Tuesday, March 4, 2014
Private Equity Markets in Australia Overview
Private Equity markets in Australia include both private equity funds, venture capital funds and other capital providers including both equity and debt financing.
The private equity market in Australia is relatively small, but nevertheless a growing market especially during the 2000-2007 era.
In the recent 5 years, a significant increase of new Asian based private equity funds operating or setting up their representative office in Australia. The leading Asian private equity funds are typically from Japan or Singapore at this stage, but other State-owned, especially Chinese owned private equity firms have been increasing their activities in Australia especially in the mining and resources sectors.
The majority of private equity firms based in Australia are interested in the traditional businesses or IT related businesses - which are mainly taken up by venture capital funds.
Private Equity firms in Australia have been largely responsible to take over established businesses including retail and manufacturing industries, a lot of deals were debt funded with very high gearing ratios, which is now causing concerns to some of the acquired companies.In 2008, there was a starting of consolidation amongst private equity firms in Australia. Some were led by wealthy Australian families, some were acquired by corporate advisory firms or investment firms from overseas as a way to diversify their interests geographically.
In the medium term, further consolidations to occur in Australia, both the medium and large sized private equity firms. We are already seeing increasing number of European and US private equity firms selling stakes to Asian based private equity funds including many State owned sovereign funds, the similar trend is also likely to occur in Australia.
Australian private equity funds tend to operate differently than other private equity funds in the world - because of the nature of the business and heavy emphasis on mining and resources.
However, this is set to change because of the rapid deterioration of mining sectors in Australia.The Australian investment market is certainly changing, and is now forming very close ties with Asia. The newly elected labour Government in particular has announced strong ties with China, and has opened for direct investments allowing Chinese nationals to invest directly in Australia - previously this was usually done through a representative or delegate in Australia.
Although the real impact is too early to predict, there has been increasing number of direct investments from Chinese financial institutions such as CITIC lately, and the recent strong investments in Australias Rio Tinto is another good example how Chinese or Chinese Government sponsored private equity firms have now taking strong interest in Australian assets.
Thursday, January 30, 2014
Calculation Of The Spot Price Of Gold In Financial Markets
Most governments have striven for the establishment of liberal markets. These are markets where the prices of various commodities are determined by the forces of demand and supply. Being the largest economy in the world, the USA has a great impact on the prices of most items in the world today.
Investors outside the USA feel the impact of dollar depreciation since it affects how the spot price of gold is calculated. According to research carried out in the past, a cycle exists in that when the US dollar depreciates, the price for gold goes down.
This increases demand from investors who want to take advantage of this low price to amass as much of the product as they can. Subsequently, it will force the US dollar to increase in price counteracting the depreciation effect.
It is common for people to purchase large reserves of gold in and outside the USA. However, their actions will have variable effects depending on when they purchase the product, the amount of time they hold onto it before reselling and various external factors. These determine the nominal value placed in the commodity and theore the amount of profits that will be realized from the deal.
The demand for jewelry produced using this precious metal also determines the prices, which people will have to pay for it. Jewelers depend on these metals to produce the highly valuable items whose demand is quite high in the market. People use these products as gifts and stores of value. Watches, wristbands and other ornamental items can be produced using this material.
Investments can also be secured using this asset. As the economies of different world players strengthen, the residents in those countries will invest more in this asset increasing its demand. If the supply levels stay constant, the price will inevitably increase and other factors will have to be changed.
Politicians have a major impact on the development of the countries they live in.
World politics also have an impact on determination of these prices. Political leaders are responsible for formulation and implementation of various policies affecting economic performance of different states. Political instability has a major impact on performance of various economies around the world. The policies also determine the amount of gold deposits that central banks of different nations will hold in their reserves.
Global warming and other harmful effects of environmental changes can have a great impact on investment choices that people will make. The effects of weather patterns in the world will adversely affect the prices of different stocks in financial markets. This also applies to the prices of gold.
Investors expect to earn interest when they hold onto this asset. The rate of return of the asset goes a long way in determining the spot price of gold. What most people are used to is that the amount they pay for the product is inversely proportional to the rate of return on their investment. The main reason for this trend is that what people earn from the reserves is influenced by inflation and the current values of the dollar.
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Friday, May 24, 2013
Private Equity Markets in Australia Overview
Private Equity markets in Australia include both private equity funds, venture capital funds and other capital providers including both equity and debt financing.
The private equity market in Australia is relatively small, but nevertheless a growing market especially during the 2000-2007 era.
In the recent 5 years, a significant increase of new Asian based private equity funds operating or setting up their representative office in Australia. The leading Asian private equity funds are typically from Japan or Singapore at this stage, but other State-owned, especially Chinese owned private equity firms have been increasing their activities in Australia especially in the mining and resources sectors.
The majority of private equity firms based in Australia are interested in the traditional businesses or IT related businesses - which are mainly taken up by venture capital funds.
Private Equity firms in Australia have been largely responsible to take over established businesses including retail and manufacturing industries, a lot of deals were debt funded with very high gearing ratios, which is now causing concerns to some of the acquired companies.In 2008, there was a starting of consolidation amongst private equity firms in Australia. Some were led by wealthy Australian families, some were acquired by corporate advisory firms or investment firms from overseas as a way to diversify their interests geographically.
In the medium term, further consolidations to occur in Australia, both the medium and large sized private equity firms. We are already seeing increasing number of European and US private equity firms selling stakes to Asian based private equity funds including many State owned sovereign funds, the similar trend is also likely to occur in Australia.
Australian private equity funds tend to operate differently than other private equity funds in the world - because of the nature of the business and heavy emphasis on mining and resources.
However, this is set to change because of the rapid deterioration of mining sectors in Australia.The Australian investment market is certainly changing, and is now forming very close ties with Asia. The newly elected labour Government in particular has announced strong ties with China, and has opened for direct investments allowing Chinese nationals to invest directly in Australia - previously this was usually done through a representative or delegate in Australia.
Although the real impact is too early to predict, there has been increasing number of direct investments from Chinese financial institutions such as CITIC lately, and the recent strong investments in Australias Rio Tinto is another good example how Chinese or Chinese Government sponsored private equity firms have now taking strong interest in Australian assets.