(Bloomberg) -- Australian pension funds are tightening scrutiny of their private assets as regulators raise more questions about disclosure and valuations, according to asset manager Stafford Capital Partners.

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The nation’s top two pensions last month revealed losses on their investments in unlisted US education software firm Pluralsight Inc., highlighting the risks around private assets that regulators have been flagging in recent months. AustralianSuper wrote off A$1.1 billion ($750 million) as private credit lenders took control of the firm, while Australian Retirement Trust lost A$75 million.

“We’re finding our clients in superannuation are asking for a lot more direct information about the companies in terms of revenue, Ebitda, leverage covenants,” Stafford Capital Partners Global Head of Private Equity Rick Fratus said in an interview. “They want to have their ducks in a row when the regulators come in.”

Fratus didn’t comment specifically on the Pluralsight deal, which Stafford wasn’t involved in. The London-based firm manages around $8 billion globally, including more than A$700 million of assets for some of Australia’s biggest pensions.

Regulators are targeting private markets as Australia’s A$3.9 trillion pension industry ramps up allocations to about a fifth of overall assets. The Australian Securities and Investments Commission is setting up a specialized unit to engage with private markets, while the Australian Prudential Regulation Authority has repeatedly raised concerns about the frequency of valuations and disclosures for unlisted assets.

“We want to ensure consistency and accountability on meeting expectations in the outcomes of investments in private markets,” ASIC Commissioner Simone Constant said in an interview. “We’re looking at superannuation funds’ financial reporting and disclosures, what they say publicly and what they are disclosing in their reports.”

Fratus said while larger funds appeared to be well placed to come to a “true understanding” of their investments and potential challenges, it could be harder for smaller players with lower levels of governance and controls.

A number of Australian pensions wrote down some unlisted property assets last year amid slumping office valuations around the world. However, they have pointed to losses like those and the Pluralsight writedowns as unique and immaterial when compared to the overall size of their portfolios.

“A lot of the private assets over the last couple of years have been either repriced or reworked or looked at,” Con Michalakis, Deputy Chief Investment Officer at A$115 billion pension fund Hostplus, said in an interview. “There’s been a lot of work over the last couple of years with the regulators over private market valuations.”

One area that regulators are focused on is private credit, where pensions are increasingly investing as banks retreat from riskier lending activity. While the assets are still a relatively small part of the portfolios, ASIC says the complexity of risk makes it “disproportionately important.”

“For example, we might ask with commercial real estate private credit, what does it mean for members that it is outside the banks’ risk appetite, but inside the super funds’ appetite?” said Constant.

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