Pengana to launch unparalleled global private credit listed investment trust on ASX

Key highlights 

• Pengana is launching a groundbreaking global private credit investment vehicle – in listed form.
• The vehicle aims to generate the strong risk adjusted returns associated with the global private credit asset class, with a high degree of capital protection as well as stable and consistent income, in the form of a targeted 7% p.a. cash distribution, paid on a monthly basis.
• Global private credit’s low correlation to other asset classes will also allow investors to further diversify their portfolios.
• Mercer has been engaged to provide investment advisory services to build a highly diversified, multi-manager, multi-strategy portfolio, made up of more than 2,000 individual underlying loans in the new vehicle.
• Focussed predominantly on loans to mid-market companies in the US and Europe, where increased regulatory requirements post the GFC, and bank failures of 2022, have caused banks to abandon lending. This gap in supply has been filled by global private credit managers and underpins the potential for attractive returns available to investors. Pengana believes this is a structural phenomenon that will carry through the next decade, or more.
• Investors may also benefit from Pengana’s innovative quarterly buyback structure which seeks to solve the issues that have faced some ASX Listed Investment Trusts trading at a discount to net asset value.
• Pengana will host a deep dive into global private credit and the PCX offer via a webinar scheduled for 14 May 2024. Registration for the webinar can be made via Pengana.com/PCX

Global private credit specialist, Pengana Credit, has announced plans for a unique Listed Investment Trust (LIT), the Pengana Global Private Credit Trust (ASX: PCX), delivering unparalleled access to the highly sought-after global private credit asset class which, to date, has been out of reach for most Australian investors. 

The Pengana Global Private Credit Trust will seek to generate the strong risk-adjusted returns associated with the best of the global private credit sector, with some capital protection, as well as stable and consistent income in the form of a 7% p.a. cash distribution yield, net of any fees, paid monthly. Investments will be selected by Pengana’s specialist private credit team, alongside specialist investment advisory input from global investments leader, Mercer, with the aim of delivering a highly diversified investment vehicle characterised by low volatility, low risk of loss, and low correlation to other asset classes. 

The Trust breaks new ground regarding accessibility and liquidity for global private credit investing according to Nehemiah Richardson, CEO of Pengana Credit. “This Trust unlocks illiquid institutional grade assets, primarily focused on accessing bilateral loans to midmarket companies, and makes them available to retail investors via the ASX. This mid-market segment has reaped some of the best rewards from the tailwinds enjoyed by the global private credit sector in recent years. 

“These diversified global private credit investments are typically out of reach for all but the largest investors, such as the big superannuation funds and the Future Fund, which have increased allocations to private markets. 

“Now, through our listed investment vehicle, everyday investors can benefit from the same returns potential and diversification of global private credit that has been enjoyed by institutional investors for years.” 

Mr. Richardson said global private credit adds a defensive aspect to investment portfolios. “Global private credit has a track record of providing diversification benefits to investment portfolios given its low volatility, and low correlation to asset classes such as public fixed income and equities.” 

He said the Pengana Global Private Credit Trust will be one of the most diversified global private credit funds on the ASX. “Diversification is structurally important to provide liquidity, and continued performance through market cycles. Hence the Trust will provide investors with an elegant way to access more than 2,000 individual loans across 19 underlying funds sourced and approved by Mercer.” 

Perhaps the most unique innovation of the Pengana Global Private Credit Trust is in offering investors the ability to make redemptions at NAV, by way of a quarterly off-market buyback offer. “Making quarterly redemptions available at NAV solves a key potential issue that we have seen with the LIT model, and should give investors confidence and price certainty when they choose to realise their investment. This is a powerful feature in the context of portfolio construction considerations, allowing investors to confidently access highly sought after investments in a truly unique form.” 

The announcement of PCX follows previous announcements of a $200m seed investment by Pengana’s largest shareholder Washington H. Soul Pattison, and the appointment of Mercer as a specialist investment advisor. Russel Pillemer, CEO of Pengana Capital Group, said Mercer’s size and scale is critical in sourcing quality global private credit opportunities, and makes the investment vehicle unique in its ability to deliver an optimal global private credit vehicle for Australian investors. “Success in global private credit is about having access to the highest quality managers, and the synergies between Mercer and Pengana help to provide access to our investors at the highest level. 

“Quality builds resilience in the portfolio and allows us to target a high monthly cash distribution as well as the return profile generally expected from highly rated global private credit investments, along with the ability to offer quarterly redemptions at NAV. 

“PCX will target loans which are typically individually negotiated and structured, allowing the borrower to obtain legally enforceable protections. This can lead to lower default rates and higher recovery rates than other fixed income alternatives.” 

Pengana will host a deep dive into global private credit and the PCX offer via a webinar scheduled for 14 May 2024. 

For more information, investors can access a wealth of information on PCX at www.pengana.com/PCX