Partners Group has launched a listed private debt trust on the Australian Securities Exchange (ASX), raising A$550 million ($371.4 million; €337.9 million).
Partners Group Global Income Fund is targeting an annual return of 4 percent plus the Reserve Bank of Australia (RBA) cash rate, net-of-fees. The trust is distributing a return every month, and the latest RBA cash rate is 0.75 percent as of 2 October 2019, according to official data.
Edward Tong, Partners Group’s Singapore-based senior vice-president and head of private debt in Asia, told Private Debt Investor the trust was officially listed two weeks ago at A$2 per share, with the ability to invest in Australia and developed Asia as well as the US and Europe. These are expected to make up the majority of the portfolio, although details will depend on future deal opportunities.
The prospectus shows portfolio composition and allocation details, and indicates that the fund will invest mainly in first lien loans with an average duration of three years, targeting an allocation of 60-100 percent. It will also target second lien and subordinated loans, as well as special situations.
The fund will mainly invest in the US (with a 65 percent allocation target); the UK (10 percent); France, the Netherlands and Germany (a combined 18 percent); and Australia (2 percent), with a five percent allocation across other countries.
The listed vehicle has a performance fee of 10 percent for its special situations strategy, which will be charged on the basis of returns over a hurdle of RBA plus 6 percent. The performance fee will be assessed across a rolling three-year period and is subject to a cap.
Tong said that the net asset value of the portfolio will be driven by Partners Group’s portfolio of private debt assets, and the unit price could fluctuate depending on buyers and sellers in the market. “There may be an element of investor sentiment in that [fluctuation], just like any other stocks listed on the stock exchange.”
The listed investment trust allows Partners to target retail investors for private debt, having traditionally dealt with institutional clients.
André Frei, Partners Group co-CEO and partner explained in a statement: “We see continued interest in private markets from distribution partners and private individuals, which represented 16 per cent of our global client demand in the first half of 2019. These types of investors increasingly recognize the benefits of private markets and aim to mirror the allocations of institutional investors in their own portfolios. Usually, they seek to access private markets through semi-liquid structures, which offer quarterly, limited monthly or even daily liquidity. We have been a notable pioneer in this space and to-date manage more than 20 per cent of our total assets under management in such vehicles.”