Pengana Global Private Credit Trust · ASX:PCX
Pengana Global Private Credit Trust — Investor Presentation (April 2024)
34 slides from Pengana Global Private Credit Trust's investor presentation, Apr 23, 2024
Slide 1: ASX Announcement: Webinar - Pengana Global Private Credit Trust
ASX ANNOUNCEMENT WEBINAR PENGANA GLOBAL PRIVATE CREDIT TRUST 23 April 2024 Pengana Capital Group Limited (ASX: PCG) is pleased to announce that it will be hosting a webinar on Tuesday 14 May for investors to learn more about the upcoming Offer for the Pengana Global Private Credit Trust (‘Trust’ or
Slide 2: Pengana Global Private Credit Trust
For personal use only PENGANA GLOBAL PRIVATE CREDIT TRUST ASX:PCX APRIL 2024
Slide 3: Disclaimer
DISCLAIMER This document dated 22 April 2024 has been prepared by Pengana Investment Management Limited (ACN 063 081 612, AFSL 219 462) (Pengana) and is provided for information purposes only. This document does not constitute an offer, invitation, solicitation or recommendation with respect to the
Slide 4: What is investable private credit?
WHAT IS INVESTABLE PRIVATE CREDIT? Individually customised non-bank loans to mid-market companies, with seniority and security, that are held to maturity or refinanced. For personal use only Individually …by non-bank …to …and managers or … with … that are held mid-market owners of seniority and to m
Slide 5: Agenda
PENGANA GLOBAL For personal use only PRIVATE CREDIT TRUST AGENDA I EXECUTIVE SUMMARY & AN INTRODUCTION TO GLOBAL PRIVATE CREDIT II TEAM, PHILOSOPHY AND INVESTMENT PROCESS III THE TRUST PENGANA GLOBAL PRIVATE CREDIT TRUST | PAGE 4
Slide 6: Executive Summary
EXECUTIVE SUMMARY Pengana Global Private Credit Trust Highlights Important Dates Date For personal use only Multi-manager global private credit portfolio Priority Determination Date 10 April 2024 Diversified by fund, geography and strategy Best in class managers rated by Mercer Hedged to AUD
Slide 7: Pengana Global Private Credit Trust
PENGANA GLOBAL PRIVATE CREDIT TRUST Aiming to generate strong risk adjusted returns with a high degree of capital protection as well as stable and consistent income via exposure to a diversified portfolio of global private credit investments, liquid credit investments and cash For personal use only
Slide 8: Growing demand: the case for borrowers
GROWING DEMAND THE CASE FOR BORROWERS Banks are scaling back lending as For personal use only Private lenders now the first “port of call” regulation decreases their appetite for for growing subset of borrowers certain activities Bank Share of US and European Middle Market Global Private Credit – Gr
Slide 9: A broad opportunity set
A BROAD OPPORTUNITY SET Bilaterally negotiated loans, primarily to companies earning USD$10-$250 million EBITDA (“Middle Market”) For personal use only Senior Secured – these loans have first right to the cash flows and assets of a company for payment of interest and repayment of debts. They will
Slide 10: Private credit invests senior to equity in the capital structure
PRIVATE CREDIT INVESTS SENIOR TO EQUITY IN THE CAPITAL STRUCTURE For personal use only Priority claim Cost of finance Return drivers for on assets for borrower investors Typical capital structure Stable income Higher Lower return streams Senior debt 45% to 70% of Private credit loans enterprise valu
Slide 11: The case for investors
THE CASE FOR INVESTORS Attractive characteristics of Global Private Credit Returns Total returns as illiquidity premium is captured, capital appreciation and yield For personal use only Borrowers pay premium for flexibility, speed of execution, customisation, confidentiality, and strategic partn
Slide 12: Historical returns: attractive yield and potential return enhancement
HISTORICAL RETURNS: ATTRACTIVE YIELD AND POTENTIAL RETURN ENHANCEMENT Private / illiquid credit For personal use only 16.0%+ 13.0-15.0% 11.0-13.0% Public / liquid credit 10.4% 9.0-10.0% 9.3% 8.4% 7.7% Global US 5.5% Europe 4.2% 4.0% 2.2% 10 Year Investment High Yield Bonds Broadly Direct Lending - D
Slide 13: Lower levels of default and higher recovery rates
LOWER LEVELS OF DEFAULT AND HIGHER RECOVERY RATES USD$ Cumulative Default Rate USD$ Average Annual Recovery Rate For personal use only 64.7% 13.6% 45.9% 5.3% 25.1% 3.9% Private Middle Broadly High Private Middle Broadly High Market Credit Syndicated Yield Market Credit Syndicated Yield (<USD $500m)
Slide 14: Portfolio construction tool
PORTFOLIO CONSTRUCTION TOOL • Historically superior risk-adjusted returns combined with low correlations can make private credit an accretive diversifier for traditional fixed income and listed equity portfolios For personal use only • Historical track record of resilience versus other fixed income
Slide 15: Agenda
PENGANA GLOBAL For personal use only PRIVATE CREDIT TRUST AGENDA I EXECUTIVE SUMMARY & AN INTRODUCTION TO GLOBAL PRIVATE CREDIT II TEAM, PHILOSOPHY AND INVESTMENT PROCESS III THE TRUST PENGANA GLOBAL PRIVATE CREDIT TRUST | PAGE 14
Slide 16: Experienced team with relevant capability
EXPERIENCED TEAM WITH RELEVANT CAPABILITY For personal use only NEHEMIAH REBECCA NICK SCOTT RICHARDSON JACQUES GRIFFITHS WILKINSON CEO PRINCIPAL AND CIO HEAD OF PRIVATE SENIOR INVESTMENT DEBT (APAC) CONSULTANT >30 yrs. financial >20 yrs. Investment & >25 yrs. actuarial and >19 yrs. financial service
Slide 17: Scale and capabilities
SCALE AND CAPABILITIES Experience Pipeline & Access Value Add For personal use only Substantial investment Mercer provides one of the Investment, operational and advice and management broadest manager research commercial benefits capabilities coverages of any investment firm US$16.2 trillion1 6,8404
Slide 18: Private debt capabilities
PRIVATE DEBT CAPABILITIES Experience Access Capabilities For personal use only Mercer’s Private Debt team has extensive Mercer’s uses its size and scale to Mercer uses its size and strong GP experience in all major markets & segments access a wide range of Private Debt Relationships to negotiate fee
Slide 19: Our approach
OUR APPROACH Constructing multi-manager portfolios Construct diverse and resilient portfolios Build flexibility to manage through the For personal use only across the Private Credit universe cycle • Contractual yield – anchor portfolios with durable yield and a • Dynamic credit allocation – select s
Slide 20: Our investment selection follows a rigorous process
OUR INVESTMENT SELECTION FOLLOWS A RIGOROUS PROCESS For personal use only Global Sourcing PCX provides exposure to underlying In aggregate, Mercer reviews ~2,000 primary fund offerings, ~100 co-investments and ~100 secondaries each year funds approved by Mercer’s investment and operational due Prior
Slide 21: Rigorous manager selection and due diligence
RIGOROUS MANAGER SELECTION AND DUE DILIGENCE For personal use only Business management Alignment of interests Strategy Track record • Quality of individuals & • Measures how well • Expected effectiveness of • Focuses on historical ability to work as a team Underlying Manager’s the strategy the curre
Slide 22: Manager selection critical to outcomes
MANAGER SELECTION CRITICAL TO OUTCOMES Global private credit IRR1 dispersion by vintage year 25% For personal use only 20% 15% 10% 5% 0% -5% -10% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Top and bottom quartile range Top decile Median IRR Bottom decile 1. Also known
Slide 23: Agenda
PENGANA GLOBAL For personal use only PRIVATE CREDIT TRUST AGENDA I EXECUTIVE SUMMARY & AN INTRODUCTION TO GLOBAL PRIVATE CREDIT II TEAM, PHILOSOPHY AND INVESTMENT PROCESS III THE TRUST PENGANA GLOBAL PRIVATE CREDIT TRUST | PAGE 22
Slide 24: Addressing investment challenges
ADDRESSING INVESTMENT CHALLENGES Addressing the challenges of investing in Global Private Credit Typical Challenges Uniquely Addressed For personal use only • Identifying, assessing and securing access to • Mercer alliance – Pengana leverages global reach, GLOBAL ACCESS best-in-class global private
Slide 25: Multi-strategy approach is attractive across economic cycle
MULTI-STRATEGY APPROACH IS ATTRACTIVE ACROSS ECONOMIC CYCLE • Multiple strategies enable construction of resilient portfolios with opportunities for yield enhancement through cycles – critical for only illiquid asset classes and evergreen vehicles • Multi-manager provides diversification to minimise
Slide 26: Trust structure
TRUST STRUCTURE Investor Pengana Investment Management Limited Responsible Entity Administrator & Issue of Units Transfer of application money Manager Custodian For personal use only Pengana Capital Limited BNP Paribas Pengana Global Private Credit Trust Investment Investment of application money in
Slide 27: Master portfolio building blocks
MASTER PORTFOLIO BUILDING BLOCKS Constructed to support the Trust’s risk/return and liquidity objectives For personal use only Master Class Income Balanced Total Return Enhanced Cash Income focus, through cash coupons Exploit the broader private credit Equity-like returns through opportunity set Hig
Slide 28: Investment governance and implementation
INVESTMENT GOVERNANCE AND IMPLEMENTATION Investment Forums And Responsibilities RESEARCH AND ANALYSIS INVESTMENT DECISION MAKING TRUST STRUCTURE For personal use only Pengana Global Private Credit Trust Investment Investment Consulting Group Manager Investment of application money in PPNs Monthly st
Slide 29: Target portfolio allocations & deployment
TARGET PORTFOLIO ALLOCATIONS & DEPLOYMENT For personal use only • Regardless of the amount raised in the Offer, we anticipate 90% of the proceeds will be committed, and over 85% of this committed amount will be called and deployed by the underlying managers, during the Trust’s first full month of op
Slide 30: Investment guidelines
INVESTMENT GUIDELINES The Trust operates (via the Feeder Class) within investment guidelines: Based on the expected Master Class target allocations at the launch date and assuming that the Trust is fully invested, the aggregate seniority, geographic For personal use only MAXIMUM EXPOSURE MAXIMUM EXP
Slide 31: Key terms
KEY TERMS Trust Name Pengana Global Private Credit Trust Structure ASX listed investment trust For personal use only Responsible Entity Pengana Investment Management Limited Manager Pengana Capital Limited Investment Manager Pengana Credit Pty Ltd Investment Consultant Mercer Consulting (Australia)
Slide 32: Offer highlights
OFFER HIGHLIGHTS Key Offer Statistics For personal use only Pengana Global Private Credit Trust Trust ARSN 673 024 489 Proposed ASX code PCX Units offered Fully paid ordinary Units Subscription Price per Unit $2.00 Minimum number of Units available under the Offer 50,000,000 Minimum gross proceeds f
Slide 33: Sources of liquidity for investors
SOURCES OF LIQUIDITY FOR INVESTORS ASX daily trading For personal use only Regular off-market scheme buy-back • The RE intends to make an offer to buy-back 5% of the issued capital of the Trust each quarter on an off-market basis • Buy-back price equal to the sum of the NAV per unit and the distribu
Slide 34: For more information
For personal use only PENGANA GLOBAL PRIVATE CREDIT TRUST FOR MORE INFORMATION PENGANA.COM / PCX CLIENT SERVICE PENGANA INVESTMENT MANAGEMENT LIMITED T: +61 2 8524 9900 ACN 063 081 612 E: clientservice@pengana.com AFSL 219 462 Suite 1, Level 27, Governor Phillip Tower, 1 Farrer Place, Sydney, NSW, 2
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