An investment in Elon Musk’s SpaceX is a way for Pengana to achieve significant long-term gains via a pre-IPO opportunity before markets fully price in its potential, according to its CEO.
The firm’s Pengana Private Equity Trust (PE1) first invested in Elon Musk’s SpaceX in 2020, starting with a 2 per cent stake when the company was valued at US$50 billion. It now holds 7.7 per cent of its diversified portfolio in the rocket-maker. PE1 has returned 8.7 per cent per annum since inception.
PE1 investments are managed by US-based private equity powerhouse GCM Grosvenor, which thoroughly analyses companies prior to initial investment and updates assessments over time.
Speaking to Investor Daily, Pengana Capital Group chief executive, Russel Pillemer, said: “We have no plans to adjust [our allocation] at the moment. We still think that there’s a very large upside in the not too distant future. It appears that an IPO is possible later on this year, and usually between the pre-IPO and the IPO valuations is a significant uplift. We wouldn’t want to sell it down, at least not before an IPO happens.”
For institutional investors in PE1, this could translate into outsized gains, offering exposure to one of the most high-profile tech companies in the private market without buying directly into the IPO.
Pillemer notes a growing trend in the US for companies to remain private longer, allowing them to focus on long-term growth without the pressures of quarterly reporting.
Firms like SpaceX and OpenAI can invest heavily and innovate without being judged on short-term results, though going public eventually offers greater liquidity and higher valuations. Remaining private provides flexibility, but companies must balance access to capital with independence from market scrutiny.
“At some point in time, it will end up in the public markets. It seems from the signals from the company, from the market, that there is work being undertaken,” Pillemer said.
For PE1, which has diversified investments across 500 private companies, this single stake in SpaceX could define the future of its portfolio.
“We still think it’s got huge upside in it, so we haven’t sold any of it to date,” Pillemer said.
In an interview with InvestorDaily, he described SpaceX as “a very exciting business.”
In PE1’s portfolio, SpaceX is still valued at US$400 billion; however, recent secondary transactions value it at US$800 billion – double last year’s valuation. A SpaceX IPO could potentially create the largest public offering the world has ever seen.
“We liked the business model. We liked how smart the people were behind it. It’s not just Elon Musk, but also the people that he employs in the business. And what they were aiming to do in the business and their various parts of the business that could deliver strong returns,” Pillemer said.
He added that Pengana is also interested in SpaceX’s satellite and connectivity business, which he describes as a “unique asset.”
“What’s happening in Iran at the moment, only SpaceX has the ability to be able to get in there and help out – the US government doesn’t even have it. It’s fantastic what, what they’re doing, what they’ve been able to achieve, and the execution on it. So we really like that.”
SpaceX is investing in significant global initiatives, which Pillemer expects to deliver additional upside. From a geopolitical perspective, businesses like SpaceX have become even more important amid recent world events.
“You know you see in Iran or you see in Ukraine how important the Starlink business is. Launching satellites into space, in this geopolitical environment, that’s going to become even more and more relevant. There’s going to be a space race, there’s going to be a potential arms race in space, etc. And [SpaceX] has got a pivotal position in all of this,” Pillemer said.
However, PE1 isn’t structured to be a long-term investor in listed companies, and when SpaceX goes public, PE1 aims to sell.
“We don’t have intentions to remain a long-term holder when stocks go to market. Sometimes, as an early shareholder, you’re tied in and you can’t sell it all at once,” he said.
“Sometimes you don’t think that the IPO price fully captures the full valuation, and it might tick upwards again after the IPO price .. You make a decision around that time as to, is it better to sell into an IPO? Is it better to hold on after the IPO? We just have to deal with the circumstances at that point in time.”
Pengana does not build its portfolio by targeting specific sectors or benchmarks. Instead, it identifies diversified opportunities offering strong returns, naturally gravitating toward high-growth areas like technology.
“There are a lot of opportunities in the tech world – a fantastic amount of opportunities. We naturally converge on that, but we’ve got to make sure within tech we diversify … you don’t want one thematic determining the portfolio,” Pillemer said.
Pengana has also taken a small initial position in OpenAI – just 0.6 per cent of its portfolio – added last year, which has since grown significantly.
“Most of our portfolio are just companies that are just growing at a nice rate, very solid, secure companies generating lots of cash flows, standard private equity. But we do have a certain number of what we call ‘growth equity’ companies in the portfolio as well,” he said.
“We’ll continue to manage this portfolio in a very diversified way, making sure that we don’t over-allocate to growth equity. I think if the bulk of the portfolio is in solid cash-flow-generating good-growth companies, and you have a small number of opportunities that can really shoot the lights out, that’s a great portfolio to have.”
Pengana says PE1 is the only way Australian investors can only gain exposure to SpaceX.
“There is no other way for an Australian investor on the ASX to get any exposure to SpaceX.”
