Pengana to launch listed private credit fund amid lending boom
Sydney investment house Pengana is expanding its private credit operations, announcing plans to launch a listed private credit fund after the success of its earlier unlisted option.
Pengana is capitalising on the retreat of the banks, with the Sydney investment house expanding its private debt play, announcing plans to launch a listed $250m fund offering retail investors access to European and American debt markets.
On Monday Pengana announced it would kick off a campaign to build its book of investors ahead of a June listing, with the offer of a 7 per cent yield and monthly distributions backed by a quarterly buyback to support the fund’s listed price.
The offering comes after Pengana’s move into private credit last year, which saw the funds manager snag $200m in seed funding from fellow investment operator Soul Patts, formerly known as Washington H. Soul Pattinson.
The new retail fund will see Pengana enter into up to 2000 individual loans, alongside 12 credit placement partners, with plans to lend to mid-market companies in the US and Europe.
Pengana chief executive Russell Pillemer said the foray into a listed private credit operation was the natural expansion for the company, with the public trading of the fund giving the liquidity needed to attract retail investors.
Mr Pillemer said there were difficulties for investors looking to access private credit markets, noting the demand on private credit managers to place loans.
“There’s just a lot of money looking to be invested here,” he said.
“The good managers are very careful about how they invest.”
Pengana has signed financial giant Mercer to provide investment advisory services, with 19 underlying funds sourced, and 17 wealth managers backing the private credit forays.
Mr Pillemer said a listed credit fund was always planned after the initial launch of the private credit fund last year, but noted the underlying loan composition of the fund would be different to the unlisted option.
This was because Pengana had to create more opportunities to push money through the fund and allow investors an opportunity to exit, which would see the new fund take less positions in distressed debt markets.
Mr Pillemer said he planned to conduct quarterly buybacks on the private credit fund, in a bid to offset the problem often faced by managed funds which frequently trade below their net asset value.
“It’s an entirely new structure, nobody else in the marketplace has ever done this before. We’ve worked really hard with the ASX over the past several months in order to get this mechanism to work because it’s never been done,” he said.
“I wouldn’t be surprised if this becomes a new standard in the marketplace because as I said investors are particularly concerned about discounts to net asset value.”
Pengana Credit CEO Nehemiah Richardson said private credit had increasing opportunities as banks pulled back from lending, as new capital rules made it uneconomical for them to lend to businesses.
“The underlying borrower doesn’t really have many options, the banks have actually been squeezing, basically retracting,” he said.
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