How to Launch a Private Equity Fund in Australia: A Step-by-Step Guide

Private equity in Australia has emerged as one of the most compelling asset classes for institutional and wholesale investors. Total Australia-focused private capital assets under management reached $139 billion in 2024, with private equity, venture capital, and private credit funds accounting for $65 billion of that figure. The market is projected to grow at a compound annual growth rate of 8.20% through to 2033, reaching USD 48.5 billion. In the first half of 2025 alone, AUD $7.9 billion in completed private equity deals was recorded — a 153% increase over the same period the prior year.

For an investment manager with the right capabilities and deal flow, the conditions to launch a private equity fund in Australia have rarely been more favourable. But the formation process is distinct from other asset classes. Private equity has its own structural, regulatory, and operational considerations that demand careful planning from the outset.

What follows is a practical guide to launching a private equity fund in Australia — from structuring decisions and licensing pathways through to building a compliant and functional operating model.

1. Understand What Makes Private Equity Distinct

Private equity is not simply another asset class. It may require a clearly different type of fund infrastructure compared with a listed equities or fixed income vehicle.

A PE fund acquires equity stakes — and sometimes debt — in private companies or assets. It does so on behalf of investors, typically over a defined investment period, with the intention of growing value and realising a return through an exit. That exit might take the form of a trade sale, an initial public offering, a secondary transaction, or a recapitalisation.

Several structural characteristics follow from this:

• Closed-end structure: PE funds are typically closed-end — meaning investors commit capital for a fixed term (commonly 7 to 10 years) and cannot redeem on demand. This is fundamentally different from an open-end unit trust used for liquid assets.
• Capital call mechanics: Rather than receiving the full commitment upfront, the fund manager draws down capital from investors as investment opportunities arise. Investors must be prepared to respond to capital calls on short notice.
• Illiquid underlying assets: Portfolio companies are not daily-priced market instruments. Valuation requires disciplined judgment and takes place quarterly.
• Governance expectations: Post-investment, PE managers are expected to be actively involved in portfolio company oversight — through board representation, operational support, or strategic direction.
• Carried interest: The standard PE economics of a management fee (around 2% of committed or invested capital) and a performance fee (around 20% of profits above a hurdle rate) create specific documentation and governance requirements.

Investors and regulators alike expect a fund manager in this space to have a credible and demonstrable edge — in deal sourcing, sector expertise, or operational value creation.

2. Define Your Investment Strategy and Edge

Before a structure, a legal document, or a service provider is selected, the investment strategy must be precisely defined.

Private equity is broad. Within it, managers may pursue buyouts of established businesses, growth equity in expanding companies, turnaround or distressed situations, or sector-specific strategies across healthcare, technology, infrastructure-related assets, or industrials.

Your strategy should clearly articulate:

• What you will acquire — the type of business, sector, and stage of development
• Where you source deals — proprietary flow, broker networks, or a combination
• How you create and capture value — operational, strategic, or structural improvement
• Target company size — this shapes the capital you need to raise and which structural options are available, including certain tax-advantaged vehicles that carry asset size restrictions
• Expected holding period — commonly 3 to 7 years per investment
• Exit strategy — how and when you plan to return capital to investors
• Fee structure — management fee, hurdle rate, carried interest, waterfall and alignment mechanisms

A precisely defined strategy is not only required for investor confidence. It also informs which regulatory authorisations you need, what documentation you must prepare, and which service providers are appropriate for your fund.

3. Choose Your Fund Structure

Australia offers several structural options for private equity funds. The right choice depends on your investor base, tax considerations, the nature of your investments, and how long you expect to be in market.

Unit Trust

The unit trust remains the most common vehicle for investment funds in Australia, including private equity. It is well understood by Australian investors and service providers, offers tax flow-through treatment, and is flexible across a range of asset classes.

In a unit trust, investors hold units representing a beneficial interest in the trust's assets. For private equity, the trust deed needs to reflect the closed-end nature of the fund — restricted redemption windows, capital call and waterfall mechanics, and the ability to issue classes of units where appropriate.

One important consideration for PE managers: trusts can lose their managed investment trust status if they are deemed to "control a business" in a way that designates them as a trading trust for tax purposes. Careful structuring and legal advice is required to preserve the trust's tax treatment, particularly when the PE fund takes board seats or operational control in portfolio companies.

Limited Partnership

Limited partnerships — particularly Venture Capital Limited Partnerships (VCLPs) and Early Stage Venture Capital Limited Partnerships (ESVCLPs) — are used by some private equity managers targeting earlier-stage or growth-oriented strategies.

VCLPs and ESVCLPs offer specific tax benefits, including capital gains tax exemptions for eligible investors and flow-through treatment, but come with significant restrictions. VCLPs can only invest in Australian businesses with total assets of no more than A$250 million. These structures are most appropriate for growth equity or venture-adjacent strategies, not large buyouts.

Standard limited partnerships (without VCLP registration) do not attract the same tax treatment as trusts and are therefore less common in Australia for mainstream private equity.

Corporate Collective Investment Vehicle (CCIV)

Introduced in 2022, CCIVs are a corporate vehicle designed to provide flow-through tax treatment similar to a managed investment trust. To date, CCIVs have seen limited market uptake and are not a standard private equity vehicle in the Australian market.

For most private equity managers launching in Australia, the unit trust remains the recommended starting structure — subject to appropriate tax advice based on your specific strategy and investor base.

4. Understand Your Licensing Obligations

No person can operate or market a private equity fund in Australia without appropriate Australian Financial Services Licence (AFSL) coverage. This is a non-negotiable regulatory requirement under the Corporations Act 2001 (Cth).

Who Needs an AFSL?

Any manager operating a managed investment scheme, dealing in financial products on behalf of investors, or providing financial product advice is required to hold an AFSL or operate as a Corporate Authorised Representative (CAR) under an existing licensee.

For PE fund managers, the licensing trigger is operating a scheme that pools capital from investors and deploys it into private company investments. If you are raising capital from investors and investing it on their behalf — regardless of the asset class — you are almost certainly providing a financial service that requires appropriate licensing coverage.

Own AFSL vs CAR Arrangement

There are two primary pathways:

Obtaining your own AFSL provides full regulatory independence. It is the appropriate long-term path for managers with established infrastructure and a regulatory track record. The application process is time-consuming, with ASIC assessing organisational competence, financial resources, and fit and proper requirements. Obtaining an AFSL can take between three and twelve months from submission, with initial costs that commonly exceed $25,000 and ongoing compliance costs of $10,000 to $30,000 per annum — not including capital adequacy requirements.

Operating as a CAR under an existing AFSL holder is the preferred pathway for most emerging PE managers. A CAR arrangement can allow a manager to begin operating legally in weeks rather than months. The licensee takes on supervisory responsibility for the manager's conduct, which means the fund manager must operate within a defined compliance framework and meet ongoing training and reporting obligations. The standard of investor protection required is no lower — it is the regulatory infrastructure and its cost that sits with the AFSL holder rather than the manager.

The licensing pathway should align with your timeline to launch, available budget, internal governance capacity, and long-term strategic goals.

5. Define Your Investor Base: Wholesale or Retail

A decision that shapes your entire regulatory and cost structure is whether your PE fund will accept wholesale or retail investors.

Wholesale investors in Australia — as defined under the Corporations Act 2001 (Cth) — include institutional investors, professional investors, and sophisticated investors who meet a financial threshold test or hold an AFSL themselves. Wholesale funds:

• Do not require a Product Disclosure Statement (PDS) — an Information Memorandum is sufficient
• Are not subject to Design and Distribution Obligations (DDO) or Target Market Determination (TMD) requirements
• Operate under a lighter disclosure and reporting regime
• Are generally faster and less costly to establish

Private equity funds in Australia overwhelmingly target wholesale investors. The long-term, illiquid nature of PE investing is not well suited to retail investors without significant additional infrastructure and consumer protection mechanisms.

If retail investors form any part of your investor base — including through retail syndicates or product distributions — additional obligations apply, including a PDS, TMD, and enhanced compliance oversight. These add materially to establishment and ongoing operating costs.

This decision is not one to revisit at a late stage. It should be made at the outset and aligned with your long-term growth plan, distribution approach, and internal capacity.

6. Prepare the Legal Documentation

The fund's legal documents define the rights and obligations of every party and form the regulatory foundation of the vehicle. For private equity, these documents are more complex than those required for liquid asset classes.

Trust Deed (or Limited Partnership Deed)

Establishes the fund and governs the relationship between the trustee or general partner and unitholders/LPs. For PE, the deed must address capital call mechanics, distribution waterfall, carried interest provisions, clawback, investment restrictions, and key-person events.

Information Memorandum (IM)

The primary disclosure document for wholesale investors. The IM sets out the investment strategy, risk factors specific to private equity (illiquidity, concentration, valuation uncertainty), fee structure including management fees and carried interest, capital call and distribution mechanics, fund governance, and the liquidity and exit process.

Investment Management Agreement (IMA) or Management Deed

Formalises the delegation of investment authority from the trustee or general partner to the fund manager. Defines the scope, limitations, and oversight obligations.

Subscription Deed and Side Letters

The investor-level documents through which commitments are made. Side letters may address specific investor requirements around reporting, most-favoured-nation provisions, or co-investment rights.

Precision in drafting matters. Poorly drafted PE documents create risk not only with investors but with tax authorities and regulators. Engage experienced legal advisers who understand the private equity asset class specifically — the documentation requirements differ materially from a liquid equities or credit fund.

7. Build the Operating Model

A PE fund's operating model must be in place before capital is deployed. Regulatory obligations, investor commitments, and the terms of the fund documents all require consistent operational execution from day one.

Fund Administration and Accounting

• Capital account maintenance — tracking investor commitments, called capital, uncalled capital, and distributions
• Portfolio company valuation and NAV calculation
• Investor reporting — capital account statements, fund-level performance reports
• Audit support and coordination
• Tax reporting

Investor Onboarding and Registry

• Collecting and verifying investor subscription documents
• Conducting KYC/KYB and AML/CTF checks on all incoming investors
• Maintaining an accurate register of unitholders and their capital positions
• Managing capital call notices and distribution communications
• Providing secure investor portal access to fund information and documents

Compliance and Governance

• Maintaining a documented compliance program
• Meeting AFSL or CAR obligations — training, supervision, breach reporting
• Coordinating regulatory lodgements
• Ongoing compliance monitoring and governance oversight

In a PE fund, the capital call process demands particular operational discipline. Call notices must be issued accurately and on time, with investor obligations clearly defined and enforced in accordance with the trust deed. Defaults on capital calls can materially disrupt the fund's investment activities and require careful legal management.

Building all of this from scratch is costly and slow. Many PE managers engage an integrated operating partner to manage these functions — allowing the manager to focus on investment activity rather than constructing parallel operational infrastructure.

8. Understand the Current Compliance Landscape

The regulatory environment for private equity managers in Australia has evolved in recent years, and several developments are directly relevant to managers launching a fund today.

AML/CTF Reform

Australia's Anti-Money Laundering and Counter-Terrorism Financing regime has undergone significant reform. All fund managers — regardless of size or investor type — must have documented AML/CTF programs, including customer due diligence procedures and AUSTRAC reporting obligations. Non-compliance carries serious penalties.

ACCC Mandatory Merger Clearance

From January 2026, Australia's mandatory ACCC merger clearance regime took effect — the most significant change to merger regulation in decades. For PE managers pursuing buyout strategies, particularly in the mid-market, this adds a procedural step to transactions that requires planning and dedicated legal advice.

ASIC Design and Distribution Obligations (DDO)

For any PE fund intending to accept retail investors, DDO requirements — including the preparation and maintenance of Target Market Determinations — have been actively enforced by ASIC since 2022. Non-compliance has resulted in interim stop orders preventing product issuance.

Greenwashing

ASIC's enforcement focus on misleading ESG claims is ongoing. PE managers making sustainability-related representations in marketing materials or fund documents must ensure those claims are accurate and substantiated.

9. Plan Your Capital Raising

In private equity, capital raising and fund formation overlap. The fund is not open for extended periods — commitments are gathered in one or two closing events, and the fund moves quickly into its investment period.

Consider the following when planning your raise:

• Target raise and minimum closing: Define your target fund size and the minimum at which you will hold a first close and begin investing.
• Investor pipeline: Institutional investors — superannuation funds, family offices, fund-of-funds, and corporate investors — will conduct thorough due diligence on your track record, team, strategy, and operational infrastructure. Operational quality is scrutinised alongside investment capability.
• Close mechanics: PE funds typically hold a first close once minimum capital is committed, then a final close to complete the fundraise. The trust deed must accommodate post-first-close admission of investors at a price that is fair to earlier commitments.
• Foreign investment: Foreign capital has become a significant component of the Australian private equity investor base. Note that certain foreign investors may require Foreign Investment Review Board (FIRB) approval before investing in an Australian fund.

Track record is the primary currency in private equity fundraising. For managers without a long institutional history, the quality of operational infrastructure, governance documentation, and reporting systems can be a meaningful point of differentiation — and can accelerate investor due diligence.

10. Timing

Launch timelines and costs vary depending on the fund's structure, licensing pathway, and investor base. A realistic guide for a wholesale unit trust PE fund:

• Unregistered unit trust establishment: 1–2 weeks (once documentation is in place)
• CAR arrangement under existing AFSL: 1-2 weeks
• Own AFSL: 3–12 months from submission
• Legal documentation: Trust deed, IM, IMA, and subscription documents — 4-6 weeks

The manager who selects an integrated provider — one that covers AFSL, trustee services, registry, administration, and compliance under a single delivery model — can reach investors meaningfully faster than one that assembles these components separately.

11. How FundBase Group Helps

Launching a private equity fund in Australia is a complex, multi-step process — but it is not an obstacle course. When approached in the right sequence, with the right partners, it becomes a disciplined execution exercise.

For emerging and scaling PE managers, building every piece of operational infrastructure independently is rarely the most effective path. The cost, time, and risk of assembling AFSL coverage, trustee services, AML/CTF systems, registry functions, and accounting capability from scratch can delay a fund's launch by many months — and introduce avoidable operational risk.

FundBase Group provides the full operating infrastructure that private equity managers need to launch and run investment funds in Australia. This includes:

• Fund formation and structuring, including fund documentation
• AFSL coverage under a CAR arrangement, enabling managers to launch faster
• Trustee services, aligned to the fund's structure and regulatory requirements
• Investor onboarding and registry, including digital applications, KYC/AML processes, and an investor portal
• Fund administration and accounting support, including capital account maintenance, NAV reporting, and audit coordination
• Governance and compliance operations, including regulatory reporting and ongoing oversight

These services are available as part of the Fund-in-a-Box model — a single coordinated delivery solution for managers seeking an efficient path to launch — or as individual services through Fund Services to complement existing internal capability.

For PE managers who want to reach investors in weeks rather than months, and who want institutional-grade operational infrastructure without building it from scratch, this is what FundBase Group is designed to deliver.

Contact our team to discuss your fund structure, timeline, and the level of support that makes sense for your specific situation.

References

Australian Investment Council & Preqin. Australian Private Capital 2025 Yearbook. Australian Investment Council. https://investmentcouncil.com.au/

Financial Standard. Australian private capital sector totals $139bn: Report. Financial Standard. https://www.financialstandard.com.au/news/australian-private-capital-sector-totals-139bn-report-179808468

IMARC Group. Australia private equity market size, share, trends and forecast 2025–2033. IMARC Group. https://www.imarcgroup.com/australia-private-equity-market

IMARC Group. Australia private equity market 2026. OpenPR. https://www.openpr.com/news/4495197/australia-private-equity-market-2026-worth-usd-52-27-billion

Chambers and Partners. Investment funds 2025 – Australia: Trends and developments. Global Practice Guides. https://practiceguides.chambers.com/practice-guides/investment-funds-2025/australia/trends-and-developments/O19738

Global Legal Insights. Fund finance laws and regulations 2026: Australia. Global Legal Insights. https://www.globallegalinsights.com/practice-areas/fund-finance-laws-and-regulations/australia/

Australian Securities and Investments Commission. AFS licensees. ASIC. https://www.asic.gov.au/for-finance-professionals/afs-licensees/

Australian Securities and Investments Commission. Requirements to hold an AFS licence. ASIC. https://www.asic.gov.au/regulatory-resources/financial-services/financial-advice/running-a-financial-advice-business/requirements-to-hold-an-afs-licence/

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