For the first time in history, Australian-based private equity and venture capital funds under management topped $30 billion in 2018, reflecting the growth in available capital to support investment into businesses across every industry sector of the economy. Significant growth is also being seen in the depth of capital through private credit funds, which is good news for businesses seeking debt capital to help them grow.

• $30 billion in private capital assets under management in 2018
  • $7.1 billion in VC and $23.3 billion in PE

• 17 private capital funds raised $6.6 billion in funds in 2018

• $11 billion in dry powder − up 31% from 2017

• $2.2 billion total deal value on the VC sector

• Private capital investment hit $14.7 billion in 2018
  • $12.5 billion private equity and $2.2 billion venture capital.

• The value of deals significantly increased from 2017 to 2018
  • 64% for private equity-backed buyouts, and 200% for venture capital deals.

Source: Preqin 2019 AIC Yearbook

• Private equity and venture capital investment has continued to perform strongly for investors with the PE and VC Benchmark Index ahead of public markets by 200 to 400 basis points.

Source: Cambridge Associates.

An increasing number of businesses are choosing to raise funds from private capital investors today, rather than through public markets, because of the benefits of partnering with sophisticated investors who can who can bring real value to the execution of business strategies that improve competitiveness and productivity.

The shift towards private capital investment is taking place in most developed markets around the world. Here in Australia, we expect domestic fund managers and institutional investors to continue to grow their activities across the market, as more businesses seek access to smart capital that can help them unlock growth opportunities in the local market, as well as internationally.

Private Equity

$12.5 billion in private equity investment in 2018 with the value of private equity-backed buyouts having increased by 64% compared to the previous year.

Private equity investment has been consistently spread across a number of key sectors such as information technology and digital, which attracted the highest number of private equity deals (19%), followed by food and agriculture, healthcare (16%), industrials, consumer (15%), energy and utilities (12%), and business services (8%).

By value of deals in Australia, healthcare has continued to dominate the sectors attracting private capital investment, representing 45% of all deals in 2018.

Venture Capital

$2.2 billion in venture capital investment in 2018 with the value of venture capital deals having increased by 200% compared to the previous year.

Venture capital deals in 2018 were dominated by the IT software (39%) and IT digital (29%) sectors, which made up the bulk of total deal activity.

Deeper partnerships with institutional investors, long-term outperformance of returns, and an ever-increasing focus on responsible investing create the foundations upon which private capital will have an even more prominent impact on our economy and communities well into the future.

• 327 000 FTE jobs

• $43 billion in total value added contributed to the Australian economy in FY2016

• >85% of PE businesses introduced some type of process or product innovation in FY2016

• 20% is the annual revenue growth typically delivered by PE-backed businesses

Source: Deloitte Access Economics – current data