[SYDNEY] Call him the Chinese millionaire hunter.
Berrick Wilson is one of at least 30 fund managers who have jumped into the business of luring China's wealthy to Australia using a new visa programme that helps the Chinese to invest abroad. Mr Wilson has flown to China three times this year from the Melbourne headquarters of investment firm KordaMentha Pty. He is looking for millionaires to invest at least A$5 million (S$5.8 million) and qualify for residency, which gets around China's restrictions on converting currency and sending it abroad.
"The interest is increasing by the day," said Mr Wilson, who planned to make his fourth trip this week to corral Chinese investors into the firm's commercial real estate fund targeted at US$100 million and aiming for a 9 per cent annual return. Referrals in Shanghai, Beijing and Shenzhen have netted miners, property developers and agribusiness entrepreneurs, he said.
The flow of money into Australia could reach as much A$10 billion a year, according to law firm Baker & McKenzie LLP. More than 1,000 people, almost all from China, have applied so far, and more are expected after Canada cancelled a similar programme in February amid a flood of applications. The number also may be boosted by a government review to hasten approvals. More than 60 funds have been started to capture the money, including by the largest banks in Australia.
'These are not your usual equity or private-equity type of investors. Fund managers need to . . . convince them of investing not just for a visa, but in turn to preserve their wealth and improve their lifestyle.'
- lawyer Bill Fuggle
"These are not your usual equity or private-equity type of investors," said Bill Fuggle, a partner at Baker & McKenzie in Sydney who advises immigrants on the process and asset managers on compliance with visa rules. "Fund managers need to visit China and convince them of investing not just for a visa, but in turn to preserve their wealth and improve their lifestyle."
Australia's Significant Investor Visas, which are similar to US EB-5 visas that come with a US$500,000 investment minimum and a requirement to create jobs, are designed to attract overseas capital and eventually allow permanent residency in the country.
Immigrants are required to put the A$5 million into government bonds or complying funds that invest in assets such as infrastructure, real estate and agribusiness, for four years, according to the Department of Immigration website. The initial visa requires residency of at least 40 days a year over the period, after which permanent residency can be granted.
The first 188 visa, so-called because the number eight in Chinese sounds similar to the word for making a fortune and is considered lucky, was awarded to an unidentified Chinese toymaker in 2013, according to the government. In May, the government announced a review to "reboot" the investor visa programme and ease implementation.
The pace of visa approvals has stepped up since the Liberal-National coalition government was elected in September, with 282 granted in the 12 months till June, compared with just four in the programme's first seven months.
Investment inflows from people with approved visas as well as those expected from 610 people on the waiting list totalled A$4.5 billion at the end of June. About 39 per cent of that money went into managed funds as at March, according to data from the office of Michaelia Cash, assistant minister for immigration and border protection.
Chinese nationals accounted for 91 per cent of applications and 86 per cent of grantees as of the end of June, according to the minister's office.
Applicants from Hong Kong, who are counted separately, make up 4 per cent of those seeking the visas, while people from Malaysia, South Africa and the UK represent one per cent each.
About 60 per cent of high-net-worth Chinese - those with at least 10 million yuan (S$2 million) - have left China or are considering it, according to a report by Bain & Co released last year. More than half of such individuals without overseas investments planned to make them, while 60 per cent of those who have them planned to increase them, it said.
"The rich feel it is time to hedge their bets," said Mr Fuggle. "The closest option for them is Australia, a country which enjoys a special and very long relationship with the Chinese populace."
The inflows are "material", Mr Fuggle said, adding that the visa plan "opens up a new and unclaimed pool of money" that otherwise would not reach Australia.
"Every single visa applicant I've worked with so far has a lot more than A$5 million to bring in," he said. "I would say the average net wealth of the people willing to come in is A$20 million plus."- Bloomberg