Private equity is emerging as an alternative source of capital for companies wishing to fund growth strategies and refinance debt, according to a report from the Australian Venture Capital Association (AVCAL).
All types of borrowers have come under pressure amid capital market constraints as a result of the global market crisis.
With private equity a likely source of funding deals in the sector could still continue, the report said.
The report also found while private equity deals peaked in 2007, deals will continue on the back of demand for new funding sources.
In particular, mid-market deals and buy-outs will remain an attractive investment opportunity due to private equity being underweight as a percentage of Australian merger and acquisition deals.
Private equity will also have a role to play as a form of rescue finance, and in the provision of bridge loans and in corporate restructures.
Despite the large number of deals undertaken in 2007, the average sizes of the transactions were valued at $229 million.
The report was conducted by Crescendo Partners and covered 220 transactions with a total value of over $23.5 billion.
