Bridging the international investment gap

Bridging the international investment gap

Despite recent hiccups in the bilateral relationship between Australia and China, reflected in trade and political flare-ups, it appears there is still plenty of optimism about the longer-term economic prospects between the two regional powers.

A recent KPMG and University of Sydney report on Chinese investment in Australia showed that while Chinese investment in Australia had declined since 2016, it remained very strong.

“Australia remains globally competitive for attracting Chinese investment, retaining its position as the second largest recipient of accumulated Chinese investment – only behind the US – with just under $US100 billion since 2008,” said Doug Ferguson, head of Asia and international markets for KPMG Australia, on the report’s release in 2018.

Perhaps even more significantly, a global survey of chief executives released by PwC last month showed Australia overtaking the US, Japan and Germany as the number one investment destination among CEOs based in China.

The 22nd Annual CEO Survey, entitled CEOs’ Curb Confidence, reported: “CEOs … are diversifying their bets away from the United States and toward a broader array of markets. Australia seems the principal beneficiary: not even in China’s top 10 last year, it has risen to the number one destination for Chinese investment.”

Meanwhile, there are more than 1.2 million Chinese-speaking people living in Australia and many are cashed-up and ready to invest. Among them is Eric Gao, a former Chinese student at both RMIT and Monash University in Melbourne, who founded BMY Group in 2010 because he identified strong demand from Chinese investors looking towards investment markets in Australia.

“We were probably ahead of our time, because we recognised that the Australian market was inefficient at the time,” he says. “Chinese investors didn’t know where to go; they were looking for opportunities, so we decided to build a business to help them manage their wealth and manage their investments.

“In the past eight years we have been working with high-net-worth individuals and professional investors to offer them opportunities with financial services products or professional services in Australia.’’

So far, Gao says he has more than 42,000, mostly Australian-based Chinese investors on his books.

What really excites him are the 2000 mainly Chinese residents who have come to Australia on a Significant Investor Visa (SIV), an immigration program run by the Department of Home Affairs. The four-year provisional visa is available to highnet-worth investors who have at least $5 million ready to invest in Australia.

BMYG already works with around 100 Chinese investors who can claim SIV status and is hopeful of attracting more interest from this, collectively, very wealthy group.

“Together, the Significant Investor Visa group represents about $10 billion ready to invest,” says Gao. “They are typically people in their late 40s or early 50s. They are still running very successful businesses in Asia and they don’t want to retire, and they are looking for financial products, direct investment opportunities or professional services in Australia.

“This group alone represents a massive opportunity for wealth and funds management. This still doesn’t include other business and investment visas, like the 188a or the 132 sub-class, which attracts business owners and investors with $1 million to $2 million each.

“We have been working with Australian funds managers to connect them with Chinese investors. This includes equity fund managers like Pendal and Bennelong, as well as VCPE [venture capital private equity] firms like Advent Partners and Square Peg.

“The market is still quite inefficient. We have seen rising demands from Chinese investors for investment products, opportunities and professional services. And we also see that more and more Australian institutions would like to expand into Chinese markets onshore and offshore.’’

To facilitate this process, BMY Group released AllFin.com in December, a new digital platform aimed at connecting Australian investment opportunities, products and professionals with Chinese investors, both domestic and overseas.

Using the platform is free for investors, while deal listers or those offering their professional services, such as lawyers, accountants or fund managers, will pay a fee.

Gao says there are already 5000 users of the AllFin platform after its soft launch three months ago. He aims to have between 10 and 15 per cent of the Chinese population in Australia regularly using the platform within two years – around 100,000 to 150,000 users.

BMY Group has experienced some bumps over its eight years – such as in 2016 when plans to attract Asian capital into its own venture capital fund had to be scaled back in light of China’s move to stem the outflow of investment funds. Regardless, the group still experienced strong growth in funds under management, which reached $200 million by early 2019. The company actively invests in technology companies.

“The crackdown in funds leaving China has had an impact globally, but I think it’s likely to be shortterm rather than long-term,” suggests Gao. “I’m already seeing some calming in the global trade talks and I think we’ll see a return in confidence in financial markets as well.’’

Conservative assets and quality business opportunities are expected to be a top priority for investors in the short term.

“I speak with Chinese investors every day and, yes, people are seeing a correction in the residential property market in Australia and there is uncertainty about the financial services sector after the royal commission,” acknowledges Gao.

“But getting the federal election out of the way will remove some of that uncertainty and investors will go from a wait-and-see approach to being more active, especially as we see some more positive news.’’

The next focus for BMYG will be the AllFin platform and a fully-fledged family office operation for wealth management.

“We’ve started having families putting in $10 million with us to invest, looking for the right asset balance and fund manager,’’ says Gao.

‘‘We still think there are inefficiencies in the market between financial products and services in Australia and wealth management. We are aiming to fill that gap.’’

In the meantime, Gao hasn’t forgotten his roots – 2019 will be the second year that BMYG has financed a scholarship for an outstanding student studying business finance at Monash University.

‘‘I’m very grateful for the education I received in Australia,’’ he says. ‘‘And the opportunities this country has provided me.’’

“More Australian institutions would like to expand into Chinese markets onshore and offshore.”

Read original news article here.

Melbourne’s BMYG launches first Chinese investor matchmaking app in Australia

Melbourne’s BMYG launches first Chinese investor matchmaking app in Australia

The hunt for more Chinese capital continues as Melbourne-based corporate advisory and wealth management firm BMY Group (BMYG) launches Australia’s first Chinese investor matchmaking platform, Allfin.

The platform will offer private equity deals in all industries as well as products such as Exchange Traded Funds (ETFs) – not available in China – to BMYG’s approximately 30,000 Chinese high net worth and family office clients. It will kick-off in early February.

BMYG, which specifically targets Chinese investors and companies, says the Chinese capital market is deep, with plenty of investors interested in sectors outside of the top three popular investment areas of real estate, shares and peer-to-peer lending.

“China does have one of the top capital markets in the world but what they don’t have is enough investment options for both individuals and institutional investors,” BMYG chief executive Eric Gao said.

“Currently the major financial sectors for Chinese investors, mainly real estate and the stock market, are suffering bad performances so the Chinese market is hungry for more options to manage their wealth.”

As a measure of the depth of the market, BMYG’s latest survey of a sample of 8000 clients show that each client has an average $2.2 million – or $17 billion in total – in capital to deploy into private investments.

BMYG will run the Allfin fintech platform, vetting the deals that come online and matching them with the right investors from BMYG’s database. Not all deals will be advertised to all investors.

It will also offer professional services such as legal and accounting to assist with the deal process.

Tapping into China’s prolific phone and social media users, Allfin will have its own channels across all the mega Chinese social media platforms including Wechat and Weibo. s

‘Trusted platform’

Local investor matchmaking platform Wholesale Investor, which counts Investec Australia as one of its investors, has agreed to pour deals into Allfin. Other partners include PwC, Paul Bassat’s Square Peg, Advent Partners and private equity firm PEP.

Wholesale Investor founder Steve Torso says Allfin will “naturally” get the interest it is looking for because there is strong Chinese appetite in Australian businesses, particularly those in general technology, life sciences, robotics and artificial intelligence, and general advanced manufacturing technology such as 3D printing.

“There’s depth in the Chinese market but it’s not just financial depth but a depth in network that is also crucial to Australian businesses,” Mr Torso said.

“Allfin will be a hit with BMYG’s audience because it will offer them what they want – a trusted platform to tap into opportunities ordinary Australians take for granted.”

As an example, Wholesale Investor’s client medical technology group 4Dx was a recent hit in Shanghai.

All up, Allfin aims to make dealmaking a lot easier than the current manual networking exercise, Mr Gao says.

“Identifying the right Chinese investors is not always easy, it does require expertise. Secondly, funds managers and deals want more coverage,” he said.

Using the platform is free for investors while deal listers will pay a fee – up to $899 a month – to promote their products and deals.

Read original news article here.

BMY Group seeks Asian investors for $50m fund to back Aussie tech start-ups

BMY Group seeks Asian investors for $50m fund to back Aussie tech start-ups

Melbourne-based corporate advisory and wealth management firm BMY Group, which targets Asian investors and companies, is raising $50 million for its first venture capital fund that will focus on Australian start-ups whose sights are set on Chinese expansion.

Despite only just launching the fund, the firm has already raised almost $10 million and expects to have closed the first $15 million tranche by January. It plans to have the additional $35 million by mid-2017 when it will also have identified a range of investment opportunities.

BMYG co-founder Eric Gao told The Australian Financial Review there was an untapped desire from Chinese investors to not just buy into real estate in Australia, but also invest in local start-ups.

“There are so many fund managers who are talking to Asian investors and promoting property and hotels. They’re familiar with that, but it’s not the one investment they want to make. Australia offers a lot more than that,” he said.

“We already have a database of investors who are looking for these opportunities. There is an investor and friend of mine who runs a medical listed company in China. He’s in his late 40s and he wants to invest in medical devices in Australia, but he has no clue where to look.”

The $50 million fund will target pre-IPO start-ups that have Asian expansion plans, already have some revenue and an established business model and come from industries such as cleantech, biotech and aged care technology.

These are areas BMY Group believes haven’t previously received as much attention from the established VC funds in Australia and the US.

“We want to add to the big funds that are already available here. China is really strong with consumer technologies, online gaming and VR, robotics and even blockchain. But what China is missing is the core technology that can facilitate other technologies in business services and improvements to existing technology,” Mr Gao said.

Funds deliver helping hand

In April, Australian start-ups wanting to expand to Asia were also given a helping hand from the launch Mai Capital’s $20 million Dragon Egg Fund.

Unlike BMYG’s fund, Mai Capital is focused on post-seed and pre-Series A capital raises.

But Mr Gao said BMYG also intends to raise a second $20 million fund in 2017, which will have a higher risk profile and invest in early stage firms.

“We’re already seeing there is demand from investors… but we want to educate them about the right companies, technologies and right teams to invest in. It’s an educational process,” he said.

The investors in the funds will be high-net worth Asians from various professional backgrounds such as manufacturing, funds management, and technology.

Mr Gao moved to Australia from China in 2002 as an international student and worked at Easy Forex (now Easy Markets) before starting BMY Group in 2010 as an information portal on financial information targeted at Australian Chinese investors.

After growing its website (BaoMoney.com.au) to 250,000 unique visitors, it diversified and added a wealth management division and had $100 million under management, before also expanding into corporate advisory work.

Previous investments

Prior to launching the venture fund, Mr Gao has also previously made investments in ASX-listed fintech company AfterPay and digital stockbroker OpenMarkets.

For the fund, he is turning his attention to start-ups with an Asian-focus because he wants to be able to add value as an investor.

“Australians already have great technologies, but they need international investors to bring in the capital and expertise in the right markets to commercialise the technology,” he said.

“Australia’s economy requires more investment into start-ups and technology and Asia, particularly China, wants to do that… So our mission is that we want to offer the right solutions from Australia to investors to help both sides to grow.

“There is much more this country [China] can do to help take the technology to the commercialisation phase.”

Read original news article here.