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The Objective

Survey of Australian Institutional Attitudes to Private Equity Investment with European (ex UK) Comparisons. The Objective. To gain an understanding of the main drivers for institutions to invest/ disinvest in private equity. Support and Authorship.

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The Objective

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  1. Survey of Australian Institutional Attitudes to Private Equity Investment with European (ex UK) Comparisons

  2. The Objective • To gain an understanding of the main drivers for institutions to invest/ disinvest in private equity

  3. Support and Authorship • Sponsored by Adveq, a Zurich based private equity fund of funds manager • Australian survey by John Evans, UNSW • European survey by Johan Ginyard,Stockholm School of Economics

  4. The Data • Australia: large superannuation funds, with 40 respondents, $A120 billion of assets • Europe: pension funds, insurers, 106 respondents, $EUR 300 billion of assets (est)

  5. Current Allocations: Australia

  6. Current Allocations: Europe

  7. Current Investment Medium: Australia

  8. Current Investment Medium: Europe

  9. Current Country Allocation: Australia

  10. Current Country Allocation: Europe

  11. Future Allocation • Australia: stable at around 4.5% of FUM • Europe: stable at around 3.4% of FUM

  12. Future Investment Medium: Australia

  13. Future Investment Medium: Europe

  14. Future Country Allocation: Australia

  15. Future Country Allocation: Europe

  16. Future Allocation by Type of Investment: Australia

  17. Future Allocation by Type of Investment: Europe

  18. Investment Return Objectives • Australia: absolute return of 16.5%pa, relative return of 4.5%pa • Europe: absolute return of 12%pa, relative return of 4%pa

  19. Investment Drivers: Australia

  20. Investment Drivers: Europe

  21. Managing the Investment • Australia: predominately trustee decision and management (with asset consultant) • Europe: In over two thirds of the Nordic institutions surveyed, the CIO (Chief Investment Officer) or a dedicated Private Equity Officer is responsible for the investment decision.

  22. Single Pool & FoF Investment Criteria

  23. PE Barriers: Australia

  24. PE Barriers: Europe

  25. Conclusions: why invest? • Return enhancement for the investor remains the dominant reason for investing • Diversification is also another important driver

  26. Conclusions: Barriers to investing • Predominately illiquidity issues • Europeans also see management time involvement as a serious issue • Australians don’t like the fees

  27. Conclusions: How to invest • Fund of Funds remains the dominant Australian investment medium, but Europeans prefer single pooled funds • A manager’s track record, ie performance, remains the main selection criteria

  28. Conclusions: where to invest • Investors are holding private equity investments at around the 3%-5% levels • Own region remains the dominant target for investment, but with increasing interest in Asia • “Buyout” situations remain the most interesting type of investment

  29. Issues • What are the implications for economic development of the investor attitudes? • What should governments do to change the attitude (assuming they want to)? • What results will investors actually get?

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