Adviser Voice – original article
Pengana Capital Group has opened its first diversified global private credit investment fund for Australian wholesale and sophisticated investors. The Pengana Diversified Private Credit Fund is a significant early step toward a broader offering from the group, that aims to offer Australian investors greater access to a burgeoning asset class that has been largely out of reach.
The Pengana Diversified Private Credit Fund is open to wholesale and sophisticated investors, with several additional offerings for retail investors to follow.
This offering follows Pengana’s joint venture with its major shareholder Washington H. Soul Pattinson, which made a $200 million investment to seed the global private credit portfolio earlier this year. The $200 million is now fully committed. “This was an important piece in solving the challenges of bringing a truly diversified global private credit offering to market”, notes Pengana Capital Group CEO Russel Pillemer. “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.”
Pengana later announced the appointment of Mercer as investment advisor for its private credit suite, and has been working closely with Mercer’s global team to secure capacity with some of the most highly sought after global private credit opportunities.
Nehemiah Richardson, CEO of Pengana Credit, said the fund would provide access to quality private credit vehicles that are difficult to access for most non-institutional Australian investors. “Our alliance with Mercer provides extensive global reach and the ability to target some of the best private credit managers.
“Access to global private credit is a huge issue for Australian investors, both wholesale and retail, who face significant obstacles to invest. We are pleased to bring a solution to market that unlocks the opportunity for wholesale investors, and are excited about launching some compelling retail offerings in the near future.”
Mr Richardson said the wholesale Fund would target a total net return equivalent to the RBA cash rate plus 8%. Investors in the wholesale fund will need to commit to a minimum three-year lock-up period, and will receive annual distributions.
The portfolio is highly diversified and specifically designed to deliver low volatility and attractive risk-adjusted returns. “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. 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.”
Growth in global private credit has been strong for the last 15 years, according to Mr Richardson. “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.”
The Pengana Diversified Private Credit Fund has opened to investors who have been on the group’s waiting list, with a broader availability to follow in the coming weeks.