Military tech company among Pengana AI trust’s early investments

As featured in InvestorDaily. View the original article here.

Pengana Capital’s AI Private Opportunities Trust (AIX) has taken a stake in German defence-AI firm Helsing, while hinting at a ‘significant’ LLM company investment to be revealed in the coming days.

Pengana’s AIX trust, which offers Australian investor access to privately-owned AI companies, has announced an investment in German battlefield AI company Helsing.

It comes just a month out from the trust’s 2 July ASX debut. Since then, AIX has already deployed more than one-third of its portfolio.

Now comprising some 5 per cent of AIX’s holdings, Helsing builds AI software for weapons systems and battlefield decision-making, military strike drones, and underwater surveillance systems.

This year, the company completed the largest private defence-technology funding round in European history, raising US$1.8 billion at a US$18 billion valuation. It is now one of the most valuable defence businesses in Europe.

Pengana chief executive Russel Pillemer said the market-first trust is well-placed to continue deploying capital over the coming months, in line with the plan set out in the product disclosure statement (PDS).

“More than a third of the portfolio is already invested and, importantly, we’re gaining exposure to private AI companies and transactions that Australian investors would ordinarily find extremely difficult to access,” Pillemer said.

Helsing was founded in 2021 and has branded itself as a more ethical AI-defence player, purportedly selling only to democracies. According to Wired reporting, Helsing’s three founders have cited Russia’s 2014 Crimea invasion as an impetus for the company’s founding.

Last year, it came to light that former Spotify chief executive Daniel Ek had led a billion-dollar investment into Helsing, causing artists and users to boycott Spotify. Ek is now a chairman of the company and has stepped down from the top job at the music streaming service.

In addition to Helsing, AIX also reported that one of its largest holdings, Chinese internet tech company ByteDance, has recently had its valuation written up by some 20 per cent. AIX said the valuation increase was due to the company’s strong financial performance and the value of shares being traded on the secondary market.

Pengana said the move represented a “strong early win” for AIX’s first month. The trust had acquired ByteDance at a valuation around US$450 billion, below secondary-market activity in the company’s shares valued at US$550 billion as of February.

“ByteDance is a good early example of what AIX is trying to achieve, and demonstrates the opportunity in targeting these private companies before they list,” Pillemer said.

“We don’t expect every company to increase by 20 per cent in the first month, but we do expect to see explosive growth among these global AI companies over time.”

In a release, AIX also hinted at an investment in a major large language model (LLM) company, saying it will be “a significant part of the Trust’s portfolio and has been acquired at what we believe is a very attractive price”.

The company’s identity is expected to be revealed to unitholders in the coming days, with Pillemer describing it as “one of the two leading companies globally”. AIX said it is also actively chasing exposure to another major LLM company.

Major privately-owned LLM firms include OpenAI and Anthropic, both of which are gearing up for public listings in the near future.

They’re among the broader suite of mega-AI companies tipped for IPOs this year, following SpaceX’s in June, reflecting the broader trend of companies staying private longer. With much of these firms’ valuations created before listing, early private access is central to AIX’s pitch to give Australian investors a way into such firms.

Separately, Pengana’s Private Equity Trust (PE1), a SpaceX investor since 2020, saw its valuation jump after the company’s record-breaking market debut.

While the Elon Musk-owned company has since seen its share price plummet, it has rebounded more than 40 per cent off its lowest point over the past week to 13 August.

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IMPORTANT INFORMATION AND DISCLAIMER

Pengana Investment Management Limited ACN 063 081 612, AFSL 219462 (Pengana) is the issuer of this information and units in AI Private Opportunities Trust ARSN 697 001 184 (AIX). This information 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 AIX you should consider the TMD available at pengana.com/AIX and assess whether AIX is appropriate given your objectives, financial situation and needs. Neither Pengana nor any of its related entities, directors, partners or officers guarantees the performance of, or the repayment of capital, or income invested in AIX. An investment in AIX 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. 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 AIX unit. In circumstances where AIX units are suspended from the ASX, unitholders may not be able to sell their AIX units via the ASX until trading recommences.