BKK Partners Pty, the advisory firm whose partners include former Australian treasurer Peter Costello, plans to start investment funds to bet on growth at home in industries such as resources and agriculture.
The funds might buy stakes in private and listed companies and are at an “embryonic stage,” said Chief Executive Officer Andrew Stuart, a former banker with Goldman Sachs Australia Ltd. BKK plans to hire a team and identify investments, which may also include infrastructure projects, over the next six months before raising money for the funds, he said.
“It will be themed investments,” Stuart, 43, said in an interview yesterday at BKK’s Sydney offices. “There are a number of sectors where we believe there is going to be greater- than-average growth in the Australian economy.”
The firm aims to attract overseas cash for the funds, buoyed by International Monetary Fund estimates that Australia will grow faster than the world’s developed economies in the next two years. As the funds business takes shape, BKK will add a “significant” number of workers in the next 12 months, said Stuart.
BKK’s main business will continue to be selling corporate advice, he said. That division competes with independent boutiques such as Lazard LLC and Rothschild.
“We’re reasonably well advanced on the agricultural side in terms of what we want to do,” BKK Chairman Alastair Walton, 52, said in the same interview. “Hopefully we’ll be making an announcement in the next few weeks about a key hire,” he said, declining to name the candidate.
Stuart and Walton, former vice chairman of Goldman Sachs JBWere in Australia, declined to say how much the funds might raise or comment on the size of the investments.
As BKK considers courting overseas investors for its funds, foreign companies are bidding for Australian assets to secure supplies of soft and hard commodities. Bright Food Group Co., Shanghai’s biggest food company, in April bid A$1.75 billion ($1.4 billion) for the sugar unit of CSR Ltd. The previous month, Royal Dutch Shell Plc and PetroChina Co. offered A$3.5 billion for coal-seam gas producer Arrow Energy Ltd.
Four of BKK’s six partners, including Jeremy Mead, who joined this month from Lazard, are former Goldman Sachs managing directors. Costello, Australian treasurer from 1996 to 2007, joined BKK in November. The firm has a workforce of 16.
Selling advice on mergers and acquisitions in Australia has got tougher since Prime Minister Kevin Rudd in May announced plans for a 40 percent tax on so-called super profits of resource companies, Walton said.
“We have a lot of transactions and interest in resources going on, but there’s literally a freezing up due to the governments mining tax,” he said.
The proposal, which mining companies are campaigning against, has made it harder to value assets because it’s not clear when or how the plan will be implemented.
“What’s to stop the government levying taxes on some other sector of the economy it deems to be deriving supernormal profits?” Stuart said.