The article challenges the prevailing narrative of a Private Equity slowdown by highlighting the strength of Australia’s mid-market segment. While large-cap global funds struggle with exits, Vantage Asset Management and similar mid-market players are thriving, supported by strategic trade sales and growing foreign interest. With higher returns, lower leverage, and strong buyer appetite, the Australian mid-market is positioned as a resilient and attractive space for investors. VPEG6 remains open for those seeking exposure to this high-performing segment.

Much is currently being made of the perceivedlack of capital being returned to investors byPrivate Equity managers. The prevailing narrativehas focused on stalled exits, lower valuations, andchanging investor sentiment stemming frominflation shocks, persistently higher rates, andgeopolitical tension.

Examination of recent market data shows thatheadlines only tell part of the story. What hasbecome apparent is that one segment of PrivateEquity remains resilient and is delivering strongreturn of capital back to investors: the small tomid-market segment of private equity.Nowhere is this more evident than in theperformance of Australia’s private capital marketreflected by Vantage Asset Management’s funds.Bain recently reported that global private equitydistributions as a percentage of net assets fell totheir lowest in more than a decade at just 11percent. Against this backdrop, Vantage and itsunderlying managers have achieved ninesuccessful exits in the past six months alone,delivering a gross multiple on invested capital(MolC) of 2.7x and a gross internal rate of return(IRR) of 23%.

Key takeaways:

• Mid-Market Resilience: Despite global challenges in Private Equity exits, Australia’s small to mid-market segment remains strong, with  Vantage’s underlying managers achieved nine successful exits in six months, delivering a 2.7x MoIC and 23% IRR.
• Large-Cap Struggles: Global large-cap buyout funds are facing stalled exits due to high borrowing costs and valuation mismatches, with IPOs nearly disappearing as a viable exit route.
• Australia’s Strong Performance: Australia recorded a 1.9x YoY increase in deal activity in 2024, with DPI returns outperforming global peers, driven by trade sales and secondary buyouts rather than IPOs.
• Foreign Buyer Interest: Cross-border transactions are rising, with foreign buyers paying higher multiples (9.9x EV/EBITDA vs 7.5x domestic), attracted by Australia’s stable economy and regulatory environment.

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