The pension fund wrote off a $1.1 billion investment in Pluralsight after the latter undertook a restructuring.
The fund invested in the US-based education software in 2021 through private equity firm Vista Equity Partners, in which it is an investor, and also acts as a co-underwriter in the privatization deal worth about 3.5 US dollars. billion.
According to media reports, Vista and its co-investors have invested some $4 billion in the company, in addition to providing more than $1 billion in debt financing.
As interest rates rose and market competitors threatened Pluralsight’s offering, the company rapidly deteriorated, culminating in the release of Vista and AustralianSuper over the weekend, in the part of an agreement led by private lenders Blue Owl Capital and Ares Management.
Pluralsight, once valued at $5 billion, is now valued at just $900 million.
“AustralianSuper remains strongly committed to private equity as it is the fund’s best performing asset class over five and ten years, delivering 10 per cent and 12 per cent respectively to members,” the head of investment said. international equities and private equity. said.
According to Hargraves, AustraliaSuper is not intimidated by the asset’s higher risk profile.
“The higher risk/return profile of private equity is a hallmark of the asset class and we will continue to invest in private equity, venture capital and also the technology sector in general. These asset classes and the technology sector are strong value creators for members,” he said.
On Pluralsight, in particular, Hargraves said The asset has been well supported by a number of major global investors, but the impact of the COVID-19 pandemic, volatile macroeconomic conditions, rising interest rates and increasing competition have combined to create a very difficult environment for the company.
“The combination of deteriorating U.S. corporate revenue due to cost cutting and increased debt servicing costs due to rising interest rates has led to a sharp deterioration in business performance of the company, triggering a restructuring,” Hargraves said.
“While these types of situations are rare, they can arise from time to time and reinforce the benefits of a diversified portfolio.
“AustralianSuper has an ongoing and rigorous evaluation process, and this investment has been continually reviewed as part of that process.”
He added that the assessment has been fully considered, ensuring “it will have no impact on members’ future income”.
Last week, the Australian Securities and Investments Commission (ASIC) announced it would prioritize reviewing the growth of Australia’s “opaque” private markets, with its chairman Joe Longo highlighting the increased risk to the market integrity as investor exposure increases.
Earlier this month, a global survey found that private credit is growing in popularity among institutional investors, with sovereign wealth funds particularly capitalizing on new lending opportunities.
Also this month, an analysis of plans to commit capital to alternatives over the next 12 months found that private credit was the favorite among investors globally, with around half of investors indicating they intended to increase their allocations to this asset class.
The private credit market was worth around $188 billion in Australia last year, according to recent EY projections.
