Key Takeaways
- • Australia's private equity market has grown substantially over recent years, with Australia-focused private capital funds expanding 350% from 2010 to June 2023, reaching AUD 139 billion in assets under management—though this remains modest at 2.5% of public equity markets.
- • The private equity market was valued at USD 23.85 billion in 2025 and is forecast to reach USD 52.27 billion by 2034, growing at a compound annual growth rate of 7.87%, with industry revenue expected to expand at 10.4% annually through 2025–26 to AUD 1.1 billion.
- • Private equity deal activity and capital fundraising surged post-pandemic but have declined substantially in recent months due to elevated borrowing costs, creating a material headwind for deal velocity and fund formation.
- • International private equity firms and investors have significantly increased their presence in the Australian market, intensifying competition for deal flow and capital deployment.
- • The RBA has flagged concerns that the robust growth of private equity is diverting equity capital from the public market, with implications for ASX-listed company financing and broader capital markets structure.
Summary
The Australian private equity market has experienced substantial growth over the past decade and a half, particularly following the economy's recovery from pandemic-related disruptions. According to the Reserve Bank of Australia's April 2024 Bulletin, Australia-focused private capital funds have grown 350% from 2010 to June 2023, accumulating AUD 139 billion in assets under management. However, this expansion remains modest relative to public equity markets, representing only 2.5% of total public equity capitalization. The market is projected to expand further, valued at USD 23.85 billion in 2025 and expected to reach USD 52.27 billion by 2034, representing a compound annual growth rate of 7.87%. Industry revenue is anticipated to grow at an annualized rate of 10.4% through 2025–26, reaching AUD 1.1 billion.
Private equity activity and capital raising have followed a cyclical pattern. Consistent with market expansion, private equity deals involving Australian companies increased substantially in value, and private equity funds raised larger amounts of capital from investors during the post-pandemic recovery period. However, this momentum has reversed sharply. Recent activity has declined materially as borrowing costs have risen, creating a significant headwind for deal completion, fund formation, and capital deployment across the sector.
A notable structural shift has accompanied organic market growth: international private equity firms and investors have substantially increased their presence in the Australian market. This influx has intensified competitive pressures on deal sourcing and capital allocation, potentially reshaping the competitive landscape for domestic and regional players.
The Reserve Bank of Australia has highlighted concerns regarding the implications of private equity market growth. The RBA warns that the sector's expansion is diverting equity capital from the public markets, with potential consequences for the financing options available to Australian Securities Exchange (ASX)–listed companies and the depth and breadth of public capital markets. While private equity serves an important function—particularly for smaller or riskier businesses that face greater costs and challenges in public market fundraising—the magnitude of capital migration warrants attention from regulators and market participants concerned with overall capital markets health and resilience.
Private equity activity and capital raising have followed a cyclical pattern. Consistent with market expansion, private equity deals involving Australian companies increased substantially in value, and private equity funds raised larger amounts of capital from investors during the post-pandemic recovery period. However, this momentum has reversed sharply. Recent activity has declined materially as borrowing costs have risen, creating a significant headwind for deal completion, fund formation, and capital deployment across the sector.
A notable structural shift has accompanied organic market growth: international private equity firms and investors have substantially increased their presence in the Australian market. This influx has intensified competitive pressures on deal sourcing and capital allocation, potentially reshaping the competitive landscape for domestic and regional players.
The Reserve Bank of Australia has highlighted concerns regarding the implications of private equity market growth. The RBA warns that the sector's expansion is diverting equity capital from the public markets, with potential consequences for the financing options available to Australian Securities Exchange (ASX)–listed companies and the depth and breadth of public capital markets. While private equity serves an important function—particularly for smaller or riskier businesses that face greater costs and challenges in public market fundraising—the magnitude of capital migration warrants attention from regulators and market participants concerned with overall capital markets health and resilience.
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