Macquarie Gets Rudd's Support For China Push

The Age

Tuesday April 15, 2008

By John Garnaut, Asia Economics Correspondent, Beijing

MACQUARIE Group hopes to be the first Australian company to break into the top tier of China's booming financial services market, after receiving backing from Prime Minister Kevin Rudd in Beijing.

Macquarie has held talks with Chinese ministries, regulators and investors about establishing China's first domestic infrastructure fund, BusinessDay believes. Ultimately, the fund would need the approval of China's governing State Council.

Mr Rudd gave his support to this and other financial services applications by Australian companies in China last week.

Like most Australian financial services companies, Macquarie had been slow to tackle the Chinese market. But it has intensified efforts since buying the broking business of ING Barings in 2004, which gave it an entry point into the region.

And this year it has lifted its sights to China's top-tier initial public offerings (IPOs) after successfully advising China Railway Construction Corporation in its $US5.6 billion share offering in Hong Kong and Shanghai last month. This remains China's largest IPO this year and the second-largest worldwide.

Foreign investment banks and fund managers are targeting China's huge new investment vehicles such as the $US200 billion China Investment Corporation, which is the main sovereign wealth fund.

Yesterday a leading Shanghai analyst predicted China's sovereign wealth funds would more than triple in size to $US729 billion ($A786 billion) by 2010, including a China-Africa development fund and the Government's main pension fund.

Z-Ben Advisers said CIC would have $US625 billion in assets and would outsource 70% of that to foreign fund managers.

"Asset management companies need to be aware of the speed at which these mandates will be assigned," said Peter Alexander, the firm's principal.

Commonwealth Bank's Colonial is at present the only established player in China's domestic funds management market.

Last month, National Australia Bank made its first significant China investment, spending $A50 million for a 20% stake in a property fund in Fujian province.

NAB officials said it was the first foreign joint-venture company to receive a licence that, they said, would entitle it to run "investment banking" style operations in the future.

AMP is also seeking regulatory clearance for a funds management licence in China.

Last year, it established a partnership with China Life Asset Insurance Management Company, China's largest institutional investor, to source Chinese infrastructure investment opportunities.

And it is the only Australian company to secure a Qualified Foreign Institutional Investor licence, which enables it to invest Australian money in Chinese equities.

© 2008 The Age

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