Overview of Private Equity Investment in Australia - May 2013

by Valerie Lee

  • 31 May 2013
  • PE

Preqin’s Fund Manager Profiles tracks 107 active private equity fund managers based in Australia. The majority of these fund managers (61%) are based in New South Wales; this is followed by Victoria with 21%. The remainder, all home to less than 10% of Australian fund managers, are Queensland (8%), Western Australia (5%), South Australia (3%) and Australian Capital Territory (2%).

In 2013 so far, three funds raised by Australia-based private equity firms have reached a final close, raising an aggregate $500mn in capital commitments. There are 19 funds currently being raised by Australia-based fund managers, targeting an aggregate $7.4bn. Venture capital funds make up the largest proportion (42%) of these vehicles, followed by buyout (26%), natural resources (11%), timber (11%), special situations (5%) and growth strategies (5%). Of these 19 funds, 14 seek investments solely in Australasia and the remaining five will consider investments further afield, such as the US and Asia. In terms of fundraising status, five of these funds have held a first close, two have held a second close and the remaining 12 have yet to reach an interim close.

Preqin’s Investor Intelligence tracks 100 institutional investors based in Australia that are actively investing or considering investing private equity funds. The overwhelming majority of the private equity investors based in Australia are superannuation schemes, which make up 62% of the total number. The next largest group of investors is asset managers, representing a much lower 15% of the group. These Australia-based private equity investors manage $1.6tn in total assets under management. Their average allocation to the private equity asset class (excluding fund of funds managers) is 9.1%. Thirty-six percent of these private equity investors are headquartered in New South Wales, followed by 34% in Victoria and the remainder in Queensland (13%), South Australia (5%), Australian Capital Territory (5%), Western Australia (4%) and Tasmania (3%).

Buyout is the most attractive private equity fund type for Australia-based private equity LPs, with 56% of these investors either investing or considering investing in the strategy. This is closely followed by venture capital (55%), growth (50%) and distressed private equity (32%). Sixteen percent of Australia-based private equity investors will only consider investing in Australasia itself, while 84% will consider investments outside of the region. In terms of their appetite for emerging managers, 25% of these investors will invest in first-time funds, 21% will consider doing so on a case-by-case basis and a further 13% will commit to spin-off teams. Forty-one percent will not invest in managers raising their first vehicle.

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