Co-Investment; the answer to sharing risk regionally?
Co-investment has been one of the key areas of focus in the recent Pacific Islands Investment Forum which was held behind closed doors in Cook Islands last month.
Adrian Orr, the Governor of the Reserve Bank of New Zealand and former CEO of New Zealand Super Fund addressed the forum highlighting the three C’s: compare, collaborate and co-invest, that were vital to improving the funds’ operations in the Pacific region.
While co-investment by counterparts can be a brilliant way to share the exposure in large regional and national projects, it does come with a fair share of challenges. Any offshore investment brings with it an additional element of risk which can be enhanced through factors such as the different legal and administrative systems unique to each country. Bureaucracy around foreign ownership of critical national assets could also be tricky.
Funds that venture beyond their home locations will have to pay extra attention to information surrounding the business due to geographical and cultural distances. Exit strategies of these co-investees will also be a vital factor that determines the success of such an approach.
Pacific Legal Network with its presence in the region through offices in Fiji, PNG and Solomon Islands and through associate offices throughout the region has successfully facilitated a number of cross-border transactions to enable co-investments in the region. This Forum seems to have reiterated the importance of such investment activities for regional growth.
Read the original article from the Investment Innovation Instituite here.