Australia draws $68b in private capital

30 April 2020

Australia stands out as an appealing investment destination and continues to draw private capital, with assets under management (AUM) reaching a record $68 billion as of the end of June, 2019, according to the Preqin &Australian Investment Council Yearbook 2020. 

The country had one of the most attractive risk/return profiles in the world, with the period ahead viewed as an opportunity to redesign its economy on the back of this current crisis where the role of the private capital would help structurally transform industry sectors and drive innovation. 

“While at a macro level, Australia is recognised for its natural resources, private capital is going from strength to strength with some of the largest deals recorded in the healthcare and consumer discretionary sectors,” said Mark O’Hare, chief executive at Preqin. 

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“The private equity and venture capital spaces have seen a significant uptick in activity, and investors are increasingly seeing Australia as a growth market with significant potential.” 

Superannuation funds represented the largest proportion (47%) of domestic investors in private capital and 150 of Asia-Pacific’s 378 signatories to the UN Principles for Responsible Investment were located in Australia, with superannuation funds accounting for 60% of the 150 signatories. 

In 2019 private equity (PE) and venture capital (VC) also followed the trend for increased AUM, rising to a new record high of $33 billion, an increase of 16% on 2018. 

PE deal activity was robust in the food and healthcare sectors, with consumer discretionary representing the largest share (52%) of aggregate buyout deal value in 2019, up from 11% in 2018, while healthcare accounted for 37%, a 30% increase on the prior year. 

At the same time, VC funds raised a total of $632 million for investment in Australia which represented the second highest annual total in the past decade where the IT sector continued to dominate in terms of aggregate venture capital deal value (51%) and number of transactions (59%). 

The IT sector was viewed as a well-placed to withstand the ongoing disruptions arising from COVID-19, with dry powder levels for private equity and venture capital now totalling $13 billion. 

“Looking ahead, Australia is well-positioned to be at the forefront of the future of private capital. It is home to almost half of the APAC signatories to the UN’s ESG framework. Investors in the country are pursuing diverse and flexible investment strategies to take advantage of emerging sectors,”  O’Hare added. 

“The economy is fundamentally strong, and seems ideally placed to recover from the current volatility. With some of the largest institutional investors and pension funds in the world, Australia will be an exciting market to watch on the world stage.” 

 

 




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