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Legislative Assembly for the ACT: 2003 Week 3 Hansard (23 October) . . Page.. 4077 ..


portfolio, management and administration cost efficiencies, the ability to hedge international currency exposures and a strong platform to support the future growth in funds under management for the Territory.

Private equity investments

(Question No 919)

Mr Smyth

asked the Treasurer, upon notice:

In relation to the commentary in Budget Paper No. 3 on the asset allocation strategy for the Superannuation Provision Account, reference is made to Private Equity investments:

What is meant by 'Private Equity investments';

What assessment process will be put in place to evaluate possible Private Equity investments;

Will Private Equity investments be sought in any specific industries;

Will Private Equity investments be sought only in Australia;

Will the investments in Private Equity ventures be short term or long term;

If any of these investments are long term, will there be any implications for the ACT Government, such as requiring the provision of management expertise for the ventures.

Mr Quinlan

: The answer to the member's question is as follows:

Private equity is a generic term for investments in non-public equity securities. Under the umbrella of private equity investments are specialty sectors such as venture capital, growth/expansion, recovery/turnaround, and fund of funds.

Private equity investments seek to provide investors with portfolio diversification, through low correlations with the public markets, and higher returns to compensate for lesser liquidity.

For these private equity investments, the SPA will be investing via a number of funds of funds. This will entail the Territory evaluating and appointing professional wholesale external fund of funds private equity managers, with the assistance of the Territory's asset consultant, through normal procurement processes and procedures. These types of funds are available to large institutional/wholesale investors such as superannuation funds, insurance companies etc.

Fund of funds products offer the Territory:

Access to a range of investment capital funds without having to meet the often high minimum capital requirements of individual funds;

Diversification, making it possible to reduce portfolio risk while improving the stability of returns due to geographic distribution by sector and by development phases; and


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