Australia regulator launches assessment into how pension funds worth unlisted belongings

By Lewis Jackson

SYDNEY (Reuters) – An Australian regulator is reviewing how pension funds worth unlisted belongings, starting from non-public fairness to workplace towers, as a part of a long-term push to restrict dangers throughout the illiquid holdings well-liked within the A$2.5 trillion ($1.7 trillion) sector.

The Australian Prudential Regulation Authority (APRA) requested info from a number of pension funds in late 2023 as a part of the assessment into unlisted asset valuation governance, in keeping with a beforehand unreported November 2023 letter seen by Reuters.

The assessment is a part of a broader deal with system-wide danger and covers business property, non-public fairness and credit score in addition to potential liquidity dangers related to publicity to unlisted belongings, the letter confirmed.

APRA declined to touch upon the assessment. The A$160 billion Conscious Tremendous, Australia’s third largest fund, mentioned it had obtained a request for info regarding a assessment of unlisted asset valuations. AustralianSuper, the most important fund, additionally mentioned it had obtained an info request.

Unlisted belongings, starting from wind farms and warehouses to non-public firm shares, are well-liked within the pension sector and holdings can attain as excessive as 40% of all belongings in some funds.

The assessment displays long-standing considerations at APRA about how the sector costs these belongings which hardly ever commerce. A 2021 assessment discovered revaluation frameworks had been “usually insufficient”. New requirements had been launched final July, together with quarterly asset valuations.

Nevertheless, a September research into how pension funds valued non-public fairness stakes in Australian expertise startup Canva discovered that whereas the vast majority of governance practices had been acceptable, “a number of areas required enchancment”.

Funds want to supply details about how they worth unlisted belongings, particularly the board’s position within the course of, in keeping with a supply accustomed to the request who declined to be named as they weren’t authorised to talk with media.

($1 = 1.5198 Australian {dollars})

(Reporting by Lewis Jackson; enhancing by Miral Fahmy)