Australia’s only retail global private equity fund has released details on some of its largest underlying investments in an update to investors. PE1, managed by $4Bn funds management group Pengana Capital, aims to provide investors with access to the world’s top-performing quartile of private equity funds, and boasts exposure to high profile private companies such as SpaceX, Rivian, UBER Freight, Nubank, Transferwise, and Stripe.
Below is the released list of the largest underlying investments in the PE1 portfolio (which boasts exposure to over 350 underlying companies), each of which represents at least 2% of PE1’s investment portfolio and which collectively represent 30% of PE1’s investment portfolio using the most recently available valuations on 30 September 2021.
Instacart, which continues to represent the largest private equity position in the PE1 portfolio, is an online grocery delivery service operating as the asset light solution for existing grocers. Instacart significantly benefitted from the stay-at-home restrictions put in place due to the COVID-19 restrictions. Instacart has also begun to monetise the opportunity it saw in consumer-packaged goods advertising as, like grocery shopping, ad sale spend has been transitioning online. Instacart has had several financing rounds since our initial investment and is currently marked at USD$35 billion. The company recently hired a new CEO, Fidji Simo, who succeeds founder and CEO Apoorva Mehta (who will shift to the role of executive chairman). Ms. Simo was previously the second most senior woman at Facebook and brings valuable experience working at a large, digitally driven company that saw rapid expansion and ended up going public.
Pathway Vet Alliance is a leading consolidator of general practice, specialty, and affordable care veterinary clinics, as well as a provider of veterinary management services in the US. Pet adoption rates have been at all-time highs due to the work from home restrictions, which has led to a significant increase in general vet needs (e.g., vaccinations). The company continues to successfully execute on its acquisition strategy and, despite some recent concerns about a current shortage of veterinarians and vet techs, performance continues to be strong.
Gainwell Technologies is a leading provider of technology solutions that are vital to the administration and operations of health programs throughout the US. The company’s solutions impact approximately two-thirds of the Medicaid beneficiaries across the US and facilitate cost savings, performance efficiencies, and improved care outcomes for state and local governments. Operational performance has been very strong since our original underwriting in March 2020, and in Q2 2021, Gainwell closed on a strategic acquisition of the Medicaid and managed care market focused capabilities of HMS Holdings Corp. (Nasdaq: HMSY) (“HMS”). The HMS transaction significantly expands Gainwell’s capabilities with unique, data-driven technology and service solutions expected to drive greater impact in the healthcare market.
Lineage Logistics, LLC is a global warehouse and logistics company specialising in cold storage. Cold storage provides critical infrastructure in the supply chain between food producers and consumers and Lineage has benefitted greatly from the increased volume in the grocery supply chain due to the stay-at-home restrictions stemming from the pandemic. Lineage has pursued an aggressive M&A strategy since our original investment, and has successfully integrated the acquisitions into Lineage’s best-in-class technology / automation platform. We have increased our position in Lineage over time by participating in several follow-on investments to fund acquisitions.
ByteDance, Inc. is a Chinese multinational internet technology company that is the developer of the video-sharing social networking services and apps TikTok and Douyin (the Chinese-specific counterpart to TikTok), as well as the news and information platform Toutiao. Excluding the company’s cash burn from TikTok, the core business is highly profitable with a strong runway for growth. With a leading distribution platform, ByteDance is diversifying its revenue stream into large addressable markets and already holds a leading market share in live streaming and is #2 in gaming distribution
Core Specialty Insurance is a specialty Property & Casualty insurance business that was lifted out of Enstar Group Limited late last year and recapitalised with new equity with the goal of creating a best-in-class specialty insurer. Core Specialty is already performing well and is projected to significantly exceed our expectations for 2021 in terms of gross written premiums, driven by new Property and Agriculture business units that are already surpassing management’s year-3 target for the units. Additionally, Core Specialty signed a definitive agreement to acquire Lancer Insurance earlier this year (expected to close this quarter), which will add a leading commercial auto division to the platform.
Peraton Corporation is a leading provider of technology-focused services and solutions to various federal US government agencies. The company has completed a number of significant acquisitions this year, including (i) in February, Peraton acquired Northrop Grumman’s integrated mission support and IT solutions business, and (ii) in May, Peraton completed the take-private acquisition of Perspecta, Inc. (NYSE: PRSP), a leading government services provider. The combination of these three heritage companies creates a top-tier, next-generation national security provider that is well-positioned to serve as a valued partner to essential government agencies across the intelligence, space, cyber, defense, civilian, health, state, and local markets.
Mux, Inc. provides video infrastructure through an application programming interface (API) for video that optimises streaming speed and quality and provides best-in-class experiences for developers and end users. The company’s product allows any company to stream 4K video to its customers without having to build out their own video backend infrastructure. Driven by increased demand for on-demand streaming that accelerated during the pandemic, Mux announced a US$105 million Series D in April that valued the company at more than US$1 billion.
PE1 has also highlighted the announcement of a number of proposed transactions which may benefit PE1 unitholders:
Nubank, the largest fintech company in Latin America, is targeting a valuation of more than US$50 billion in its proposed IPO in New York, higher than that of Itaú Unibanco, Brazil’s largest traditional lender. Nubank offers credit cards, personal loans and savings accounts by smartphone without the need for physical documents or branch visits, at more competitive rates than traditional Brazilian banks and with zero fees. The company was valued at US$30 billion earlier this year in a financing round led by Warren Buffett’s Berkshire Hathaway. PE1 gained its exposure in June 2020
Rivian is seeking a valuation of around US$70 billion in its IPO, following a fundraising round that valued it at US$27.6 billion in January. Rivian’s targeted and first-mover approach to the SUV, pick-up, and van electric vehicle (EV) market, along with a strategic partnership it has with Amazon (which holds a 20% stake), position it to be a leading supplier of EVs. Rivian’s current strategy involves building EV delivery vans for Amazon and developing an electric pickup and SUV brand aimed at affluent individuals.
An affiliate of Amentum Holdings LLC will be acquiring one of our underlying investments in PAE Incorporated, a leading government services contractor. The transaction is expected to close by the end of the first quarter of 2022 and once finalised, will create one of the largest providers of critical services to U.S. federal and allied governments.
Additional holdings in the PE1 portfolio include:
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