Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Private equity: higher risk, higher return, higher danger

By Andrew Murray - posted Monday, 5 February 2007


Private equity investment companies suggest that Australia is not in a boom of private equity investment, but rather it is just catching up to the rest of the world. If that is the case, then the lessons learned in other markets need to be assessed and, if relevant, applied in the local market.

Many of the private equity deals which have been put together in Australia in recent months have involved close relationships between investment banks and private equity firms, including the recent proposed management buy-out of Alinta, the purchase of Coles Myer, Cleanaway and 3M, the Asia Pacific pharmaceuticals business, so it is clear that it is an area which needs to be closely monitored.

In evidence to the Joint Parliamentary Committee on Corporations and Financial Services, Mr Cooper, the deputy chairman of ASIC advised the Committee that the regulator is considering matters of conflict of interest, the transparency of information flow to investors, the size of management fees and whether the appropriate disclosure mechanisms are in place. As Mr Cooper pointed out, “It is a delicate balancing act about not dampening something that might be beneficial while being alive to the potential downside.”

Advertisement

I accept that there is nothing inherently bad in private equity investment and that in some circumstances it is an appropriate investment vehicle. However with the increase in activity in Australia, the move into sensitive markets and into markets which are for all intents and purposes oligopolies, there needs to be the appropriate checks and balances. This ensures that private investors and fund investors are kept apprised of matters which could put their investments at risk, and which could, in the long run, and in particular circumstances, put the economic interests of all Australians in jeopardy.

The best and easiest solution is simply to require most of the reporting and disclosure requirements placed on companies on the Australian stock exchange to apply to large private equity companies too. That would secure the public interest.

  1. Pages:
  2. 1
  3. 2
  4. Page 3
  5. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

4 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Senator Andrew Murray is Taxation and Workplace Relations Spokesperson for the Australian Democrats and a Senator for Western Australia.

Other articles by this Author

All articles by Andrew Murray

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Andrew Murray
Article Tools
Comment 4 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy