To say 2018 was a year of extremes in Australian private equity would be an understatement.
Fundraising by Australian managers more than doubled to a record US$8.3 billion last year across 10 vehicles, according to PEI data. Seven funds exclusively focused on Australia collected US$855 million between them, the third largest total since 2008.
More capital requires greater spending. The value of buyout deals almost doubled to A$12.5 billion ($8.6 billion; €7.7 billion) across 75 deals, roughly level with the 72 completed the previous year, according to the Australian Investment Council’s 2019 Yearbook.
Uncertainty in the public markets globally likely contributed to the continued decline of IPOs as the exit route of choice for private equity and trade buyers have been the main beneficiaries. Strategics accounted for more than 70 percent of exits in Australia last year, compared with just over half in 2017.
“I don’t think we’re at risk of the public markets becoming irrelevant in Australia, but the strategic pathway will continue to be a prominent part of the exit landscape,” says AIC chief executive Yasser El-Ansary.
Returns have yet to reflect last year’s excesses. Since inception internal rate of return for Australia based companies has been relatively steady for assets receiving an investment post-2009, rarely straying from around the 20 percent mark.
NB: All figures are in Australian dollars except where stated