Superannuation and industry funds are “marking time” on decisions whether to invest in leveraged buyout funds as they analyse their general partner relationships, the implications of superannuation reforms and market volatility, says a doyen of Australian buyouts.
“Volatility, the fear of GFC2 and a liquidity preference is hampering private equity fund raising now,” says Joseph Skrzynski, founding partner of CHAMP Private Equity.
Several of the largest traditional private equity investors, the $42 billion AustralianSuper and the $28 billion UniSuper, are weighing up the implications of the government’s MySuper changes. Potentially large numbers of their members may seek to move to a cash option if market volatility continues.
That may mean that superannuation funds may be reluctant to lock up money with a buyout fund for 10 years, says Skrzynski.
“This is not a result of track record analysis but liquidity preference in asset allocation,” he says.
“It’s a shame that short term regulatory issues around superannuation are restraining long-term investment decisions, which will ultimately bear on returns for super funds in the long-term,” says Skrzynski. “Australian super funds are out of step with their peers overseas with this part of their asset allocation to long-term investments.”
CHAMP raised a $1.5 billion fund about 12 months ago.
“It seemed like the toughest time to raise funds but if anything things have gotten tougher in Australia,” says Skrzynski.