The Pengana Private Equity Trust (“Trust”) will provide investors with exposure to a diversified portfolio of private equity with a select allocation to private credit and opportunistic investments.
The Trust is the first of its kind in Australia, and provides an opportunity for Australian investors to gain access to a professionally managed and globally diversified portfolio of private equity funds and direct private equity investments, with daily liquidity, through a single ASX trade.[i]
This report may only be accessed by holders of Australian Financial Services Licences and their authorised representatives. This report is not to be circulated or distributed and is solely for the information of financial services professionals.
|Performance||Private equity has outperformed public market equivalents[ii] across multiple time horizons, geographic regions and market conditions.[iii]|
|Diversification||Private equity investments have historically tended to exhibit somewhat lower correlation with traditional stock and bond markets.[iii]|
|Market cycle resilience||Historical performance of private equity has been resilient across various market environments.[iii]|
|Income||Pengana intends to target a cash distribution yield equal to 4% p.a [iv]|
|Simple to invest||A single point of entry to a well-diversified portfolio of private equity investments in accordance with the long-term target guidelines for the portfolio.|
|Access||The Trust will seek to provide investors with exposure to oversubscribed or difficult-to-access middle market managers globally.|
|Liquidity||The structure of the to-be-listed Trust will allow small and large investors to gain exposure to private equity with the flexibility to buy and sell units on the ASX so long as an active market exists.[i]|
|Investment management||The Trust’s listed structure allows Pengana to deliver an investment management capability typically accessed by institutional clients.|
|Experienced Investment Manager||The Trust’s investments will be sourced and due diligence conducted by Grosvenor Capital Management, L.P. (“GCM”). GCM possesses a track record in private markets investing dating back to 1999. GCM and its affiliates have over US$24 billion in private equity, real estate and infrastructure assets under management.|
|Alignment Shares||A 5% uplift in net asset value on the allotment date is expected to be created by the issue of PCG shares equal to 5% of the total amount raised under the Offer into the Trust for nominal consideration.|
You can view a summary of the risks associated with an investment in the Trust here.
How to access an ASX listed portfolio of global private equity
Who is GCM?
GCM is a global alternative asset manager which, together with its affiliates, has in excess of US$52 billion in assets under management (‘AUM’). GCM invests across a broad range of alternative strategies and asset classes including private equity, infrastructure, real estate, hedge funds and strategic investments. GCM possesses a track record in private markets investing dating back to 1999. GCM and its affiliates ('GCM Group') have more than US$24 billion of AUM across its private market platform. The GCM Group has in excess of 500 investment manager relationships in private markets with commitments in over 800 underlying funds and over 200 co-investment opportunities since 1999.
|Broker Firm Offer Closes||03 April 2019|
|Priority Offer Closes||10 April 2019|
|General Offer Closes||10 April 2019|
Available for all investors in Pengana’s funds, as well as shareholders in Pengana International Equities Limited (ASX: PIA), Pengana Capital Group (ASX: PCG) and Washington H. Soul Pattinson (ASX: SOL). Offer open 4 March 2019, close 10 April 2019.
The Trust seeks to provide investors with a diversified set of exposures to private markets, including private equity, private credit, and other opportunistic investments.
Private equity investing involves fund managers investing capital in ownership interests in private companies and pursuing an active role in their management. Managers advise and monitor the companies through restructuring, refocusing, and revitalising tactics by providing operational, governance, and strategic input. The ultimate objective is to generate a superior return for investors by selling the investment at a premium to the costs that have been incurred through this process.
There are significantly more private companies than public companies in the world.[v] These companies do not have shares or bonds that are listed on public exchanges; instead, they frequently raise capital directly, often from private equity investment funds.
For more information on private equity you can download a private equity fact sheet here.
Historical outperformance relative to other investment opportunities: Private equity has historically often outperformed public market equivalents[ii] across multiple time horizons, geographic regions and market conditions.[iii]
Portfolio diversification: Private equity funds have historically tended to exhibit somewhat lower correlation with traditional stock and bond markets.[iii] As such, private equity may be useful in helping to diversify an investor’s overall portfolio risk (as measured by volatility).
Broader universe of Investment opportunities: The universe of private companies is significantly larger than that of public companies. In recent decades, the number of listed companies has been steadily decreasing.[v]
Active value creation. Managers of private equity investments bring industry expertise and are afforded the opportunity to increase the value of portfolio companies through operating efficiency, expansion capital and significant hands-on involvement. In doing so they endeavour to create and increase value over the longer-term and exit the company at a higher value than at the time of investment.
Risks associated with portfolio companies – The portfolio companies in which funds have invested or may invest may involve a high degree of business and financial risk.
Lack of portfolio liquidity – Funds may hold significant amounts of securities and other assets issued by portfolio companies that are very thinly-traded, for which no market exists, or which are restricted as to their transferability.
Market risk – During periods of difficult market conditions or slowdowns in a particular investment category, industry, or region, portfolio companies may experience decreased revenues, financial losses, difficulty in obtaining access to financing, and increased costs.
Long-term time horizon – Even if investments prove successful, they are unlikely to produce a realised return for a number of years.
See section 11 of the PDS for more detail regarding risks.
Private markets investments can be difficult to access for individual investors and typically involve the investors’ capital being locked up for a number of years. The structure of the Trust allows the investment manager to make long-term investment decisions without being affected by considerations of cash reserves for the purpose of funding redemption requests, while at the same time offering unitholders liquidity via the ASX[i] so long as an active market for units exists. Further, the investment manager will not be required to sell down positions in the portfolio under disadvantageous market conditions for that purpose.
Based on historical returns and correlations between public and private markets, private equity has the potential to deliver investors with diversification benefits when combined with their existing investments.[iii]
The Trust will be subject to more than one level of fees:
Depending on the Trust’s performance, a performance fee of 20% above an 8% p.a. hurdle return may be payable to Pengana Capital Limited.
Further information regarding the fees for managing the secondaries portfolio and the management and incentive fees paid at the underlying fund level will be in the PDS once available.
The total value and performance of the Alignment Shares are not included when calculating the responsible entity fee, the management fee, and the performance fee payable.
The minimum application amount under the offer is $10,000.
If you would like more information or have any questions relating to the offer, call the Offer Information Line on 1800 291 041 (within Australia) or +61 3 9415 4019 (outside Australia) between 8:30am and 5:30pm (Sydney time) on a business day.