US$14.8bn available for private capital investment in Australia
SYDNEY: Private capital investors in Australia have a combined US$14.8bn of
dry powder to deploy in the next two to three years, according to a new
by EY and the Australian Investment Council.
The report −
Will the rise of private capital tip the balance of investment power?
– shows the growth in allocated capital for private markets in Australia is
consistent with other developed economies indicating a potential upsurge in
deal activity in the future. New opportunities created from changes to
regulations in SE Asia, closure of some of the megafunds in North America,
and a relatively stable macroeconomic environment and low interest rates in
Europe, are some of the reasons behind this growth.
Australia raised a total of US$12.7bn in aggregate capital in 2018 with
funds showing strong preferences for new investments into stable assets
such as land title registries, data centres and smart metering along with
real estate and natural resources.
Deal value also significantly increased from 2017 to 2018 − by 64% for
private equity-backed buyouts, and by 200% for venture capital deals.
Australian Investment Council Chief Executive Yasser El-Ansary said
Australia is well positioned to reap the opportunities presented by a
changing private capital landscape as the industry continues to grow and
domestic fund managers expand their access to a deeper and more varied pool
“More engagement from institutional investors, solid and consistent returns
and an increased focus on responsible investing lay the foundations for
private capital to have an even more prominent impact on our economy and
communities well into the future,” he said.
Milan Milosevic, EY Oceania Private Equity Leader added: “The rise of
private capital indicates a new era for Australia’s investment market,
characterised by increasingly influential investors along with new
“Importantly, the emergence of private capital in Australia comes at a time
when public markets are increasingly focused on short-term investor
expectations at the expense of long-term growth initiatives.”
Private equity and venture capital investment has continued to perform
strongly for investors. The most recent data shows the PE and VC Benchmark
Index was ahead of public markets by 200 to 400 basis points in Q3 2018.
Australia closed 48 funds in 2018 and raised US$12.7bn in aggregate
- Dry powder investment in Australia was US$14.8 bn in 2018, an increase of
6% from 2017
37.5% of institutional investors are co-investing with private equity and
venture mangers and a further 22.5% are considering co-investment in the
Australian Superannuation funds hold 39% of the total investment
allocation to the private capital market
IPOs are no longer the primary source to fund growth or access liquidity.