New buyout fund-raising has stalled at 2009 levels as anxiety over the country's tax regime keep investors at bay, according to data released by the Australian Private Equity & Venture Capital Association (AVCAL) on Tuesday.

Figures show that a total of 10 private equity funds raised A$1.46 billion ($1.4 billion) in the year to June, up only 3 percent from the previous year.

By contrast, Australian buyout funds were raising A$5 billion or more in the peak years of 2007 and 2008. The Australian tax office hit private equity firm TPG with a $628 million tax bill late last year on the $1.4 billion profit it made on the sale of department store Myer.

It has yet to issue final rulings on the treatment of the profits from private equity sales.

AVCAL Chief Executive Katherine Woodthorpe said although more buyout firms are currently in the marketplace looking for new commitments, the uncertainty over taxing profits means that any recovery will depend on the outcome of the tax decision.

A flurry of new fund raising at the beginning of the last fiscal year was quickly dampened, partly due to concerns the over tax ruling.

"Private equity fundraising picked up a little at the beginning of FY 2010 with the improving market conditions at that time," Woodthorpe said.

"However, (investors) continued to take a cautious approach to new commitments and this, combined with heightened uncertainty over the tax treatment of PE proceeds, saw fundraising activity slowing markedly in the subsequent quarters," she said.

Industry sources say it is taking much longer to raise new funds, with one of Australia's largest buyout funds, CHAMP Private Equity, about to close a new A$1.0-A$1.5 billion fund after nearly a year of fund-raising efforts with local and international investors.

The tax office has delayed its final rulings on the issue three times this year, most recently in May due to uncertainty ahead of the federal election, but is expected to release its decision in coming weeks.

Source: Reuters