Transcription of The Stock Network Interview with Pengana Private Equity Trust (ASX: PE1), Executive Director, Adam Myers
Lel Smits: After a prolonged reset across private markets, conditions are now turning. Transaction activity is lifting, capital markets are reopening and exit pathways are becoming clearer, setting up a more constructive environment for private equity investors in the year ahead. Pengana Private Equity Trust gives Australian investors access to global private markets through a single ASX-listed vehicle, providing diversified exposure across private equity, private credit and opportunistic investments.
Today, joining me is Executive Director Adam Myers to discuss what’s changing, why it matters and how investors can access global private market leaders through Pengana Private Equity Trust. Adam, welcome back to the Stock Network.
Adam Myers: Thanks, Lel. A pleasure to chat to you.
Lel Smits: Now, after a tough few years for private equity, the environment finally feels like it’s shifting from your seat. What’s actually improving on the ground, such as deal activity, valuations and exits? And also, how is Pengana Private Equity Trust positioned to take advantage as conditions seem to be turning more favourable this year?
Adam Myers: Thanks, Lel. I think that that’s a key question and you’ve really captured it well. Activity is picking up. We’ve seen a strong start this year in Europe.
In the US, the power plant is building. And in Asia, particularly in Hong Kong, we’re seeing deal flow improving. And the operating environment for businesses is also strong.
So, we’ve got the benefits of the capital markets reopening and the operating environment strength. Functioning capital markets environment is really important because it supports exits and realisations and these allow capital to be recycled back into new investments. We’re also seeing the valuation gap, which is the difference between the expectations of buyers and sellers, starting to narrow.
And that is also driving a meaningful increase in deal activity. From the perspective of the Pengana Private Equity Trust, PE1 and ASX, we are entering this phase from a position of strength. The portfolio is mature.
Remember, PE1 was established in 2019. So, it’s been around for long enough for the companies to be at a decent stage of maturity. It is focused on mid-market businesses.
So, improving exit conditions should really support realisations and allow capital to be redeployed into the next generation of investments for PE1.
Lel Smits: Excellent. Now, one of the biggest shifts that you’ve flagged there is that capital markets are reopening.
How important is this reopening really for private equity returns and sentiment? And also, when it comes to Pengana Private Equity Trust’s exposure to assets such as SpaceX and OpenAI, how are they fitting into that opportunity set?
Adam Myers: The reopening of capital markets and the number of RPOs that we are seeing is one of the strongest signals that confidence and liquidity are returning to private equity. PE1’s core exposure is to the profitable mid-market segment where returns are driven by operational improvement. Most exits don’t involve an RPO, but a healthier exit environment lifts the whole ecosystem.
It improves distribution flows and it certainly supports confidence in valuations, and that’s always important. As you said, PE1 does have selective exposure to high-quality growth assets like SpaceX and OpenAI, which are two of the most anticipated listings of this year. But it really is important to stress that these aren’t the foundation of the portfolio.
The foundation of the portfolio is really that cashflow-generative, economically resilient mid-market buyout business. We have exposure to nearly 600 underlying companies globally. But because a company like SpaceX has performed so strongly, it is now the biggest position in our portfolio, so it can provide meaningful upside as markets normalise and exit opportunities start to materialise, or continue to materialise, I should actually say.
Absolutely, it’s incredible. For investors who may be less familiar with private markets, can you outline how they actually access Pengana Private Equity Trust and all of the companies that are in your portfolio? Look, PE1 trades like a listed security. It’s listed on the ASX, so with a single click you can get exposure to the full diversification I’ve just described.
Lel Smits: Fantastic. Well, Adam, I really appreciate the update and I look forward to hearing more as all the equity developments occur over the coming year.
Adam Myers: Thank you, Lel.
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