Transcription of The Stock Network Interview with AI Private Opportunities Trust (ASX:AIX), Executive Director Adam Myers
Adam Myers: It always pays to start with a disclaimer. This presentation is general information only and in no way represents personal financial advice. Please consider your own circumstances, read the relevant disclosure documents and do your own research before making any investment decisions.
My name is Adam Myers. I’m an Executive Director at Pengarna. For those of you who don’t know Pengarna, we’re a highly diversified investment manager and we’ve been managing or investing money on behalf of our clients for more than two decades.
There are a few key things that differentiate us. We generally don’t target the institutional market, so our focus is on delivering differentiated investment strategies to everyday investors, primarily financial advisors and their clients. Each strategy that we offer is managed by a specialist investment team and we also deliberately avoid what I call Me Too products.
For us to bring a strategy to market, it needs to be genuinely differentiated and offer investors something that they are unlikely to already have in their portfolios. Increasingly, that has meant focusing on less liquid and private market opportunities, which have historically been much easier for large institutional investors to access. Our objective here is to give our investors, so the sub-institutional segment, access to private markets, which sophisticated institutions have historically used as a source of portfolio diversification and differentiated returns.
In 2019, we established PE1, which is a highly diversified global private equity offering. We listed that in the ASX and it gives investors an opportunity to access private equity in a size that suits their portfolio. In 2024, we established and listed PCX.
It’s a very similar story, just providing access to private credit. Importantly, PCX allows investors to access the characteristics of the private credit asset class, while significantly diversifying the individual borrower exposure across more than four and a half thousand underlying loans. And this year in June, we established and listed the Pingona AI Private Opportunities Trust.
And I’ll talk about that in a bit more detail because it’s an exciting time as we are building out the investment portfolio. But first, what was our motivation? Why did we put this trust together? Our view is at the moment, many investors have limited opportunities to acquire direct exposure to many of the companies at the center of AI development. And that’s simply because so many of these businesses remain privately owned.
And at the same time, we’re seeing examples of listed companies that are having their business models disrupted by AI. So investors may already be experiencing indirect exposure to the risks associated with AI without having the direct exposure to the private companies that are driving the disruption. So we designed AIX to provide exposure to private AI companies during a period in which many of these businesses are still privately owned, are still continuing to develop and scale.
To avoid thinking about AI too narrowly, we break the ecosystem into four segments and we either have or still intend to make allocations across all of them. The first is foundational models. The large scale model builders such as OpenAI and Anthropic.
Second is what we refer to as picks and shovels. The infrastructure layer. The compute, hardware, data and tooling required to build and deploy AI.
Third is AI applications. Pieces of software that apply AI directly into workflows and end markets. Databricks is probably one of the examples many of us are familiar with and AIX actually has just announced an investment into Databricks.
The fourth is physical AI. This is robotics, autonomy, defense systems and industrial automation. We’ve invested in Helsing which is a European defense technology company.
Our aim is to capture value across the ecosystem rather than making a single narrow bet on one company or one sub-segment. AIX has been specifically designed to provide exposure to private AI companies during this period when access through public markets remains quite limited. Our expectation is that over time more private AI businesses will transition to public markets and this should progressively broaden the opportunity set available to public market investors.
We’ve structured the investment quite differently to a typical closed-end permanent capital listed investment trust. For the first two years, any time one of our portfolio positions realizes value, the gains associated with that realization will be distributed to investors but not the initial capital that will be reinvested. From year three onwards, the full realization proceeds will be distributed back to investors and our expectation is that the portfolio will progressively realize investments and return the resulting proceeds to investors and the trust will substantially wind down over about seven years.
And finally, to align our economics with the trust’s expected life, we will reduce our management fee to zero at the end of year seven. So this has been a brief introduction to the Pangana AI Private Opportunities Trust. There’s much more information available on our website.
I urge you to check her out. Otherwise, please get in touch. We’d love to hear from you.
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