AustralianSuper targets India and Japan as PE allocation increases

AustralianSuper is planning to increase its private equity exposure to India and Japan as Australia’s largest pension fund expands its presence across Asia and anticipates improving deal activity in the region, according to a report by Bloomberg.

Asia currently represents about 10% of AustralianSuper’s private equity portfolio, but that proportion is expected to double over the next three to five years, according to Lilian Fang, the fund’s head of private equity for Asia Pacific.

The AUD430bn ($300bn) pension fund has around AUD22bn invested in private equity globally, equivalent to about 5% of its total assets. That compares with a 4% allocation in February, when AustralianSuper said its private equity portfolio could more than double.

Fang said relatively low private equity penetration across Asian markets was creating opportunities for institutional investors seeking to increase their exposure to the region.

Japan is a particular focus, with corporate governance reforms helping to generate more potential transactions. Fang said AustralianSuper is seeing increased activity across buyouts, public-to-private deals and corporate carve-outs.

The fund is also targeting businesses where ageing founders have yet to identify successors, creating potential opportunities for private equity investors to provide capital and ownership solutions.

AustralianSuper is considering investments across areas including healthcare, consumer businesses, education and artificial intelligence, although Fang said the investment case rather than a particular sector remains the primary consideration.

Healthcare is becoming an increasingly important theme in India and Southeast Asia as rising incomes and the expansion of the middle class drive demand for services. AI is another area of interest, particularly as data centre development accelerates across Asia.

AustralianSuper invested more than AUD3bn across 26 private equity transactions in the financial year ended 30 June. The pension fund has also added more than 15 private equity managers across North America, Europe and Asia over the past two years.

Fang said the number of external managers is expected to rise further as AustralianSuper increases its overall private equity allocation, underscoring the fund’s broader push into private markets across Asia.