Money
Issue No. 38 - December/January 07/08
VCB chief‘s caveat on private equity cowboys
SA’s top venture capitalist has warned investors to apply the “buyer beware” principle - and due diligence - before putting money into the state’s rapidly developing private equity sector.
Speaking at the 2007 Congress of the Certified Practicing Accountants Association, SA Venture Capital Board chair, Dr Roger Sexton said good economic times, low interest rates and more flexible bank lending had fostered a flourishing private equity market.
Roger is keen to ensure rapid expansion does not allow a “few bad apples” to undermine confidence in the “respectable and reputable” private equity community.
“More than half of the largest superannuation funds in Australia have a portfolio allocation to private equity,” he says.
Private equity growth allows superannuation funds to diversify their portfolio into alternative asset classes and has provided an important source of funding for company expansion and development.
“Industry analysts are predicting a number of large superannuation funds will ramp up their allocation to private equity from 5% to 7% of their portfolios,” Roger says.
“There’s already $17.5 billion of Australian pension savings invested in the private equity market by super funds.
“If, as predicted, large super funds managers allocate up to 7% of their portfolio to private equity over the next few years, this will bring another $23 billion into the industry.”
The transfusion of...
