Investor Strategy News

For a private equity-backed business generating $3-20M EBITDA, the optimal amount of debt is typically not zero; and it is not the maximum a lender will provide. Academic research and market evidence place the value-maximising zone for most businesses in this segment between 2.5x and 4.0x Net Debt / EBITDA. Our view sits deliberately below this: we target 1.5x-3.0x for the businesses we back, at entry.

Australian institutions settled the question of whether alternatives belong in their portfolios roughly a decade ago. Unlisted infrastructure, property, private equity and private credit now sit at the centre of most large fund strategies, and the scale involved makes that structurally significant. Total superannuation assets reached $4.4 trillion in March 2026, equivalent to roughly 160 per cent of GDP. The questions that matter now sit downstream of the allocation decision.

At the Milken Institute conference in Beverly Hills in May, EQT chief executive Per Franzen made a prediction about his own industry. The word “semi-liquid funds” will disappear, he said, before adding five words that should give any allocator pause. “These products are not liquid.” He was not alone. DoubleLine’s Jeffrey Gundlach, at the same conference, called the term a diabolical name.

The cost of two fund collapses that no APRA-regulated trustee underwrote will shortly transfer to the cost base of every large Australian superannuation fund. The Shield and First Guardian failures cost approximately 12,000 members more than $1.2 billion on the Super Members Council’s estimate, and those losses originated in advice-led structures operating outside the large fund sector.

Australia’s labour market has confounded the consensus expectation of a turn through most of 2026. Employment has continued to expand, participation has held near record levels, and the unemployment rate has drifted higher at a pace slow enough to appear benign. The July Labour Force Survey leaves that headline configuration largely intact, though the composition beneath it has shifted in ways carrying direct consequences for the front end of the curve.

Median spreads on two to four year bonds from Amazon, Alphabet, Meta and Oracle have widened to 40 basis points over Treasuries from 30 basis points in 2025, on Reuters data. Five to seven year paper has moved to 60 from 50, and bonds beyond 20 years to 118 from 108.5. Hyperscalers issued 91 comparably priced bonds in 2026, and 78 were trading at higher yields in late July than at issue, a median widening of about 22 basis points.

Two repricings are converging on Australian portfolios, and they are arriving from opposite ends of the valuation equation. The discount rate applied to domestic assets is rising because the long end of the curve has repriced, while reporting season is cutting the cash flows those rates discount. The Australian 10-year government bond yield reached 5.16 per cent on 1 September, its highest level since April 2011, with the three-year at 4.73 per cent. The move began earlier.

Washington H. Soul Pattinson & Company, better known as Soul Patts, is one of Australia’s largest diversified investment houses with a history spanning more than 120 years. The firm invests across listed equities, private companies, credit and real assets with an unconstrained mandate, permanent capital and a long-term philosophy built around enduring value.

Federal Reserve Chairman Kevin Warsh used his first Jackson Hole keynote on 28 August to put inflation ahead of everything else, and the market repriced hard. Fed funds futures carried a 36 per cent probability of a Fed rate hike in September before the speech. By 31 August the CME FedWatch tool put it at 66 per cent. Alessia Berardi, head of global macroeconomics at the Amundi Investment Institute, said the address broke little new ground.

Capacity discipline discloses more about a manager than any performance figure, since it obliges the firm to forgo revenue it holds every right to collect. Perennial Partners has exercised that discipline on its Strategic Natural Resources Trust, and the closure carries more information for institutional allocators than the global vehicle launched alongside it.