The head of Australia’s corporate regulator has warned private equity funds and the country’s powerful pension funds not to resist its efforts to bring greater transparency to private markets to reduce the risk of a financial crisis.
Joe Longo, chair of the Australian Securities and Investments Commission, which regulates listed companies, is turning his attention this year to private markets, where there is less visibility on deal sizes, valuations and potential conflicts.
This month, the regulator is set to publish a report — expected to be its most significant of 2025 — in which it will lay the groundwork for expanding its role monitoring Australia’s private capital later in the year.
“Will the next significant crisis come out of the private market sector? We’re trying to expose questions and issues about that risk. I don’t want to set the hares running on a big crisis coming. But this is an area we need to understand better,” Longo told the Financial Times.
Asic has not historically regulated the private markets, but a recent surge in private deals has seen it become more active in requesting information related to those transactions.
Longo said those approaches had already encountered some “pushback” from the private equity and legal sectors, while some larger investors had been “dragging their feet” when responding, in resistance to what was perceived to be an “interfering” regulator.
“We’re just being curious and doing our job. You shouldn’t be so defensive,” Longo said he had told those resisting Asic’s demands.
“I’m agnostic about public versus private markets, but I’m not allowed to be agnostic about risk if it’s systemic,” he said of Asic’s move to get a deeper understanding of private market deals.
There has been a dearth of new listings on the Australian exchange in the past three years as most deal flow has been in the private market.
That was capped in September when Blackstone agreed a $16bn takeover of Sydney-based data centre operator AirTrunk which had previously been tipped to float on the ASX. The deal triggered “a lot of curiosity”, said Longo, adding that such deals had raised concerns about Asic’s ability to protect capital markets against risk. “We don’t have enough visibility,” he said.
The forthcoming report will also consider the role of Australia’s A$4tn (US$2.5tn) “superannuation” system, where the country’s largest pension funds play a leading role in both public and private investing. “Is super playing an outsized role in our capital markets? It’s an obvious question to ask but the answer isn’t so obvious,” he said.
Longo said Asic was also considering whether there was a root cause for the lack of Australian listings and whether changes to the regulatory or compliance requirements needed to be made to attract more companies to the ASX, particularly in light of US President Donald Trump’s deregulation mantra.
“My preliminary view is probably not,” he said, pointing to signs that IPO activity was starting to pick up after a long lull.
Australia’s corporate sector has been rocked by governance scandals in the past six months. Asic has launched formal investigations into mining company Mineral Resources over executive tax evasion schemes, the bank ANZ over bond price rigging allegations, and instigated court action against HSBC over scam failures.
Longo said it would continue to take a tough line against banks, insurers, super funds and the “big end of town” if it discovered failures. “The market should operate freely — but we need to be aware of anything causing harm. If there is still a problem, then expect us to take action,” he said.