AustralianSuper will double down on PE

Australia's biggest superannuation fund plans to grow its private equity portfolio from about $9bn to $18bn over the next two years.

As private markets slow along with a broader economic slowdown, at least one large institutional investor plans to double down over the next two years: AustralianSuper.

Australia’s biggest superannuation fund said on Tuesday that it will double its private equity exposure over the next two years. It plans to boost its PE allocation to 7 percent from 5 percent, growing its portfolio to A$26 billion ($18.03 billion; €17.12 billion) by 2024 from A$13 billion today, it said in a press release.

The superannuation fund has committed to 92 private funds, including 41 private equity funds, 27 real assets funds and 19 venture capital funds, according to data gathered by PitchBook. Of the 19 venture funds, five are managed by firms based in the US: HarbourVest Partners of Boston; Longitude Venture Partners of Menlo Park, California; Northgate Capital of Danville, California; Southern Cross Venture Partners of Palo Alto; and Weathergage Capital of Austin, PitchBook said. The US venture funds are vintage 2006 through 2008, except for a 2003-vintage VC fund of funds from HarbourVest.

Most recently, AustralianSuper committed to three VC funds based in Australia: a vintage 2020 fund from Blackbird Ventures in Melbourne and two vintage 2020 funds from Square Peg Capital in Melbourne, according to PitchBook.

“Not only do we bring a large pool of long-term capital, but we also have processes that align with the cadence of private equity transactions and can assess and act on opportunities very quickly,” Terry Charalambous, AustralianSuper’s head of private equity, said in the press release.

The long-term plan is to grow AustralianSuper’s private equity portfolio to A$50 billion within five years.

The fund will pursue a three-pronged strategy, investing in funds and in co-investments and by co-underwriting opportunities.

It plans to put about A$9.5 billion to work in the US, where it has an interest in healthcare, technology, industrials, consumer and financials.

“To help implement the fund’s strategy, our US-based private equity team will grow to 20 members in the next few years, focused on strengthening relationships with well-aligned investment partners and sourcing compelling long-term investment opportunities,” Charalambous said.

AustralianSuper manages more than A$260 billion in retirement savings on behalf of more than 2.6 million members. Last year, it opened an office in New York focused on private markets, where it expects to employ “just under 100” people by the end of 2024. AustralianSuper has invested about A$72 billion globally in private markets to date, but plans to grow that figure to A$100 billion by June 2024, it said in the press release.