Buyout funds’ Australian assets have grown 75 per cent in four years, but the ASX 200 has shrunk by roughly $6 billion this year.
Private equity’s relentless rise risks undermining the size and diversity of the Australian sharemarket, as privatisations handily outnumber floats, the Reserve Bank warned.
“Heightened levels of private equity buyout activity may reduce the diversification of the public equity market,” the central bank said. “This has contributed to a greater concentration of the biggest companies in the public equity market, although only to around the average of the past 14 years.” While private equity’s Australian AUM still dwarf the $2.7 trillion market cap of the ASX, the speed with which private equity has accumulated capital, versus the tepid appetite for IPOs has caused the central bank to take notice.“On a global basis, we have seen equity capital move from the public markets to private hands.
Year-to-date, the ASX 200 has shrunk by approximately $6 billion, according to Goldman Sachs. Between 2019 and 2022, the net supply of equity increased by $180 billion, whereas the past 18 months was the lowest supply of net new equity in more than 20 years, according to the broker.
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