Australia’s Hostplus: China tensions have ‘ramifications’ for asset allocation

The A$49bn institution has ‘a lot of money’ invested across Chinese private equity and venture capital, PE head Neil Stanford tells delegates at a virtual conference.

Intralinks Neil Stanford
Stanford (top right): Sino-Aus tensions are only just beginning

Australian superannuation fund Hostplus has been given pause for thought over its Chinese investments amid deteriorating relations between the two nations.

Speaking at the Intralinks Global Alternatives Summit on 10 December, private equity head Neil Stanford said the A$49 billion institution had “a lot of money” invested across Chinese private equity and venture capital, including through separate accounts.

“What’s playing out now … it’s really giving us a lot of thought as to how do we continue to invest and the investments that we currently have, are they still ok,” Stanford said.

“Our politicians [are] really struggling for any sort of coherent strategy in terms of how to move that relationship forward. It’s got a lot of ramifications in terms of our asset allocation.”

Hostplus, which invests on behalf of the sports and hospitality sectors, is 7.8 percent exposed to private equity, including venture capital, per its latest annual report. Its China exposure includes ROC China Growth Fund, Siguler Guff HP China Opportunities Fund and Artesian Hostplus China Venture Capital Fund 1.

Australia and China have been at loggerheads this year since the former called for an investigation into the origins of the covid-19 pandemic. As sister title Infrastructure Investor reported, the federal government tightened foreign investment rules in March over concerns about foreign companies, particularly from China, launching takeovers of distressed Australian firms. Beijing has imposed restrictions on Australian exports such as wine, barley and beef, citing dumping and other trade violations.

Chinese managers already face a more complicated relationship with US public pension funds after an escalation in tensions under the Trump administration. The situation prompted concerns that US public pensions would face government and public pressure to reduce their exposure or allocations to Chinese private equity funds – a dynamic that has played out in the public markets.

“The current geopolitical issues there between Australia and China, it feels like it just continues to get worse and worse,” Stanford added. “There’s sort of no light at the end of the tunnel; I think we’re only just beginning actually.”