Pengana Capital Group Lifts Net Base Revenue 17% as Private Credit Surges

Pengana reports 17% jump in net base revenue as private credit platform accelerates

Pengana Capital Group (ASX: PCG) has delivered a standout H1 FY26 update, with Net Base Revenue climbing 17% to a $37m annualised run rate as its Global Private Credit Platform drove $313m in net inflows over the six months to 31 December 2025. Base Operating EBITDA surged 98.9% from $2.2m to $4.3m, while statutory profit after tax returned to positive territory at $1.7m compared to a -$0.9m loss in the prior half.

The result demonstrates material operating leverage kicking in. Funds under management rose 8.6% to $3.8bn, with the Net Base Revenue margin expanding 90 basis points to 97 basis points (a 7.7% improvement). Gross Base Revenue hit a $48.1m run rate, up 13.2%. Critically, new GPC inflows delivered an average NBR margin of 1.7%, nearly double the group average, generating $5.4m of additional Net Base Revenue.

New GPC Platform inflows over 6 months had average NBR margin of 1.7%, generating $5.4m of additional NBR

For a funds management business with a largely fixed cost base, this margin expansion is the most important metric. Revenue is growing faster than expenses, and management has explicitly flagged that further FUM growth will translate into “super-charged growth in Operating Profits.”

What is net base revenue and why does it matter for fund managers?

Net Base Revenue represents management fee income minus profit share payments to investment teams. For Pengana, this is the most significant line in the accounts, capturing the net impact of FUM growth. The NBR margin (currently 97bps) is the key profitability metric because it reveals how much revenue flows through to the business after paying fund managers their share.

Pengana’s operating cost base is mostly fixed, meaning NBR growth flows directly to profits. Higher NBR margin equals more profit per dollar of FUM. The margin improvement from 90bps to 97bps over six months demonstrates the quality of new FUM inflows, particularly from the GPC Platform where margins are materially higher than the group average.

The revenue waterfall works as follows:

• FUM drives Gross Base Revenue
• Profit share payments to investment teams reduce this to Net Base Revenue
• NBR minus fixed operating expenses equals Base Operating EBITDA

Small increases in FUM can therefore generate outsized profit growth, which is exactly what the H1 FY26 result demonstrates.

Global Private Credit platform now drives 41% of group profits

Private markets (GPC plus Private Equity) now contribute 41% of Pengana’s Net Base Revenue, up from just 9% in H1 2020. This strategic shift positions the group to capture structural growth in one of the most in-demand asset classes globally.

The GPC Platform provides diversified exposure to more than 4,500 underlying corporate loans across 30 “Top Rated” funds divided into three distinct portfolios. This structure enables Pengana to efficiently launch multiple products targeting different market segments, including the ASX-listed Pengana Global Private Credit Trust (PCX), 11 unlisted unit trusts, separately managed accounts, and tailored mandates for corporate superannuation funds.

PCX continues trading at a premium to Net Asset Value, indicating investor demand exceeds supply. The first tailored mandate from a corporate super fund represents a material milestone, opening access to a large institutional market segment that has been historically difficult for boutique managers to penetrate.

The economics are compelling. GPC inflows at 1.7% NBR margin versus the group average of 0.97% means every dollar flowing into the platform is nearly twice as profitable. With FUM inflows of $313m over six months, the platform is now the primary driver of group profitability growth.

TermPlus gaining market traction

TermPlus operates as a fintech business within Pengana, offering high-yield fixed-term accounts with durations of one, two and five years. Rates are set at RBA Cash Rate plus 3% to 4.15% depending on term length, providing compelling returns for retail investors and SMSF holders.

The platform was designed and built in-house over three years and has been fully operational for the past year. TermPlus has secured a BondAdviser “Approved | Stable” rating and holds a 4.8-star customer rating, indicating strong satisfaction metrics.

This direct-to-consumer distribution channel bypasses traditional advisor gatekeepers, providing a scalable fintech model that feeds directly into the GPC Platform. Management has flagged TermPlus as an increasingly important source of high-margin FUM.

SpaceX position boosts Private Equity credentials

Pengana Global Private Equity Trust (ASX: PE1) holds an outsized position in SpaceX, which has significantly enhanced Pengana’s credibility in global private equity. PE1 is Australia’s only ASX-listed vehicle providing exposure to global PE through co-investments, primary investments and secondary investments.

The fund launched in 2019 and has completed multiple follow-on offerings, reaching a Net Tangible Asset value of $448m as at 31 December 2025. However, no new capital has been raised in recent years due to challenging global PE returns.

The SpaceX position creates a marketing halo effect that improves Pengana’s ability to raise capital for future PE vehicles once market conditions improve. Private equity is attractive for fund managers due to high fee structures and long FUM duration, making it a strategic growth area.

Listed equities delivers steady performance fees

While Listed Equities FUM has remained flat at $2.7bn over four years due to challenging conditions for active funds, the business continues to generate steady base revenue and lumpy but lucrative performance fees. Over the past five years, Pengana has generated $44m in net performance fees (after payments to fund management teams), averaging $9m annually.

Pengana High Conviction Trust has delivered exceptional returns, posting 30.1% over one year, 48.5% over three years, and 28.3% since inception in December 2014. The Listed Equities business runs 9 active strategies across Australian and global markets.

While not a growth engine, Listed Equities provides a stable revenue base and remains an important contributor to overall profitability.

Balance sheet supports continued investment

Pengana closed the half with Net Tangible Underlying Assets of $47.1m, providing a strong capital base to support growth initiatives. The group holds $12.5m in cash and $27.9m in investments, with approximately $24m of assets available to invest (excluding co-investments in GPC funds).

This financial capacity positions Pengana to continue investing in product development and marketing without constraint, particularly in the high-growth GPC and TermPlus segments.

Management outlook points to accelerating profitability

Management’s forward guidance emphasises six key themes:

1. GPC Platform: Growth is expected to continue across existing and new products, with strong margins to persist and very high growth in Net Base Revenue anticipated.

2. TermPlus: The fintech business is positioned to accelerate adoption, becoming an increasingly important source of high-margin FUM for the GPC Platform.

3. Listed Equities: Low growth with focus on selective opportunities, continuation of performance fees albeit sporadically.

4. Private Equity: Opportunities to grow in the PE space by taking advantage of market positioning and brand profile enhanced by the SpaceX exposure.

5. Operating Expenses: Expected to grow only marginally, with product development, capital raising, marketing and advertising costs able to be dialled up to drive FUM growth when conditions warrant.

6. Profitability: High growth in NBR combined with a mostly fixed cost infrastructure is expected to enable “super-charged growth in Operating Profits.”

The fixed cost base narrative is critical for investors. Management is explicitly flagging operating leverage, meaning incremental FUM growth flows disproportionately to profit. With the GPC Platform delivering margins nearly double the group average and TermPlus scaling efficiently through its fintech infrastructure, Pengana has positioned multiple growth engines to drive profitability acceleration.

The H1 FY26 result validates the strategic shift toward private markets and demonstrates the operating leverage inherent in the business model. With diversified revenue streams across GPC, TermPlus, Listed Equities and Private Equity, Pengana Capital Group is positioned to capture structural growth across both public and private markets while delivering material margin expansion.

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