This article was produced in association with ELITE Connect. It was originally published on the ELITE Connect platform
As a growing number of fund managers in Australia find themselves with a mandate to directly invest in offshore equities, the long-haul journey to the Southern Hemisphere is increasingly becoming a worthwhile consideration of time and budget. Here, Chris Willcocks, director of equity sales for Citi, gives us an overview of Australia’s current investment landscape.
ELITE Connect: Is Australia gaining in popularity as a roadshow destination, and why?
Chris Willcocks: Yes, I do get that sense. While corporates from Europe and the US have visited Australian investors for many years, the number of companies and the frequency of visits appear to be growing. An increasing number of corporates have asked to include Australia in their Asian roadshow plans.
The primary attraction is the growth in number of global funds based in Australia, and the increase in funds under management. Australia is now home to the sixth-largest pool of funds under management globally, ahead of Singapore, Japan and the UK. The managers here are experienced international investors, and many have worked overseas before returning to Australia so they tend to take long-term, high-conviction views. It’s a growing pool of funds that is sticky by nature.
EC: What’s your personal experience of organizing roadshows in Australia?
CW: From the perspective of the investors it is very positive: they travel a lot each year and appreciate more than most the time and effort required to travel to Australia. They are therefore highly complimentary of senior executives who make the time to visit.
Similarly, from a company perspective, the feedback we have received has been overwhelmingly positive. Senior management members are impressed by the level of knowledge about their companies, the size of the pie here and the conviction levels of the funds. They have also found the focus and discussions on long-term strategy from the Australian investor base particularly refreshing.
EC: What are the main investments Australian investors are showing an appetite for?
CW: All global sectors are of interest in Australia. That said, the ASX 200 is heavily populated by mining, energy and financial stocks. While these will always form a significant portion of global fund investments, many of the international funds that are or have been launched are skewed toward consumer, tech, industrial and healthcare sectors.
EC: Which Australian cities are best suited to roadshow activity?
CW: The two major cities in Australia with international investors are Sydney and Melbourne. As it stands, there are more funds run out of Sydney but that is changing. The majority of the superannuation funds are Melbourne-based, and they are increasingly looking to internalize funds under management.
EC: Do Australian investors favor any particular type of meeting?
CW: Meetings here tend to focus a little more on the longer term than the next quarter. Because of the distance from the Northern Hemisphere and access to senior management, investors take a long-term view and tend to focus on the company’s strategy for the next five years. Hearing from management is incredibly important as much of the time Australian investors are backing management rather than the cycle to deliver on strategy.
EC: Do you have any tips to share for a successful Australian roadshow?
CW: If you are planning a roadshow in Australia, plan for the next few years. Visiting sporadically tends not to yield great results. An annual trip supplemented with a video conference every other six months will allow company management to build rapport with investors.
