Private equity still strong

The fundamentals of the Australian equity market are still sound and provide continuing opportunities for local investors, according to the managing director of ING Private Equity Access Limited (ING PEAL) Jon Schahinger.

In Schahinger’s view, widespread concern about private equity’s demise as a result of major debts in the US sub-prime mortgage market have been “totally exaggerated” and fail to distinguish between what he termed the “mega deal” end of the market and emerging unlisted Australian companies.

Schahinger’s comments accompanied ING PEAL’s announcement that it had increased its revenue by 5 per cent to $9.1 million for the financial year ended June 30, 2007, and increased its number of private equity investments by 128 per cent in unlisted companies across a wide range of industries.

Schahinger said the company’s growth demonstrates that Australian private equities still provide ample opportunity for investors.

“With our focus primarily on the Australian market, we have added about 40 new private equity investments to our PEAL portfolio, but most of them have not hit the headlines. The private equity market is much more diverse and much wider than what is often reported in the media, which tends to focus on the mega deals of private companies.”

Schahinger said recent market volatility should have little short-term impact on the company’s current portfolio because the debt of the portfolio’s underlying investments, largely in unlisted companies, are typically at prudent levels, on a long-term basis and at fixed rates.

However, he said that because many of these unlisted companies are not valued at cost, ING PEAL’s NTA and share price did not reflect the value of these companies.

Going forward, Schahinger expects the private equity market will be driven more by economic conditions as debt markets stabilise.