Transcription of The Stock Network Interview with Pengana Private Equity Trust (ASX:PE1), Executive Director Adam Myers
Lel Smits: Pengana Private Equity Trust gives investors rare access to global private markets through a single listed vehicle. Managed by Grosvenor Capital Management, one of the world’s longest operating alternative investment allocators, Pengana Private Equity Trust offers diversified exposure to private equity, private credit and opportunistic investments. I’m joined today by Executive Director Adam Myers to explain how Pengana Private Equity Trust opens the door to global private companies and long-term growth opportunities.
Adam, welcome to The Stock Network.
Adam Myers: Thanks, Lel. Good to be with you.
Lel Smits: Now, Pengana Private Equity Trust gives investors exposure to the kind of private equity usually reserved for institutions. Can you outline how Pengana Private Equity Trust make institutional quality private equity accessible for everyday investors?
Adam Myers: I think that the key point is that private equity is only really worth pursuing when you can access the best managers in an efficient structure that works for investors. The best managers are extremely hard to access because they tend to reserve their capacity for long-standing institutional clients and they very rarely open their funds to new allocators, particularly not to smaller allocators.
And then, even if you can secure the access, the minimum investment sizes are typically at least $5 million to $10 million. That would be pretty standard. And diversification in private equity is extremely important.
So, if investors want to allocate to multiple funds to achieve that diversification, we’re talking about a significant capital requirement. And then, on top of that, there’s the drawdown model in private equity, which means that the manager decides when to call for capital to fund the investments that they’re making and when to return the capital when they don’t require it. But investors only earn returns on the capital that is actually invested, even though they need to keep the full commitment amount available in case that capital is called.
P1 solves for these issues through its partnership with Chicago-based GCM Grosvenor, which is one of the largest independent allocators to private equity globally. The depth of their relationships mean that they get access to the leading private equity managers. They manage all the cash flow mechanics for investors inside the vehicle.
And the scale of the trust allows for broad diversification. Today, P1 provides exposure to about 550 companies.
Lel Smits: Excellent. Now, the trust spans multiple strategy sectors and geographies through Grosvenor’s platform. Which portfolio companies or themes perhaps best highlight Pengana Private Equity Trust’s global diversification?
Adam Myers: The portfolio is highly diversified. Our largest geographic exposure is to North America, which probably makes sense because the U.S. is the largest and most developed private market in the world, private equity market in the world.
Industrials are our largest sector. Almost a quarter of the portfolio is allocated to industrials. And most of these companies are steady, resilient businesses that can grow cash flow and earnings through different economic cycles.
And then we have a smaller allocation to high-growth names, some of which probably won’t be familiar to most investors, and others like SpaceX probably will be familiar. Financials are our next largest sector exposure. Here we’re not talking about the highly leveraged banks, but businesses like insurance groups and financial advice networks.
So, not flashy, stable and reliable, which is exactly what you want from a long-term private equity portfolio.
Lel Smits: Absolutely. Now, Pengana Private Equity Trust also combines private market exposure with ASX liquidity. Why is listed private equity an effective long-term addition to modern portfolios? And also, what’s your outlook for the year ahead?
Adam Myers: With a single trade on the ASX, investors can access a mature, diversified private equity portfolio without the lockups that are normally associated with the asset class. So, you can choose the size that suits you, and you can buy and sell whenever you like through the market. The environment for private equity is improving.
Valuations have settled, and deal activity is picking up again, which is a great sign for the health of the industry. And finally, PE1 is currently trading at a discount. So, Pengana has put a permanent on-market buyback in place to support value for investors.
So, this means that there’s potential upside, both from the underlying portfolio and the narrowing of the discount.
Lel Smits: Well, Adam, thank you so much for the introduction to Pengana Private Equity Trust, and I look forward to hearing more.
Adam Myers: Great. Thank you very much for your time.
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