(26 February 2025 – Australia) The Australian Securities and Investments Commission (ASIC) has cautioned that an almost tripling of the size of unlisted investments poses risks to financial markets stability because the sector’s growth has come without the same requirements to clearly disclose fees, performance and the value of assets as public markets have.
Private assets include anything from a loan for a commercial property development to an ownership stake in Sydney Airport. The investors do not trade on an open exchange like a share or a bond, cannot be easily bought or sold by smaller investors and their price is less transparent.
ASIC is frustrated by private capital funds resisting the regulator’s attempts to gain greater visibility of their operations and are too “defensive”.
Private credit is offering speed, flexibility and variety to smaller companies banks can’t match, Capital Brief reports. The smaller end of the corporate market is far more attracted to private credit than the big end of town, according to new research by East & Partners on the fast-expanding sector.
“Private markets pose particular challenges for market confidence. For instance, a lack of transparency can lead to mistrust about the valuations of private assets. Given the complexity of the dynamics driving the apparent shift from public to private markets, we need to understand whether regulatory considerations are having an undue impact on driving investors’ and companies’ decisions” the ASIC report states.
“It is time for a national discussion on the rise of the so-called private capital market, which we estimates has swelled to some A$150 billion in assets compared to public markets worth more than A$5 trillion” stated ASIC Chairman Joe Longo.
“If we want healthy, vibrant, private and public markets, then part of that does involve transparency and people being open about their governance practices and their valuation practices” Longo added.
“Private credit is very concentrated in hospitality and property development, the two sectors that are suffering the most. Private credit firms are spinning the benefit of being equity holders. Don’t believe that moving from a senior secured lender position to an equity holder is OK. It’s not OK. Stop believing that spin” stated Pimco Managing Director, Rob Mead.