The value of private capital hits a record $90 billion

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According to new data, published by Preqin and the Australian Investment Council, private equity assets under management increased by 11% in the six months from December 31, 2020 to mid-2021, following a vote of trust from major investors, including super funds.

The aggregate value of private equity buyouts reached $20.1 billion, up 32% year-on-year, while venture capital deals doubled from $3.9 billion in 2020 to a record $7.9 billion.

“Private capital has continued to find new investment opportunities despite the disruption caused by border closures and the prolonged impact of the COVID-19 pandemic,” said Jonathan Kelly, Acting CEO of Australian Investment. Council.

The report also revealed that private equity and venture capital assets under management grew at an average rate of 11% per year over the five years to reach $42.2 billion at the end of the financial year. 2020-21.

Additionally, uncommitted capital increased from $13.5 billion to $10 billion from the beginning to the end of the 2020-21 financial year, “reflecting a significant deployment of capital by these segments into Australian businesses”.

Commenting on the results, Dave Lowery, head of research at Preqin, said Australian private market funds are very attractive to those looking for above-market returns as Australia is increasingly seen as a destination and a desirable hub for institutional investments.

In fact, data from Preqin revealed that Australia-focused funds that matured from 2012 to 2019 generated median net returns of 17.8%, outpacing North America, Europe and the United States. rest of the world. As a result, foreign investors have become more active in Australia over the past two decades, rising from 18% of investors to 49% today.

Going forward, private capital is expected to contribute significantly to the Australian economy.

“We believe that private capital will play a key role in the country’s economic recovery, as the sector holds $26 billion in funds available for investment,” Lowery said.

Additionally, according to the report, private debt was the fastest growing asset class in Australia with a 144% increase in AUM recorded in the six months from December 2020 to June 2021.

The report predicts that, in the coming months, super funds’ allocation to private debt could rise relative to public markets as investors seek to get involved in this asset class for potentially higher returns in a context of rising inflation.

The value of private capital hits a record $90 billion

Australia’s private equity industry hit a record high of $90 billion, with private equity and venture capital making up the bulk of the sizable sum after high deal volumes in 2021.

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Last update: May 06, 2022

Posted: May 06, 2022

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