Australian private equity and venture capital funds can play a significant role in supporting investment into around 30,000 more domestic businesses.
That’s according to a submission lodged to the Financial System Inquiry by the Australian Private Equity & Venture Capital Association Limited (AVCAL).
“Private equity funds are currently invested in fewer than 350 businesses in Australia – which means they presently have funding capacity to back less than two percent of the total investable pool of up to 30,000 businesses,” says AVCAL’s chief executive, Yasser El-Ansary.
The need to expand the availability of capital to support more Australian businesses in need of growth equity funding is one of the major components of AVCAL’s submission to the Financial System Inquiry.
“For Australian businesses that don’t have access to debt financing from banks, venture capital and private equity funds can help to provide capital and skills to expand business operations and deliver growth in productive output and employment,” El-Ansary says.
Other areas highlighted in the submission include the need to re-calibrate existing policy settings within the superannuation system to address the imbalance between investment in short-term high liquidity asset classes (such as equities), versus long-term less liquid asset classes (such as private equity and venture capital).
“Our superannuation savings pool is a vitally important part of the foundation of our financial system now,” says El-Ansary. “But there is a very clear opportunity to remove roadblocks that deter some superannuation funds from backing private equity and venture capital firms to invest in Australian businesses.”
