SYDNEY: Australia’s corporate regulator has set up a specialised unit to engage with private markets over the next 12 months, amid persistent concerns about valuations in the sector.

Australian Securities and Investments Commission (Asic) chairman Joe Longo said the regulator had made private markets a “top five priority” and is engaging with market participants to examine where improvements could be made.

“We want a level playing field between private and public markets,” Longo said.

“We don’t want misconduct, we don’t want conflicts of interest, we don’t want poor valuation practices and we don’t want investors being misled.

“The issue with the private markets is we don’t have the same level of transparency as we do with the public markets.”

Asset valuations and liquidity management practices are facing tougher scrutiny as money management firms grow their holdings of unlisted assets.

The issue is particularly acute in Australia, home to the fastest growing retirement savings pool in the world that’s been plowing money into private markets.

Australia’s A$3.9 trillion (US$2.6 trillion) pensions industry operates under two regulators, Asic and the Australian Prudential Regulation Authority (Apra).

The Apra has repeatedly raised concerns about the frequency of valuation disclosure for private assets. Last year, some of the biggest firms told Bloomberg that they had seen writedowns in their property portfolios, but said that hadn’t materially impacted the returns for retirees.

“There’s a lot of talk about what’s going on in the private market and the public market,” Longo said. “And the critical question for me is, is there a problem here? And if so, what is the problem?”

Longo added that Asic was considering whether Australia’s regulatory settings were pushing “investors and capital raising in one direction or the other”.

 - Bloomberg