Rated: XXX
ASX: PCX
UNPARALLELED ACCESS TO GLOBAL PRIVATE CREDIT
A listed fund with unlisted characteristics.
Key features:
- The most diversified global private credit fund on the ASX
- Targeting strong risk-adjusted returns, including a 7% p.a. cash distribution yield, paid monthly1
- Opportunity to sell quarterly at NAV3
- An asset class with historically low volatility, and low correlation to other fixed income and equity indices
PCX will be the only global private credit fund on the ASX that provides investors the opportunity to either sell on market, or at NAV, via a quarterly off-market buy-back mechanism3.
PCX aims to deliver a portfolio that generates strong risk-adjusted returns with a high degree of capital protection, as well as stable and consistent income via exposure to a highly diversified portfolio of over 2,000 loans, from a wide range of leading global private credit fund managers.
Pengana Investment Management Limited (ACN 063 081 612, AFSL 219462) is the Responsible Entity and issuer of units in the Pengana Global Private Credit Trust (ARSN 673 024 489) (PCX). Please read our Target Market Determination (TMD) and seek professional advice to determine if investing in PCX is suitable for you. Investors should consider the Product Disclosure Statement (PDS) before making a decision about whether to acquire units in PCX.
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Key Benefits of PCX
Access to a diversified portfolio of global private credit funds across various geographies, strategies and sectors.
Diversification
PCX will be highly diversified across strategy, geography, sector, credit quality, and type of instrument.
Performance
PCX is targeting the strong risk adjusted returns associated with the global private credit sector, with a high degree of capital protection, as well as a stable and consistent income, which will be paid monthly.1
Liquidity
Buy and sell on the ASX2.
(global private credit is typically characterised by lengthy capital lock-ups).
Unique Stability
Option for investors to buy and sell at NAV by way of a regular off-market scheme buy-back mechanism3.
Simplicity
PCX will be a single access point to over 2,000 individual loans, across 19 Underlying Funds, sourced and rated by Mercer.
Institutional Scale
Unlock access, sourcing, research, due diligence and portfolio construction capabilities - via a unique alliance with Mercer.
Defensive investment
Global private credit has a strong track record of low volatility, attractive returns and low correlation to other asset classes such as public fixed income and equity, which can provide diversification benefits by enhancing portfolios' risk-adjusted returns. 4
Access
PCX will aim to provide exposure to difficult-to-access global private credit investments predominantly in middle market companies (being those with USD$50m-250m of annual EBITDA), typically only available to institutional clients.
Resilience
Loans are typically individually negotiated and structured, allowing the borrower to obtain legally enforceable protections. Historically, this has lead to lower default rates and higher recovery rates than other fixed income alternatives.5
Bespoke solution
Tailored by Mercer, specifically to the requirements and objectives of PCX.
Currency
PCX will be hedged back to AUD mitigating the risk of foreign exchange fluctuations.
Predictability
PCX by nature, and design, aims to have lower volatility than other asset classes.
Revolutionised Delivery
PCX aims to uniquely address many existing barriers to accessing a diversified portfolio of global private credit, with a listed structure approach that, to date, has not been available to Australian investors.
Typical Challenges
Addressed by PCX
GLOBAL ACCESS
- Identifying, assessing and securing access to best in class global private credit managers
- Mercer’s global reach, private credit expertise, and buying power, deliver access to approved global private credit managers
DIVERSIFICATION
- Australian vehicles are typically
single-manager and concentrated by geography, asset class, and/or strategy
- Multi-manager, multi multi-strategy, global portfolio designed to deliver strong risk adjusted returns, a high degree of capital protection, and stable and consistent income
- Underlying loans > 2,000
DEPLOYMENT
- Funds typically have up to 4 year drawdown schedules, this dilutes investor overall returns and creates cash management challenges
- Most of the capital raised is expected to be committed, called and deployed into return-generating investments during the first full month, thereby reducing IRR impact
HEDGING
- Investing in offshore funds carries currency risk, and hedging of illiquid credit assets is not possible or prohibitively expensive
- PCX will be hedged back to AUD mitigating the risk of foreign exchange fluctuations
STAYING INVESTED
- Closed-end funds return capital, requiring a repeat of entire investment process
- PCX is a fully-invested evergreen vehicle traded on the ASX, allowing investor to manage their allocations to global private credit and stay fully invested for optimal portfolio construction
LIQUIDITY
- Unlisted vehicles are illiquid, and listed vehicles typically risk trading at discounts to NAV.
- Listed format provides the potential for daily liquidity2, with the introduction of a regular off-market mechanism to support buy-back at NAV3
THE IMPORTANCE OF A LISTED STRUCTURE FOR GLOBAL PRIVATE CREDIT
Liquidity
Time Horizons
Daily Pricing
Access
Portfolio Construction
Perpetual Exposure
- Private Credit assets (and funds) are illiquid by nature.
- Investors in unlisted Private Credit structures are generally required to invest for many years, with little prospect of short-term liquidity.
- There are structures that do purport to offer short term liquidity; however, these are always subject to gates, which would deny investors liquidity (perhaps when they need it most).
- A listed structure solves the liquidity problem by enabling investors to sell immediately on market (with ultimate pricing depending on supply and demand).
- Many financial advisers and/or investment platforms require daily pricing and the ability to invest and/or withdraw for their clients’ portfolios.
- Investors can immediately gain access to the required amount of Global Private Credit needed to optimise their portfolio construction.
- No repayments of capital – enables investors to maintain, and manage, their required exposures to Global Private Credit in perpetuity.
- Buy-back mechanism supports investor liquidity at NAV and mitigates the risk of trading at discount to NAV.
Key Risks of PCX
All investments are subject to risk which means the value of investments may rise or fall, which means that you may receive back less than your original investment or you may not receive income over a given time frame. The key risks associated with investing in PCX include investment risk, investment strategy risk, market risk, leverage risk, credit and default risk, valuation risk, currency risk, underlying manager risk and fund risk. Refer to section 8 of the PDS for a comprehensive summary of potential risks.
Important Dates
Priority Determination Date | 10 April 2024 |
Lodgement of the PDS with ASIC | 19 April 2024 |
14 May 2024 | |
Offer Opening Date | 20 May 2024 |
Offer Closing Date | 6 June 2024 |
Expected Settlement Date | 13 June 2024 |
Expected date of the allotment of Units under the Priority Offer, Cornerstone Offer, Broker Firm Offer and General Offer | 14 June 2024 |
Expected date for dispatch of holding statements | 17 June 2024 |
Trading of Units on the ASX commences (on a normal settlement basis) | 20 June 2024 |
Mercer insights
Issued by Mercer Consulting (Australia) Pty Ltd – Available for Financial Advisers only.
Contact Us
Offer Information Line on 1300 265 239 (within Australia) or +61 3 9415 4844 (outside Australia) between 8:30am and 5:00pm (Sydney time) on a Business Day.
- The target cash distribution yield is an objective target only and may not be achieved. Any shortfall in net income generated may result in a distribution payment made out of capital invested. Future returns are not guaranteed and a loss of principal may occur. Investors should review the Risks summary set out in Section 8 of the PDS. The first distribution is expected to be paid with reference to the period ending on 31 July 2024, with July 2024 being the first full month following the Settlement Date. Past performance is not necessarily a guide to future performance.
- There are no guarantees that an active trading market with sufficient liquidity will develop or that such a secondary market will sustain a price representative of the NAV per unit. In circumstances where units are suspended from the ASX, unitholders may not be able to sell their units via the ASX until trading recommenced.
- The Responsible Entity intends to make an offer to buy-back 5% of the issued capital of PCX at the Buy-Back Price each calendar quarter on an off-market basis, subject to the Responsible Entity determining such is in the best interest of unitholders. The Buy-Back Price is equal to the sum of (i) the NAV per unit as at the Buy-Back Pricing Date; and (ii) the amounts of distributions that the unitholder would have been entitled to if the unit was not cancelled from the Buy-Back Cancellation of Units Date up to the Buy-Back Payment Date. This off-market buy-back mechanism is intended to provide investors with an alternate option to sell their holdings. It is also intended to give investors a better investment outcome over traditional listed investment company (“LIC”) and listed investment trust (“LIT”) structures by reducing the propensity for trading on-market to occur at large discounts to the NAV per unit. The first round of quarterly buy-back post the completion of the IPO will have a Buy-Back Pricing Date of on or around 31 December 2024. Subject to the acceptance of a buy-back timetable which is acceptable to the ASX, a Buy-Back Booklet with details of specific dates for this first buy-back will be made available to unitholders on or around 15 August 2024, with the date required for a unitholder to elect to participate in the buy-back being on or around 20 September 2024. The Responsible Entity intends that each subsequent round of quarterly buy-back after the first round will also have at least one calendar quarter between the date required for a unitholder to elect to participate in the buy-back and its Buy-Back Pricing Date and Buy-Back Payment Date, with specific dates to be made available in future Buy-Back Booklets (subject to the acceptance of the buy-back timetable by the ASX). Please refer to the PDS for an explanation of capitalised defined terms and in particular to section 6.12 for further information in respect of the buy-back proposals and other capital management initiatives.
- 10 year period from 1 July 2013 to 30 June 2023. Sources: S&P (S&P 500 Total Return Index), Bloomberg (Bloomberg US Corporate Total Return Value Unhedged USD), Burgiss (Burgiss – Private Debt (North America)), and Thomson Reuters Datastream (ICE BofAML US High Yield Master II, S&P Leveraged Loan). No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily a guide to future performance.Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
- USD$ Cumulative Default Rate 1995 – 2021: S&P LCD & CreditPro (1995 to 2021), as at 31 December 2021. USD$ Average Annual Recovery Rate 1995-2022: S&P LCD & CreditPro (1995 to 2022). No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily a guide to future performance. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
*Lonsec ratings issued 24/04/2024 are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. © 2020 Lonsec. All rights reserved.
The information on this website has been prepared and issued by Pengana Investment Management Limited (ACN 063 081 612, AFSL 219462). The information provided in this website is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of PCX, you should consider the current PDS and assess whether PCX is appropriate given your objectives, financial situation or needs. None of Pengana Investment Management Limited, Mercer Consulting (Australia) Pty Ltd, nor any of their related entities, directors, partners or officers guarantees the performance of, or the repayment of capital, or income invested in PCX. An investment in PCX is subject to investment risk including a possible loss of income and principal invested. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.