Partners Group, the global private markets manager which encompasses equity, debt, real estate and infrastructure, and also provides the biggest open-ended private equity fund in the region, is to launch a $500 million ASX private debt listed investment trust.
The combination of private debt and listed vehicles is currently a compelling one, particularly for individual investors. Partners Group has worked on securing a $100 million cornerstone investor for next month’s roadshow for an Australasian LIT, which Urs Wietlisbach, one of the firm’s three founders, says will take only about three months to be fully invested, which is quite quickly for such a private markets program as the firm is already starting to warehouse deals.
“We will hand-picked about 150-200 names,” he said on a trip through Australia last week. “Income and debt LITs and LICs all tend to trade at a premium,” he said, unlike the majority of other ASX-listed investment vehicles.
Martin Scott, Partners Group’s head of the 23-person office in Australia, claims the LIT will be the region’s first “truly global private debt” liquid fund. It will be hedged back to the Aussie dollar for added simplicity.
“We had to be sure that there was sufficient demand [for the LIT]so we could be sure there was a solid secondary market for investors.” The fund would be rated by key research houses ahead of listing, he said. “We have been running portfolios like this for about 20 years.”
The development of the new fund followed requests from investors in Partners Group’s oldest open-ended fund, the Global Value Fund, which had about 30 per cent of its portfolio invested in private debt. Clients, Scott says, asked whether the firm could concentrate on that component in a separate vehicle and provide income. Listing is expected in early September. The promoters are saying they are aiming for a return of the RBA official cash rate plus 4 per cent net of fees, with monthly distributions.
Weitlisbach says that, due to the climate, the firm had not done a single transaction in the last three years where the exit multiple was higher than the entry multiple. “So, you need to be extremely active with the companies. ‘Buy and build’ is what we do a lot,” he says. “We always have some people on the boards of the companies we invest in and a roster of independents who can sit on boards.”
Partners Group is a Zug (near Zurich) based Swiss-listed company with about $US83 billion in assets under management in private markets. It has raised about A$12 billion in Australia and New Zealand and reinvested close to A$6 billion into local investments. The firm has about 1,200 employees in 20 offices around the world.