Business abroad

There’s been no shortage of news about the United States’ financial problems over the past few months. Ever since the situation escalated in September 2008, the issues and have been well documented in the media. Indeed, there seems to be no end to the doom and gloom coming out of the US as each day brings forth new pronouncements of what has happened, what will happen, and what should be done to fix the country’s – and the world’s – current economic problems.

Reading all this you could be forgiven for thinking that business is in a bad situation at present, especially in America, and that there are few opportunities for entrepreneurs and business minds to crack the market and/or diversify and expand further into it. But in fact, there are actually lots of opportunities – right across a range of industries – if you only know where to look.

America’s business recovery will be given a boost this year by the US federal government’s stabilisation plan; a $US700 billion Troubled Assets Relief Program (TARP) aimed at soaking up toxic assets. It’s a key measure being implemented to return confidence to the sector and bring growth back to the economy and it’s expected to rejuvenate the country, or at least give it a financial leg-up.

The US federal and state governments are also giving certain industries an injection of cash and confidence by offering funding, tax relief and state development agency assistance to interested parties who are pursuing the opportunities in these sectors. It’s easy to spot these key industries and sectors because there are large numbers of conferences and seminars being organised around them. The big three feeling the focus at the moment are alternative energy, clean technology and infrastructure. 

So how does this all relate to financial services and the opportunities that might be available, especially to entrepreneurs? 

Well, at the various conferences being organised on alternate energy and clean technology at the moment, especially in New York and San Francisco, the majority of the attendees are representatives from the financial services sectors –venture capitalists, private equity firms or infrastructure-focused fund managers. Okay, so the current conditions may not be ideal for making investments at present but these players are now actively looking for the next opportunity. They’re relatively well cashed up and on the look-out for new avenues for their funds.

Of the two coasts, the West Coast is currently viewed as deal rich for the industry and consequently has become a very active place for investors, while the East Coast is viewed as a market that is not as competitive. However, this perception is slowly changing and the East Coast is now attracting greater attention because of the concentration of industry, population and the priority the regions and state governments are giving these industries.

Larger investment firms are also taking the approach that they need to look elsewhere (which means other than the US) for potential investments, and additionally for their investors to invest their funds. As a result, Australia is well recognised as a potential destination for investments, particularly in alternate energy and clean technology. In addition, Australia’s fund management industry is also viewed as a potential
source of investment funds specialising in these sectors.

To this end, The Australian Trade Commission’s (Austrade) US team recently hosted a clean technology mission that attracted interest from the investor community in not just Australian technology firms but also with Australian venture capital firms active in this sector. Austrade’s New York and San Francisco teams are also currently working with major funds specialising in this area to help them develop the right strategies to include Australia as part of their portfolio.

As well, Austrade is conducting a series of promotional events aimed at raising the profile of Australia’s financial services expertise, and in particular how it relates to venture capital, private equity, hedge funds and Australia’s superannuation funds management industry. This will be further demonstrated when the New York office holds two events in April and May. This interest is enhanced because Australian firms have a well-developed expertise and depth of experience that is widely acknowledged in the US. Investment firms are especially interested in those infrastructure opportunities in the US that may arise as a result of the Federal Government’s stimulus package.

While major questions still remain on whether public private partnerships will play a major role in 2009 business and whether the terms will be transparent enough to attract private investors, Australian firms are still keeping a close eye on developments. At a recent conference on energy transmission, the interest in infrastructure as a destination for investors was so overwhelming that the technical aspects of the conference took a back seat to discussions on what the investor community wanted to enhance the commercial and investment environment. This is being driven by cashed-up investment firms who need to invest and view infrastructure as a good bet if the conditions can created to give security to very significant outlays.  This attracted strong interest in Australian firms, as Australian expertise in this arena is so highly regarded, and there has been an uptake by some US funds in attracting fund managers with experience working with some of Australia’s major payers in this space.

Looking ahead, 2009 and 2010 appear to be exciting years, not just for how the current economic situation will resolve itself but also how the some of these key economic and industry priorities will develop. That is why Australia definitely has a role to play in this space – either as a destination for investment, as an investor of funds and or as a fund manager in market.

Australian firms wishing to investigate these opportunities need to connect with Austrade’s network across the Americas.