Financial System Inquiry is right to focus on venture capital funding
Thursday 20 March 2014
The Australian Private Equity & Venture Capital Association Limited (AVCAL) supports comments made last night by the Chair of the Financial System Inquiry, Mr David Murray AO, that the review must explore how to create a ‘more dynamic’ venture capital funding environment in Australia.
“The Financial System Inquiry gives us an opportunity to identify how we can reform our policy and regulatory frameworks to foster a more innovative economy that supports the growth and expansion of Australian businesses,” said AVCAL’s Chief Executive, Yasser El-Ansary.
AVCAL’s 2013 Yearbook, released in December last year, highlighted the challenges in fundraising across both the venture capital and private equity industries over recent years. Fundraising for financial year 2012-13 totalled $867m, down from $3,271m in the year 2011-12.
“Private equity and venture capital funds invest in businesses that account for around four per cent of Australia’s GDP, who in turn support over 500,000 jobs across almost every industry sector of our economy – but there is potential to invest significantly more than that in the future,” Mr El-Ansary said.
“We have to take the opportunity as part of this Inquiry to look at how Australia’s $1.8 trillion superannuation industry can play an even more significant role in helping to drive investment in Australian businesses,” he added.
Local superannuation funds have traditionally been major investors into private equity and venture capital funds in Australia.
“There are very clear changes that can be made to the policy landscape to better align the long-term interests of superannuation fund members with the long-term investment horizon required to provide innovation and growth capital for Australian businesses.”
“Creating a more dynamic future Australian economy is going to be dependent on our ability to support innovation and back businesses that can create competitive positions in the globalised marketplace,” said Mr El-Ansary.
AVCAL will be lodging its submission to the Financial System Inquiry in late March 2014, and will set out its views about the key policy and regulatory issues that should be examined as part of developing a blueprint for future reform of our financial services industry.
For more information about the contribution of private equity and venture capital funds to supporting investment in Australian businesses, visit www.avcal.com.au.
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Author: Adrian O’Shannessy, Director, Greenwoods & Herbert Smith Freehills
Author: Dr Kar Mei Tang, Head of Policy and Research, AVCAL