Australian pension funds told to improve how they value private equity
04 September 2023 - 16:35
byLewis Jackson
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Sydney — Australian pension funds need to improve how they value private equity, the sector’s regulator said on Monday after a review into the sector’s treatment of Canva, an Australian technology start-up whose lofty valuation tumbled in 2022.
Sydney-headquartered software firm Canva hit a peak valuation of $40bn in late 2021, only to be revised sharply lower to $25.5bn last August amid a downturn in technology stocks. Major funds including Aware Super and Hostplus were investors.
The Australian Prudential Regulation Authority (APRA) on Monday said while most funds had “appropriate” valuation practices for Canva, “several areas required improvement”, including instances where boards were not given appropriate information or were unwilling to challenge what they had been told.
The regulator also said some valuation policies needed clearer triggers for when to do an interim valuation.
“Through our supervision activities, APRA has continued to address these issues with RSE [registrable superannuation entity] licensees since the conclusion of the review,” APRA said in a release that did not name any funds.
Private assets are popular in Australia’s A$2.4-trillion professional pension sector, with some funds holding almost half their assets in private markets. Since 2021, the regulator has pushed the sector to improve how it values assets that range from venture capital to office blocks.
In July, the regulator published new guidelines for the sector, which among other things, called for portfolio valuations each quarter
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Australian regulator warns pension funds
Australian pension funds told to improve how they value private equity
Sydney — Australian pension funds need to improve how they value private equity, the sector’s regulator said on Monday after a review into the sector’s treatment of Canva, an Australian technology start-up whose lofty valuation tumbled in 2022.
Sydney-headquartered software firm Canva hit a peak valuation of $40bn in late 2021, only to be revised sharply lower to $25.5bn last August amid a downturn in technology stocks. Major funds including Aware Super and Hostplus were investors.
The Australian Prudential Regulation Authority (APRA) on Monday said while most funds had “appropriate” valuation practices for Canva, “several areas required improvement”, including instances where boards were not given appropriate information or were unwilling to challenge what they had been told.
The regulator also said some valuation policies needed clearer triggers for when to do an interim valuation.
“Through our supervision activities, APRA has continued to address these issues with RSE [registrable superannuation entity] licensees since the conclusion of the review,” APRA said in a release that did not name any funds.
Private assets are popular in Australia’s A$2.4-trillion professional pension sector, with some funds holding almost half their assets in private markets. Since 2021, the regulator has pushed the sector to improve how it values assets that range from venture capital to office blocks.
In July, the regulator published new guidelines for the sector, which among other things, called for portfolio valuations each quarter
Reuters
Q&A: Resilient Reit CEO Des de Beer on his career in banking and real estate sectors
Municipal officials are set for salary hikes, and Cosatu is livid
STUART THEOBALD: Why domestic demand is less vulnerable than it once was
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
BRIAN KANTOR: The ins and outs of identity economics
LUNGILE MASHELE: Only government can help with prohibitive cost of becoming an ...
Q&A: Transcend Residential Property Fund CEO Myles Kritzinger on residential ...
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.