Australia's Future Fund sees opportunities in debt

MELBOURNE, April 23 (Reuters) - Australian sovereign wealth fund the Future Fund, which has A$60 billion ($57 billion) in assets, said on Wednesday it was eyeing private transactions and debt markets amid the current stockmarket turmoil.

The fund, Australia's largest single investment fund, was set up to cover public pension liabilities and is expected to grow in size to about A$150 billion by 2020.

General Manager Paul Costello told a business lunch the fund was a cashed-up supplier of liquidity that was operating in a market currently short of providers of funds.

Costello said the fund's private markets team was looking at infrastructure, private equity and real estate investments.

"We are talking with both the local and international marketplace in those assets.

"We have found that the terms upon which we are able to participate in those opportunities have improved materially in a relatively short period of time," Costello said.

Costello said debt strategies were also attractive in the current investment climate, and there were plenty of opportunities outside of the stock market.

The fund, which began investing last year, has been biding its time as a four-year bull market in equities abruptly came to an end late last year as the global credit crunch spread. It has about three-quarters of its assets in cash.

The transparency of state investment funds has come under the scrutiny of the Group of Seven finance leaders, and in a recent survey by the Washington-based Peterson Institute of International Economics, the Future Fund received a low score for transparency and behaviour.

The fund has said it will become more open after what it sees as a transition period to fully entering markets.

As of Jan. 31, according to the most recently published figures, the Future Fund held 8.8 percent of its assets or A$4.5 billion in Australian equities, 15.3 percent or A$7.7 billion in global equities, and had a small exposure to listed global property.

It held A$37.8 billion, or 75 percent, of its assets in cash.

The figures exclude the fund's 17 percent stake in Telstra Corp Ltd (TLS.AX), worth some A$9 billion, which not sold when the government exited its stake in the phone company in 2006.

The Future Fund is due to give an update on its investment allocations when it publishes its annual report for the year ending June 30. ($1=A$1.06) (Reporting by Victoria Thieberger; editing by Jonathan Standing)