Two ASX-listed stocks offering exposure to private equity

While private equity investors are often demonised for mercilessly acquiring, restructuring and returning undervalued and/or mismanaged quality listed [or unlisted] assets to profitability, savvy investors may well to ask themselves… “if we can’t beat em, why not join em?”

Bottom line is ASX investors no longer have access to a myriad of quality stocks recently acquired by private equity, and right now, taking the handful of remaining listed infrastructure stocks private is the biggest M&A game in town.

But instead of mourning the laundry list ASX-listed stocks lost to private equity (PE), why not consider how you can get some skin in the PE game?

Private equity playbook

According to an Australian Investment Council (AIC) report, Australian PE firms raised $4.3bn in 2020, while super fund giants are now allocating 20%-plus of their portfolio asset allocations to PE alone.

Industry super lobby group Industry Super recently noted that the ‘unique exposure’ to unlisted assets by industry super funds within sectors like property, airports, agriculture and manufacturing, could lead to members having an additional $130,000 in extra savings at retirement.

While the private equity model focus is unashamedly on profitability, experts that repeatedly buy private companies [or privatise listed companies] can see opportunities that existing management often can’t.

Tickets to the private equity dance

It may sound like an oxymoron, but it is possible to get access to private equity assets via the ASX.

The beauty of buying listed private equity is being able to tap into an investment playbook that was typically off limits to anyone but the uber wealthy or institutional investors like super funds or fund managers.

Equally attractive, unlike shareholders in a private company that might find it difficult to exit the business in a hurry, you can typically sell ASX-listed PE stocks any time you want.

While PE arguably has own unique set of risks, being unlisted removes exposure to the share market volatility that can drag good stocks down when it falls.

Check these stocks out

Here are two ASX-listed stocks offering retail investors access to a rich vein of unlisted PE-owned stocks.

Private Equity Trust (ASX: PE1): Is a diversified portfolio of global private equity investments, which aims to provide investors with access to the top-performing quartile of global private equity managers and boasts exposure to over 400 underlying private companies.

The portfolio is managed by one of the largest and longest continually operating allocators to alternative investments in the world, Grosvenor Capital Management L.P.

The trust seeks to generate, over an investment horizon of at least 10 years, attractive returns and capital growth through a selective and diversified approach to private market investments.

• Unit price: $1.51

• NAV per unit: $1.615

• Performance since inception 12.7% pa

• Target distribution yield: 4%

• Market cap: $420m

Pengana private Equity Trust: A five year snapshot.

Van Eck Global Listed Private Equity ETF (ASX: GPEQ): Aims to provide investment returns (before fees and other costs) by tracking the performance of the LPX50 Index which measures the performance of the 50 largest and most liquid global listed private equity companies.

• NAV per unit: $14.29

• Net assets: $11.5m

• Management fee: 0.65%

• Dividend frequency: Annual

Performance history

Source: VanEck

Top ten funds

Source: VanEck