June 23, 2017

Indian Ocean Group, the corporate advisory firm of Australian brothers Domenic and Luke Martino, is launching the $50 million Indian Ocean Venture Capital Fund – the first of a potential number of specialty funds that will leverage access to Chinese capital to invest in Australian sectors including agriculture, technology, equities, and real estate.

Indicative of the trend that Indian Ocean is trending, Chinese investment in Australian agriculture has seen unprecedented growth over the past year. According to Montana Public Radio, Chinese investment in the sector has jumped from $300 million to $1 billion in 12 months.

Although the fund will be seeded by Chinese investors, and plans to capitalize on its connections to mainland China to gain investors looking to access exposure to Australian opportunities, the fund will not limit itself to only Chinese investors.

Legwork for the fund has been completed, including establishing a three-person team on the ground in mainland China – something that the Martino brothers consider non-negotiable when fundraising in the country.

“All the structural and legal work has been done … and we’re about to get the first $5 million to $10 million into it,” Indian Ocean’s executive director, Luke Martino told The West. “It’s very hard to get around in China if you don’t have a team on the ground.”

The firm has also previously tied-in with Hong Kong-based financial services company BM Intelligence. Through BM’s string of offices across China, BM is positioned to offer a key network of referrals, client-base, and pool of capital in the country which often proves difficult to break into.

Despite the Sentiment

Eighty four percent of Australians view foreign investment as either a critical or important threat to their country, according to a Lowy Poll released on June 21, reports ABC. These results sparked a rare public statement by Foreign Investment Review Board (FIRB) member, Patrick Secker, who expressed that public sentiment regarding foreign investment in Australian agriculture is ‘misplaced’.

Despite this negative native sentiment, Chinese investors are still keen to deploy investment capital into the Australian agricultural space, reports The Australian.

Matthew Schofield, partner with Chinese accountacy business, ShineWing, told the publication that the volume of Chinese capital being invested in Australian agriculture is “astounding” – drawn by Australia’s reputation as a clean source of high quality food.

“They want premium brands and think our food quality is fantastic and, like with Louis Vuitton [handbags], they are prepared to pay a significant premium for it,” said Schofield, who went on to single out Australian vineyards, seafood, aquaculture, and dairy assets as main areas of interest for Chinese investors.

“I think seafood and aquaculture will be the next round; you only have to look at (Chinese companies) buying hotels and ­casinos around the world and to think about Chinese tourists ­loving their seafood to see that,” he told The Australian.

Mitchell Taylor, managing director of Taylors Wines in Sydney, Australia also credits China with boosting Australia’s wine sector, reports Montana Public Radio.

Five years ago the U.S. and UK were the two top buyers of Australian wines – a ranking now held by China, which is seeing its imports of Australian wines increase by 40 percent per year.

“We’re very excited about this agricultural boom that is starting to happen now, not only in the wine sector, but in so many agricultural industries,” says Taylor. “And I really believe it’s due to having that access of being on the same time zone as China, and being able to provide that clean, green, positive image that Australia presents.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.