31 May 2019 

Australian private capital levels hit new record

The Australian private capital industry has hit an all-time high, holding $30 billion in assets under management (AUM) as of June 2018. The new record follows a strong year of fundraising, according to the Australian Investment Council’s 2019 Yearbook, which uses figures compiled by data provider Preqin and looks at fundraising, investments and exits across the industry.
In calendar year 2018, a total of 17 private capital funds secured an impressive $6.6 billion which will be invested into Australian businesses in the coming years. This strong fundraising activity puts the industry’s level of dry powder at $11 billion (up 31% from 2017), and points to a busy pipeline of investment activity by the industry in the medium-term.

“These figures highlight just how attractive our market is to both local and global investors. Private capital investment offers an opportunity to provide smart capital to privately backed companies in a relatively low risk environment and the numbers prove we’re well positioned to do that,” said Australian Investment Council Chief Executive Yasser El-Ansary. 

“More and more businesses are choosing to raise capital from private capital investors today, rather than through public markets, because of the benefits of partnering with venture, private equity and private credit firms,” said El-Ansary. “Private capital investors can help unlock the growth and expansion opportunities of businesses, in a way that public markets simply cannot,” he added.

Buyout funds were the dominant player in the fundraising numbers, generating 79% of total new fund commitments raised. Buyout funds now represent a total of $20 billion in AUM in Australia. Since 2012 buyout funds have raised almost double the amount of new commitments than the rest of the industry. 

In terms of capital deployed into investments over the past year, there were a total of 75 deals valued at $13 billion in private equity, and 160 deals in venture capital investment valued at $2.2 billion – an increase of 89% and 77% respectively on the 2017 calendar year. 

Investments were consistently spread across a number of key sectors with IT edging out the consumer sector for the highest number of private equity deals (19%), followed by food and agriculture, health care (16%), industrials, consumer (15%), energy and utilities (12%), and business services (8%). But when it came to the value of deals made, healthcare deals dominated, making up 45% of total deals, by value. 

Venture capital deals were heavily weighted towards the IT software (39%) and IT internet (29%) sectors, making up the bulk of total deal activity.  

In terms of exit activity, this was much more evenly spread between leveraged buyouts (39%), add-on and merger deals (30%) and public-to-private transactions (28%) than in previous years, where leveraged buyouts dominated for the better part of the last decade.   

“Interestingly, the volume of add-on and merger deals went from eight per cent to 30 per cent in 2018, which points to a surge in ‘buy-and-build’ strategies where industry expertise can be leveraged to support business growth,” said El-Ansary. 

“Looking at the rest of the region, Australia is the sixth largest private capital industry in the region. However, given the size of our market, on a per capita basis Australia is ahead of China, India and Japan.”

Preqin Chief Executive Mark O’Hare added, “the private equity market in Australia is growing from strength to strength. Investor appetite is strong, and a growing economy is providing lots of investment opportunities. Australia is an increasingly important and attractive part of the global private equity and venture capital industry in several respects: as a source of funding for Australian businesses, and as an attractive opportunity for global investors. We can expect to see it continue to flourish in the coming months and years.”

Key highlights 
Australian private capital firms have $30 billion in assets under management ($7.1 billion venture capital $23.3 billion private equity) 
$6.6 billion in aggregate capital was raised by private capital in 2018 
Of the $6.6 billion raised to December 2018, $1.3 billion was raised by nine venture capital funds and $5.3 billion by eight private equity funds
Private capital investment totalled $14.7 billion in 2018, made up of $12.5 billion by private equity and $2.2 billion by venture capital 
IT, healthcare and food and agriculture were the top three industries where private equity deals were made 
IT (software), IT (internet) and energy and utilities were the top three industries for venture capital deals


N.B. all currency units are denominated in Australian dollars unless otherwise stated.

Read the 2019 Yearbook report. 

Watch a video wrap of key findings. 

See an infographic of the 2019 Yearbook highlights.