Australia in 2013-14, and another US$42.3bn is expected to be invested in the next six years, far more than the US$20bn over the past six years. The Australian government requires non-resident foreign investors to buy new-build properties instead of established housing, and investment interest has been focused on apartments close to city centres, universities and public transportation networks, as opposed to detached houses. Purchases have been concentrated in Sydney and Melbourne, as well as Brisbane. Seeing opportunities in demand for Australian housing, Chinese developers have been entering the Australian market as the Chinese government puts in braking measures to dampen price gains in the domestic housing market. China’s anti-corruption drive, combined with Canada’s cancellation of its investor visa programme in 2014, may have driven investors with flight capital to flock to Australia in hopes of a soft landing. In the aftermath of stock market volatility in China, wealthier investors are expected to look for a relatively stable alternative to stocks, and to the Australian property market for a tried-andtrue safe haven in which to park their funds, which could in turn lead to inbound M&A activity generated by Chinese developers. Developers need to be wary of the risk of average investors being unable to undertake new investments or to honour payments for investments already underway, having been singed in the Chinese stock market turmoil. Investors attempting to bail out of stocks may have been stymied by the Chinese government’s market correction measures, such as the ban preventing shareholders with stakes of more than five percent in listed firms from selling for six months. With their share prices taking a hit, Chinalisted real estate companies emerged from the Shanghai share market tumult with an average debt-to-enterprise value of 75%, according to Citi, which may reduce acquisitive M&A activity as developers seek to reduce debt. Agriculture and agribusiness With the signing of the ChAFTA, Australian agribusiness targets look even more compelling to Chinese investors, since the removal of various tariffs means Australian agricultural products can arrive in China at a highly competitive cost, potentially generating more demand and increasing profit margins. The Chinese government has also expressed interest in backing Australia’s plan of developing Northern Australia to become part of Asia’s “food bowl”, displaying increased interest not only in the agriculture and food processing sector, but also in the concatenated infrastructure sector, which provides the roads, dams, air-strips and ports upon which the export of agriculture and food products depend. A major risk of investing in agribusiness lies in the unpredictability of the climate.

Foreign investors unfamiliar with the territory need to invest more time and funds into acquiring the knowledge and technology for running agricultural enterprises in the land, or structure their investments through managed agricultural funds. Infrastructure Given their close proximity to major Asian trading hubs, the privatisations of Australian state-owned ports have been particularly attractive to Chinese SOEs, as control of such premium ports would streamline trade logistics and transportation for China’s enterprise interests in other sectors. The largest single Chinese investment in 2014 was the acquisition of construction service provider John Holland. Of high strategic importance was China Merchants Group’s co-investment with Hastings Funds Management in an US$1.2bn deal to secure 98-year lease rights to the Port of Newcastle. Potential buyers and sellers need to be fully informed of the jurisdiction-specific regulatory issues surrounding M&A between China and Australia, ensuring satisfactory and timely completion, so that regulatory uncertainty does not translate into competitive disadvantage. Chinese investment in agribusiness is driven by a need to ensure food security and to maintain safe sources of food products amid a growing number of scandals and food scares at home. To tighten its scrutiny of foreign purchases of farmland, the FIRB lowered its screening threshold from AU$252m (US$179.6m) to AU$15m (US$10.7m) from 1 March 2015. Australia’s agricultural exports are placed at a premium for the country’s pristine reputation in upholding uncompromised food safety standards and quality. Contact us Asia: Violet Ho vho@kroll.com +852 2884 7777 Asia: Richard Dailly rdailly@kroll.com +65 6645 4521 EMEA: Neil Kirton nkirton@kroll.com +44 207 029 5204 Americas: Betsy Blumenthal bblument@kroll.com +1 415 743 4825 The information contained herein is based on currently available sources and should be understood to be information of a general nature only. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.

This document is owned by Kroll and Mergermarket, and its contents, or any portion thereof, may not be copied or reproduced in any form without permission of Kroll. Clients may distribute for their own internal purposes only. All deal details and M&A figures quoted are proprietary Mergermarket data unless otherwise stated. M&A figures may include deals that fall outside Mergermarket’s official inclusion criteria.

All economic data comes from the World Bank unless otherwise stated. All $ symbols refer to US dollars. Adrian Ng adrian.ng@mergermarket.com +852 2158 9743 .