Unlisted assets: A case for APAC-wide regulatory scrutiny is growing

As the popularity of private assets continues to soar among Asian asset owners, heightened regulatory scrutiny of asset valuations seems inevitable, with Australia taking the lead.
Unlisted assets: A case for APAC-wide regulatory scrutiny is growing

In the wake of Australia's heightened regulatory vigilance over the valuation of unlisted assets held by the country’s pension funds, private asset markets in the rest of Asia could also face similar growing scrutiny.

In the Asia Pacific, the Australian Prudential Regulation Authority (APRA) set a precedent by expecting superannuation funds to price their assets quarterly.

Andrew Boal, partner, actuarial consulting at Deloitte, believes that regulators across the globe are taking note of the asset valuation crackdown in Australia based on his past observations.

"One of the things I have seen over many years is that the pension regulators around the world get together and have conversations and share their experiences,” Boal told AsianInvestor.

"I have no doubt that if we're leading the charge on this particular issue in Australia that the other regulators, pension regulators around the world will be very interested and will be having discussions to follow suit.”

The call for transparency in Australia is not just a bureaucratic whim—it's a response to the inherent difficulties in valuing assets that lack a public price tag and are infrequently traded.

This issue is heightened by the fact that many funds do not regularly value these assets, operating under the assumption that they will not be sold for a long time, if at all.

Australia effectively presents a case study which could have broader regional implications for Asia’s asset owners who have increasingly turned to private markets in the post-Covid era.


The Australian regulatory scrutiny on unlisted asset valuations may influence wider regulatory trends in Asia due to global financial interconnectedness and the region's increasing reliance on alternative investments, according to Nick Kelly, head of real assets, Asia Pacific at WTW.

“The globalisation of financial markets encourages alignment with international standards, prompting neighbouring countries to consider similar measures for transparency and risk mitigation,” Kelly told AsianInvestor.

With alternative investments gaining prominence in Asia, accurate valuation practices are becoming crucial for investor protection and market stability, Kelly said.  

Challenges such as diverse regulatory frameworks and potential industry resistance, however, could slow adoption in the region.  

“Harmonising regulations across diverse nations remains complex. It’s also worth highlighting that there is a greater dominance of open-ended real asset vehicles in Australia with more active secondary markets and so more frequent independent valuations is critically important to ensure all investors are treated equally,” said Kelly.

“While the Australian focus could catalyse regulatory changes in Asia, the speed and extent of adoption will depend on factors like market dynamics, regulatory capacity, and industry reactions.”


Particularly in the case of Australian superannuation funds where regular contributions and withdrawals are commonplace, the irregularity of valuations can create problems. 

Yet some industry observers believe that daily fund transactions suggest APRA’s call for quarterly valuations may not be entirely justified.

Also read: Australian regulatory scrutiny of unlisted assets reflects global trend

“There is often an underlying perception that there is a straightforward discrepancy between the valuations of listed and unlisted assets, which might imply that unlisted assets are consistently mispriced or not transparently valued,” said Boal.

However, he suggests that the reality is more nuanced, with unlisted assets experiencing a different pattern of valuation changes compared to listed assets.

Listed assets, which are subject to daily market fluctuations, may often appear to be marked down more significantly during market downturns.

Unlisted assets, which are not subject to daily pricing pressures, may not exhibit the same degree of volatility.

“They might not have been valued as aggressively in the first place, and therefore, do not necessarily need to be marked down as much in times of market stress,” he said.

Boal's perspective challenges any rush to judgment that unlisted assets are being deliberately mispriced.

He believes Australian super funds want to correctly value these assets for their own interests and it will also be the case for Asian pension funds despite the implication that falsely maintaining asset valuations could be used strategically to influence a fund's standing.

“It would be very shortsighted, but that would be one of their concerns -- that if you downgrade an asset and then underperform, that will damage your brand, and maybe lose some members and cashflow,” he said.

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