A new report by EY commissioned by the Australian Investment Council (AIC) has found that companies under private capital ownership accounted for $54 billion in total value added to the Australian economy in 2020.
The funds under management (FUM) of Australian-based private capital funds, including private equity, venture capital, corporate venture capital and private credit, reached $77 billion during the year.
Additionally, EY reported that 474,763 full-time jobs were supported directly or indirectly through private capital investment.
“Companies backed by private equity, venture capital and private credit, continued to grow businesses and create jobs across Australia’s economy during this time of uncertainty, and contributed 2.6 per cent to Australia’s GDP,” said AIC interim CEO Jonathan Kelly.
“Our members are investing to drive growth in sectors that will enable Australia’s long-term prosperity, such as healthcare, digital technologies and advanced manufacturing.”
According to the report, private equity and venture capital-backed health and medical companies contributed more than 120,000 full time equivalent jobs and nearly $10.8 billion in gross value added to the local economy.
“Private capital is playing a key role in building healthcare models of the future through investing in innovative service delivery in areas such as disability, mental health, at home and community-based services and preventative care; and is also nurturing and commercialising new medical technologies and pharmaceuticals,” said Mr Kelly.
Furthermore, technology companies backed by the members of the AIC provided a further 86,000 jobs and contributed $11.6 billion in gross value added to the economy.
Private capital was said to be a major force behind the growth of Australia’s technology industry, which is expected to become the third largest behind mining and finance.
“The pandemic accelerated progress in technology-driven transformation, particularly in digital health, advanced manufacturing, and IT, while also highlighting the need for a greater focus on issues such as sustainability and climate change,” the report said.
“Now as we capitalise on these opportunities, private capital is uniquely positioned to provide the foresight and investment that will fuel high-growth sectors and boost Australia’s transition to a low-carbon, knowledge economy.”
