Australia’s largest superannuation fund, the $260 billion AustralianSuper, plans to invest $13 billion in private equity strategies globally over the next two years.

Head of private equity, Terry Charalambous said this would mean the fund would increase its current 5% allocation to 7% by 2024.

Most of the additional capital, $9.5 billion, is planned to be invested in the US where the fund is targeting a range of sectors including healthcare, technology, industrials, consumer products and financial services.

The fund would also increase the size of its US-based investment team reflecting the fact that the North American market continues to generate most private equity opportunities by volume and size as well as being the home of most leading private equity fund managers.

The increased allocation will lift AustralianSuper’s investment in private equity to $26 billion by 2024 with that expected to increase to $50 billion within five years. The focus of the private equity investments will be to seek long-term returns for members.

Charalambous said: “Not only can we act quickly and deploy large amounts of capital, but we can also bring considerable value to the process by leveraging the deep sector expertise of a 70-person strong global listed equities capability that manages over $143 billion.

“To help implement the fund’s strategy, our US-based private equity team will grow to 20 members in the next few years, focused on strengthening relationships with well-aligned investment partners and sourcing compelling long-term investment opportunities.”

Charalambous said the fund was following a three-pronged private equity investment approach: investing in the funds of general partners (GPs); investing alongside GPs in co-investments and co-underwriting investment opportunities.

“We have a strong focus on identifying best-in-class manages and working with them to build a relationship that will enable us to invest across all our strategies over the long term,” Charalambous continued. “Not only do we bring a large pool of long-term capital, but we also have processes that align with the cadence of private equity transactions and can assess and act on opportunities very quickly.

AustralianSuper has been co-underwriting deals since 2018 and has worked with its preferred GPs to deploy $3 billion in co-underwriting transactions and co-investments over the last 18 months across 10 transactions globally.

The super fund continues to invest to develop a private equity portfolio diversified by the style and types of investment as well as sectors. 

“The fund is working with leading GPs to source opportunities including management buyouts, growth equity financing and public-to-private transactions,” Charalambous said.

AustralianSuper opened its New York office last year and expects staff numbers there to be approaching 100 by the end of 2024. The fund expects its London team to grow to a similar size over the same period.

The New York office focusses on private markets. Across the whole spectrum of private markets, AustralianSuper currently has about $72 billion invested globally.

Image: AustralianSuper’s head of private equity Terry Charalambous.