Soul Patts pours $200m into new Pengana global private credit offering

By Sarah Thompson, Kanika Sood, and Emma Rapaport – AFR – original article

Australia’s hottest asset class has a new player. Pengana Capital and its major shareholder, Washington H. Soul Pattinson, are understood to be jointly launching a global private credit offering as early as Wednesday.

WHSP has put up $200 million in seed funding to establish the portfolio of private credit investments, largely made up of offshore US and European managers including New York-based Reverence Capital Partners.

Pengana has got some significant names on board to manage the business. Telstra’s former M&A boss, Nehemiah Richardson, has come on as chief executive and Citi country treasurer Charles Finkelstein as chief investment officer. A yet-to-be-announced large asset consultant has been hired to select individual managers.

Pengana will launch several vehicles, targeting different market segments – advised and direct to retail, high net worth and family office investors.

It is the latest multi-boutique manager to add a private credit offering to its sleeve. Pinnacle’s non-bank lender, Metrics Credit Partners, are the main players in the market, managing assets exceeding $14 billion.

Phil King’s Regal Funds Management dived into private credit last year, launching its private credit opportunities fund in October. A prominent unnamed Australian family office committed $200 million in January, as Regal said it was seeing “increasing interest in private credit … as investors search for ways to diversify their alternatives exposure”.

In contrast to Pengana’s global focus, Regal’s strategy focuses on senior loans to small and medium-sized public and private companies in Australia and New Zealand.

Growing interest in the asset class from fund managers comes as major banks pull away from lending to anything that doesn’t fit neatly in the box. The collapse of Silicon Valley Bank and rescue of Credit Suisse have financial institutions more concerned about the health of their balance sheet. But the demand for capital is there, and private credit funds are stepping in to provide financing, eyeing healthy spreads.

Pengana has been building the portfolio over the past year, with an eye on companies they think will be resilient in a recession, with the seed capital close to fully allocated.