TLDR:
- Private capital fundraising in Australia slowed down significantly last year.
- Investors are becoming more cautious in the current economic environment.
Article Summary:
Big super funds and asset allocators have put the brakes on private capital fundraising in Australia, leading to a significant slowdown in new funds raised by private equity and venture capital firms. The decrease in fundraising is forcing investment managers to prove their ability to outperform listed markets in a more cautious investor landscape. This slowdown in fundraising activity reflects a wider sentiment shift within the industry, as investors take more time to evaluate their commitments in the face of changing interest rates.
The decline in fundraising has also affected dealmaking activity in the private capital industry, leading to expectations of a period of rationalization. Despite the challenges, the industry is expected to become more sustainable and resilient in the long term as a result of these tougher times. While fundraising levels in 2023 were down compared to previous years, Australian-focused funds continue to deliver strong returns, attracting interest from both domestic and international investors.
Managers like Allegro Funds are preparing to return to fundraising soon, leveraging the interest from high net-worth individuals and family offices. However, new managers are finding it increasingly difficult to establish themselves in the current environment, with traditional investors showing more caution and preferring to back existing managers. Overall, the focus remains on generating profitable returns and investing in globally relevant companies to drive success in the private capital industry.
