Pantheon Infrastructure PLC (PINT) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Pantheon Infrastructure plc Annual 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 all 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]

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

Good afternoon, everybody. Thanks for joining us today. What we wanted to do was Ben and I were going to give you a bit of a refresher about Pantheon Infrastructure plc or PINT for short, and also take you through our annual results. For those of you that don't know me, my name is Richard Sem. I've been working in infrastructure for about 29 years. I head up our European infrastructure team. I'm also the Portfolio Manager for PINT and I sit on our Global Infrastructure and Real Assets Investment Committee. I'll also be joined by Ben today.

Good afternoon, everybody. My name is Ben Perkins. I'm a principal in the infrastructure and real assets team at Pantheon. I joined in the summer of 2022, shortly after PINT's IPO, and I work pretty much day-to-day with running the vehicle.

And then also [ Xiyue ] supports us, but won't be presenting to you today. So in terms of the today's session, we'll talk to you for about 30, 35 minutes, take you through the PINT's approach. We'll take you through some highlights of the company, our financials. We'll give you a little bit of a reminder about the portfolio and also have a bit of time to talk about the market outlook and some of the key themes we're seeing. In terms of just now quickly a recap of our investment approach. So the strategy is to create a globally diversified portfolio of infrastructure assets. By globally, we mean Western Europe, North America. These are predominantly core plus assets. So these are assets that have good downside protection, have all the characteristics of infrastructure assets in terms of inflation protection and so on, but also have several growth drivers that allow us to target sort of higher returning strategies. In terms of the investor case, at IPO, we said we would be targeting an 8% to 10% per annum NAV total return. We have exceeded that significantly with over 13% return over the last -- sorry, over a 14% return over the last year. We're looking to provide a progressive dividend. We paid 4p in the first full year once the portfolio was fully invested, increasing that by 5% for the full year 2024. That dividend is now [indiscernible]. And we seek to create value by investing in assets where there are opportunities for growth, either organically through CapEx or inorganically by making or affecting acquisitions, bolt-on acquisitions to those platforms. And we're typically looking to hold the asset for somewhere about 5 to 7 years and realize those assets for a capital gain and return -- use that -- those cash proceeds to invest in further assets. As a reminder, the Pantheon Global Infrastructure platform, Pantheon has about $70 billion of assets under management. The infrastructure team accounts for about $23 billion. And we're invested across 1,800 or so assets. So what that does is it gives us great visibility in terms of some of the key themes and key sort of drivers of the different infrastructure assets out there. We are sourcing from about 60 different sponsors that we work with. So with these partners, we will provide them primary fund capital. We'll also do co-investments alongside those partners, and we'll also do secondary investments into those funds. Now just as a reminder, PINT benefits from that primary capital investing alongside these sponsors, but PINT is only investing in single asset acquisitions alongside these sponsors. In terms of differentiation and how we think people should look at us, I think, number one, you're able to leverage a very strong platform. We're extremely selective in terms of the type of deals we're doing. So we're typically executing on about 5% of what comes across our desk. We've got unique access to information through those 1,800 or so companies and able to kind of track profitability and sector themes with those companies. And then we're working with top quality blue-chip sponsor names and get access to sort of these infrastructure assets without any underlying fee leakage apart from the fees at the PINT level. Just a quick recap in terms of some of the characteristics of infrastructure, you can see there. Clearly, they support the economy at large, providing not just economic growth, but providing essential services, typically looking to support the 3Ds. So digitization, decarbonization and deglobalization, increasingly a theme with sort of the onset of recent tariffs. As an investor, we think infrastructure should provide not just attractive yields, but attractive total returns. Hence, if you think about the weighted average discount rate of PINT, it's currently 13.6% across our 13 assets. So you can see we're targeting a higher return. So downside protected, typically giving kind of single-digit returns of the existing assets of existing contracts but then looking to drive additional value through those inorganic or organic growth opportunities. We think infrastructure can provide good portfolio diversification. And clearly, infrastructure assets are not typically that easy to access in as a lot of them are done through the private markets. So we believe PINT and the other infrastructure companies, investment companies out there can provide really interesting access to hard-to-access assets. Again, what is PINT looking for? Typically, we're looking to invest somewhere between GBP 25 million and GBP 50 million. We're looking for embedded value, so opportunities to invest in assets at a good price, so an attractive entry point, but also opportunities to back management teams that can grow these assets so that we can realize a capital gain. In terms of target assets, they're there on the right-hand side. But what I'd like to do now is maybe just take you through some of the key themes. So if we look at digital infrastructure, first and foremost, it's our largest subsector accounting for about 44% of the portfolio. This really falls into 3 key areas: data centers, mobile towers and fiber. We think fiber-to-the-home predominantly. We like a number of themes in this subsector. We've seen really good growth dynamics, if we think about -- mobile data traffic has increased about 20% over the last year. So whilst that might be declining in the Western world, there's clearly still massive requirements for investment across not just mobile towers to support that 5G rollout to support the increasing densification needed for those towers, but also the fiber backhaul from the tower to the data center and then indeed from the data center fiber back -- fiber to the home or fiber to the mobile. Where we've really focused, if we look -- we'll go through some of the assets in some detail. But if we think about fiber to the home, this is an area, as you can see there, it's one of the areas we highlight where we have some concerns. Typically, there's overbuild risk, there's risk of kind of getting the penetration levels up, especially with more than one competing provider. Where we found really interesting value has been on the more rural fiber-to-the-home network. So a good example of that is NBI, National Broadband Island, and I'll let Ben talk a little bit more to that later on. Data center is clearly benefiting massively from not just cloud computing, but also the trend towards more adoption of AI, training AI models and also edge provision of these data centers. Power and Utilities is our next biggest subsector, accounts for about 29% of the portfolio. Again, we like this space. Why? Because typically, we are putting regulatory -- we're underpinned by regulatory support. So that means we'll -- any CapEx that we spend to build out these assets, we will benefit from a return on capital on those assets. The sort of increasing -- we've seen power consumption be relatively flat over the last decade or so as we've seen increasing reductions in power consumption being offset by additional population growth. Why we're seeing some additional growth right now is really down to kind of the growth in data centers and their power demands. When we look at the next 3 subsectors, renewables and energy efficiency, I think this is a sector that most people are very familiar with, long-term contracts typically benefiting this subsector and providing for both solar, wind and other renewables within the space. And then finally, transportation and logistics makes up 9% of our portfolio. Here, we think increasingly, there's a modal shift in this subsector. We see kind of electrification of fleets. A good example of that is our investment in Zenobe. We certainly, though, try to steer away from some of the less logistics assets, more transportation assets just given some of the linkage to GDP and the softness we expect in future for GDP growth. Finally, social infrastructure, we're not invested. We've not found the right opportunities here. There's either -- these typically do benefit, as you know, from availability cash flows. But there is a whole subspace of care provision where we see some of the governance risks and some of the contracting risks not being supportive from an infrastructure perspective. Just a reminder in terms of what a co-investment is on this page. So we're looking, as I said at the start, to sit alongside sponsors and back various investments they are making into their portfolio companies. We typically do that on a fee-free basis, so we don't pay any underlying fees. We will be a minority shareholder. We're very active on the way in. We are less active on the way through. We do benefit from strong drag-and-tag along rights so that we can exit the investment alongside the sponsor and maximize value. So what I wanted to do was hand over to Ben now, who will take you through some of the key highlights of PINT's recent results.

Thank you very much, Richard. So to kick off with the performance stuff, I think there's a fair bit to unpack on this page. So PINT has invested in 13 assets. That's in line with last year, totaling GBP 542 million. That includes a residual GBP 10 million that has been committed but currently undrawn. The dividend target was increased this year by 5%. So previously, it was 4p for the year ended December '23. It was moved up to 4.2p this year. Most recently, the second interim dividend of 2.1p was announced a couple of weeks ago and is payable on the 22nd of April. We've had no decisions yet on the FY '25 dividend level. There's a few competing factors in terms of dividend coverage and also in terms of the kind of progression that our shareholders are expecting, but no firm decisions yet. We think the key highlight here is that NAV increase. So you can see the NAV is now sitting at 118.1p driven by very strong portfolio valuation gains. That's up from 106.6p at December '23. And it means we've hit 14.3% NAV total return during the period. So this is well ahead of that 8% to 10% target return range that we have for the year. And it's also fair to say a substantial increase from the 10.4% we had last year when the portfolio has just been fully invested. We'll touch upon earnings in greater detail a bit later, but safe to say we're really pleased with both the top line growth and what you can see here, the EBITDA growth, which is actually 36% this year across the portfolio. Some of this has come from an increased capital base. So because we've made new investments, it adds to that level. So there were deals that we're not invested in 2022 or for the entirety of '23. But all the same, we think that this is a really positive trend and speaks again, this is an area that as a house, we really significantly focus on for growth infrastructure assets, the ability of the GPs and the sponsors that we work with to execute on those business plans to deliver additional growth. And there's no better an indicator of that than this EBITDA figure. Final figure is the 1.33x multiple. So this is the multiple on invested capital. It's essentially the upside to a deal. So it's the total sum of the current fair value of a position plus any net distribution since entry divided by the entry cost. We can also see how this has nicely evolved over time, and we'd expect this to continue as the sponsors that we have invested alongside continue to deliver and derisk those business plans of the companies we've invested in. Looking at the portfolio composition and Richard's coverage of the market sectors that we're -- the sectors that we're invested in was very helpfully covered the key sectors that we're in. There's been very little change during the year. This is a function of the fact that we've not made any new investments. We will touch upon the balance sheet a bit later. But because of the inability to access capital markets and raise further equity, the company has made the decision not to use its RCF to do further investment, which means we have the same number of assets. The only shift in portfolio composition from a geography and a sector perspective has come from the relative fair value gains. We've seen big uplifts on Calpine and also CyrusOne, which has driven up the North America exposure that was previously 34%, now sitting just shy of 40%. We've also deployed GBP 6 million of capital. So this is capital that was previously committed and had been ring-fenced. Around GBP 6 million has been drawn across CyrusOne and Delta Fiber, so topping out the investment commitments we've made there. But the main driver here is ultimately the fact that the pie has got bigger. So the valuation gains, which we'll touch upon in greater detail, have meant that the portfolio and the companies NAV has grown materially. Looking at the way that the NAV has evolved. So in aggregate, it's moved 11.5p during the period. When you add back the 4.1p that was paid to shareholders, 4.1p dividends paid to shareholders, that gives 15.6p to total shareholders. That's around a 14.6% NAV total return. The 14.3% we mentioned earlier is our income statement metric, and then we had a 0.3% uplift from the nonrecurring benefit of the share buybacks that the company had entered into during the year. Unsurprisingly, as an investment company, the bulk of this movement has come from sizable underlying fair value gains of around 17.5p. That's around GBP 80 million. We've got a tab later on that shows how that's been broken down across the portfolio. In keeping with the fact that we are typically trying to hedge foreign exchange exposures, the portfolio FX of 1.1p was pretty much offset by the movement on our FX hedges of 1.2p. And the 2.2p you see of expenses is in line with expectations, bearing in mind, this also includes the company's RCF commitment fee and the amortized upfront costs. Share buybacks, which I mentioned, had added 0.3% to NAV return were fairly modest, GBP 3.4 million was spent on 4 million share repurchases. We retained some firepower to do further buybacks, but these have been relatively muted. We do look a bit later on when we break down the portfolio and the attribution, so we won't touch upon it any further here. A look now at the balance sheet position. We've presented this to shareholders before. We've slightly refreshed the presentation this time. However, the message is consistent, and it remains the same as before. We've got a very, very robust balance sheet. We have around GBP 140 million of liquidity. This is consisting of the RCF as well as some cash. The RCF, as a reminder, was pretty much put in place to off-balance sheet the coverage for the commitments and buffers that we keep, many of which we still feel aren't really real-world scenarios. It's a very institutional approach to thinking about risk, but we do keep back these buffers to cater for tail-end risk for things such as the movement in our FX position and what that could theoretically do in terms of mark-to-market requirements. But even allowing for that, we still have around GBP 39 million of theoretical lease change. As I mentioned before, we've been maintaining a pretty disciplined approach around the balance sheet and about making sure we don't use that RCF for as long as we feel that there isn't really visibility on how that would be repaid, be that either asset realizations or be that the ability to tap the market for further equity. That could change depending on having nearer-term visibility on an asset exit. So a great example is potentially Calpine, which we've got a slide or 2 on later. We expect a significant cash receipt as part of the disposal to constellation later this year. Once we've got even greater visibility on the terms of that transaction being satisfied and it becoming a final and completed deal, it may be the catalyst that means that we can put PINT back in the waterfall to transact on some of the many opportunities that as a house, we are still plentiful. Another thing that could potentially be a catalyst for that is ultimately, like I mentioned, the ability to access capital markets again. Maybe a final point on that. We're still seeing an incredible amount of high-quality deal flow. As a house, as Richard touched upon earlier, we've got in excess of GBP 20 billion of AUM. So we are still very actively investing in co-investments and single asset transactions. It just happens right now because of the capital limitations, PINT is not able to transact. But were that to change, we remain highly confident that we could deploy any kind of reasonable expectations of PINT's fundraising. We'd still be able to deploy given the volume of high-quality opportunities that we're seeing. An extension now of the portfolio metrics, which we briefly touched upon earlier. So again, reporting versus the previous year, we've had a steady discount rate. There have been some movements upwards and some movements downwards, but we're still, when all is said and done at the 13.6% weighted average discount rate, which is very much an outlier relative to the sector, and we think speaks to the very differentiated business model that PINT has to target significant upside and total returns. Gearing has dropped ever so slightly on a net debt to EV basis, but again, speaks to the consistency that we have in looking at and being very focused on making sure companies have a robust gearing level. Similarly, hedge debt is also a significant focus. This is up -- ticked up slightly from December 2023. We'd expect this to increase slightly over time as well as the companies that are using temporary capital facilities, the revolving credit facilities or capital liquidity facilities that don't lend themselves as well to hedging once those facilities are unlocked. So once the data center is completed, it lends itself to more long-term lending packages that can then be hedged out either with a mix of interest rate caps or interest rate swaps. So we would naturally expect the level of hedge debt to evolve over time. The biggest story, though, is the metrics that we put on the bottom row here. So a reminder that we calculate these by taking PINT's relative proportion of the underlying revenue, EBITDA or CapEx in each of the underlying companies because we don't consolidate these positions as minority positions. To filter out the FX noise and to make sure we're comparing apples with apples, we presented all the historical figures at the same December '24 spot rate. Naturally, it's really, really satisfying to see growth in revenue and earnings. So it's implying that companies are getting larger, but they're also getting more efficient. And that's a really critical point that the EBITDA growth is ahead of the top line growth. It's pretty much a testament to the focus, the growth focus of these companies. And that's also supported by that vastly increased CapEx outlay that you can see. A reminder, if you need it, that all the companies that we invest in are fully funded upfront for their base case business plans. So that means that we're not making the assumption that we'll raise further equity or significantly further debt during that 5- to 7-year hold period that we mentioned. We don't like funding shortfalls, and that's why we're always focused on making sure that the sponsor has all the capital that needs to deliver on its expected growth trajectory over the whole period. It doesn't mean that some companies aren't on the lookout for more capital, and we saw some pretty high-profile examples of that in our 2 data center assets. So Vantage Data Centers with DigitalBridge that raised more equity, a combination of Silver Lake Capital Partners and also DigitalBridge putting their hands in their pockets themselves. And that was a function of the fact of the AI story driving even greater deal flow than they had originally foreseen at entry. And then CyrusOne is another good example. So not only did they call the residual equity commitment that we've made. So we've now fully invested all the equity we committed to, but they've also put in place a pretty substantial warehousing facility that means they can carry on delivering on the growth that is actually transpiring to be above their original expectations. The themes around that growth, we've alluded to it before. Calpine has seen significant growth since we've entered the business. It's been a real success story since day 1. As Richard's alluded to, we've seen fairly stagnant growth in U.S. power load over the last decade. That's projected to increase fairly significantly over the next decade. I think there's around 9% or 10% growth by the end of -- by 2030. This is being driven by data centers, which is being driven not only by AI, but also cloud computing and also the move to decarbonizing across the grid. So that's really been favorable for Calpine. Fundamentally, the baseload power sector is rerated. And we've got a slide later on. There's some residual exposure in the transaction to Constellation Corporation, which has clearly softened in recent weeks. But we've been very happy with the performance of that deal, which ultimately led to the conditional exit that was announced. We've also seen EBITDA growth across the data center businesses. They're growing kind of high teens to 20% year-on-year, in line with the sector more broadly. And we've also been really pleased with the progress on Primafrio to call out another asset recently, had some slight challenges and some headwinds in the first year or 2 of the business plan, but they've really seen it bounce back materially in the last year. They've now been putting online new centers, new distribution centers that expect even more earnings accretion over the coming years. So really sitting in a very healthy position there. A bit of a dive now into the assets. So I don't propose going through all of them here, but you can see on the right-hand side column that we've included our relative judgment of how these investments are tracking relative to the original investment plan. This is a Pantheon judgment, but it is very much heavily informed by the guidance that the sponsors that we work with are giving around performance and do they still think that they're going to hit the returns that they expected to at entry. If they don't, then quite frankly, we've scored them down as being below plan, as you can see with both Cartier Energy and also GlobalConnect. The themes remain the same, as I mentioned. AI has been favorable, but it hasn't been the key determinant to success here. We underwrote the data center businesses on the thesis of cloud computing, the need for corporations to have cloud demand and also things like the Internet of Things. AI has been additive to the return story there. I think the clearest -- the biggest factor is clear from the numbers, the 2.3x MOIC that we've seen on Calpine. It's been marked up at various points through the year as they progress towards ultimately the Q4 valuation, which was reflective -- or nearly reflective of the Constellation sale. Again, we touch upon that in a bit more detail later on. I think it's only fair to also mention the assets under plan. So Cartier Energy, for those that we've spoken to before, had some challenges in its first couple of years, it saw more milder winters, which is bad for a district heating platform. They lost one particular customer that they previously expected to roll over. And they've also had an exposure to natural gas prices on one particular contract, which was very unfavorable, particularly given the spike in prices after the Russian invasion of Ukraine. Management have very much stabilized this business. They've been -- they've had to divert their attention from accretive growth initiatives to fixing the problems and spending a lot of time specifically on looking at the rollover risk of some of their customers and making sure that they don't take them for granted and they're pricing the contracts correctly. We do think now management is going to have more bandwidth to focus on the growth initiatives, albeit we don't see this business -- this investment delivering the original returns. The story on GlobalConnect has been a little different. We invested in this with an expectation that there would be significant business growth in the fiber-to-the-home market in Germany, given that the Nordic markets have been more mature and were already characterized by high levels of fiber adoption. Given the significant risk of overbuild, management decided to retreat from that sector. Instead, they've been deploying more resources in the underdeveloped fiber-to-the-home market, where they currently have around 10% to 15% market share. It's a smaller market than the German one, which means there's less growth potential. And ultimately, we expect the terminal value of that business to be lower than what we'd originally forecast, which again is leading to us scoring this currently as being below plan, notwithstanding that it is still marked at a premium to its entry cost. A bit more detail here on the fair value movement. So we can see quite clearly the significant contribution that Calpine has had, notwithstanding the noise that there obviously is around the fact that a significant part, around 3/4 of the transaction consideration is payable in Constellation stock, which has been significantly volatile in recent weeks. We do still see the fundamentals of that combined business being very strong. And even with some softening of the AI story, fundamentally, baseload generation in the U.S. is going to be a booming sector. We do think on that basis that the transaction with Constellation is reflecting a significant derisking of this position and in effect, taking some value off the table. Also mentioned CyrusOne, that's been a significant contributor. We've also seen fairly material gains from NBI, which is now around 60% complete. So that's the National Broadband Ireland that's delivering the rural broadband plan in Ireland. They paid their first distribution during the period. We see the key pillars to delivering the success of this business will be delivering the intervention area on time and on budget and then also derisking by seeing fiber adoption in track with plan. Happily, we think that they're ahead in both fronts, which, again, to the slide before is why we're scoring it ahead of plan. We've also seen distributions from National Gas. So although you can clearly see that Calpine is the key contributor to cash flow during the period, there are other assets now pulling their weight. As a reminder, we've tried to strike a balance in portfolio composition. So there are some assets like CyrusOne and Vantage that we probably don't expect to see a penny from until we actually exit those positions, such as the intensity of the cash need and the opportunity set to go and build out new data centers. It's more efficient to recycle that into the highly levered returns you can get on building out new data centers than it is to paying a dividend. In order to meet the company's level dividend, we've had to complement those kind of hyper growth opportunities with investments like Calpine, investments like National Gas and also NBI, which is kind of a combination of a high-growth potential as well as giving yield. And we are -- as we move on to the next slide, that has happily meant that we've delivered cash flow performance that's actually in excess of where we were previously expecting. So we set out the figures here that we'd previously forecast at the year-end '23, so about this time last year and what we're now forecasting. In the case of 2024, that obviously reflects actuals. We didn't put a number on it when we presented the figures last year, but essentially, we were guiding to around 0.5x dividend cover. We've hit around 0.7x because of higher distributions from the companies that I just mentioned. We're now expecting higher near-term distributions also in 2025. A key swing factor here will naturally be Calpine. So the sale proceeds of that are expected to be around 25% cash. The balance payable in Constellation stock that will be subject to certain lockup periods. They are reflected in the figures that you're seeing here. But generally, the direction of travel is extremely positive and one that we're really happy and do have pretty decent expectations that dividend cover will be moving forward over time. Final word from me on the outlook before I hand back to Richard. So we've mentioned Calpine quite a few times. It's been a subject of great excitement given the announcement by Constellation on the 10th of January. As a recap, Constellation announced the acquisition of Calpine for an equivalent equity value of $16.4 billion. That was based on a 25% cash component, which we expect to receive when the deal closes, which is still expected at the end of this year. And then around 75% would be through the issue of Constellation stock. That $16.4 billion and the majority, pretty much of the valuation that had been reflected in the Q4 '24 NAV was based on a Constellation share price of $238. It's safe to say that, that stock price has been significantly volatile since it spiked about as high as $340 in the weeks after the deal when the market absorbed, the benefit of this combined baseload player. And the thesis for Constellation is that by buying a gas power producer, they've got a far quicker route to market than it takes to build a nuclear asset. We still see the characteristics of that combined business being extremely favorable, but there has been significant softening initially from the AI story and the revolutions around DeepSeek. And then more recently, as the rest of the market globally has been affected by the prospects of a trade war and most recently this week, tariffs. We've included a brief note here on the hedging opportunities. I won't go into too much detail. In summary, it's not really practical nor feasible to hedge the Constellation exposure until the deal has definitely been confirmed, so until those regulatory approvals have come through. Thereafter, PINT will never actually be the custodian of CEG shares. They will still be held by ECP, the sponsor we're invested alongside. They will determine and execute the liquidation strategy there. Once the deal has definitely concluded, we do expect to explore potential hedging options that could include a forward sale. It could include a collar, which in effect, capture upside and also can capture downside. But until such time as we have that clarity of completion, that's not something that we're able to explore. With that, I will now hand back to Richard to -- for concluding remarks.

Thanks, Ben. So just a couple of more slides before we get into some of that Q&A. So what we're showing here is really an exhibit that we've got in the annual report and accounts. We've just adapted it for these slides to give you sort of a sense of kind of how we see the trifurcation of the market between renewables, between core and between Core-plus. There's kind of a recognition, we believe that Core-plus is -- Core-plus strategy is giving us a pretty interesting opportunity set right now. We've got the downside protection. We've got the inflation protection. We've got a higher discount rate, which means it's less sensitive to some of the change in rates. We're not particularly impacted by energy prices or indeed sort of from political risk interference, I would say that's probably pretty neutral across all the opportunity set because governments generally involve some way or which way in infrastructure provision. So we're excited about the opportunity set. We think the diversification across different subsectors and the ability to toggle between all those different subsectors as we're looking to make investments, that diversification, we think, is a key attraction of investing with PINT, not having to have deployment in a certain subsector and have to ride the potential cyclicality or valuation bubbles that may form in one particular subsector. So finally, just to conclude and maybe bringing back to sort of just wrapping up what we've covered this afternoon. So look, we think PINT remains a very interesting access point for investors into really truly diversified infrastructure assets. We've got a portfolio of 13. We have assembled that during a period of time where we've had quite a lot of macro and geopolitical uncertainty, but it has performed strongly during that period as well. The opportunity set remains abundant, and I've seen a question come in on that, so we will get into that. We are unfortunately not investing for PINT at the moment. But as a house, we do continue to do that. And we're, I think, uniquely positioned given some of my opening remarks around the sponsors, high-quality sponsors that we work with. Very excited about the performance, a NAV return, NAV total return of 14.3% on an income basis. That's well in excess of the 8% to 10% target and excited, I think, about some of the growth prospects of the assets. Ben took you through kind of that EBITDA performance, 29% year-on-year growth. That really is supporting the valuations. It is also that continued investment, that CapEx, predominantly a theme in, say, NBI, as Ben mentioned, or maybe in our data centers, where we're sort of seeing that build-out contributing to future EBITDA growth. We've increased the dividend by 5%. We know for some of you, that's very important. You see this infrastructure as an income stock. We would remind you that, that is -- that wasn't quite cash covered, but we do expect to be cash covered given the increasing cash flow projections that Ben laid out for you. We do, though, think that income is only half of the story. We are looking to target realizations and demonstrate the true value in the underlying assets and obviously excited to have that realization or conditional realization of Constellation. We got a strong balance sheet. We've got -- no, we haven't got any expensive debt. We haven't got any drawn debt at all. So absolutely no pressure to dispose of assets. What we want to do is realize those according to our business plan of typically 5 to 7 years. We've also got the facility to provide for those risk buffers, again, that Ben mentioned. We've allocated some firepower to buybacks. There has been limited opportunity just given there weren't any natural sellers. It's actually been quite difficult for our brokers and others to be able to secure decent stock for trading as people wanted to come in. And look, again, final mention of Calpine. We're taking significant value off the table, albeit with some residual exposure to that Constellation stock. So that takes us to the end of our presentation, the formal presentation today. What I'd like to do now is maybe turn to some Q&A. So we've had a number come in through the period. So what we'll try and do is get through as many as possible. If we don't, please do get in contact. We'd love to. We've got -- I think we've got names for most of them. But if we don't manage to get through all the questions today, please do get in contact and we'd be happy to have a separate call on those.

So the first one, and I'll read these out and then we'll decide who answers them. The first one is we've got 2, and I'll paraphrase, 2 data center assets, which have performed quite differently, Vantage at MOIC of 1.1x and CyrusOne at MOIC of 1.5x, shouldn't they benefit from the same trends? You mentioned the Vantage capitalization event should that have led to an increased value. Ben maybe you could cover that off.

Absolutely. Yes. Thank you, Richard, and thank you for the question. So big picture, they do have very similar objectives. They're seeking to work with hyperscale counterparties, looking at the 10- to 12-year underlying lease model where they're pretty much derisked or insulated from power prices because they can pass that off to customers. I think the principal difference -- well, there's a couple of principal differences. The first one is scale. And within scale, the existing operational footprint, CyrusOne is a vastly bigger business. It's seeking similar kind of growth levels that Vantage is, but it's doing that on a far larger platform. So its relative proportion of additional growth relative to the current revenue profile is somewhat smaller than it is for Vantage, which is a smaller scale business. And it's still got very significant potential, but its existing operational footprint is actually a lot smaller than CyrusOne's, which I guess, provides a bit more risk in terms of the relative size of the pie at the end is more beholden to actually their ability to execute and deliver growth, whereas with the case of CyrusOne, a lot more of that is baked in. Another factor here that I think is worth touching upon is that CyrusOne was a take-private. CyrusOne, when it was in public hands, had what was generally considered to be a suboptimal balance sheet. It was not as geared. It had not thought about the structuring of debt against the underlying facilities in the way that both Vantage and now CyrusOne has done, which meant that there was more immediate low-hanging fruit during the early holding period for that business. In time, we would expect ultimately the outcomes to be pretty similar for these companies because, like I say, their go-forward business model is to target the hyperscale segment.

And just as a follow-up in terms of the kind of capitalization or the recapitalization advantage, what was -- what was the process in terms of deciding if we participated or didn't and we didn't. So maybe, Ben, you could just highlight why we didn't participate in that recap.

Yes. So it's 2 things to note here. As Richard said, we didn't participate in the recapitalization. It doesn't mean we weren't able to. And as shareholders, we benefit across all the companies we're invested in with preemption rights to participate in subsequent equity rounds. The reason that we didn't in this case was, again, I'd draw you back to the capital allocation sheet. This was done at a time where PINT was fully invested. We -- in the same way that we weren't considering and haven't been considering new deals, we haven't been considering follow-on deals. That's also the case for Vertical Bridge, where they had the Verizon transaction. again, we had the ability to participate as existing shareholders, but we decided not to, because it wasn't conducive to our current capital allocation.

Thank you. Vertical Bridge recently acquired a large portfolio from Verizon. What is our view on that? Did we get briefed by the GP? And is this something that you monitor closely in terms of, I guess, sort of these new inorganic growth opportunities?

Yes, we were briefed on it. We knew about it well ahead of the announcement going out. It was, again, as I mentioned before, it was something we were given the opportunity to participate in the equity for. We were given the terms of the transaction. We were noted about why it was very attractive for them to be bidding for this. But to be clear, we are not able -- we're not privy to the decision to bid for it or the terms upon which it's done, and that's customary for co-investors. But we did have very good line of sight around the broad characteristics of the transaction, which to touch upon, I think we're quite excited about. We know that the management of DB and also the DB, DigitalBridge deal team see significant upleasing potential. What that means is that because it's being carved out of an existing mobile network operator who naturally were not inclined to lease some of the capacity to their competitors now that it's in private ownership that isn't beholden to the same kind of commercial restriction, we think that there's scope for them to add a lot more tenants on each of the towers that they're on, which is highly profitable business because there's little to no incremental cost to facilitate access to other MNOs on the towers. It's pretty much all additional revenue without that kind of overhead. So encouraged by that. We think it cements the relationship Vertical Bridge has got with Verizon a couple of years ago, they announced the JV that was targeting the rollout of 3,000 build-to-suit towers. Those are customized towers in very specific locations that Verizon demanded. We think it's an extension of that relationship which in itself was a derisking of the hold period expectations of organic growth through the build-to-suit program.

Next one is around Constellation Energy. There's obviously some interest in this. Did the GP lock in -- I mean, you highlighted some of the volatility that we've seen there, recent volatility. Did the GP lock in the bad timing? Or did they consider the exuberance in utility share prices in their deal calculations? The share price is 40% off its high. And frankly, we've seen some additional softness yesterday. So Ben, maybe you could take that.

Yes, I think just in terms of focusing on what I haven't already touched upon. So I think the parameters of the deal have been explained and the fact that we're exposed to this rump of Constellation shares that we'll -- we expect to account for around 10% of NAV. We don't really subscribe to the view that the timing was wrong or it was a bad move. And I think the reason for that is because of -- the size of Calpine and that $16.4 billion equity value meant that we always suspected and ECP always expected that the public markets were going to play some form in the exit story here. So by that logic, it would have been either a trade sale to an existing listed corporation like Constellation. There's a handful of others of mega scale power producers in the U.S. or it could have taken the form of an IPO. Now if it had been through an IPO, I think we'd be suffering the same issues right now. The softening in the market hasn't been specific to Constellation. All the large-scale power producers have been trading off. And the fact that they've traded so much over the 2 years or 3 years that we've been invested in Calpine has been instrumental in how that valuation has evolved. So although it's a private markets asset and we are now expressly likely wearing the volatility of the mark-to-market share price, we do still think that the fundamentals were driven by the wider power market in the U.S. and principally the net outcome when all is said and done, and we do expect once there's the shock, once the market has absorbed the shock of the tariffs and once the true fundamentals bear out, we do still see the prospects of this business being positive, and we'd expect the sector more widely to re-rate in the future. Maybe, Richard, a question for you now, given I've been hogging them. There's one around the share price discount, 17.5% discount to NAV. Investors -- one particular investor saying people seeing losses since the IPO despite the dividends. What's the company doing to narrow that discount? And are we considering more share buybacks?

Yes, look, I share your frustration. I obviously became a big investor at IPO as well, but I have also bought on the way down and benefited from those dividends. We do have a buyback in place about GBP 18-or-so million. We have used that thoughtfully. I think our experience has shown that whilst we can mop up maybe some smaller -- where there's maybe just not enough activity in the market. I think that's where the brokers have typically used that buyback facility to buy additional stock. What our overriding -- and this has been supported by the Board. Our overriding view on buybacks is that you can't beat the market. And we've got pretty strong evidence to demonstrate that buying back shares does not close the discount. It is a great investment opportunity, as you point out, we can buy into the existing shares at 17.5% discount. I think what we're trying to balance, and this is a key theme that we're talking with our institutional shareholders who are out on the road show is they're very supportive. We have provided some really strong performance over the last 3 years once the portfolio was fully invested, as you've seen today. If we shrink the vehicle, we run the risk that we will not be able to continue to have that portfolio diversification. So I think quite to the contrary, a lot of our institutional shareholders are asking us to grow the vehicle. The vehicle does compound at the difference between the unwind of its performance and costs. So somewhere in that 7% to 8% range. So we will see the company grow. We will see, hopefully, that translate to greater liquidity, index, FTSE 250 inclusion. So that's kind of where we're going with the strategy but the buyback is available, and you've seen some of that incremental performance come through on the value bridge that Ben took you through.

Maybe another one, Richard. There's a lot of questions. So thank you, everybody. And sorry, we're probably not going to be able to get through all of them. What have you been investing in your other Pantheon funds? I think that's a good one. And what would we have done with PINT had we had the cash and not been capital constrained?

So I mean the team is really busy as you saw, we've got GBP 23 billion of assets under management. So we're investing GBP 2 billion, GBP 2.5 billion a year. So PINT is actually a relatively small vehicle when you consider it in the context of our platform. Types of assets we've been investing in, we're agnostic. We can see interesting opportunities and terrible opportunities in all the subsectors. So we continue to shift through those. For instance, we've probably seen 3 airports in the last 6 months. We've not participated in any of those to date. I think, just for those fears of GDP linkage. What we have invested in, we've -- let me give you a couple of examples. We invested in a smart metering business in Europe. Again, a subsector we know incredibly well, having participated in a number -- and invested and successfully exited a number of assets in that space. There was a renewables platform. Again, it was a platform. So it wasn't sort of a single asset. It was what we think of as an independent power producer. So a team developing assets, constructing assets, owning and operating assets. So really sort of the full start to finish where we've been able to generate greater returns through some of that development activity. What else is there? Maybe the other one maybe just to mention was, there was another tower deal we invested in. So you can sort of see one digital, one renewable and one energy efficiency deal there, just to give you a flavor of what we've been looking at.

I think we're probably on last questions now. There's one here that I'm happy to take. Revenue growth is impressive, but CapEx is also high. How do you monitor the return on capital if this is CapEx? So yes, CapEx is high, but that's a good thing. We see that as being the tool to unlock growth in these companies. It's why we present this. It's why it's something that we're always very focused on. And it is something that, yes, it needs to be because of the cost of CapEx investments and the cost of the equity to do that and the cost of the debt to do that and the overall weighted average cost of capital for these companies, it has to be done diligently. And we do have -- in the most part, across the 13 assets that we're invested in, we do have generally pretty good visibility on the thought process that goes through these companies. To give you an example, we -- Vantage is a company that we actually benefit from a significantly elevated level of reporting information because as a house, we've got a very significant volume of capital with them. We actually privy to the investment committee materials at the company level that seeks to appraise different potential unlevered returns and the prospect of putting gearing on those companies and what it does to make sure that they're very much considering capital allocation themselves. Another good example is Zenobe. So this is the company that invests in grid battery storage and also electric vehicle bus fleets. We know that they've been very, very prescriptive about the kind of pipeline deals they're doing. Batteries, in particular, right now are a sector that unless you can get the right revenue stack and a combination of ancillary services, capacity markets, you don't want to be unduly exposed trading revenues. So essentially being able to do intraday trading and arbitraging between power highs and power lows. We know that they are very focused on underwriting against very high returns to absorb against the potential volatility there. So it's -- again, I think the comfort that we get and that investors in PINT should get is the very heavily incentivized sponsors that we're working alongside to deliver growth and then also the management of those companies themselves. They have long-term incentive plans that are conditional on the growth performance and ultimately, the valuations of these companies.

We've probably got time for a couple more questions. It's difficult because there's quite a few here. So I do apologize, we're going to run out of time, but we'll sort of pick them up almost in the order they've come in. There's one around -- you mentioned social infrastructure hasn't been interesting to you. Would you mind elaborating a bit? What deals are you looking at? And why did you decline them? So first and foremost, I mean PPP, there's plenty of sort of P3, PPP, PFI type vehicles out there, which is a key component of their strategy. One of those is obviously just been taken or in the process of being taken private. So that will reduce the opportunity set for shareholders. But we feel it's well catered for. PINT was always meant to be more targeting assets with, should we say, some more operational complexity, some more growth drivers. So I think -- we don't sort of include that so much within social. The returns are probably too low for what PINT is trying to achieve. It's more some of those things I mentioned earlier. So if we're looking at more sort of health care assets where -- or care home assets or these assets, I think, have really suffered from some governance, high-profile governance risks. We've seen that across our more passive primary fund investing that we do with other separately managed accounts. You typically have a high proportion of almost minimum wage staff. There's been some staffing problems, high-profile staffing issues. There's the governance issues, which I mentioned as well. So for those reasons, we've typically stayed clear and continue to stay clear of that subsector.

Maybe to round off, Richard, and it's the theme of the day. Final question before we wrap up. What effect, if any, do you expect the recent U.S. tariffs to have on the company's performance and portfolio.

I think we're in the early innings of what's going on. I've seen something flip up on my screen during this, that China has put reciprocal tariffs in place. So I think we're early innings. What I would say is we've got a diversified portfolio. So we're not reliant on any single subsector, any single geography for our deal flow. I suspect what we'll find is we'll -- in our wider investment activity, we'll take a little bit of a pause maybe and just want to sort of take stock of what some of the impacts would be predominantly in the U.S. But if you think about it, we've -- if we take some of the impacts of inflation, most of our assets have a high inflation protection. So we'd expect to have a fairly good hedge there. Higher rate environment of that higher inflation, again, Ben outlined that the majority -- the vast majority of our underlying company debt is hedged. We do have some residual exposure on some of those CapEx facilities that we're using to, say, build out data centers or expand our fiber provision as examples. Again, there, we would expect the companies to look very carefully at the return on capital they're able to achieve in some of those CapEx activities to use the high inflationary environment that we've just had through the back of COVID, we did see sort of pretty strong discipline there across all of our GPs and also the ability to pass on those costs to the end customer. So you will see that, for example, your mobile contract will come up for renewal and you'll get a text message saying the price has gone up with inflation. So if you think about it from that perspective, we are seeing that being passed on, say, to the end retail customer. We're also seeing some of the big tech companies being pretty insensitive, should we say, to the cost and more sensitive to obtaining power, fiber connectivity to existing campuses and to be able to expand their data center capacity. So again, a couple of examples of where we think inflation protection comes through. So any of that tariff hitting CapEx as well, again, we'd expect that to price through. There's no perfect answer. There's still a lot of uncertainty out there, but it's something that we are close to. And as we've gone through sort of the full year review with all of our sponsors and management teams, it's been a key focus of questions as this had been highlighted to us for some time. So I think we have actually timed out. So thank you very much for your time. Thank you very much for some great questions. And please do get in contact. Very happy to pick this up with you individually.

Perfect. I'll just jump in. Thank you very much for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. On behalf of the management team of Pantheon Infrastructure plc, I'd like to thank you for attending today's presentation, and good afternoon to you all.