DLA Piper advises Pengana on the launch of innovative listed investment trust (LIT) to be listed on the ASX

DLA Piper has advised funds management group Pengana Capital Group Ltd (ASX: PCG) (Pengana) and its subsidiaries Pengana Investment Management Limited (Pengana Investment Management) and Pengana Credit Pty Ltd (Pengana Credit) on the structuring and initial public offer of units in the Pengana Global Private Credit Trust (ASX: PCX) (Fund), a groundbreaking listed investment trust (LIT) seeking to raise up to AUD250 million in capital from retail and wholesale investors and which is expected to commence trading on the ASX on 21 June 2024. The Fund will be the third in a series of listed investment vehicles managed by Pengana.

The DLA Piper team was led by Martin Jamieson, Partner within DLA Piper's Australian Investment Management & Funds, Superannuation and Financial Services Regulatory practice. Martin Jamieson was principally assisted by Edwin Kwok (Solicitor) and Timothy Lou (Senior Associate). David Ryan (Partner, equity capital markets), Eddie Ahn (Partner, tax) and Tom Barnes (Partner, New Zealand funds) also advised on the transaction.

Private credit investments typically involve the investors' capital being locked up for a number of years. The structure of the Fund will allow investors to gain exposure to global private credit with the flexibility to buy and sell units on the ASX, as well as an industry first ability to dispose of units quarterly at NAV.

The Fund will employ innovative capital management initiatives that are designed to reduce the likelihood that the market price of units will deviate materially from the NAV per unit for the Fund. One such industry first initiative is a regular off-market buy-back mechanism whereby investors can regularly dispose of their units at NAV and as such have no need to consider selling their units on market below NAV. It is intended to give investors a better investment outcome over traditional listed investment company (LIC) and listed investment trust (LIT) structures by reducing the propensity for trading on-market to occur at large discounts to the NAV per unit.

Martin Jamieson and the DLA Piper team assisted Pengana with obtaining the ASX Listing Rule waivers and ASIC individual relief required in order to offer this industry first regular off-market buy-back at NAV mechanism in a LIT or LIC. As stated by Martin Jamieson, “the regular off-market buy-back at NAV mechanism is an entirely new structure which we worked really hard with Pengana, ASX and ASIC to bring to market for the first time. I wouldn't be surprised if the whole LIT/LIC industry adopts it to ensure LIT/LICs don't trade at a discount. We'd suggest that the fact the PCX offer surpassed its USD100 million minimum subscription amount on the first day the offer opened is also evidence the market is very supportive of this new mechanism”. Martin also added “we were pleased to again partner with Pengana in its continued focused pursuit of new innovative market leading investment product initiatives”.

The Fund achieves its economic exposure to global private credit assets via investments in a hedged class of Profit Participating Notes (PPNs) issued by Cayman fund infrastructure investment managed by Pengana Credit. This offshore fund infrastructure provides Pengana with an efficient, flexible and scalable platform by which to optimally obtain investment exposure to global private credit assets for this Fund and future global private credit offerings to a variety of Australian clientele. DLA Piper also assisted with the structuring and establishment of this offshore fund infrastructure.

If you have any queries in respect of the Fund and its structuring, please contact Martin Jamieson.