PCX - Pengana Global Private Credit Trust

[Dona Ferentes]

Listing date	20 June 2024 #
Company contact details	https://pcx.pengana.com/ Ph: 61 2 8524 9900
Principal Activities	Listed Investment Trust investing in global private debt
Issue Price	AUD 2.00
Issue Type	Ordinary Fully Paid Shares
Security code	PCX
Capital to be Raised	$250,000,000
Expected offer close date	06 June 2024
Underwriter	Not underwritten. Taylor Collison Limited, Morgans Financial Limited, Shaw and Partners Limited. (Joint Lead Managers).

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Pengana Capital Group is excited to announce the upcoming launch of a listed vehicle that will deliver unparalleled access to global private credit in the Australian market.

ASX : PCX​ PENGANA GLOBAL PRIVATE CREDIT TRUST​

Investing in global private credit has historically delivered an abundance of benefits to investors. High yield Low volatility Capital stable Stable income Attractive risk-adjusted returns Diversification Capital preservation Low correlation relative to fixed income and public market alternatives However, global private credit has, until now, been largely out of reach for non-institutional Australian investors due to the difficulty in identifying high-quality global managers, gaining access to them, complex due diligence requirements, high minimum subscription amounts, long lock-up and drawdown periods, and limited liquidity. PCX aims to uniquely address many past barriers to accessing true diversified global private credit, with a listed structure approach that, to date, has not been available to Australian investors.

 

[Dona Ferentes]

Pengana to launch listed private credit fund amid lending boom​

April, 2024

Pengana is capitalising on the retreat of the banks, with the Sydney investment house expanding its private debt play, announcing plans to launch a listed $250m fund offering retail investors access to European and American debt markets.

On Monday Pengana announced it would kick off a campaign to build its book of investors ahead of a June listing, with the offer of a 7 per cent yield and monthly distributions backed by a quarterly buyback to support the fund’s listed price.
The offering comes after Pengana’s move into private credit last year, which saw the funds manager snag $200m in seed funding from fellow investment operator Soul Patts, formerly known as Washington H. Soul Pattinson.
The new retail fund will see Pengana enter into up to 2000 individual loans, alongside 12 credit placement partners, with plans to lend to mid-market companies in the US and Europe.

Pengana chief executive Russell Pillemer said the foray into a listed private credit operation was the natural expansion for the company, with the public trading of the fund giving the liquidity needed to attract retail investors.
Mr Pillemer said there were difficulties for investors looking to access private credit markets, noting the demand on private credit managers to place loans.

“There’s just a lot of money looking to be invested here,” he said. “The good managers are very careful about how they invest.”

Pengana has signed financial giant Mercer to provide investment advisory services, with 19 underlying funds sourced, and 17 wealth managers backing the private credit forays.
Mr Pillemer said a listed credit fund was always planned after the initial launch of the private credit fund last year, but noted the underlying loan composition of the fund would be different to the unlisted option.
This was because Pengana had to create more opportunities to push money through the fund and allow investors an opportunity to exit, which would see the new fund take less positions in distressed debt markets.

Mr Pillemer said he planned to conduct quarterly buybacks on the private credit fund, in a bid to offset the problem often faced by managed funds which frequently trade below their net asset value.

“It’s an entirely new structure, nobody else in the marketplace has ever done this before. We’ve worked really hard with the ASX over the past several months in order to get this mechanism to work because it’s never been done,” he said. “I wouldn’t be surprised if this becomes a new standard in the marketplace because as I said investors are particularly concerned about discounts to net asset value.”

Pengana Credit CEO Nehemiah Richardson said private credit had increasing opportunities as banks pulled back from lending, as new capital rules made it uneconomical for them to lend to businesses.
“The underlying borrower doesn’t really have many options, the banks have actually been squeezing, basically retracting,” he said

 

[Dona Ferentes]

Now open, the Initial Public Offer for the Pengana Global Private Credit Trust (ASX: PCX), has exceeded its minimum subscription threshold of $100 million via applications and commitments, within the first day of the offer period.

Capped at $250 million, at $2.00 a share, the offer closes 06 June if not before.

 

[qldfrog]

Yes Bell Direct was offering this. I really have issues with IPO..how the hell can you value a company before it exists.." a bit rough but that is the idea.."
So then it is just a matter of market mood, fashion trend:
A brand new EV AI lithium and gold mining company will be a killer..
Time will tell, here ,you can assume whatever money raised will be put as capital at work (mostly) and earn return, so maybe better than other blue moon company...

 

[Dona Ferentes]

,you can assume whatever money raised will be put as capital at work (mostly) and earn return, so maybe better than other blue moon company...

it will buy credit , and spread the risk around.

The new retail fund will see Pengana enter into up to 2000 individual loans, alongside 12 credit placement partners, with plans to lend to mid-market companies in the US and Europe.

Cost of setting up will be a few percent, probably up to 5%, with the money going into a spread of loans.

The issue, which Pengana try to manage with loyalty inducements, is that soon after listing, $100 is really only valued at $95, taking out marketing costs, ASX fees, etc, and before they commit the capital.

There is already an unlisted Wholesale Private Credit Fund aimed at and sold to wholesale, sophs, family offices. So they have some experience. This PCX offering is for Retail, a bit derisked but otherwise similar investment style. As Pengana has multiple funds and even listed PCG, current investors will get priority and broker allocations will be skinny / likely to be scaled back.

 

[investtrader]

The concern for a listed fund like this is when sentiment in the market is poor the fund can and probably will trade under NTA value. It happens a lot. It is kind of the trade off for liquidity.
Better to wait and be a buyer when this happens rather than participate in the IPO at a 5% haircut.

 

[qldfrog]

The concern for a listed fund like this is when sentiment in the market is poor the fund can and probably will trade under NTA value. It happens a lot. It is kind of the trade off for liquidity.
Better to wait and be a buyer when this happens rather than participate in the IPO at a 5% haircut.

My thinking too

 

[Dona Ferentes]

one attraction of PCX, Pengana's soon to be listed investment trust, is that it provides exposure to 16 global private credit funds that diversify investors away from, in Christopher Joye's words, "local private credit players’ perverse fixation with funding very risky residential development and commercial property projects. These two sectors being " ground zero for what is becoming the worst default cycle since the GFC."

 

[investtrader]

one attraction of PCX, Pengana's soon to be listed investment trust, is that it provides exposure to 16 global private credit funds that diversify investors away from, in Christopher Joye's words, "local private credit players’ perverse fixation with funding very risky residential development and commercial property projects. These two sectors being " ground zero for what is becoming the worst default cycle since the GFC."

Yes, but in the words of David Suzuki you have to ask Christopher Joye where the money is coming from. He is very critical of all RE finance which is too simplistic. He of course, has his own products to promote.
The banks are very difficult, inflexible and cumbersome and this has created the opportunity for RE private debt. But it can be just as safe as a bank with low LVR's and first mortgage security. I believe it can sensibly be part of an allocation to private credit.
And even if PCX looks good I wouldn't invest in a listed fund for the reasons I have already mentioned except maybe when it has fallen way under NTA.
I do also invest in the Coolabah Floating Rate High Yield Fund.

 

[Dona Ferentes]

lists today at 12 noon
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.

 

[Dona Ferentes]

healthy day 1 on the bourse.. never went under IPO issue price

 

[Dona Ferentes]

healthy day 1 on the bourse.. never went under IPO issue price

... and seems to have acquired 'boring' status rather quickly, and not dropped below IPO of $2.00, as feared.

 

[Dona Ferentes]

has been trading as high as $2.10. And now, as in the prospectus, the expectation is that there will be monthly distributions. First one freshly minted. No franking

PCX - ORDINARY UNITS FULLY PAID
- Date of this announcement
26/7/2024
- Distribution Amount
AUD 0.01160000
- Ex Date
01/8/2024
- Record Date
02/8/2024
- Payment Date
16/8/2024
- DRP election available

 

[Dona Ferentes]

PCX has performed, as expected. Mainly trading just above $2.00, there's a secondary market but low volume. Now $2.04

and today, a soph adding to the coffers:

Received binding commitments for 5,886,782 new fully paid ordinary units in the Trust by way of a wholesale client placement, at a price of A$2.0227 per New Unit, raising approximately $11,907,194. The Placement price is equal to the unaudited net asset value per unit of the Trust on 31 August 2024 of $2.0002, adjusted to offset any estimated dilutive effect of the Placement on existing Unitholders. The Placement price represents a premium to the $2.01 ASX closing price of PCX on 12 September 2024.

The Responsible Entity confirms that, pursuant to ASX Listing Rule 7.1, New Units to be issued under the Placement fall within the Trust’s 15% placement capacity and accordingly do not require unitholder approval. The proceeds from the Placement will be invested .. in existing global private credit strategies in accordance with the investment mandate and objectives of PCX and consistent with the disclosures made by the Responsible Entity to the ASX in relation to PCX. New funds raised are not expected to impact the Trust’s investment objectives, including its target distribution which remains unchanged.

CEO Nehemiah Richardson said: "The Placement was targeted at a very small group of investors who were unable to participate in the IPO. This continued demand, and the recent on-market trading performance of PCX highlights the ongoing investor demand for a high-quality global private credit closed-ended product that delivers monthly income and attractive risk-adjusted returns, capital preservation and portfolio diversification...".

The Placement was not underwritten and was arranged by Taylor Collison Limited as sole broker and bookrunner pursuant to a placement agreement entered into between the Lead Arranger, the Manager and the Responsible Entity.

Under the Placement Agreement, the Manager has agreed to pay certain fees to the Lead Arranger for acting as the broker and bookrunner to the Placement. Such fees will be borne by the Manager and will not be an additional cost to unitholders of the Trust.

 

[Dona Ferentes]

PCX has performed, as expected. Mainly trading just above $2.00, there's a secondary market but low volume.

6 months in

PCX PERFORMANCE UPDATE
• All capital raised has been fully deployed.
• Underlying performance of our managers at or above their target returns.
• Our monthly distributions are meeting our 7% minimum target distribution funded strong cash flows from our Income managers.
• Regarding NAV performance, while we pay distributions monthly from cash distributions received from our investments, underlying valuations of our fund investments are received less regularly. As a result, there may be a limited amount of NAV movement each month until the reported returns on all funds invested are received and then will appear in our NAV.

paid 4 x 1.16c every month ( ... ex- today)