Activity in the private equity (PE) & venture capital (VC) industry in Australia in the 2018 calendar year has seen higher levels of fundraising and investment compared to 2017. This points to a confident outlook for the private capital market, as both fund managers and institutional investors deploy increasing amounts of capital into funds and businesses.
The industry’s assets under management (AUM) stand at just over $30bn as at June 2018, an all-time record. Australia-based buyout funds account for the highest amount of AUM at $20bn. Industry-wide dry powder stands at a healthy $11bn.
In the 2018 calendar year, the fundraising activity of Australia-based PE and VC fund managers hit a record high in terms of capital raised, with $6.6bn in aggregate capital secured by 17 PE and VC funds. PE funds raised a total of $5.3bn across eight funds, while VC funds raised $1.3bn across nine funds. Buyout funds have been the dominant segment for fundraising since 2012, having secured $14.5bn, more than double the amount of capital raised by all other fund strategies combined throughout these years ($6.9bn).
Following several years of strong fundraising, the aggregate capital targeted by PE and VC funds in market is lower as at February 2019 compared to the same point in both 2017 and 2018.
Investment activity across Australia’s private capital sector in 2018 experienced a significant increase in both the PE and VC markets. This marks a new turn from the declining trend seen in the market since 2016. This positive trend in investment activity has been driven by sufficient dry powder levels, the low-risk environment and the attractive fundamentals of many privately backed companies in Australia for both domestic and foreign investors. The VC sector had an especially strong year in 2018 as total deal value more than doubled from 2017 to a record $2.2bn.
Looking at divestment activity, aggregate buyout exit value made a modest recovery in 2018 to $9.2bn, from a low of $8.1bn in 2017, stemming the consecutive drop in aggregate exit value since 2014. Trade sales were the favoured exit pathway, and represented a record 73% of total buyout exits in Australia in 2018.
This is an extract from the recently released 2019 Yearbook: Australian Private Equity & Venture Capital Activity Report, which was produced in collaboration with the Australian Investment Council. Read the full report for detailed data on funds, deals and exits across the private equity & venture capital industry in Australia, based on data contained in the Preqin Pro data platform as well as on-the-ground information collected by both Preqin and the Australian Investment Council.