AVCAL: Australian funds attracting foreign LPs

The total amount of funds raised in Australia for the fiscal year was the highest since 2008, with more than half of commitments coming from overseas investors.

The fiscal year ranging from July 2011 to June 2012 was Australia’s best fundraising year since the Lehman-sparked crisis in 2008, according to an Australian Private Equity & Venture Capital Association (AVCAL) report.

According to the report, 21 Australian venture capital and private equity firms raised A$3.3 billion (€2.7 billion; $3.4 billion), up 59 percent year on year.

However, the vast majority of that money was raised in 2011, according to AVCAL chief executive Katherine Woodthorpe. Numbers were skewed by a few very large funds, including Archer Capital’s A$1.5 billion fund, which closed in December 2011.

Another report by Thomson Reuters also confirmed that fundraising in Australia is down for the first nine months of 2012, totaling only A$376 million across five funds, a 46 percent decrease from the first nine months of 2011.

“What we can take away is that fundraising in Australia is very lumpy,” Woodthorpe told PE Asia.

Australian funds have also been pulling in foreign LPs. Commitments from overseas investors in Australian private equity and venture capital constituted 57 percent of funds raised, according to the firm, up from 51 percent last year. Woodthorpe said this is an encouraging show of interest in the Australian economy.

Domestic investment in Australian private equity has slightly decreased, Woodthorpe added, but she said this is expected as private equity projects begin to mature and expand geographically. That Australia can attract investment from overseas in such a bad fundraising environment is a hopeful sign, she said.

“The fact that most of these funds were raised from offshore investors demonstrates Australia’s resilience amid ongoing global financial market volatility,” Bryan Zekulich, Ernst & Young Oceania Managing Partner for Private Equity, said in the statement.

According to the recently released AVCAL Yearbook, Australian private equity funds had A$26.5 billion in assets under management in total, while Australian venture capital firms managed A$2.9 billion.