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Australian Private Capital Assets at All Time High Of $90b

Australian Private Capital Assets at All Time High Of $90b

The Australian private capital industry reached a record-breaking $90 billion in assets under management (AUM) as of June 2021, an increase of 11 per cent in the six months from December 2020 according to the Preqin & Australian Investment Council Yearbook 2022 released today. 

Private equity (PE) and venture capital (VC) which account for half of private capital AUM saw high deal volumes in 2021. The aggregate deal value of PE deals reached $20.1 billion passing the previous peak of $16.8 billion in 2019, while VC deals set an all time record of $7.9 billion, doubling the previous year’s $3.9 billion. 

“This latest data confirms the capacity of private investment capital to find new opportunities from domestic and international investors, even with the disruption of border closures and the extended impact of the COVID-19 pandemic,” said Australian Investment Council Interim CEO, Jonathan Kelly.

Private Capital in Australia

PE and VC grew at an average rate of 11 per cent over the five year period accounting for $42.2 billion in combined AUM, while uncommitted capital fell from $13.5 billion in 2020 to $10.0 billion in 2021, reflecting the significant investment opportunities for this asset class. 

Dave Lowery, SVP, Head of Research Insights at Preqin says: “Australia’s sophisticated and mature private capital market remains attractive. With returns of 17.8% (median net IRR) for Australia-focused funds with fund vintages from 2012 to 2019, fund performance topped North America, Europe, and Rest of World.

“Australia is increasingly seen as a desirable destination and hub for institutional investment, with the active participation of both international and local fund managers. We believe that private capital will play a key role in the country’s economic recovery, due to the sector holding $26 billion in available funds for investment.” 

Private debt was the fastest-growing asset class in Australia with a 144% increase in AUM from December 2020 to June 2021. 

“This has been largely driven by tighter lending conditions which have opened a gap in the market for private debt funds to finance smaller and mid-sized companies,” Mr Kelly says. 

The Preqin and Australian Investment Council Yearbook uses figures compiled by leading international alternative assets data provider Preqin, and looks at fundraising, investments and exits across the Australian private capital industry. 

Key highlights 

  • $90 billion in AUM and $26 billion in uncommitted capital held by Australian-focused private capital fund managers at June 2021. 
  • 17.8% median net IRR of Australian-focused private capital funds (vintages 2012-2019). 
  • Australia-focused private equity and venture capital funds had a combined $ 42.2 billion in assets under management ($30.0 billion PE and $12.2 billion VC) as at June 2021. 
  • $10.0 billion in total uncommitted capital held by Australian-focused PE and VC funds at the end of September 2021 ($8.1 billion PE and $1.9 billion VC).  
  • 267 VC deals were completed with a record $7.9 billion invested in 2021. 
  • $9.1 billion in aggregate capital raised by Australia-focused private capital funds in Australia in 2021. 
  • Private Debt was the fastest growing asset class with a 144% increase in AUM. 
  • Foreign investors have grown more active in Australia over the past two decades from 18% of investors to 49% today. 
  • Australia now has 198 signatories to the United Nations’ Principles for Responsible Investment, up from 173 in 2020.  

Note: all currency units are in Australian dollars unless otherwise stated. 

Read the full report here