(Pictured: Randal Williams)
Big Chinese investors, such as the clients of the Sino-global law firm of King & Wood Mallesons (KWM), are diversifying their Australian investments away from resources and into new growth areas, according to a symposium organised by La Trobe Financial last week in Shanghai and Beijing.
Those new growth areas for Chinese investments include infrastructure and logistics, agribusiness and commercial property, Jonathan Grant, a KWM partner who recently transferred from Sydney to Beijing, said.
Grant told the gathering in Beijing that, as far as his firm’s clients were concerned, there had been a “ten-fold” increase in Chinese investments in Australia since the mid-2000s – admittedly after the merger of the blueblood Australian-oriented Mallesons with the China-based King & Wood.
The China symposium organized by La Trobe is the second it has held in the two major Chinese cities and is a companion to its China Scholarship Program, which is now in its sixth year. The Scholarship Program involves about eight young executives from Chinese financial services and other big firms spending six weeks in Australia to learn about how the financial services industry operates and interacts with other industries.
La Trobe, a credit manager and mortgage lender, has had an office in Shanghai since 2009. It was last year awarded a coveted WOFI (wholly owned foreign institution) licence to operate in the new Shanghai Free Trade Zone.
Randal Williams, the La Trobe chief investment officer and senior vice president who chaired and presented at the symposium, said the firm looked to China as a way to diversify its wholesale funding facilities, which had traditionally relied on the Australian banks.
Recently, La Trobe was discussing the possibility of extending its relationships to Chinese intermediaries, such as broking firms, with a view to offering its Australian mortgage products to Chinese retail investors, he said. La Trobe has nearly $2 billion under management in credit investments – mostly mortgages – about half of which is in residential and commercial mortgage trusts.
The symposium series was this year supported by three ‘collaboration partners’: the State Government of Victoria, KWM and consulting firm EY. The commissioner for the Victorian Government for Greater China, Tim Dillon, sang the praises of Victoria as an investment destination, while Grant spoke of the legal framework for investing in Australia and EY’s Loretta So spoke of the tax implications of various decision paths.
Williams presented on Australia’s banking system, including the increasing share going to foreign banks, as well as Australia’s wealth management system and the opportunities for Chinese fund managers to set up in Australia.
He noted that foreign banks, including seven of the largest Chinese banks, were expanding in Australia although they tended to have different status levels, from branches to subsidiaries to representative offices. These banks were presenting new competition to the Australian-domiciled banks.
In wealth management he advised how to build a product for the Australian marketplace, notwithstanding the competition from an estimated 10,000 existing wealth management products in the marketplace.
NOTE: the author is a former director of the La Trobe mortgage fund and was a presenter at the symposium on the history of the Australian super system.