ASF Group creates value in growing Sino-Australian synergy
Australia has remained one of the most important ultimate destinations for Chinese outbound investment since 2006. In addition to being situated in the same region, Australia's attractiveness as an investment destination lies with its established political climate, open and transparent markets, and abundant natural resources. Notably, Chinese direct investment into Australia surged 21 per cent to US$11 billion in 2012, demonstrating China's growing role in Australia's economy, which continues to be sustained by net foreign capital inflows.
Sino-Australian investment trading house ASF Group is strategically positioned to leverage the increasing interdependence between the two nations. "Australia and China have great synergies," says Min Yang, chairman of ASF Group. "Resource-rich Australia perfectly complements China, which needs a stable and reliable supply of raw materials to power its economic growth. ASF is here to harness these synergies and create a fortune for both nations."
ASF, which stands for "Aus-Sino Fortune", is a gateway company focused on identifying, incubating and realising opportunities in sectors where the two countries have synergy. ASF's in-depth understanding of the Chinese mind and business culture, combined with its thorough knowledge of the Australian market, regulatory environment and opportunities for growth, are its key market advantages. ASF, domiciled in Sydney, has opened an office in Hong Kong to be within reach of its predominantly Chinese clients and strategic partners.
The investment house was founded by Min in 2005 after the businesswoman saw the vast opportunities for Sino-Australian trade. Bringing more than 20 years of hands-on experience in dealing with Chinese state-owned enterprises (SOEs) and private companies and a wide network of business connections in Asia-Pacific, Min plays a key role in transforming ASF into a leading creator and facilitator of cross-border investments and trade. Min grew up in the southeastern Chinese province of Fujian and first came to Australia as a student in 1988. Back then, she already had the insight that great fortunes could be generated from the complementary nature of the Chinese and Australian economies.
More opportunities in diversity
Listed on the Australian Securities Exchange, ASF has built a horizontally integrated business to match Chinese investor demand with Australian opportunities across several sectors, including property marketing and services, resources and energy, corporate services, and funds management and investments. Operating through a number of controlled entities, the company has developed expertise in developing investment opportunities into viable projects through joint ventures or other forms of co-operation with its network of strategic investors and partners from China.
"Our role is to introduce the vast investment opportunities in Australia to China and give investors and potential partners a sense of comfort and ease in bringing their business here," Min says. "We are a one-stop shop for Chinese investors who want to make a move to Australia. What we focus on is building relationships based on mutual trust."
ASF started off in real estate, branched out to resources development and then into providing corporate advisory and investment services to Chinese companies and high-net-worth individuals looking to invest in Australia and Australian firms with an eye on China. ASF has also set up an investment banking business overseen by ASF Capital, a controlled subsidiary.
Holding an Australian financial services licence, ASF Capital specialises in mergers and acquisitions and corporate advisory services. It can assist suitable businesses based in China on the prospect of listing their stocks in Australia.
Also through ASF Capital, ASF is participating in the Significant Investor Visa (SIV) programme, which was launched by the Australian government in late 2012. Under the SIV programme, migrant investors who maintain a minimum of A$5 million (HK$35 million) in complying investments for at least four years will be eligible to apply for a permanent visa. With the ASF Capital Investment Fund, Chinese entrepreneurs and other high-net-worth individuals will be able to make direct and indirect investments in infrastructure and real estate in Australia and in other assets authorised under the scheme.
"We believe our detailed understanding of Australia's regulatory framework, together with our extensive connections in China, put us in a good position to increase shareholder value through this new venture," Min says.
Significant investments in resources and energy
With soaring shipments of Australian commodities, such as coal and iron ore into China, resources became a main area of investment for ASF. "We acquire mining tenements and develop them," Min says. "Once operations are stabilised, we bring in a Chinese partner to co-invest and advance the project. Our plan is to sell the majority of our stake when these projects mature, retaining a fraction so that we can share in future growth."
ASF entered an investing phase last year, buoyed by significant gains it realised on certain projects. The company acquired substantial interests in Rey Resources and ActivEX, thereby exponentially increasing ASF's pipeline of opportunities.
Rey Resources is a coal explorer with a large tenement holding in the Canning Basin, including the Duchess Paradise thermal coal project. ActivEX is a junior mineral company with several promising copper and precious metals exploration projects in the Mount Isa district and southeast Queensland. ASF also became a cornerstone investor in Civil & Mining Resources, a private coking coal explorer in Queensland, in December last year. Continuing on its acquisition course, ASF acquired a 19.9 per cent shareholding in Canning Basin-focused oil and gas explorer Key Petroleum in January this year.
ASF has built a strong pipeline of resources investments to date, holding (directly and through its investments) exploration licences of more than 100 tenements in Western Australia, Tasmania, Queensland and Victoria. The tenements, covering nearly 30,000 square kilometres, contain potentially significant deposits of thermal and coking coal, gold, copper, tin, potash, iron ore and base metals. In addition, ASF holds (directly and through its investments) energy assets in exploration permits in Australia, spanning a total of 30,000 square kilometres for oil and gas exploration.
ASF has found different types of commercially strategic partners in the resources sector. The company has a supply deal with China Huaneng Group, a major SOE and coal-based power producer. ASF also has ventures with China Coal Geology Engineering, which has specific experience in resource exploration and mining.
"We see having a mix of partners as a good thing," Min says. "We deal with small business enterprises to SOEs with deep pockets and strong business networks."
Hong Kong listing
As ASF has significant interests in resource assets in Australia, it has developed a strategy to list suitable Australian resource assets on the Hong Kong stock exchange. With the introduction of Chapter 18 in the Hong Kong listing rules encouraging resource companies to list on the Hong Kong stock exchange, there are many opportunities for ASF to unlock value in its resource assets.
Throughout this year, ASF will be exploring listing opportunities of resource assets under its direct control and those of its associated investments. As ASF has a considerable Chinese investor following, it will be beneficial for those investors and others to use the flexible and bilingual environment of the Hong Kong stock exchange to invest in the growing number of resource and energy assets being developed by ASF.
Renewed focus on properties
ASF continues to provide property and marketing services to investors in China through its wholly owned subsidiary ASF Properties. "ASF has its roots in real estate," Min says. "In fact, we're pioneers in marketing Aussie real estate to high-net-worth individuals in China. Now we intend to again focus on our properties segment."
In order to build up its network in China, ASF forged a strategic partnering deal with the China Real Estate Association, which is a peak association authorised by China's Ministry of Construction and has a significant influence in the Chinese real estate sector. ASF also entered into a long-term and strategic co-operative agreement with E-House China to boost sales of its Australian property projects.
Broadwater Marine Project
Meanwhile, ASF Consortium's proposal - the multibillion integrated tourism resort at Broadwater in Gold Coast - has been selected by the Queensland Government. The proposal, which includes a cruise ship terminal, casino, hotel, marina and retail facilities, is heralded as one of the largest property developments in Queensland's history.
"ASF is an incubator of many different businesses," Min says. "Although we are a diversified investment company, we do focus on areas of synergy between China and Australia. ASF's mandate is to build a recognisable and trusted brand so that when people think of investing in Australia, ASF first comes to mind."