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March 2, 2017

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Avoid bidding for Australian icons

CHINESE companies looking to invest in Australian businesses should avoid bidding on “national icons” to save being denied by the Australian government, the chairman of Australia’s Foreign Investment Review Board has said.

Following a number of high-profile decisions by the government to deny the sale of key Australian infrastructure and assets including the S. Kidman & Co cattle empire to foreign investors, FIRB chief Brian Wilson has said potential investors need to be aware of the firms they take interest in.

In comments published in yesterday’s papers, Wilson said that in the case of the Kidman sale, it was evident to the public and the government that such an “iconic” company should stay in majority Australian hands.

He said that while it was nothing against Chinese investment firm Pengxin, which had its A$370 million (US$285 million) bid denied by the government on “national interest” grounds, iconic companies are always going to be a “hard sell” to the government.

“Because it was so iconic and so large, (the Kidman sale) caught the public imagination,” Wilson told the Australia China Business Council forum on Chinese investment in Australian agriculture.

“Given that (Australia) must maintain public confidence in our foreign investment stream, I’d suggest that if you are (a Chinese company) looking to invest, you try to avoid icons.”

The Australian government eventually approved the sale of S. Kidman & Co mid-last year. The winning bid was one from mining magnate Gina Rinehart’s Hancock Prospecting (two thirds) and China’s Shanghai CRED (one third).

Wilson said that if Chinese companies are set on an Australian “business icon,” they need to convince the government of the benefits foreign ownership will bring.

“My advice if you are thinking of investing is stay away from the business icons — they are always going to be difficult — and really make the case for the benefits, by talking about jobs created, the growth of markets, added value and what your capital can do,” he said.

Following Wilson’s comments at the forum, Treasurer Scott Morrison told News Corp that the government welcomes all foreign investment, particularly from China, so long as it is in the “national interest.”


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