Pengana Capital Group Ltd. · ASX:PCG
Pengana Capital — FY2024 Earnings Presentation
27 slides from Pengana Capital's earnings presentation, Aug 29, 2024
Slide 1: Investor Presentation
INVESTOR PRESENTATION PIONEERING TOMORROW, TODAY.
Slide 2: Table of Contents
TABLE OF CONTENTS 1. Pengana Overview 2. Strategic Positioning 3. Year in Review 4. Shareholder Opportunity
Slide 3: Pengana Overview
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Slide 4: Pengana Capital Group ('PCG')
PENGANA CAPITAL GROUP (‘PCG’) PCG is an Australian-based funds management group, with a highly diversified range of distinct and differentiated investment strategies across both listed equities and private markets. Pengana focusses on the non-institutional-investor market and is well recognised as a
Slide 5: Pengana Overview
PENGANA OVERVIEW Established in 2003, Pengana Capital Group Limited (‘PCG’) is a diversified fund manager with $3.4bn of funds under management (‘FUM’)1 • Highly diversified with multiple investment offerings across both private markets and listed equity markets. • Good fee margins, and diversified
Slide 6: Compelling Track Records with Capacity to Grow
COMPELLING TRACK RECORDS WITH CAPACITY TO GROW (AS AT 30/06/2024) Performance Since Inception p.a. 13 FUM Indicative Further Fund Benchmark Relative Primary Fund/Vehicle Name Strategy Team Current ($m) FUM Capacity ($bn) % % % Pengana Emerging Companies1 Australian Small Caps Internal 759 Limited 11
Slide 7: Strategic Positioning
STRATEGIC POSITIONING
Slide 8: Australian Funds Management Market
AUSTRALIAN FUNDS MANAGEMENT MARKET Australia is one of the most attractive global markets for fund managers due to Superannuation • The compulsory savings (Superannuation) system requires individuals to invest 12% of their yearly earnings. There is ~A$3.5tn in Superannuation (projected to grow to A$
Slide 9: Strategic Reposition to Focus on Private Markets Strategies
STRATEGIC REPOSITION TO FOCUS ON PRIVATE MARKETS STRATEGIES • Private market strategies are currently the most attractive part of the funds management market due to growth, returns and stability: • Shortage of diversified private markets strategies available to Australian non- institutional investor
Slide 10: Funds Under Management ('FUM')
FUNDS UNDER MANAGEMENT (“FUM”)1 • Listed Equity Funds: HISTORICAL GROWTH IN FUM ($B)2 • A stable base over many years, with modest $4.5 FUM growth potential $3.97 • Business now re-positioned to Private Markets: $4.0 $3.52 • Potential for outsized FUM growth $3.5 $3.27 $3.33 $3.35 $3.37 $3.13 $3.13
Slide 11: Pengana Global Private Credit
PENGANA GLOBAL PRIVATE CREDIT • Global Private Credit master portfolio comprised of 20 underlying funds, selected by Mercer: • Unparalleled manager access allows purpose-built exposures to the range of underlying investments in different proportions suitable for required risk/return targets. • Launc
Slide 12: PCG's Current Global Private Credit Offerings
PCG’S CURRENT GLOBAL PRIVATE CREDIT OFFERINGS Tailored Accounts • Retail, listed investment structure • Direct to consumer (‘DTC’) offering - • Wholesale fund • For institutional clients, large • Recent IPO raised $157m from operating under the TermPlus brand • For family offices, high net-worth dea
Slide 13: Financial Impact on PCG
FINANCIAL IMPACT ON PCG • Global Private Credit is generally a high fee margin business for PCG: • Current offerings have varying net revenue margins (including from base fees, performance fees and spread) that on average are targeted be >1.0%. • TermPlus is expected to be a key profit driver over t
Slide 14: Year in Review
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Slide 15: Profitability in FY 2024
Profitability in FY 2024 Profitability was subdued over the course of FY2024 due to several factors, including: • Absence of significant performance fees. • Expenditure required to fully establish our Private Credit Business. • Limited revenue from Global Private Credit funds/vehicles which only lau
Slide 16: Leveraged to Growth and Performance Fees
LEVERAGED TO GROWTH AND PERFORMANCE FEES ($M) FY 2024 FY 2023 FY 2022 FY 2021 FY 2020 Management Fees 35.9 36.0 41.8 41.2 38.1 Performance Fees 3.1 - 32.7 27.5 6.1 Total Fees 40.0 36.0 74.5 68.7 68.7 Operating expenses (24.2) (21.1) (19.4) (25.0) (21.2) Team Profit Share (11.7) (11.1) (23.2) (24.4)
Slide 17: Annual Gross Fee Margin
ANNUAL GROSS FEE MARGIN 3.5% 3.23% Return to performance fees in FY 2024 some funds at, or close to, performance fee high-water marks 3.0% 2.5% 2.37% 2.20% 2.19% 2.0% 1.69% 1.56% 1.5% 1.43% 1.33% 1.32% 1.18% 1.0% 1.18% 1.15% 1.12% 1.15% 1.14% 1.18% 1.17% 1.19% 1.18% 1.18% 0.5% FY 2015 FY 2016 FY 201
Slide 18: Overview of Performance Fees
OVERVIEW OF PERFORMANCE FEES (AS AT 30/06/2024) 74% OF FUM SUBJECT TO • Diversified sources of performance fees (‘PFs’) PERFORMANCE FEES ($2.5BN) should provide added stability over time • Average split of PFs to PCG: • 100% in all Global Private Credit Market Relative hurdles - Style vehicles, PE1
Slide 19: Balance Sheet
BALANCE SHEET1 30 Jun 2024 30 Jun 2023 Pengana Capital Group ($’000) ($’000) Cash net of AFSL cash requirements 4,751 10,740 Receivables 8,420 4,064 Payables (6,624) (4,206) Net working capital 6,547 10,598 Investments net of AFSL liquid asset requirements and associated current liabilities 7,455 6,
Slide 20: Shareholder Opportunity
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Slide 21: Pengana's Growth Prospects
PENGANA’S GROWTH PROSPECTS • Platform for growth: • Capacity to grow in existing strategies as well as optionality to add new strategies/vehicles. • Multiple growth prospects in “high-demand” segments/themes. • Innovative management team with experience and ability to capitalise on opportunities. •
Slide 22: Sources of Potential Valuation Upside
SOURCES OF POTENTIAL VALUATION UPSIDE There currently appears to be subdued equity market interest in the stock due to: • Low free float of shares. • Small market capitalisation. Current market value does not reflect significant potential upside, including from: • Re-emergence of performance fees. •
Slide 23: Appendix
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Slide 24: Underlying Profitability
UNDERLYING PROFITABILITY1 30 Jun 2024 30 Jun 2023 Pengana Capital Group ($’000) ($’000) Management fees 35,853 35,973 Performance fees 3,136 - Operating expenses (24,189) (21,145) Team profit share (11,678) (11,125) Operating EBITDA1 3,122 3,703 Interest and investment income 755 681 Interest on loa
Slide 25: Statutory Profit
STATUTORY PROFIT 30 Jun 2024 30 Jun 2023 Pengana Capital Group ($’000) ($’000) Underlying profit before tax1 2,395 6,028 Less: Loan share plan interest income 2,539 1,802 Amortisation and non-cash items (4,252) (3,487) FX in other comprehensive income (5) (52) Investment gains in other comprehensive
Slide 26: Disclaimer
DISCLAIMER This presentation has been prepared by Pengana Capital Group Limited (ABN 43 059 300 426) (“PCG”). The information in this presentation is current as at 29 August 2024. This presentation is not an offer or invitation for subscription or purchase of securities or a recommendation with resp
Slide 27: For More Information
FOR MORE INFORMATION PENGANA.COM PENGANA CAPITAL GROUP LIMITED Suite 1, Level 27, CLIENT SERVICE ABN 30 103 800 568 Governor Phillip Tower, T: +61 2 8524 9900 AFSL 226566 1 Farrer Place, E: clientservice@pengana.com Sydney, NSW, 2000