Private equity investment in Australia

21 Aug 2007

Since 2001, there has been an exponential increase in private equity investment in global markets from just under $US200 billion to just over $US800 billion. The strong growth in private equity in Australia is, however, a more recent phenomenon, having accelerated only during 2006. Two proposed private takeovers of high profile companies — Qantas and Coles — increased public interest in the issue of private equity in Australia and its potential costs and benefits. This report assesses: domestic and international trends concerning private equity and its effects on capital markets; whether private equity could become a matter of concern to the Australian economy if ownership, debt/equity and risk profiles of Australian business are significantly altered; the long-term government revenue effects, arising from consequences to income tax and capital gains tax, or from any other effects; whether appropriate regulation or laws already apply to private equity acquisitions when the national economic or strategic interest is at stake and, if not, what those should be; and the appropriate regulatory or legislative response required to this market phenomenon, if any.

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