AVCAL chief executive Yasser El-Ansary said private equity funds are currently invested in less than 350 Australian businesses.
According to Mr El-Ansary, this accounts for only two per cent of the total investable pool of 30,000 businesses.
In its submission to the financial systems inquiry, AVCAL argued that adjusting the existing policy and regulatory frameworks is vital in ensuring venture capital and private equity perform a wider role in funding Australian businesses in the future.
The association also argued the inquiry needs to examine how the current imbalance existing between short-term and long-term investments can be corrected.
Mr El-Ansary said the reforms of the past few years have caused superannuation funds to increasingly direct their focus towards “short-term, low-fee, high liquidity investments” as opposed to other asset classes with high net returns and long-term investment horizons.
“This imbalance must be corrected if we are to effectively address the growing gap in the supply of equity capital to the majority of Australian businesses that may not have the ability to raise capital or debt through other means,” said Mr El-Ansary.
AVCAL believes government programmes supporting research and early-stage funding are also an important part of generating greater equity support for small to medium-sized enterprises in Australia.
The current tax landscape for domestic and offshore investment in venture capital and private equity is something AVCAL believes the inquiry should also address.
“Providing clarity in relation to the existing venture capital limited partnership regime, examining the merits of a new stepped, long-term approach to the capital gains tax concessions, and the introduction of a new flow-through collective investment vehicle are all options that should be considered by this Inquiry,” AVCAL stated in its submission.
