While the Private Equity industry experienced declines during the global financial crisis, it has recovered strongly
Melbourne, Australia (PRWEB) April 23, 2012
Leading up to 2007, private equity investments were kind to both investors in private equity funds and the private equity firms that managed them. Stable economic conditions, steadily rising sharemarkets and cheap, abundant debt financing fuelled a global boom in large private equity buyouts, with numerous major companies bought by private equity, overhauled and sold at large profits. This led to strong returns for investors in private equity funds along with strong fee revenue for private equity firms. IBISWorld industry analyst Ee Jen Lee notes, "The global financial crisis put an end to the cheap credit conditions and consistently rising asset prices, resulting in substantially reduced private equity activity." Returns and fee revenue dropped, but the lower asset prices and reduced competition from other investors provided the opportunity for the Private Equity industry to pick up stakes in companies at bargain prices.
In 2010-11, the Private Equity industry's performance rebounded, with private equity firms' management fee revenue expected to grow by a further 7.4% to reach $303.3 million in 2011-12. Industry revenue will increase at an average annualised rate of 1.5% over the five years through 2011-12. In the five years through 2016-17, IBISWorld forecasts revenue for the Private Equity industry in Australia will grow slowly. Lee explains, ‘boding well for the industry will be the return of investors to the market that will be eager to capitalise on the opportunities on offer.’
Many of the potential investments that private equity firms could undertake were severely affected by the global financial crisis. Many investments were devalued and others ceased to exist. The turbulence and uncertainty made it difficult to price investments and predict their future returns. Now that conditions are improving and more stability is coming through, the effectiveness of valuation techniques is improving, which is expected to result in more activity. The Private Equity industry has a medium level of market share concentration. Champ Private Equity Pty Limited, CVC Asia Pacific, Pacific Equity Partners and Catalyst Investment Managers Pty Ltd are the major companies in the industry.
For more information, visit IBISWorld’s Private Equity report in Australia industry page.
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IBISWorld industry Report Key Topics
Private equity firms manage investments in private companies. They may raise funds from external investors and invest on their behalf, or invest the firms’ own funds, or a combination of the two. Investments can include venture and growth capital for emerging companies as well as buyouts, including purchases of publicly traded companies to take them private. Firms earn revenue from management fees from outside investors, and profit or loss on investment of their own funds.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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