Pengana Private Equity Trust · ASX:PE1
Pengana Private Equity Trust — Investor Presentation (March 2024)
23 slides from Pengana Private Equity Trust's investor presentation, Mar 6, 2024
Slide 1: The Bright Outlook for PE1 and Global Private Equity Investments
For personal use only PENGANA PRIVATE EQUITY TRUST (ASX: PE1) THE BRIGHT OUTLOOK FOR PE1 AND GLOBAL PRIVATE EQUITY INVESTMENTS THIS WEBINAR WILL BEGIN SHORTLY Independent Investment Research A broader introduction to the Fund is available at: pengana.com/PE1 Recommended+
Slide 2: Disclaimer
DISCLAIMER This presentation is issued by Pengana Investment Management Limited (ABN 69 063 081 612, AFSL 219 462) (“Pengana” or “Responsible Entity”) as responsible entity of the Pengana Private Equity Trust (ARSN 630 923 643) (“Trust”) in relation to a pro rata non-renounceable entitlement offer o
Slide 3: NAV Performance as of 31 January 2024
NAV PERFORMANCE AS OF 31 JANUARY 2024 60% For personal use only 50% 40% 30% 20% 10% 0% -10% Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 1 month 1 year 3 years p.a. Since inception p.a. NAV per unit 2.9% 5.2% 15.6% 9.5% Past performance is not a reliable indicator of future
Slide 4: Premium/Discount to NAV to February 2024
PREMIUM/DISCOUNT TO 29 FEBRUARY 2024 50% For personal use only 40% 30% Trading at a Premium 20% 10% 0% Trading at NAV -10% Trading at a Discount -20% -30% 0 31/03/2019 30/09/2019 31/03/2020 30/09/2020 31/03/2021 30/09/2021 31/03/2022 30/09/2022 31/03/2023 30/09/2023 As of 29 February 2024. “Premium/
Slide 5: The Bright Outlook for PE1 and Global Private Equity Investments
For personal use only PENGANA PRIVATE EQUITY TRUST (ASX: PE1) THE BRIGHT OUTLOOK FOR PE1 AND GLOBAL PRIVATE EQUITY INVESTMENTS MARCH 2024
Slide 6: Is Inflation Under Control?
IS INFLATION UNDER CONTROL? After surging to multi-decade highs in 2021/22, inflation has come down in response to monetary tightening and easing supply bottlenecks. Long term inflation expectations remain anchored. For personal use only INFLATION HAS COOLED SIGNIFICANTLY LONG TERM INFLATION EXPECTA
Slide 7: Previous Cycles Portend Caution
PREVIOUS CYCLES PORTEND CAUTION Prior inflationary episodes have cycled, such as in the 1960s and 1970s. Should inflation reemerge it would likely be a headwind for equity markets. For personal use only INFLATION CONTINUED TO RESURGE IN YEARS FROM START OF INFLATIONARY PREVIOUS CYCLES EPISODE CPI Yo
Slide 8: Why Wasn't There a Recession?
WHY WASN’T THERE A RECESSION? While the majority of economists viewed a recession as a likelihood in 2023 driven by monetary tightening, aggressive fiscal stimulus through deficit spending alongside a strong labor market kept the economy growing. For personal use only ECONOMISTS ARE INCREASINGLY U.S
Slide 9: No Free Lunch
NO FREE LUNCH With higher rates, financing deficits is getting more expensive. The annual deficit is slated to keep rising with debt servicing costs accounting for an increasingly large share of the federal budget. PACE OF FEDERAL GOVERNMENT SPENDING INTEREST COSTS ON U.S. FEDERAL DEBT For personal
Slide 10: 2023 Sector Performance
2023 SECTOR PERFORMANCE The market recovery in 2023 was generally led by the sectors that struggled the most in 2022. The themes that hurt equities in 2022 (high inflation leading to higher interest rates and recession fears squeezing corporate profits) reversed throughout various points of 2023, su
Slide 11: A Top-Heavy Market in 2023
A TOP-HEAVY MARKET IN 2023 A growing share of the market is composed of mega-cap technology businesses. Outperformance of these “Magnificent Seven” drove a majority of the markets’ 2023 gains. INDICES ARE INCREASINGLY MARKET RETURNS WERE DRIVEN For personal use only CONCENTRATED IN A SMALL NUMBER OF
Slide 12: Uncertain Outlook for Equities
UNCERTAIN OUTLOOK FOR EQUITIES Amid rising geopolitical concerns and seemingly expensive equity markets, the environment for equities beta is increasingly less attractive. For personal use only GEOPOLITICAL RISKS; A GROWING CONCERN ELEVATED STARTING P/E RATIOS TEND TO FOR BUSINESSES INDICATE MUTED F
Slide 13: Global Mergers and Acquisitions Volume
GLOBAL MERGERS AND ACQUISITIONS VOLUME Global M&A activity declined for the second straight year, though the decline in 2023 was not as big as it was in 2022 and Q4 2023 had the most activity in six quarters. M&A ACTIVITY For personal use only Deal value ($B) Deal count Estimated deal count 43,598 4
Slide 14: Leveraged Buyout Activity Remained Slow in 2023
LEVERAGED BUYOUT ACTIVITY REMAINED SLOW IN 2023 THOUGH THE YEAR CLOSED WITH SOME POSITIVE SIGNS For personal use only Driven in part by higher financing costs and a lower-multiple environment, many managers chose to hold onto assets in 2023; however, some early signs of a recovery in activity have b
Slide 15: Middle Market Private Equity Remains Attractive
MIDDLE MARKET PRIVATE EQUITY REMAINS ATTRACTIVE For personal use only LARGE MULTIPLE LOWER BREADTH OF EXIT POTENTIALLY INVESTABLE VALUE CREATION PURCHASE OPPORTUNITIIES, HIGHER UNIVERSE STRATEGIES MULTIPLES AND WHICH CAN RETURNS BASED ON LEVERAGE POTENTIALLY HELP HISTORICAL WITH UPLIFT ON SALE PERFO
Slide 16: PE1 Current Portfolio Allocation
PE1 CURRENT PORTFOLIO ALLOCATION PE1’s portfolio provides investors with broadly diversified exposure to over 500 companies. The private markets portfolio has delivered strong net returns to PE1 to date (18% IRR and 1.5x). SUB-STRATEGY GEOGRAPHY INDUSTRY For personal use only BUYOUTz 59% NORTH AMERI
Slide 17: Private Equity Valuations – Embedded Value in PE1?
PRIVATE EQUITY VALUATIONS – EMBEDDED VALUE IN PE1? Private equity managers generally employ several different methodologies and use numerous sources of information to help them determine the value of companies in their portfolios. For personal use only COMMON METHODS OF ESTIMATION • Market approach:
Slide 18: GCF II Snapshot: Strong Middle Market Buyout Focused Portfolio
GCF II SNAPSHOT: STRONG MIDDLE MARKET BUYOUT FOCUSED PORTFOLIO WITH SIGNIFICANT LIQUIDITY EVENTS TO DATE AND MORE LOOMING For personal use only ON THE HORIZON PE1 COMMITTED • GCF II invested in 23 different companies from 2018-2021 and has had five full realizations and several partial realizations
Slide 19: PE1's Private Market Investment Performance
PE1’S PRIVATE MARKET INVESTMENT PERFORMANCE • Upper quartile inception to date return for PE1’s private market investments as of 30 September 2023 when compared to the Burgiss Fund of Funds Index for funds formed in 2019 For personal use only • Strong performance relative to listed equities globally
Slide 20: We Believe in Investing Through the Cycle
WE BELIEVE IN INVESTING THROUGH THE CYCLE • Many top quartile GPs have been successful in achieving private equity returns through prior recessionary periods (Dot.com Bubble and the Great Financial Crisis) For personal use only • If you missed out on 2001 and 2009 vintages, which occurred in times o
Slide 21: Attractive Near-Term Opportunity Set
ATTRACTIVE NEAR-TERM OPPORTUNITY SET We believe the current market environment could yield a number of highly attractive investment opportunities for PE1. For personal use only Middle market investors may be able to benefit from relatively lower valuations in the current market as well as their more
Slide 22: Q&A
For personal use only PENGANA PRIVATE EQUITY TRUST (ASX: PE1) Q&A A broader introduction to the Fund is available at: pengana.com/pe1
Slide 23: For More Information
For personal use only PENGANA PRIVATE EQUITY TRUST (ASX: PE1) FOR MORE PENGANA INVESTMENT MANAGEMENT LIMITED CLIENT SERVICE T: +61 2 8524 9900 INFORMATION ABN 69 063 081 612 E: clientservice@pengana.com pengana.com/pe1 AFSL 219462 Suite 1, Level 27 Governor Phillip Tower, 1 Farrer Place Sydney, NSW,
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