Proactive Investors - Pantheon Internat Participations (LON:PANI), the private equity firm, could be putting some downward pressure on the discount of its trust, 43%, following the launch of an “aggressive share buyback”, analysts at Stifel believe.
“[It’s]a significant move and we think the additional demand for shares this creates in the market should put some downward pressure on the discount from its current level of 43%,” analysts at the US investment bank said.
The discount on Pantheon International shares has widened in recent months due to a number of factors, including the ongoing sell-off in global equities and the trust's relatively high exposure to the technology sector.
The buyback will be funded from the trust's cash reserves and is expected to be completed in the current financial year, which ends in May 2024.
Risks are associated with the share buyback programme, Stifel warned, for example, if the trust does not generate enough cash to fund the buyback, it may need to resort to borrowing money.
“Pantheon had £60m of cash on its balance sheet and to avoid funding buybacks through leverage, which we would be wary of, the fund will need to see some significant net cash inflow with realisations exceeding drawdowns in order to fund the buyback programme,” Stifel concluded.
Stifel rates the stock a ‘buy’, shares in the group opened at around 260p on Thursday having jumped more than 4%.