By Rhea Nath – Money Management – original article
Pengana Capital Group has announced the launch of its first diversified global private credit investment fund for Australian wholesale and sophisticated investors.
The Pengana Diversified Private Credit Fund will target a total net return equivalent to the RBA cash rate plus 8 percent, with a minimum three-year lock-up period and annual distributions for investors.
The launch of the fund follows Pengana’s joint venture with its major shareholder Washington H. Soul Pattinson (WHSP), which made a $200 million investment in April to seed the global private credit portfolio.
This would include the launch of several vehicles, specifically tailored to different market segments, including advised and direct retail investors, high-net-worth and family offices.
The firm also indicated it is assessing an opportunity to launch a direct-to-consumer (D2C) retail offering later in the year.
Russel Pillemer, chief executive of Pengana Capital Group, described the seed funding as an “important piece” towards bringing diversified global private credit offerings to market.
“In order to offer our investors a truly global private credit return experience from day one, this initial investment allowed us to build out the foundations of a portfolio that we can bring to market,” he said.
Nehemiah Richardson, chief executive of Pengana Credit, explained the inaugural fund is highly diversified and specifically designed to deliver low volatility and attractive risk-adjusted returns.
He said: “Risk is spread across an actively managed multi-manager, multi-asset portfolio. Portfolio construction is key to ensuring low correlation across investments and high risk-adjusted returns.
“The big differentiator is diversified access to some of the best global private credit managers. Building a diversified private credit portfolio has proven to be very difficult for all but the largest institutional investors.”
He added: “We have also worked hard to ensure we were able to solve the puzzle of hedging the portfolio of global private credit investments in order to deliver asset-class returns in AUD.”
According to Richardson, who joined the firm in June this year alongside chief investment officer Charles Finkelstein, growth in global private credit has been strong for the last 15 years.
“Private credit has grown rapidly as global banks have retreated from corporate lending due to increasingly stringent regulatory requirements, providing one of the most compelling risk/return investments. Constructing a highly diversified portfolio of top-quality private credit managers is key.
“Private credit has low correlation with other asset classes, and is also attractive due to its resilience to higher interest rates and inflation. This is largely due to the fact most securities have a floating rate,” he said.
In July, Pengana Capital appointed Mercer as an investment adviser on its portfolio construction for its private credit arm, looking to leverage Mercer’s global footprint, access and investment expertise.
Pillemer recently appeared on an episode of Money Management’s podcast Relative Return to discuss the firm’s developments in the private assets space. Click here to listen now.