Opening statement to the Senate inquiry into private equity investment and its effect on capital markets and the Australian economy
ASIC Opening Statement, 25 July 2007, Sydney
Executive summary of ASIC view
- The regulatory regime ASIC administers (consumer protection, financial services licensing, scheme registration, product disclosure, market trading, takeovers and corporate behaviour) has coped adequately with current levels of private equity (PE) activity in Australia.
- The scale of PE in Australia is still relatively modest and so concerns about risk and possible harm to the financial system need to be put in proper perspective.
- Overall, the arrival of PE in Australia has been a healthy development because:
- it is a globally recognised alternative asset class that should be available to Australian investors, subject to the existing regulatory regime;
- Australian institutional investors have been forced to focus more closely on the value of their investments in listed entities;
- capital has been allowed to be allocated by market forces with corresponding increases in equity market liquidity and value added to underlying businesses.
- As things currently stand, there is no need for new regulation or increased powers for ASIC to deal with issues arising out of PE activity in Australia. However, it is a fast-moving landscape and this view is also subject to the outcome of our closer examination of the risks facing retail investors in Australia; one of the six regulatory priorities outlined to the Senate Standing Committee on Economics on 30 May 2007.