Private Capital – A view from Australia

Australia has well and truly got the memo that private capital is booming. Private equity funds have reached an all-time high, and deal volumes have risen in 2025, much of it acquiring business listed on the Australian Securities Exchange (ASX).

When you combine the resilience of the Australian economy and the outperformance of private capital in this market, it all makes sense. According to the Australian Investment Council, Australian private capital outperforms other private capital markets in the short and medium term, including the US, Europe and the developed Asia region.

It is no surprise that the deals are flowing.

Australia’s Santos (ASX:STO) has received a non-binding offer valued at approximately US$18.7 billion from the Abu Dhabi National Oil Company and Carlyle. This is subject to a Foreign Investment Review Board approval process but would qualify as the largest all-cash corporate buyout in Australian history.

This continues a muti-year trend of Australia’s largest public firms being snapped up by private-market buyers.

But private capital is proving to be good for public markets too. In June, the Bain Capital owned airline Virgin Australia (ASX: VGN) re-listed on the ASX through a US$450 million initial public offering (IPO), valuing the company at approximately US$1.5 billion. In 2020, Bain Capital acquired the previously ASX-listed Virgin Australia after the airline entered voluntary administration. The successful listing caps a comprehensive restructure and financial turnaround.

The success of the Virgin Australia IPO has raised hopes that other PE-owned assets may also rejoin the ASX in future. It does not have to be all one-way traffic.

Australia continues to be a preferred destination for global funds seeking stable and lower-risk investment opportunities. But our home-grown players are also thriving. The local Pacific Equity Partners (PEP) is both a pioneer and a dominant force in the Australian sector. When it started to raise capital for its recent private-equity fund (Fund VII), global volatility was at a high – yet it was oversubscribed and closed at a hard cap of US$2.1 billion.

As the Wall Street Journal quipped: “PEP is making early use of that money”.  Johns Lyng (ASX:JLG), which carries out insurance-related repair work and is listed on the ASX, just announced it had agreed to a takeover offer by PEP worth around US$740 million.

However, it is not all plain sailing. The US$3.1 billion acquisition of previously-ASX listed hospital provider Healthscope by Canada’s Brookfield Asset Management in 2019 has been vexing. Unable to meet its debt obligations and restructure its liabilities under acceptable terms, the company entered receivership in May 2025. The media has described this as a “High-risk bet gone wrong” and it has fuelled a debate around the role of private equity in healthcare.

One issue to watch is the regulatory environment. Australian regulators, particularly the Australian Securities and Investments Commission (ASIC), are intensifying their oversight of Australian private capital markets. This includes the uniquely Australian superannuation sector which manages nearly US$3 trillion in assets, as part of our compulsory retirement arrangements.

This increased scrutiny responds to the sector’s rapid growth, the rising involvement of retail investors, and concerns over transparency and governance.

As for the future, private capital is expected to continue raising capital domestically and attracting international investors seeking exposure to Australia’s stable economy. It will be interesting to see how this plays out through sector diversification, with investment in various industries and different risk profiles.