Australia’s private capital industry has flagged superannuation regulation as a constraint on further growth, even as assets under management (AUM) hovered near record levels and local fundraising held up better than regional peers, according to the Australian Investment Council’s Private Capital Yearbook 2026.
Australian private capital AUM reached $161 billion, with private equity and venture capital accounting for $72 billion and a further $83 billion spread across real estate, infrastructure and natural resources, the report said.
The broader yearbook also showed Australia-focused private equity, venture capital and private credit AUM hit a record $77.9 billion as at June 2025.
“Our yearbook reveals a structural shift in who is funding Australia’s future with private capital playing a more significant role, fuelling the growth of small and medium enterprises and world-class innovation,” Australian Investment Council CEO Navleen Prasad said.
The council said Australian private markets participants raised $9 billion in fresh funds in the 12 months to 31 December 2025, up six per cent on the prior year, while Asia Pacific fundraising excluding Australia fell 45 per cent to $98 billion.
North American managers, by contrast, increased fundraising by 5 per cent to $1.27 trillion.
The yearbook noted a clear inverse relationship over the past decade between higher interest rates and private capital fundraising, warning that rising rates generally make private capital relatively less attractive than lower-risk assets such as cash and bonds.
The report also pointed to a growing tension for institutional investors, particularly superannuation funds.
It said super funds face liquidity and regulatory constraints, including the Your Future Your Super performance test and ASIC RG 97 fee disclosure rules, while private wealth and family offices are becoming increasingly active in private markets.
In a stronger critique, the yearbook argued there is “growing awareness” that addressing structural impediments in superannuation settings, including RG 97 and the performance test, could unlock up to $54 billion in additional capital for start-ups and growth companies, while also improving retirement outcomes.
“There’s considerable headroom for growth with the right settings,” Prasad said. “Australia’s macroeconomic stability, transparent regulation and relatively low leverage underpin its appeal as a lower-risk proxy for Asian exposure. Assets are viewed as high quality and competitively priced.”
The council nevertheless warned the data contained several red flags in the global competition for capital, including rising interest rates, deregulation agendas abroad and foreign investment flowing back into China.
“We should be concerned about Australia’s regulatory direction of travel in this context, particularly the friction being created by our new merger regime, foreign investment screening process, and outdated tax structures in the venture space,” Prasad said.
“Other countries are falling over backwards to court international capital, including our world-class superannuation pool. Presenting a Team Australia front is smart, but where are the much-needed reciprocal programs selling Australian opportunities to international investors?”
On performance, the yearbook said Australian private capital markets outperformed North America, Europe and Asia, with 2015–22 vintages delivering a median net internal rate of return of 12.7 per cent.
Private equity also continued to return more money to investors than it had called up for nine of the past 10 years, according to the media release, while the full report said the figure extended to 11 years for Australia-focused private equity.
Private equity-backed deals totalled $13.6 billion across 147 transactions in 2025, with around one-third tied to technology.
Venture capital fundraising returned to its long-term average of $1.3 billion across 13 funds, while average deal size reached a record $18.8 million even as deal volumes fell to their lowest in nearly a decade.