Private Debt’s silver lining despite a cloudy economic outlook

Livewire Exclusive

Livewire Markets

Raising around US$192 billion in funds in 2021 alone, global private debt is the only segment of private markets to deliver consistent annual growth for 10 consecutive years, including during the pandemic-marred 2020. While PE fundraising fell almost 20%, private debt grew by the same margin between 2019 and 2020, a McKinsey study shows.

Why is this? It’s largely driven by private debt’s more senior position within the capital structure versus equity. We saw this in the returns delivered by our listed debt fund in FY2021, which exceeded our target of the RBA cash rate plus 4%. And we’re confident our new Partners Group Global Income Fund – Unlisted will also deliver strong performance, even as the economic environment worsens.

The unlisted product is less dependent on daily market pricing, with plenty of deal flow available on a global basis amid senior loans. We think it makes a lot of sense for investors, particularly in the current environment.

Actively managing a broad fund of more than 200 individual senior loans, we focus on non-cyclical businesses that are less leveraged to the economic climate. And our emphasis on leveraged loans, and on those with floating rates rather than longer-term fixed rates, further decreases the loss rates compared to other parts of the credit universe.

With inflation and interest rates rising, traditional debt products – especially those longer-duration assets such as 10-year plus bonds don’t make sense, because their valuations will drop. But this environment is actually a positive for our products and provides a boost for our return profile.

Learn more about Partners Group Australia

Partners Group are one of the largest private markets investment managers in the world. To learn more about their recently launched Global Income Fund - Unlisted, please visit their website.

........
Equity Trustees Limited (“Equity Trustees”) (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for Partners Group Global Income Fund and Partners Group Global Income Fund - Unlisted. Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This document has been prepared by Partners Group Private Markets (Australia) Pty Ltd ACN 624 981 282 AFSL 509285 (“PGA”), to provide you with general information only. In preparing this document, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither PGA, Equity Trustees nor any of its related parties, their employees or directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product. The advice provided in this document is provided by PGA. Any advice provided is general financial product advice only and does not take into account your objectives, financial situation or needs. Before acting on the advice, you should consider how appropriate it is having regard to your objectives, financial situation and needs. You should consider the product disclosure statement for the fund, and consider talking to a financial adviser before making a decision to invest in, or continuing to hold, interests in the fund. Interests in the fund are issued by Equity Trustees. The product disclosure statement for the fund is available at https://www.partnersgroupaustralia.com.au/en/our-funds/funds-overview/. PGA can be contacted via https://www.partnersgroupaustralia.com.au/en/contact/. PGA can be contacted via https://www.partnersgroupaustralia.com.au/en/contact/. PGA has been appointed as the investment manager and the promoter of the interests in the Partners Group Global Income Fund and Partners Group Global Income Fund – Unlisted by Equity Trustees in its capacity as responsible entity of the Partners Group Global Income Fund and Partners Group Global Income Fund - Unlisted. PGA may receive fees in those roles. These fees will generally be calculated as a percentage of the funds under management within the Partners Group Global Income Fund - Unlisted. See the Fees and Other Costs section of the PDS for further information about the management fee charged by the investment manager. You may request particulars of the fees that are paid to PGA and its related companies within a reasonable time of receiving the advice contained in this document. The Partners Group Global Income Fund – Unlisted's Target Market Determination is available https://www.partnersgroupaustralia.com.au/fileadmin/PG_Australia/PDF/Global_Income_Unlisted/Partners_Group_Global_Income_Fund_-_Unlisted_TMD.pdf. A Target Market Determination is a document which is required to be made available from 5 October 2021. It describes who this financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors. It also describes the events or circumstances where the Target Market Determination for this financial product may need to be reviewed. Note: all references in this document to Portfolio refers to the portfolio of investments within the PG Global Income Investments Loan Strategy Designated Activity Company ("DAC"). Partners Group Global Income Fund and Partners Group Global Income Fund - Unlisted invest directly into the DAC providing indirect exposure to the Portfolio attributes detailed in this document.

1 topic

Livewire Exclusive brings you exclusive content from a wide range of leading fund managers and investment professionals.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.