Australia’s largest pension fund eyes India, Japan for private equity

Australia's largest pension fund, AustralianSuper, is expanding its private equity investments into India and Japan, aiming to capitalize on a growing dealmaking environment and demographic trends in the region. Currently, Asia makes up about 10% of the fund's private equity portfolio, but this could double within the next three to five years, according to Lilian Fang, head of private equity for Asia-Pacific.

The fund's total private equity investments stand at around AU$22 billion, which accounts for 5% of its total assets, up from 4% in February. This increased focus on Asia highlights the growing appetite of Australian pension funds for private markets, even as regulators intensify scrutiny of unlisted asset valuations. Fang noted that corporate reforms in Japan are creating opportunities for the fund's 11-strong team, based in Melbourne.

Private equity managers are also finding potential in companies with aging founders and no clear successors. AustralianSuper is particularly interested in healthcare, consumer education, and artificial intelligence, although it prioritizes investment opportunities over specific sectors. Healthcare is emerging as a major investment theme in India and Southeast Asia, driven by an expanding middle class, while artificial intelligence continues to be a key focus as data center development expands across the region.

Over the past financial year, AustralianSuper has completed more than AU$3 billion worth of private equity transactions and added more than 15 new managers across North America, Europe, and Asia, as the fund increases its allocation to the private equity industry.