The NZ financial regulator is to sound out KiwiSaver providers over private asset holdings and valuation techniques amid a “significant transformation” of global capital markets.
In an update published last week, the Financial Markets Authority (FMA) previews an imminent survey of 30 KiwiSaver providers set to establish a “baseline” view of the sector’s exposure to private assets.
The probe will also improve the FMA’s knowledge of how NZ licensed fund managers value private assets “and the level and type of oversight they apply to third-party asset managers and valuers”, the release says.
Former Commerce Minister, Andrew Bayly, championed better access to private assets – preferably NZ ones – during the 2024 election campaign with an official consultation floated last December.
The Ministry of Business, Innovation and Employment (MBIE) has yet to release feedback on proposals to allow KiwiSaver providers to segregate private markets holdings from transfers in certain circumstances, support the asset class with valuation processes and better disclosure. MBIE also mooted the potential for KiwiSaver schemes to bury the investment management cost of private assets in unit prices.
According to the FMA, the “rapid expansion” of private markets is “bringing about fundamental changes in New Zealand’s investment patterns, liquidity conditions and risk distribution”.
“We also know that investing in private markets comes with several risks that differ from those associated with public markets. The FMA is looking to better understand these risks.”
Alternative assets represent just 1 per cent of KiwiSaver funds, according to the latest Morningstar report on the sector.
Booster, one of the early adopters of private assets in KiwiSaver and retail products, reported last week that its Innovation Fund held more than 40 underlying investments in NZ start-ups valued at $20 million.
In a release, Booster says the fund assets include 13 technology companies worth a combined $7.2 million that emerged from a long-running partnership with UniVentures – a business arm of the Victoria University in Wellington.
Currently, the FMA is pursuing Booster over alleged governance breaches in another private asset fund specialising in local wine ventures: the case is due to be heard in February 2027.
Also last week, the President Trump issued another executive order to free-up the US version of KiwiSaver schemes – known as 401(k) plans – to invest in private assets and other alternatives such as cryptocurrencies.