Pengana Capital aims to tap into private markets

He said the business would initially be an equity and debt capital markets offering, skewed towards the private sector looking at businesses worth between $50 million and $500 million.

The group would be ready to advise on floats when the markets opened up again, but Mr Pillemer declined to speculate on when the “down and out” market might turn.

“We are preparing ourselves, we will be able to be flexible in our business and nimble in that we will be able to go where we need to go,” he said, adding that he expected private markets to be the major focus.

Pengana’s increasing focus on private markets – including its listed Pengana Private Equity Trust – comes amid a broader industry upheaval for active fund managers, who are increasingly under pressure on fees and performance.

ASX-listed fund managers including Magellan Financial Group, Platinum Asset Management and Perpetual, which took over rival Pendal Group late last year, are among the larger companies that have suffered from margins being eroded and a crunch on share prices.

But Mr Pillemer said it was important to differentiate between the trends hitting the larger active managers that have an institutional client base with smaller firms such as Pengana, whose clients are high-net-worth retail investors.

He said the market was starting to reflect those distinctions.

“If you’re a manager who does mainly large cap equities, and you’ve got an institutional-type client base, and you’ve kind of struggled to differentiate yourself from the index, then you are really going to struggle and you’re going to be marginalised. And you’ll see your margins erode and lose mandates,” he said.

“If you are a more specialised, active fund manager who does things differently, and who is trying to generate different types of outcomes to what indexes provide, then I think you’ll be fine. There’s a lot of money looking for those types of managers we find.”

Mr Pillemer said self-directed investors and some advisers didn’t want to “throw their money blindly into the market” with an index fund.

“Sometimes indexes do really well. And sometimes they do badly. People like making informed decisions and most people don’t want to bet their lives on that. It’s a little bit like going to the casino, I guess.”