Opportunities in private equity remain compelling during volatility

Russel Pillemer

The chance to invest in mid-market private equity companies at favourable valuations has seen the Pengana Private Equity Trust (ASX: PE1) increase its commitment to several international private equity strategies.

Pengana CEO, Russel Pillemer, said current turmoil experienced across the global economy has made some private equity investments more attractive. “There are compelling opportunities across mid-market-sized companies, which comprise a massive proportion of private companies across the globe.

“There are quality companies looking to benefit from further investment, and as investors we can benefit by buying in at valuations which have become more attractive.

“Down markets and recessionary environments often signal good buying opportunities for private equity investors, and some of the best ‘vintage’ years for investing in private equity occurred during and after the GFC.

“During these times managers are often able to enter at more favourable valuations as well as conservatively structure deals to include strong downside protection and significant upside participation.

“Private businesses also tend to be more robust because they aren’t as vulnerable to short-term public pressure and investor sentiment, and deals are generally placed under more scrutiny.”

With over 400 underlying companies, Pengana Capital’s listed Private Equity Trust (ASX:PE1) is Australia’s only listed vehicle offering a portfolio of globally diversified private equity investments. In taking advantage of recent events, it has increased its commitment to US$71 billion GCM Grosvenor’s Secondary Opportunities Fund III, and made a new commitment to the GCM Grosvenor Co-Investment Opportunities Fund III.

PE1 also announced investment in company SpotOn, among the fastest growing software and payments companies for business globally, and investment in Exterro, Inc., a provider of legal governance, risk, and compliance software with over 2,700 customers.

The Pengana Private Equity Trust performed strongly over the last financial year, experiencing share price growth of 27.4%, and a 29.2% growth in net asset value (NAV). The Trust has delivered a 10.3% annualised NAV return since its inception over three years ago.

PE1 also recently paid its highest ever half-yearly distribution to investors, at 3.243 cents per unit.

Mr Pillemer said: “Private equity historically outperforms equities during periods of volatility, but is best viewed as a long-term investment.”