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Private Equity Investors in Australasia

by Yong Xiang Pua

  • 11 May 2012
  • PE

Preqin’s Investor Intelligence shows that that there are 101 Australasia-based investors, excluding fund of funds managers, investing in private equity funds. These investors collectively allocate an aggregate USD 42 billion to the asset class. Superannuation schemes are the largest group of investors in terms of private equity exposure, accounting for 51% of the region’s private equity allocation. Other significant investors include asset managers and sovereign wealth funds, which collectively contribute 32% and 14% respectively to the region’s pool of private equity fund investments in terms of capital.

More than half (55%) of the investors are below their target allocation to private equity, suggesting a healthy appetite in the region for additional exposure to the asset class. Twenty eight percent of the investors are  fully allocated to the asset while another 17% are above their private equity allocation.

No particular investment strategy stands out as a favourite among Australasia investors. Thirty two percent seek private equity exposure via fund of funds, including secondaries, while another 30% invest via buyout funds. Venture and growth funds are favoured by 25% of Australasia investors each. Twelve percent of investors are interested in distressed private equity funds, including distressed debt, turnaround, and special situation funds, while 7% will consider funds providing mezzanine financing.

Eighty seven percent of Australasia investors prefer to invest domestically, and over half of these investors will also seek to diversify their portfolio via global fund commitments. Fifty three percent of the LP community will invest in North America while a similar but slightly smaller proportion of investors (48%) will consider funds with an allocation to Europe or Asia. Sixteen percent will consider increasing their exposure to Greater China. This includes HOSTPLUS, which recently awarded a AUD 100 million China-focused separate account mandate to US private equity fund of funds manager Siguler Guff. Going forward, the AUD 9.5 billion superannuation scheme is expecting to gain additional private equity exposure through five to 10 commitments and co-investments via the mandate. Specific emerging markets that Australian investors are interested in include Americas (13%), South Asia (13%), and Africa (5%).

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