(Bloomberg) -- Australian pension fund Equip Super plans to add billions of dollars worth of private markets investments over the next few years, lifting such holdings to around a quarter of its overall assets.
The A$35 billion ($24 billion) fund is hunting for private credit and equity deals globally, building on recent co-investments including a battery storage facility in the northern state of Queensland and a data center in the US, Chief Investment Officer Andrew Howard said in an interview.
Equip plans to boost its allocation to unlisted assets to 23-24% in the next three years, from 19% currently, with the bulk of new investments in North America and Europe. The fund’s small private equity allocation of about 1% is likely to grow to as much as 4%, said Howard.
Equip is also getting more attractive terms in private equity and private credit investments than it was five or seven years ago, he said.
Private markets now comprise around a fifth of Australian pension funds’ A$3.9 trillion of assets, both locally and offshore. That’s bringing greater scrutiny, with the Australian Securities and Investments Commission this month flagging private markets as a top strategic priority. Disclosure around such investments, which tend to be valued less frequently than public assets, can be patchy.
“We recognize that there can be risks in this space,” Howard said of ASIC’s scrutiny. “So you want to be very, very careful about how you do actually invest and make sure that you’ve got your eyes wide open.”
The fund has slightly lifted its cash holdings to 6% of assets after trimming its equity and bond portfolios, which positions it to invest in opportunities as they arise, Howard said. The deals its seeking are often of the size that wouldn’t necessarily interest larger rivals.
Equip is the latest Australian pension fund to ramp up plans for private markets. AustralianSuper, the biggest, is seeking private equity deals from its New York and London bases, while rivals Australian Retirement Trust and Colonial First State are among those looking for private credit opportunities.
Howard believes there could “a few cracks in that larger end” of private credit. “And so we see that mid-market space as being pretty attractive.” he said.
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