Under the proposal, Pengana International Equities (PIA) will borrow from a major international bank – secured against its existing global equity portfolio – to invest in a diversified portfolio of global private credit funds managed by top US and European private credit managers. This is expected to provide exposure to more than 3,500 mid-market companies.
The target return is 4.5 per cent above the cost of debt, with Pengana Capital Group covering any shortfall and sharing in the upside if returns exceed the target, it said in an ASX listing on Thursday.
“The portfolio will be diversified across geographies, sectors and credit strategies, avoiding the heavy commercial real estate concentration found in many Australian private credit products,” the firm said.
Crucially, PIA’s global equities allocation will remain unchanged in size of the company and will remain under the management of Harding Loevner.
Once the proposal is implemented, the move is expected to lift dividends to 8.4 cents per share a year – equating to an 8.9 per cent gross yield based on the 31 July share price – paid monthly from November 2025.
PIA explained that for investors frustrated by falling deposit rates and the phasing out of bank hybrids, the private credit pivot offers a way to diversify income streams away from traditional equity and interest-rate pressures, while maintaining the benefits of an ASX-listed vehicle with fully franked dividends.
Speaking to InvestorDaily, CEO of Pengana Capital Russel Pillemer highlighted the appeal of global private credit over expanding equity or hybrid holdings.
“Global private credit is probably the best sub-asset class to invest in on a risk return basis i.e. high-single/low double-digit returns with very low volatility and almost no losses – and its uncorrelated with equities,” Pillemer said.
“Because of these features, it makes a lot of sense to use gearing to fund it. Whereas if we used debt to increase our equity exposure, then all we would be doing is magnifying equity exposure.”
In terms of how PIA’s global private credit offering compares to other products available to institutional investors, the CEO said: “Our GPC portfolio is state-of-the-art for institutional investors and family offices - i.e. we have the best of the best managers in the mid-market space as well as huge diversification. Only PCX (Pengana Global Private Credit Trust) currently has such exposures – and now PIA also will.”
The proposal still requires board and shareholder approval, as well as the completion of transaction documents and an independent expert’s report.
PIA will put the plan to shareholders at its AGM on 10 October, following a webinar discussion on 4 September.
