Breaking new ground: Pengana unveils global private credit fund

Pengana Credit, a Sydney-headquartered global private credit specialist, is set to launch a new Listed Investment Trust (LIT) global private credit fund, giving Australian retail investors access to a long-out-of-reach fixed income asset class.

Accessible via the Australian Securities Exchange (ASX), the soon-to-be-launched Pengana Global Private Credit Trust (ASX: PCX) will provide local retail investors access to illiquid institutional-grade assets in the global private credit space.

The fund is primarily focused on accessing bilateral loans to midmarket companies in the US and Europe, targeting loans that are typically individually negotiated and structured. This ensures lower default rates and higher recovery rates over other fixed income alternatives.

Pengana Credit chief executive Nehemiah Richardson notes that this midmarket segment “has reaped some of the best rewards from the tailwinds enjoyed by the global private credit sector in recent years”.

According to Pengana, banks largely retreated from midmarket segment lending, owing to increased regulatory requirements post-GFC and 2022 banking failures, with the lending gap filled by global private credit managers. The increased presence of global private credit in this space has “[underpinned] the potential for attractive returns available to investors”, the firm said.

According to Pengana, it has also cemented a “structural phenomenon that will carry through the next decade or more”.

The PCX boasts exposure to the “best of the global private credit sector”, promising a consistent income of 7% per annum on cash distribution yield, net of any fees, paid monthly.

“These diversified global private credit investments are typically out of reach for all but the largest investors, such as the big superannuation funds and the Future Fund, which have increased allocations to private markets,” Richardson said.

Being among the most diversified global private credit funds on the ASX, according to Richardson, the fund is characterised by low volatility, low risk of loss, and low correlation to other asset classes, such as public fixed income and equities.

Investments are selected by Pengana’s in-house private credit team, providing investors access to more than 2,000 individual loans across 19 underlying funds. These funds are sourced and approved by Mercer, which has recently been appointed by Pengana as a specialist investment adviser.

The PCX trust will also offer investors the ability to make redemptions at net asset value (NAV) through a quarterly off-market buyback offer.

“Making quarterly redemptions available at NAV solves a key potential issue that we have seen with the LIT model, and should give investors confidence and price certainty when they choose to realise their investment,” Richardson said.

“This is a powerful feature in the context of portfolio construction considerations, allowing investors to confidently access highly sought after investments in a truly unique form.”