Retail investors to gain from private equity allocations in 2025

There is a lot of potential in certain sectors of the private equity market, which will create opportunities for retail investors heading into 2025, according to Federation Asset Management, one of Australia’s leading private markets firms.

“There are three key macro trends driving the demand for private capital – sustainable energy, digitisation of the economy and an ageing population. Within sustainability, we are focused on expanding two core platforms: one for wind generation in Australia and another for energy storage,” Cameron Brownjohn, CEO of Federation Asset Management said.

Federation has established a strong wind energy platform through Windlab, formerly the CSIRO wind science division. Acquired and taken private four years ago, Windlab is now co-owned by Federation and Andrew Forrest, founder of Fortescue Metals Group.

“Our primary goal is to build energy generation assets that integrate with the national electricity market, capitalising on long-term offtake agreements,” Brownjohn said.

Earlier this year, Federation signed a landmark 25-year renewable power purchase agreement (PPA) with Rio Tinto. The agreement, which was the largest renewable PPA of its kind at the time, will supply wind-generated power to the mining giant to re-power the company’s Gladstone production assets.

“Wind and energy storage solutions are already more cost-effective than nuclear, coal, or gas, and they can be implemented much faster. The economic benefits are clear,” Brownjohn added.

In energy storage, Federation is advancing plans for additional large-scale battery projects, building on the success of its existing battery in New South Wales’ Riverina region.

The firm is also turning its attention to the challenges and opportunities presented by Australia’s ageing population. Federation recently acquired Home Safe Solutions, a home equity release provider designed for homeowners aged 60 and above.

“We see significant potential to scale this business by expanding its reach into new geographic areas. Currently, it operates in a limited number of suburbs across Sydney and Melbourne,” Brownjohn said.

As private equity becomes more accessible, retail investors are beginning to recognise its benefits.

“The adviser-led industry and family offices are increasingly drawn to semi-liquid private equity products offered by managers like us. These products provide a level of liquidity that appeals to a specific segment of client portfolios.”