Australian family offices often manage substantial wealth accumulated over many generations (since the Australian gold rushes, starting in 1851), providing them with a strong capital base to engage in diverse investment opportunities including land acquisition, farming, mining and real estate. Unlike institutional investors, family offices are not bound by short-term performance metrics. This allows them to pursue long-term investment strategies, often leading to more stable and sustainable returns.
Does it make some business sense to cooperate between family offices in other places (such as in Australia and Hong Kong) for bilateral co-investment opportunities?
Here are potential rationale into these partnerships or investment model:
1. Market Access
Diversification: By investing in each other’s markets, family offices can diversify their portfolios geographically and sectoral, spreading risk and increasing potential returns, e.g. many Australian family offices have significant expertise in the real estate sector, which remains a cornerstone of their investment portfolios. Their ability to identify and invest in high-potential real estate projects is a major strength. HK family offices could be very interest in Australian real estate sector.
Economic Synergies: Combining the financial strength and investment expertise of Hong Kong family offices with Australia’s robust economic sectors creates powerful investment opportunities, e.g. many Australian family offices may be interested a more populated market such as in the Greater Bay Area whereas there is an 85 million population with great consumption capabilities for Australian products/services. Australia family offices could be interest to find a right “blind stick” to invest there.
2. Expertise Sharing:
Knowledge Transfer: Collaborative investments allow family offices to share market insights, regulatory understanding, and sector-specific expertise, enhancing overall investment quality or success, e.g. many Australian family offices have robust governance structures in place, ensuring that investment decisions align with the family’s values and long-term goals. This will be attractive to Hong Kong Family offices.
3. Tax Efficiency:
HK government has offered a profits tax exemption on foreign-sourced income for family-owned investment holding vehicles (FIHVs) and their underlying special purpose entities (SPEs). This is part of Hong Kong’s strategy to maintain its competitive edge as a low-tax jurisdiction. A local HK family office partner will be helpful for Australian family offices.
I can see the opportunities and threats in the above co-investment model and concept. If you are interested to learn more about family office co-investment opportunities in Australia-Hong Kong, please write email to [email protected]
