OFFER HIGHLIGHTS
- Private equity valuations are typically updated quarterly in arrears. The rights issue, which is based off the current NAV, references 31 March valuations for the underlying investments of the Trust. Although private equity valuations declined less than listed assets through the crisis, valuations were significantly lower in late March. However, based on current listed market indications we anticipate a strong increase in the value of our underlying investments over the coming months.
- The attractiveness of the offer is further enhanced by an opportunity to subscribe for PE1 units at NAV. PE1 generally trades at a substantial premium.
- Unitholders will be guaranteed an allocation of 1 new unit for every 3 units held in PE1 as at the record date of 16 June 2020 (7PM Sydney time)3.
- As part of this offer, unitholders are also invited to subscribe for additional new units in PE1 under a shortfall facility that may become available if the rights issue is not fully subscribed by other unitholders.a
a great environment for private equity
〰
The impact of COVID-19 on financial markets has been profound and, in most cases, has negatively impacted the value of assets and investment opportunities. However, as is the case in every major market disruption, there are a small number of investment vehicles that are ideally positioned to benefit from the dislocation. We believe PE1 is such a vehicle.
Private Equity (“PE”) as an asset class is well placed to generate strong returns in the aftermath of market crashes. This was evidenced in PE funds launched after the 2008 crash (in 2010-2012) which to date have returned 14.9% p.a. compared to the MSCI World public market equivalent which has returned 11.5% p.a.b
WHY NOW?
〰
Our decision to raise additional capital is motivated by a combination of 2 core factors: continued investor demand and a belief that new capital will be highly accretive to PE1 investors due to the attractive cyclical entry point following the market’s recent dislocation.
1. Investor Demand
Investor feedback and market signals, such as the persistent premium to NAV, are evidence of the demand for PE1. We view this offering as a continuation of what we planned to offer in March 2020 that was interrupted by the COVID-19 crisis and believe additional liquidity will be beneficial to all unitholders.
2. Accretive Investment Opportunity to Add Capital
Due to GCM Grosvenor’s leading position in the middle-market PE space, PE1 is being shown an abundance of high-quality opportunities at discounted prices.
- With only 46% of capital currently invested (30% at the time the crisis emerged), GCM and our PE managers have significant firepower to take immediate advantage of opportunities.
- Whilst only 46% of capital is invested, almost all existing capital has been committed for investment with private equity investment managers or strategies. Additional capital will enable PE1 to invest in new opportunities that we think will be significantly accretive to unitholder value over the coming years.
- Capital deployment in the opportunistic segment of the portfolio has accelerated as the team has been able to use its flexible mandate to take advantage of pockets of dislocation. Approximately 75% of commitments in this space have been called and deployment is now tracking ahead of schedule.
- To date, high valuations have resulted in a very small allocation to PE secondaries. We expect recent events to result in an increase in the number of distressed secondary sellers looking to transact. GCM has decided to accelerate the launch of its next PE secondaries fund as the opportunity set has improved materially and PE1 will be an early investor.
Private Equity has historically outperformed listed equity2
Across time periods
Across regions
Through different economic conditions
With less volatility
| IMPORTANT DATES | |
|---|---|
| Announcement of the Offer | 11 June 2020 |
| Units trade on an 'ex' basis in respect of the Offer | 15 June 2020 |
| Record Date for eligibility in the Offer (7.00 pm Sydney time) | 16 June 2020 |
| Dispatch of offer details to eligible unitholders | 19 June 2020 |
| Offer Opening Date | 19 June 2020 |
| Unitholder Webinar | 25 June 2020 |
| Offer Closing Date (5.00 pm Sydney time) | 6 July 2020 |
| Settlement of the New Units issued under the Offer | 10 July 2020 |
| Allotment of the New Units issued under the Offer | 13 July 2020 |
| New Units issued under the Offer commence trading on the ASX on a normal settlement basis | 14 July 2020 |
| Dispatch of holding statements for the New Units issued under the Offer | 15 July 2020 |
Public Markets are
JUST the tip of the iceberg
The Pengana Private Equity Trust provides:
Access
Direct exposure to oversubscribed and difficult-to-access middle market managers globally.
Income
A target cash distribution yield equal to 4% p.a. from 1 July 2020 payable semi-annually.4
Simplicity
A single point of entry to a well-diversified portfolio of private equity investments.
Availability
ASX: PE1
