of the funding requirement for Intersect Power is expected to come from the utilization of the RCF, which we would then expect to repay when those cash flow proceeds from the Calpine close come in at the end of the year. Now to look at the portfolio, we'll talk you through the metrics that we've proposed or presented previously. I think the main one to dig into here is the weighted average discount rate, we had a couple of inbound questions around this. It looks like it's dropped materially from 13.6% to 12.3%. What you can actually see, if you dig into the details of the footnote that we put here is, we've effectively stripped out the exposure to the Constellation Energy share price. So a large part of the sale of Calpine is linked to inheriting exposure to the CEG stock. That effectively is not something that can be measured with the discount rate. It moves intraday. It's something that has moved significantly, not just since the quarter end, but also since the deal closed or was announced in January. So what you see here is 12.3% discount rate on the portfolio, excluding the element of the valuation that relates to the Constellation Energy share price. What we can say is that there's been no other rebalancing changes. So whilst it looks like it's moved on a like-for-like basis, it's been unchanged, albeit we've now segregated the fact that there's this exposure to a listed stock, which we don't feel needs to be reflected in the discount rate. In terms of the other metrics, weighted average gearing, as a reminder, we present this as net debt to enterprise value on a weighted average basis based on our underlying shareholding in each of the relevant investments we've made that's holding steady at around 36%. So companies typically are using leverage to grow. So we're always very focused on this and making sure they've got the capacity to do so. But happily, we can see that they've done that on a fairly consistent basis with historic gearing. Likewise, weighted average hedge debt, what this also includes is fixed step. So the other way to think about this is that only 18% of debt on an average basis across the underlying look-throughs is exposed to interest rate risk. And this is something that we've spoken about before. We do see some pockets of exposure but only where companies are using short-term debt facilities, so a revolving credit facility or a warehousing facility to finance the rollout and the deployment of a pipeline. So again, this is sticking to the very clear guardrails we've set at the start to make sure we're managing things like interest rate risk. Moving to the bottom row now. So weighted average -- weighted aggregate revenue has grown 15% CAGR over the period year-on-year, this is around a 17% increase. So the companies are still growing significantly through organic and in some cases inorganic ways. EBITDA over the period has had a slightly higher compound annual growth rate. Year-on-year, the GBP 78 million figure is about an 18% year-on-year growth. So really happy with how that's tracking. And again, it supports that significant valuation movement, which is supporting our NAV returns. It's something we'll remain really focused on as a growth play and investing in companies that are very deliberately seeking to expand their earnings as opposed to being a finite life asset, it's something that people should judge us by. The final figure here, which we've not always gone into as much detail about when we were presenting to investors is around CapEx. And there's probably 2 things to consider here. So we've spoken probably at relative length before about the fact that we're investing in companies that have a fully funded business plan. So we don't want to be investing in a company that needs to find a way to fund growth within a couple of years after closing. So there's various means that can come through funded debt facilities. It can come through the headroom to an equity commitment we make to the amount that's not been called or it can be just through the regeneration of cash flows, the recycling of cash flows within the company. So really a case example of that is a data center company. It's 1 like CyrusOne that has a highly cash-generative operational portfolio. But such as the demand for cash to roll out their pipeline is that that's entirely being recycled. So a company like a very high growth sector like data centers is less likely to distribute cash to PINT until we actually sell and realize that asset. So another thing that we're really focused on and we think speaks to the fact that we are targeting companies that have -- are well positioned to deliver against significant tailwinds. And we would expect in turn, in time that significant CapEx outlay to translate to accretive earnings. Look at the portfolio now. So this has had the addition of what looks like a series of crocodiles on the right-hand side. The intention here is to demonstrate to visualize how the MOICs on these investments have materialized over time. And I think there's probably a few things to flag here. Obviously, there's been some that have moved in a nonlinear -- linear progression, and I think that's probably a key theme that we take from this is that these are very complex operational businesses from day-to-day, you never mind quarter-to-quarter the outlook can change materially. Valuations don't always move necessarily in the way that you'd see in a finite life, a PPP asset or a renewables asset, absent things that changes in the discount rate. So we thought that would be a useful exhibit to demonstrate that whilst we're happy with the progression of the portfolio, it's not always uniform in the way that MOICs evolve and valuations increase. In terms of maybe looking at performance, rather than going in asset-by-asset, you talk about maybe sectors. So it will be no surprise to everyone to hear about the significant growth in that CapEx outlay and the earnings progression that we've seen in the data center business, the data center businesses we've backed. This is driven by the continued and sustained demand from hyperscalers for AI compute capacity. So this is a real shift from just the cloud computing model that we'd originally entered these companies in. So really benefiting from our timing in entering that sector. What I would say is that Vantage is in a slightly different part of its progression in CyrusOne. CyrusOne as a listed entity had a very significant proportion of its business was in its operational fleet. The ratio is a lot more skewed for the case of Vantage to its development pipeline, which is why you can maybe see a bit of a stagger in the way that those MOICs have evolved. In terms of Fiber, you can see we've got one above plan to below plan. I think the characteristic to take away from this is that NBI was a business -- is a business that we back because of the significant downside protection of effectively being a monopoly operator. So it operates under a concession agreement with the Irish government. What that means is that basically, they're the only show in town for rural fiber. It means -- there's risk in delivering that model. So it has to be done on time and it has to be done on budget, which happily they are delivering on, but there's limited pockets of overbuild risk, which is not necessarily the story we've seen for the other 2 fiber operators. Less so an issue on Global Connect. I think the challenges that we had there was that they decided to withdraw from the German fiber-to-the-home market because they saw the prospects of overbuild as being an attractive. In the case of Delta Fiber, they've seen slightly overbuilt than they expected to initially, and this is a function of the incumbent operator that the incumbent network operator in the Netherlands actually overbuilding in certain pockets that weren't envisaged. So some softening from those are the fiber stories. In terms of Towers, both those businesses tracking on plan Vertical Bridge a bit of a different story. They've just onboarded the Verizon portfolio. So they've gone from around 11,000 to 18,000 towers. There's massive potential here for upleasing, so adding more tenants to towers, which is highly profitable for both of these companies. If you think about existing infrastructure, tagging on a few more dishes has next to no marginal cost. So it's highly incremental and it means that the pivot of both these companies has been to focus on co-location and increasing tenancy ratios. In terms of Power and Utilities, Calpine, needs no introduction. It's the asset that is now sitting at nearly 3x. It's been a real beneficiary of the load growth that we're expecting to see in the U.S. It was acquired by -- well, provisionally acquired by Constellation Group, which I mentioned earlier, who operates a predominantly nuclear fleet. Gas is seen as a quicker route to market. It's also cheaper than nuclear. So it's complementary to the existing fleet that Constellation have and if something is benefiting substantially from both behind and front of the meter private or direct PPA arrangements with a lot of hyperscalers. National gas is a U.K. regulated business that delivers the methane transmission network. They're also looking to pivot to hydrogen, expecting some positive news from the U.K. regulator in time about 2% blending, which we think will be very good for nurturing the development of potentially in time a backbone hydrogen network. And then Cartier Energy is the one that we had a few more challenges with. It's a district. It's a platform of a number of different district heating businesses in the U.S. They're exposed a little on some early contract terminations as well as exposure to natural gas prices. A quick word on the other 3. So Zenobe is a U.K. operator of network infrastructure, so grids, batteries and also buses. We're happy with how that business is tracking. We're seeing significant opportunity set in the electrification of transport in the U.K. but also in the states where they had a big contract win in -- actually in Canada, so North American footprint expanding and they're now starting to see a real ramping up of some of their network infrastructure opportunities. Fudura is not a dissimilar story. So they're benefiting from grid congestion in the Netherlands by providing adjacent products to their customers outside of medium voltage transformers so things like behind the meter batteries, integrated solar and EV charging, really happy with how that business is tracking. And then Primafrio has seen a real recovery in revenues and volumes in the last 2 years, had some early challenges in our investment here around where fuel costs were going with the increase in inflation and then also the cost of leasing. They're now seeing the impact of that tapering off and the business is becoming even more profitable. I won't dwell too here, but -- I won't go up too long here, but we've got a refresh of the cash flow forecast that we prepared at the year-end. I think the big message to take away here is that it's pretty much unchanged right now. In time, sponsors plans can change. They might shift their exit window or the horizon might change depending on where they see value creation opportunities. The key change here when we did these figures for the year-end was the fact that we had that near-term liquidity coming from the Calpine exit, so not just from the cash component, but also from the expectations about the disposal of the Constellation shares subject to those lock-in periods. So unchanged current horizon, we do continue to monitor this with the sponsors that we work alongside what we're tracking towards without putting figures to it is to have that dividend fully covered, as Richard mentioned, it's taken a little longer than we have hoped, but we're now seeing meaningful cash come off a variety of different sources and not just Calpine. This is an extension of the slide. We showed 2 pages back. So you can see where the -- this is the nuts and bolts of where the movements have come. Safe to say a large component of the valuation gains have come from Calpine and specifically from the mark-to-market movement from the Constellation Energy share price. So we disclosed the sensitivity in the year-end that pretty much for a $10 movement in the share price, we benefited to the tune of about 0.5p. And that's translated with the fair value gains that we can see in this asset. Other notable movers have been Fudura and Primafrio moving quite nicely as well as Vantage Data Centers. Some softening from that story that I mentioned around Delta Fiber, they remarked the business to track the latest expectations of adoption. So that's probably the one disappointment across the portfolio. But generally speaking, we're very pleased with where the portfolio is going. We think that the outlook for these assets remains incredibly positive. Calpine, I mentioned, so this is the sensitivity I touched upon a recap for those that need it. This is a business that has done incredibly well from those AI tailwinds and low growth. The value that we struck was GBP 16.5 billion in January, GBP 4.5 billion of that is in cash. So we will be entitled to a very large chunk of that in December. Then the balance was through the value of the CEG share price. So that was quoted as nearly GBP 12 billion back then, but that was on a $238 share price. Where we are today is about $100, north of that, the value at Q2 was around $320. So a significant movement upwards in that. That does introduce mark-to-market risk. We have looked at ways which we might explore for hedging this. It's not possible to do before the deal closes. We can't get a counterparty that would be able to price that contingent risk so that we're not exposed if the deal didn't close. But there's a couple of options we've looked at and may explore for potentially minimizing that mark-to-market exposure going forward. And a final word on Constellation. So this has taken directly out of the most recent earnings call, some notable updates there. They've been re-energizing a couple of their key nuclear facilities. They're seeing really significant long-term offtake for these assets, a really significant development for the sector as a whole was the meter PPA that they entered into for 20 years. It's a front of the meter one. So this is something that is seen as mitigating potential regulatory concerns about behind-the-meter PPA arrangements that might potentially compromise grid resilience. So this is something that has been a key area of focus from the regulator in the U.S. and happily they found a constructive way around it. And you've got very captive off-takers there. You've got potential market for significant load that this fleet is able to generate as a combined entity because of the sheer nature of the demand for power within these hyperscalers in the data center sector. So really encouraging prospects that the share price value reflects that. We know that there's that volatility that in time, we wouldn't ideally like in the PINT portfolio but the contribution to performance has been incredibly impressive and something that has led us very much to a key component of the NAV returns that we've delivered. With that, I'm going to hand it back to Richard to talk through Intersect and the pipeline more broadly.

Thanks, Ben. So an opportunity maybe just to talk about the pipeline. But first, before we get there, let's take a quick look at Intersect. So as you'll appreciate, I think valuations in the data center space have been quite elevated. So we want to try and find alternative ways to play some of the AI tailwinds. We've seen sort of a massive rollout of data centers. The key constraint has always been access to power, land and fiber capacity, obviously, important components potentially water as well from a cooling perspective, but power has been the key constraint. Why we like Intersect? It's a very large-scale solar and battery player. They currently operate in both Texas and California, and the entirety of their pipeline is backed into those territories. This is a full suite co-location model. So not only do they have the solar and the battery, but they also have some modular gas as well added into the mix. So what that does is it gives us kind of that 24/7 baseload energy profile that data centers need, especially in this world where we've got highly congested grids. We've invested with CAI, Climate Adaptive Infrastructure. This is a specialist manager alongside other large-scale investors, Greenbelt, TPG Rise, who we know extremely well. And then Google as well has provided strategic capital. So again, we think, an interesting partner to have in this type of business. Clearly, some risk around tax credits as we've seen with the repeal of the IRA and some of the worst macroeconomics that we've seen around kind of -- and some of the challenging tariff environment. Look, what we say is we've grandfathered all the tax credits into the business. I think the pipeline is very much focused on opportunities where we've kind of got PPAs, power purchase agreements with counterparties where we're not taking sort of that tariff risk. And also you have to think about solar is now really sort of the cheapest power on the grid. So again, we think a lot of protections for the underlying business. We've got a good pipeline. Project A there, here is an anonymized list. Project A is the deal we just talked about Intersect. We've got a very, very good pipeline. We've kind of split. We're not giving you the full detail because we're still working on these deals on behalf of our wider platform. But to give you a sense, we've got deals with Brookfield, KKR, Stonepeak, Ardian and to name a few. We expect to be open to further acquisitions. We've got the locked-up CEG shares, which should distribute over the next 18 months or so and give us an opportunity to deploy capital into more of these subsectors. We'll always be looking for where we can find the best risk-adjusted returns at any point in time and making sure that we also build a diversified portfolio by subsector and by revenue mix. So just before we go to questions, maybe just a few of the things that we're focused on and I want you to remember. Firstly, PINT really does deliver a truly diversified and resilient portfolio across 13 infrastructure assets, soon to be 14 when we complete on Intersect. It's been performing very strongly during a period of heightened macro uncertainty. There's lots of opportunities for us to deploy capital. We've had very strong NAV growth, as you've seen, supported by strong EBITDA growth, too. We've increased the dividend by 3.5%, and now we're approaching that to be fully covered with the cash receipts we're expecting from Calpine. A strong balance sheet, as Ben highlighted to you, we don't have any expensive drawn debt. We've got no pressure to actually realize assets. And what this does -- what this facility allows us to do is cater for some of those risk buffers we have within the portfolio -- within the balance sheet. So with that, that probably takes us to the end of what we want to talk about today. I will move to Q&A.

That's great. Well, Richard, Ben, thank you very much for your presentation. [Operator Instructions] [indiscernible] company take a few moments to review the questions that are being submitted today. I'd like to remind you the recording of this presentation, along with a copy of the slides and the published G&A can be accessed via our investor dashboard. As you can see, we have received a number of questions, both pre-submitted and throughout today's live presentation. What I'll do now is I'll hand back to you to read the questions out and then I'll pick up from you both at the end.

So Ben, maybe first one for you. There was a question around the discount rate reduced from 13.6% to 12.3%. I think you largely covered in your presentation, but maybe you could just provide some additional color on why such a large movement for the 6 months?

Yes. Thank you. So as we mentioned, this is not an apples for apples comparison. So the 13.6% was based on the entirety of the portfolio because at that time, it was still valued using a discount rate. The 12.3% is based on the portfolio less the value that includes the component of the CEG shares, which is around 12% of the aggregate portfolio value. So it's a more like GBP 500 million. And that gives the 12.3%. I think if you reverse that and basically do the calc on the same basis, it would be unchanged. So there's no other material drivers other than the fact we're reflecting that listed component. Richard, maybe 1 for you here. So which of your core sectors, Digital, Infra, Renewables or Utilities offer the best balance of growth and resilience today?

Look, I think all subsectors provide opportunities, but also risks. So I think we need to be pretty nuanced in terms of how we look at the different opportunity set. We've got a very wide funnel so we can typically look for the best risk-adjusted returns at any point in time. Yes, as Ben highlighted, we've clearly got some quite different risk profiles within even assets in the same subsector. So we compare and contrast at NBI, which was largely sort of a concession-driven monopolistic business that's outperformed pretty materially versus other assets that have faced maybe a little bit more overbuild risk. And Global Connect for instance withdrawing from the German market, just given some of the anticompetitive behavior by the incumbent telco provider. So we're always looking for the best opportunities. We can't say if it's Digital, Renewables or Utilities. We're trying to factor in a balance of both yield and growth. Next question, probably just take these in turn. With the conditional sale of Calpine expected to complete later this year, how are you prioritizing reinvestment of those proceeds and what criteria would drive your capital allocation decisions in the current macro environment?

Yes. So this is something we've been thinking about a lot and clearly was part of the -- was factored into the decision-making to go back in the waterfall and do the deal for Intersect Power. We've heard from a lot of shareholders that further buybacks need to be done in a very judicious way. So we maintain, if you remember the balance sheet, we maintain GBP 9.2 million that's being allocated to potential buybacks. We're not assuming that we're entirely out of the woods and the discount will always only narrow. But we are at a point that if you apply the potential return from buying our own shares it becomes less compelling than doing new investments. So very much looking at that as being a soft hurdle. So what would be the effective return on buying the existing shares at a discount given that discount rate the portfolio is valued on. And happily, we're now in a position that the discount has narrowed such that it's a more compelling argument to make new investments. That also gives us the ability to continue growing the vehicle. And with that, we think will come more liquidity, more potential buyers, the greater the scale of it, the greater the market cap, the more people this is interesting to and in time, potentially the more narrowing of the discount we can do. Maybe 1 back to you, Richard, how do you plan to leverage joining the FTSE 250 to broaden your shareholder base and increase liquidity?

0 Look, I mean, it was a great -- I think a great milestone for the business back in June. So thank you, shareholders, for your continued support for the business. We will continue to focus on driving performance within the portfolio and the redeployments, making sure that we invest in other assets that can bring -- deliver the target returns and the yield that we're looking to give shareholders. We work -- this forum, I think, is great to be able to reach a broader audience. So hopefully, initiatives like this can be helpful. We've also worked pretty hard on the website, so hopefully, give greater information about the portfolio, greater transparency around the portfolio. We work with Lansons, our PR agency, have had a couple of articles in the telegraph, an article in the Times and in various other specialist financial press. So again, you can see copies of those articles on the website. So we're trying to get the word out there. And then finally, through Investec, our brokers actively using the opportunity of these results to go out and speak to investors and build a road show. So some of the things we're doing to try and increase liquidity in the share. Next question, Ben, we'll keep back and forth going. What can you say about the return of capital from the Calpine transaction beyond the $35 million expected in Q4, how it is structured?

Yes. So we have a -- as we've mentioned, there's been a significant component of the consideration is in CEG shares. They are subject to lock-ins which is customary for this kind of trade where you wouldn't want to create an immediate day 1 overhang that we drag on the share price. We can refer to the public announcement at the time, which confirms that Constellation and ECP being the seller had agreed to an 18-month lockup with respect to the ownership of the Constellation common stock, and that's subject to a schedule of potential sales over that 18-month period. So we would expect all being well and subject to the deal closing, that the final liquidity of that position would emerge within 18 months. Richard, another 1 straight back to you. So please, can you say a bit more about the relationship between PINT and the other Pantheon Infrastructure strategies?

Yes. Look, PINT is one of our clients, effectively for Pantheon as a business. We have, as we said at the beginning, just over GBP 24 billion of assets under management. So we are providing our deal flow to our various different clients. To be clear, our allocation strategy is very simple. We allocate it on a pro rata basis based on those clients that have available capital to invest at any period of time. There's more detail in the IPO perspective. In a nutshell is where we're at. I think the other thing probably just worth highlighting is most of our private infrastructure programs suffer -- we take a carried interest or a performance fee on those mandates. We do not charge an equivalent performance fee or carried interest on PINT. So PINT is getting a pretty good deal compared to some of our other programs. Needless to say, PINT is still benefiting effectively from the halo effect of us looking to earn those performance fees or those carried interest on those wider programs.

Maybe another one for you, Richard, about general mood around the IPO market and it seems that deal flow and IPOs are irking up. Is this your experience? And do you anticipate further realizations in the coming period?

Yes. No, it's an interesting one. I think we felt there were green shoots at the beginning of this year. Clearly, Trump had other ideas with effectively stalling that recovery in March this year. It certainly is the case that the IPO market seems to be gaining some really interesting momentum post the summer. Bankers are busy again. I think they're talking up the market. So yes, I think the IPO market is pretty interesting, especially in the U.S. Do we expect that to be some realizations coming off the back of that? Yes, in time, I think IPO is only one exit route, remember, we can exit to a strategic or financial player as well. So we have various different exit routes for our assets, but it's definitely helpful that the IPO market is opening. There's further liquidity coming into the market. I'd also highlight that the private infrastructure market has some significant dry powder, which will also act as an opportunity to buy some of those assets. And equally, a number of assets are sitting as quite mature in some of the funds right now and looking necessarily for an exit. So we feel the market is pretty bright right now and especially given sort of the less volatility we see in the infrastructure market. We see this as an interesting time to be back in the waterfall. Next one for you, Ben. You have adopted a conservative approach to debt so far. Would this change have you found a compelling opportunity? Or are you committed to a very cautious approach to debt?

Yes, it's a really fair question to raise. And I think the answer is, yes, and I think the evidence is in the transaction that we announced last week. So we've always said that we don't want to be using the RCF to using debt as a bridge to an equity raise when frankly, isn't the certainty in the market that this is in the 2010s, it's not when there's what feels like an endless stream of money that's chasing the sector. And especially we're trading at a discount, it's not something that you can assume you'd be able to raise money to repay an RCF. So we think we've been pretty consistent in that. What changed with Intersect was that visibility on the Calpine deal coming in and those initial proceeds. And it was using the RCF was a very effective way to be very balance sheet efficient. So making sure we didn't have cash sat on the balance sheet for a long time. It's a deal that -- because of the RCF, we could front run that. The deal is not entirely certain with Calpine. So it won't surprise people to understand that we looked at the downside risk here. What would be the case if we were drawn on the RCF. The reality of that situation would be that Calpine would still have a lot of cash flow to distribute. So we feel that there's a downside scenario that's quite comforting. In terms of a specific scenario, if we saw a very attractive deal, again, in the same circumstances next year, I think it's something that we involve the Board with significantly, but the issue here is making sure we've got that flexibility and that's what having an RCF provides you with. It means that your balance sheet efficient, your warehousing or those buffers and commitments without using cash and it also affords you the ability of a really exciting opportunity comes to potentially transact on that. So no hard and fast rules, but I think the proof has been in that recent deal that we're willing to be a bit flexible where we see an exciting opportunity. Richard, 1 for you now. We've got 1 shareholder flagging the -- pleased to see the share price discount to now narrow over the last couple of years. What are the main factors that have caused this? And how do you think we can sustain that improvement?

Yes. So I think there's a few factors. So first of all, there's been general malaise within the infrastructure and renewable subsectors, the listed infrastructure and renewable subsectors. Some of that kind of well documented within the financial press, so I won't sort of go over all of that here. Pleased to see that our -- all we can do is focus on the performance and the underlying assets and invest that capital and communicate well and provide transparency as I outlined earlier. We do feel that we are now -- if you look at the discount, we're probably joint best rated within the sector for the last few months. We hope to continue that and we have to continue with the road show and continue with the marketing to try and to say, keep that or reduce that discount through time. So we're very focused on that. I think -- when I look at what we can do further, I think continue to do the road shows, continue to focus on the assets and continue with the performance. As we highlighted at the beginning of the presentation, there's quite a major differential between kind of the core plus and core strategies. As I think capital flows back into the sector, I think we'll see that capital will naturally choose those opportunities where they see the best risk-adjusted returns. And what I trust is our continued performance will mean that we are one of the first to see that capital flowing to us. I think this is the final question. There are increasing concerns of overspend in AI-related infrastructure spend with comparison to fiber spend of approximately 25 years ago. What are your thoughts on this and what guarantees do you have for long-term revenue visibility and protection?

So the thing we point to here is our asset selection. So unsurprisingly, as the question points out, there's an awful lot of money chasing this sector. There's an awful of data center developers that we are screening and not choosing to invest in within our wider platform. The fundamentals that we really like about certainly the 2 assets that we've backed in PINTs and other data center investments we've made across the rest of the platform is pretty much the sole focus on working with hyperscalers. And what this means is that you're effectively working on a contracted basis before you'd even finish building or before the data center developers even finish building out their shell. There's different -- there's a range of different options that you can provide. But typically, we're working with hyperscaler operators for 10- to 12-year contract lengths that we passed through the entirety. There's no demand risk, it's availability based. So they're taking that risk of their need to use it. And they would also pass through -- you'd also pass through the power cost. So there's no exposure to utility prices. And so it becomes something that feels very defensive. What we're also seeing within them is, I think it was Vantage that actually recently announced a $20 billion campus in Texas. They're really specializing now in the really high-powered units. So where we're seeing the load demand for AI are significantly higher than where you see cloud. So the businesses have had to evolve slightly there. But it's that -- it's focusing on those fundamentals of working on a model that is contracted. It's not a co-location model. It's not one that has really high regular churn. It's a model that works with a handful of very significant material counterparties that are good for that money for at least 10 to 12 years, and it's something that we think protects us in what is admittedly a very invouge sector right now. So we don't see the -- you have to dig down into that detail to know that the analogies to Fiber aren't necessarily as comparable, Fiber being a sector that lends itself to overbuild if we've touched upon and the fact that you've effectively got no certainty of adoption. We mentioned NBI being a deal we like because it's got as close to certainty of adoption as you can get. It's still not guaranteed, but effectively being the only fiber show in town reduces some of that contractedness, but it's still there in a way that working with a hyperscaler data center operator.

Right. I think -- thank you, Ben, and thank you, everybody. I think that's us out of questions. If nothing comes through in the next few seconds. I'd just like to thank you all shareholders and those prospective shareholders for joining today and hopefully you found is useful, and please do answer -- respond to the poll, and we look forward to speaking to you soon. Bye-bye.

That's great. Well, Ben, Richard, thank you for updating investors today. Can I please ask investors not to close the session as you now be automatically redirected to provide your feedback and management team can better understand your views and expectations. On behalf of the management team of Pantheon Infrastructure PLC, we'd like to thank you for attending today's presentation, and good afternoon.