PENGANA PRIVATE EQUITY

Launching early 2019. Australia's first listed global private equity trust.

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Pengana has partnered with Grosvenor Capital Management L.P. (‘GCM’), one of the largest and longest continually operating alternative asset managers in the world to work on plans to launch an ASX listed investment trust ('the Trust') that will invest in global private equity. It is proposed that the Trust will provide investors with exposure to a diversified portfolio of private equity investments, including funds, secondaries, directs, co-investments and other opportunistic strategies. 

Sophisticated investors generally recognise that global private equity can be an attractive investment proposition. This is due to the potential for higher returns than traditional stock and bond markets with relatively lower correlations.[1] Institutional investors are already significantly exposed to global private equity and a recent survey indicates that the majority are planning further increases.[2] An example of this is the Future Fund, which in the year ended June 30 2018 increased its exposure to private equity to 14.1%, or $20.6 billion, up from 11.6%, or $15.5 billion, a year earlier.[3] In contrast, most Australian retail investors have very little, if any, exposure to this asset class.[4] A key reason may be that many investors and advisers feel that there are a lack of suitable investment options, including the absence of suitable vehicles with daily liquidity.

Launch is proposed early 2019 and this will be Australia’s first global private equity listed investment trust.

GCM’s Managing Director, Frederick Pollock discusses the private equity landscape.

REASONS TO INVEST

  • Performance iconPerformance
  • Diversification iconDiversification
  • Market cycle independence iconMarket cycle independence
  • One ASX trade iconOne ASX trade
  • Access iconAccess
  • liquidity iconliquidity
  • Experienced Manager iconExperienced Manager
  • Institutional quality iconInstitutional quality

KEY BENEFITS

Performance Private equity investments have historically often generated higher returns than traditional stock and bond markets.*
Diversification Private equity investments have historically often had relatively lower correlations to traditional stock and bond markets.*
One ASX trade A single point of entry to a globally diversified and customised portfolio of private equity funds and direct private equity investments.
Access The Trust can provide investors with exposure to oversubscribed or difficult to access middle market managers globally.
Liquidity Potential for daily secondary market liquidity through the ASX, if there are willing buyers.
Institutional quality The Trust’s listed structure allows the investment manager, GCM to deliver an institutional offering to a retail audience.
Experienced Manager The Trust will be managed by GCM, one of the most experienced and largest allocators to private equity investments, with 27 senior investment professionals devoted to private equity.
Market cycle independence Historical performance of private equity has been resilient across various market environments.*


  

GCM’s Managing Director, Frederick Pollock provides insights on investing in private equity.

GCM is a global alternative asset manager based in Chicago and, together with its affiliates, has in excess of US$51bn in assets under management in private equity, hedge fund strategies, infrastructure and real estate. It has a long track record and vast experience in seeking to invest with high-quality private equity managers worldwide, having made investments into 650 underlying private market funds and participated in over 200 direct and co-investment opportunities since 1999.

 

Upcoming events

Roadshow featuring the investment manager. Dates soon to be released. 01 February 2019

NEXT STEPS

Offer launching early 2019

Offer launching early 2019

To stay up-to-date and receive the latest information on the offer please register your interest.

Register Interest

FREQUENTLY ASKED QUESTIONS

  • Q. What is private equity?

    There are significantly more private companies than public companies in the world.[5] These companies do not have shares or bonds that are listed on public exchanges; instead, they raise capital directly, often from private equity investment funds.

    Private equity investing involves fund managers taking ownership interests in private companies and pursuing an active role in their management. 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.

    For more information on private equity you can download a private equity fact sheet here.



    [5] Source: CapitalIQ as of 16 May 2018. Includes all private companies with revenues ≥ US$10 million.

  • Q. What are the advantages of investing in private equity?

    Performance: Private equity investments have historically generated higher returns and have outperformed public market equivalents across most time horizons, geographic regions and market conditions.[6] 

    Portfolio diversification: Investments may be made into a broad range of individual companies and different securities that have historically tended to exhibit low correlation with traditional stock and bond markets. As such, these investments may be useful in helping to diversify an investor’s overall portfolio risk.

    Broader universe of Investment opportunities: The universe of private market investments is significantly larger than that of public market investments.[7]



    [6] Data as of December 31, 2017. Source: BURGISS, MSCI. No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily indicative of any future results.

    [7] Source: CapitalIQ as of 16 May 2018. Includes all private companies with revenues ≥ US$10 million.

  • Q. What are the risks of investing in private equity funds?

    Lack of Portfolio Liquidity: Private equity funds hold securities for which there is no established market for exchange or trade. Such illiquidity risk can be exacerbated due to changes in market conditions or business prospects of the underlying companies. 

    Debt or Leverage Risk: Leverage, if used, may magnify the potential gains and losses achieved by the underlying funds. The use of leverage may also diminish the returns to the funds if the overall returns are less than the cost of borrowing.

    Portfolio Valuations: Valuations of the underlying fund investments may involve uncertainties and discretionary determinations. Third-party pricing information may not be available regarding certain asset classes, and in some circumstances funds may rely on valuation models that have been created in order to value the assets and calculate the account value. Further, the liquidation values of securities and other investments may differ significantly from the interim valuations of these investments.

    Concentration and performance risk: Funds typically make a limited number of investments. As those investments generally will involve a high degree of risk, poor performance by a few investments may severely affect the total returns generated by the fund. The Fund may be subject to wider fluctuations in value if it is non-diversified than if it was subject to broader diversification requirements.

  • Q. Why is private equity suited to a listed investment trust?

    Private market investments can be difficult to access for individual investors and typically involve the investors’ capital being locked up for a number of years. Further, the closed end structure of the Trust allows GCM to make long term investment decisions without being affected by considerations of cash reserves for the purpose of funding redemptions requests and GCM will not be required to sell down positions in the portfolio under disadvantageous market conditions for that purpose. However, while the Trust is listed, unitholders wishing to exit their investment will have the potential to do so via the ASX, although there can be no assurance that any meaningful market for the Trust’s units will develop.

  • Q. How has private equity performed relative to public markets?

    Private equity investments have historically generated higher returns and have outperformed public market equivalents across most time horizons, geographic regions and market conditions.[8]

    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.[9]



    [8] Data as of December 31, 2017. Source: BURGISS, MSCI. No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily indicative of any future results.

    [9] Based on an analysis over the 20 years ending 31 December 2017 that adds a 20% private equity allocation to a traditional 60/40 equities/bond portfolio. Data sources: BURGISS; Barclays Bank PLC 2018; MSCI. No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily indicative of any future results.