Investing in great tech companies Pre-IPO

Investors are clamoring to buy into listed global technology companies – on the Nasdaq, the ASX, and other exchanges worldwide, driving valuations to all-time highs.

And then there are unlisted global technology companies, many of which have phenomenal growth prospects but are valued at much lower multiples than their public market counterparts. Unfortunately for most investors, it is impossible to invest in these unlisted companies which usually only raise money from large institutions and extremely wealthy family offices – who get to share in what is often substantial gains, when these companies are listed or sold.

FORTUNATELY FOR AUSTRALIAN INVESTORS, THEY CAN NOW INVEST IN MANY OF THESE COMPANIES VIA THE ASX BY ACQUIRING UNITS IN THE PENGANA PRIVATE EQUITY TRUST.

 

PE1

 

Examples of market-leading, unlisted, global technology companies that are owned by PE1 include:


Instacart
: the leading independent grocery delivery platform in the US and the largest single investment in the PE1 portfolio. Instacart which has had 500% volume growth over the last year, is reported to be targeting an IPO in the first half of 2021.

 


Stripe
: a payment processing company with software that allows businesses to make and receive payments, primarily in e-commerce environments. We believe that Stripe is the globally preferred solution for both e-commerce and software as a service (SaaS) companies.

 


ByteDance
: the second-largest internet platform in China and owner of TikTok. The company has 800 million daily average online users of its video, live streaming, and newsfeed apps, accounting for 12% of time spent online in China. Recently reported to be raising an additional US$2 billion, valuing it at circa $180 billion.


Transferwise: a payment platform launched in 2011, designed to provide its customers with the lowest possible costs on foreign currency transfers. With 8 million customers, Transferwise employs 2,200 people across 14 offices globally and processes in excess of US$5 billion of transfers per month.

 


Transact
: a payment and campus management software platform operating in the higher education market, serving ~1,300 unique institutions and over 12 million students globally.

 


Nubank
: a Brazilian company that is the largest Fintech in Latin America, offering credit cards, personal loans and savings accounts by smartphone without the need for physical documents and branch visits. Nubank has 23 million unique customers, equating to 14% of Brazil’s adult population.

 


SpaceX
: an American aerospace manufacturer and space transportation services company founded in 2002 by Elon Musk, with the goal of reducing space transportation costs to enable the colonization of Mars.

 


Uber Freight
: an UBER-for-freight-logistics app that helps carriers make hassle-free bookings and shippers tender shipments easily.

 


Let’s take a look at a recent example of a pre-IPO investment that Australian retail investors who hold PE1 were able to access.

 

 

Unity software is a mobile game development platform operating in a global duopoly with an increasing market share in a rapidly growing market. The Unity platform boasts 1.5 million active creators, over 3 Billion app downloads per month, with over 50% of all mobile games in the world being created using Unity’s platform.

In September of 2019 PE1 invested in Unity at a price of $22 per share. In September of 2020, Unity executed an IPO at $52 per share and is now valued at circa $95 per share (as at end of October 2020). PE1 still holds in investment in Unity which is currently worth 4.3x its entry price.

PE1 is listed on the Australian Stock Exchange (“ASX”) and therefore is accessible to investors who are able to acquire ASX listed investments.

In addition, most major investment platforms allow their investors to invest in PE1 units.

Speak to your financial advisor about an investment in PE1 or contact us directly.

 


 

Disclaimer:

Whilst PE1 has the potential to generate returns from investing pre-IPO, it is important to note the following:

  • PE1 has a highly diversified portfolio and therefore, only a minority of PE1’s investments will be in technology companies. Furthermore, it is expected that PE1 will exit only a minority of such investments through the public markets
  • PE1 does not have a concentrated portfolio and therefore any single investment is unlikely to have a major impact on PE1’s investment performance
  • There are risks from investing in every company and there are prospects of generating negative returns from any investment.

Pengana Investment Management Limited (ABN 69 063 081 612, AFSL 219 462) (“Pengana”) is the issuer of units in the Pengana Private Equity Trust (ARSN 630 923 643) (“Trust”). A Product Disclosure Statement for the Trust (“PDS”) is available and can be obtained by contacting Pengana on (02) 8524 9900 or from www.pengana.com. A person who is considering investing in the Trust should obtain a copy of the PDS and should consider the PDS carefully and consult with their financial adviser to determine whether the Trust is appropriate for them before deciding whether to invest in, or to continue to hold, units in the Trust.

This report was prepared by Pengana and does not contain any investment recommendation or investment advice. None of Pengana, Grosvenor Capital Management, L.P., nor any of their related entities, directors, partners or officers guarantees the performance of, or the repayment of capital, or income invested in the Trust.

Certain statements in this report constitute Pengana’s opinions on investment related matters. While Pengana has a reasonable basis for holding these opinions these do involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of Pengana and which may cause actual performance or outcomes to differ materially from those expressed or implied by such opinions. To the maximum extent permitted by law, Pengana disclaims any obligation to disseminate any updates or revisions to Pengana’s opinions as expressed in this report.

An investment in the Trust is subject to investment risk including a possible delay in repayment and 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.