AustralianSuper’s $1.1b Pluralsight loss echoes APRA on Canva

Mike Taylor

Managing Editor and Publisher

28 August 2024

The Australian Prudential Regulation Authority (APRA) is facing political pressure to examine AustralianSuper’s reported loss of $1.1 billion as a result of its co-investment in education software group, Pluralsight.

Concern around AustralianSuper’s exposure to Pluralsight comes barely a year after APRA conducted a review of superannuation funds which were identified as holding the private equity technology company, Canva.

It also came as superannuation executives privately noted that while $1.1 billion represented a small fraction of AustralianSuper’s funds under management it was a large amount in the context of many other superannuation funds.

At the same time, NSW Liberal Senator, Andrew Bragg suggested that the reports indicated a governance issue.

“It is incumbent on superannuation funds boards to be aware of these things and ensure governance is properly enforced,” he said.

In early September last year, APRA, while finding that superannuation funds had taken an appropriate approach to their valuation of Canva, said there were several areas where improvement was needed including gaps in Board skillsets.

APRA said that it had observed some instances of:

• inadequate interim revaluation triggers in valuation policies;
• deficiencies in information provided to the Board;
• gaps in Board skillsets, willingness to challenge information provided and access to expertise; and
• lack of consideration of the expected performance and unit pricing impact of valuation decisions.

The regulator said that it had used its findings to informed planned thematic review on unlisted assets and liquidity risks, in addition to further developing APRA’s approach to stress testing.

According to reports on AustralianSuper’s investment in Pluralsight it was undertaken alongside PE manager, Vista Equity partners.

Contacted by Financial Newswire, AustralianSuper’s head of International Equities and Private Equity, Mark Hargraves said the fund remains strongly committed to Private Equity as it has been the top performing asset class over five and 10 years for the Fund, delivering 10% and 12% respectively for members.

“The higher risk/return profile for private equity is a characteristic of the asset class and we will continue to invest in private equity, venture capital and also the tech sector in general. These asset classes and the tech sector are strong value creators for members,” he said.

“The asset was well supported by a range of major global investors, however, the impact of the COVID pandemic, volatile macroeconomic conditions, rising interest rates and increasing competition combined to create a very challenging environment for the company.

“The combination of deteriorating sales revenue from US corporates due to cost cutting and the increase in debt service costs due to higher interest rates led to a sharp deterioration in the company’s trading performance triggering a restructure.”

“Although these types of situations are rare, they can occur from time-to-time and serve to reinforce the benefit of a diversified portfolio,” Hargraves said. “AustralianSuper has a rigorous ongoing valuation process, and this investment was continuously reviewed as part of that process.”

“The valuation has been fully accounted for so there will be no impact on members’ future earnings,” he said.