One of Australia’s largest superannuation funds expressed skepticism over the potential for deeper regulation of private markets, and questioned whether it would be realistic for institutional investors to value unlisted assets more frequently.
“On the issue of valuations, the regulators are tying to solve for something that can’t be solved,” Hostplus Chief Executive Officer David Elia told the Australian Financial Review Business Summit in Sydney on March 4. He also doubted whether it was realistic to value assets such as Sydney Airport “on a daily basis.”
Elia was speaking a week after the Australian Securities and Investments Commission released a discussion paper on private markets to help determine whether unlisted assets need new regulatory oversight.
ASIC is conducting the review as the country’s A$4.1 trillion ($2.5 trillion) supers sector fuels an explosion of activity in private markets, while public listings have plunged. About one fifth of the total supers system is invested in unlisted assets, and funds have shown a growing appetite for investments including private credit, infrastructure and private equity.
Regulators have warned that some pension funds aren’t valuing such assets often enough, a contention that Elia questioned.
“Everybody here has defensible approaches to how we value their assets,” Elia said. “I don’t know if there’s a pure solution out there that solves for what the regulators are rightly focused on.”
Hostplus, Adelaide, which manages A$115 billion for more than 1.8 million members, has about 40% of its default savings option invested in unlisted markets.
ASIC’s discussion paper examines why public listings have fallen out of favor, the rapid growth of private market allocations, and the outsized influence of the country’s major super pools. ASIC is seeking industry feedback on its paper by April 28, amid concerns about data transparency and potential investor losses.
