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Australia’s private capital industry grew by 33 per cent in 18 months, reaching A$139 billion

SYDNEY, Australia, April 01, 2024 (GLOBE NEWSWIRE) -- Preqin and the Australian Investment Council today released the 2024 edition of the annual Australian Private Capital Market Yearbook.

The report tracks activity in the Australian private capital industry using Preqin data, as well as exclusive information obtained from Preqin and the Australian Investment Council's teams.

Key points:

  1. Australian private capital assets under management (AUM) reached A$139 billion as of June 2023, up 33 per cent from 18 months prior.
  2. Private equity and venture capital (VC) have a combined AUM of A$65.5 billion, as of June 2023, which is 30 per cent higher than in December 2021. Meanwhile, real estate AUM grew by 28 per cent from December 2022 to June 2023, on the back of robust fundraising to become the largest asset class with A$55.7 billion in AUM.
  3. In 2023, 37 Australia-focused private capital funds raised A$10 billion.

Preqin data shows that private capital AUM climbed to A$139 billion by 30 June 2023, from A$104.5 billion at 31 December 2021. This growth trend underscores domestic and international investor appetite to seek returns by investing in Australian ideas, businesses, and assets.

Fundraising amongst Australia-focused private capital funds moderated in 2023, compared with record levels in 2021 - 2022, but continued at levels in line with pre-pandemic norms, with an aggregate value of A$10 billion raised. A general trend has emerged where, in a more subdued global and market environment, more capital is being committed to fewer, but more experienced, fund managers.

Of all active Australia-based private capital investors, the proportion of family offices increased from 7 per cent to 36 per cent from 2019 to 2023, according to Preqin’s database. The number of Australia-based family offices tracked by Preqin to be actively investing is now eight times the number it was over the same period.

Higher interest rates increased pressure on margins for private equity firms. This is particularly the case for leveraged buyouts. In 2023, Australian private equity-backed buyout deal value reached A$13.2 billion, around one-fifth of the value in a buoyant 2022. However, when compared to the five-year average of A$14.2 billion from 2015 to 2019, the deal value for 2023 is 6.8 per cent lower.

Australia’s VC sector remained resilient despite more challenging market conditions. 260 VC deals were completed with an aggregate value of A$3.8 billion invested in 2023, while seed or pre-seed deals continue to remain central to the focus of major venture capital funds. High funding costs and lower valuations at exit mean VC firms are showing a preference for early-stage companies.

Australia’s emerging private debt industry continued to show strong signs of growth in 2023, supported by robust deal activity and tighter lending conditions amongst traditional debt providers. As of June 2023, private debt AUM stood at A$1.8bn.

Australia’s alternative assets industry continues to see opportunities arising from developing new technologies and infrastructure that support the energy transition. The country continues to lead its peers in APAC in environmental, social and governance (ESG) investing, with 228 UN PRI signatories. This, together with greater regulatory certainty about the energy transition, should give Australian managers a point of difference compared to their regional counterparts.

Angela Lai, VP, Head of APAC and Valuations, Research Insights at Preqin, says, “Despite difficult macroeconomic conditions, Australia's private capital markets held up well. The strong track record of Australia’s VC ecosystem continues to attract global GPs and LPs. Fundraising and deal activity have been robust despite moderating from 2022’s record highs.”

Navleen Prasad, CEO at Australian Investment Council, said: “Compared with long-term averages, the private capital industry has proven to be resilient, notwithstanding more subdued global market and economic conditions. While 2021 and 2022 offered more buoyant conditions, the long-term comparison is important given private capital is patient capital. This long-term resilience underscores strong industry fundamentals and Australia’s merits as a place for private capital investment.

“Private capital currently contributes three per cent to Australia’s GDP and, based on US and UK experience, has the potential to double that contribution, supporting the country’s growth ambitions. The challenge for Australia, in a globally competitive market for patient capital, is to ensure that its regulatory and legislative frameworks remain efficient, effective and flexible enough to enable investment in start-ups and growth businesses. It is these businesses that will give Australia a more dynamic and future-proofed economy as well as supporting incumbent industries adapt to a changing world.”

To download the Australian Private Capital Market Overview Yearbook, please click here.

Media contacts:
Australian Investment Council
Mark Sefiani
0401 252 582
mark.sefiani@investmentcouncil.com.au

Preqin
Carmen Wong
(+65) 6305 2218
carmen.wong@preqin.com

About the Australian Investment Council
The Australian Investment Council is the peak body for private capital in Australia. Comprising leading private equity, venture capital, private credit, family offices, superannuation, and sovereign wealth funds, our members collectively manage over $61 billion for investment into the establishment and growth of Australian businesses. The Council’s members support more than 850 businesses of varying sizes across every sector of the economy, and directly or indirectly employ close to 500,000 people in Australia.
www.aic.co  

About Preqin
Preqin, the Home of Alternatives™, empowers financial professionals who invest in or allocate to alternatives with essential data and insight to make confident decisions. It supports them throughout the entire investment lifecycle with critical information and leading analytics solutions. The company has pioneered rigorous methods of collecting private data for over 20 years, enabling more than 200,000 professionals globally to streamline how they raise capital, source deals and investments, understand performance, and stay informed.
For more information visit www.preqin.com.


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