Future Fund ups PE exposure

The Australian sovereign wealth fund’s private equity exposure increased by another $1bn in 2016.

Australia’s Future Fund deployed more capital into private equity in 2016, according to the fund’s December 2016 portfolio update.

The fund increased its exposure to private equity – which includes venture capital, growth capital, buyout and distressed debt – in the 12 months to 31 December 2016, from 9.8 percent or A$12.3 billion ($9.3 billion; €8.7 billion) in the first quarter to 10.9 percent or A$13.9 billion by the end of the fourth quarter.

Future Fund managing director David Neal said in a statement that the fund’s private equity capital was primarily deployed through co-investments in venture capital and growth strategies.

The fund has backed Hong Kong-based FountainVest Partners, which targets growth equity and venture capital investments in Chinese consumer goods companies, and also led the $50 million funding round for California-based data specialist MapR Technologies with Google Capital and Lightspeed Venture Partners in August.

Over the last year, the Australian sovereign wealth fund also shifted its exposure to infrastructure and alternative assets. Its infrastructure and timberland holdings increased from 7.1 percent in December 2015 to 7.9 percent in December 2016, while its alternative assets exposure rose from 12.6 percent to 14.2 percent in the same period.

Most notably, the fund reached a financial close on the A$9.7 billion transaction for the Port of Melbourne, a deal which includes the Queensland Investment Corporation, Canada’s OMERS and Global Infrastructure Partner as co-investors.

In addition, Neal also said that the fund cut its cash allocation to 19.7 percent in the final quarter of 2016, from 20.6 percent in the previous quarter due to the falling Australian dollar.

The Future Fund also reduced its real estate holdings over the course of the year, from 7.1 percent in the first quarter to 6.2 percent in the last quarter of 2016.

As of end December 2016, the Future Fund saw its portfolio grow to over A$127 billion.