ASIC questions shift to private market in Australia

Last week the Australian Securities and Investments Commission (ASIC) published Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets (Discussion Paper). The Discussion Paper seeks feedback on a series of questions relating to Australia’s evolving capital markets, particularly regarding the shift from public to private markets.

What is ASIC asking?

The Discussion Paper makes a number of observations and poses a range of questions about the growing size of Australia’s private investment market relative to its public markets. It highlights that while there has been a threefold increase in global private assets under management over the last decade, IPO activity is at its lowest level in the same period — and has been in net decline since 2022.

ASIC has identified several potential issues arising from the shift to private markets, including:

• Reduced transparency (for example, ASIC does not have data on Australian investors’ exposure to private markets).
• Potential conflicts of interest.
• Risk of failures, and the ability of private equity and credit to respond to stress scenarios.
• Lower liquidity.
• Valuation challenges.
• Lower levels of regulation and investor protection.

ASIC wants to know how it should respond to these issues: should it regulate more, less or is the status quo working?

The Discussion Paper considers what protections should be available to protect retail access to private market investment, and notes that superannuation funds allocate between 0% and 38% of total assets to private assets.

It seeks responses to questions on:

• Developments in, and the significance of, global capital markets to Australia.
• Enhancing public equity markets.
• Addressing risks and increasing efficiency and confidence in private markets.
• Retail investment in private markets.
• Transparency and monitoring within the financial system.

Submissions close on 28 April 2025.

Our views

The issues and trends raised in the Discussion Paper are global in nature and are also evident in New Zealand. These include the decline in new public listings, the accelerating growth of private investment (including private credit), and the increasing importance of retirement savings vehicles. The Discussion Paper explicitly notes the challenges faced by New Zealand’s public markets.

Given New Zealand’s regulatory framework is heavily influenced by the environment across the Tasman, we anticipate New Zealand regulators and policymakers will be following these Australian developments closely. In the longer term, any resulting regulatory changes in Australia may well be proposed or adopted in New Zealand.

In the shorter term, a key question is what, if any, impact the Discussion Paper – and any subsequent developments – will have on the work underway to incentivise private asset investment by KiwiSaver schemes in New Zealand (on which we recently made a submission to the Ministry of Business, Innovation and Employment on its Enabling KiwiSaver investment in private assets discussion document). While it is still early days, our hope is that this work will continue.

Please get in touch if you have any questions about the Discussion Paper or would like to speak about capital markets (both in New Zealand and abroad) more generally.