China’s $110 billion state-controlled pension fund is about to launch the biggest spending spree of the downturn – and Australia looks certain to be one of its main targets.
China’s National Social Security Fund (NSSF) is scouring the world looking for investment as it seeks to take advantage of falling asset prices and diversify its investments away from the US economy.
NSSF chairman Dai Xianglong addressed a special forum on the impact of the downturn over the weekend and said the fund was looking for private equity managers to assist with its investment drive.
“We will pick at least three to five private equity firms this year, focusing on investing in small and medium businesses and the service industry,” he told the audience.
“Last year nearly 100 foreign and domestic firms contacted us about private equity, and another 20 wanted to raise funds.”
Australia is seen as a prime investment target. Chinese companies have recently increased their stakes in mining firms Fortescue Metals Group (headed by entrepreneur Andrew Forrest) and Rio Tinto.
Chinese banks are reportedly in discussions with Australian officials about the possibility of setting up operations here and Chinese Government officials are keen to expand economic ties between the two nations.
Andrew Forrest could be one of the biggest beneficiaries of the Chinese investment push.
Over the weekend he met with Chinese banks and officials from the $200 billion Chinese Investment Corp sovereign wealth fund in a bid to secure billions of dollars to fund an expansion of Fortescue’s iron ore operations.
The big stumbling block in front of any Chinese investment in Australian companies is Australia’s foreign investment rules, but the fact that China is one of the few investors willing to actually spend money in the current environment will make the cash hard to resist.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
