The Australian government should modify new transparency laws to exempt commercially-sensitive information about a private equity investment from public disclosure, according to a statement from the Australian Private Equity and Venture Capital Association
Proposed regulations have had strong objections from “a number of superannuation funds” who are opposed to disclosing portfolio holdings on a “full look-through basis”, according to the statement.
“We have already observed at least one superannuation fund in recent months which was unable to invest in a sought-after, top-tier foreign PE fund solely on the basis of the impending look-through disclosure obligations, thus missing out on a potentially attractive investment,” the statement said.
Under proposed reforms, the country’s superannuation funds will be required to publicly disclose information such as fees and costs payable by the fund and asset allocation percentages. In addition, every six months the supers will need to identify all of their direct or indirectly held assets and each asset’s current value on their website, according to a King & Wood Mallesons report.
The requirements are for all superfund investments globally, including existing commitments.
AVCAL said that the rules would be costly and time-consuming to implement and would require renegotiating existing LP-GP contracts, which could result in “forced divestment” of assets to the secondary market.
The group added that public disclosure of an unlisted asset’s book value would “adversely affect the fund's ability to obtain any sale price above the book value” and put private equity at a disadvantage with non-private equity-backed unlisted companies, which would not have the same disclosure requirements.
While AVCAL is against public disclosure of commercially-sensitive information – particularly ownership percentage, cost, valuation and distributions – it does not oppose releasing the information to regulators.
In addition to the exemption, the group also wants the proposed July 1 start date to be extended to evaluate alternative models under consideration.
AVCAL represents the venture capital and private equity industry in Australia, which has $24 billion in funds under management.