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Future Fund's private equity commitments surge

The Australian sovereign wealth fund's exposure to private equity grew 520% year-over-year.

Australia’s A$54 billion ($49 billion; €33 billion) Future Fund committed A$6.4 billion to nine new private equity fund managers in the year ended 30 June 2009, according to its annual report. This brings its total commitments to the asset class to A$7.6 billion.

The nine new managers are Adams Street Partners, Apax Partners, Charterhouse Capital Partners, HarbourVest, Hellman & Friedman, Montagu Newhall, Nordic Capital, Oaktree Capital Management and TowerBrook. They join existing managers Advent International Corporation and Horsley Bridge Partners.

For the year ended 30 June 2009, the sovereign wealth fund had invested A$1.24 billion – or 2.3 percent of its assets – in private equity, up from just A$2 million across two managers the previous year.

Of the A$1.2 billion invested in the asset class in the year ended June 2009, the majority was called down by private equity managers focused on distressed opportunities, the annual report noted.

In total, the fund committed A$4 billion to distressed investment strategies, including private equity and credit and distressed debt. Credit and distressed debt managers the fund has committed to include Canyon Capital Advisors, Centerbridge Partners LP, King Street Capital and Sankaty Advisors.

In February, Future Fund, GIC and one other sovereign wealth fund acquired a stake of roughly 10 percent in Apax Partners’ management company. The net proceeds from the stake sale were to be re-invested in a permanent capital vehicle to invest in Apax funds in which the Future Fund would have a 10 percent stake, the sovereign wealth fund said in a statement at the time.

The Future Fund was set up in 2006 to help the Australian Government meet the cost of pensions paid to retired civil servants. It was seeded with Telstra shares and surplus government budget money.