Thursday, 10 February 2011

"Fund chief looks to China growth story": Clinton Dines heads up Caledonia Investment

Clinton Dines, and lookin' good at 52!
I first met Cliton Dines in Peking 1990.  He introduced me to a China-based guy, who was to come work for me and become our top Aussie Trade Commissioner in Asia.
Clinton worked for many years for BHP -- 21 years according to this story.
Here he is, back in Sydney, as "Executive Chairman Asia" for Caledonian Investments.
"He knows the Chinese domestic economy very well and the way China works more so than most," said Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group.
Hear, hear! to that.  And would add that his Chinese is perfect.  Good on Clinton!
Reported in today's South China Morning Post, Business section, "The Back Page".  Here; but subscription required.  Copied in full below....

Fund chief looks to China growth story

Former BHP executive bets on food, technology

Clinton Dines said he had a rude  introduction to China deal-making - being held "prisoner" while negotiating a ball-bearing export contract to Germany.

That was in the early 1980s in  Hubei province, when he worked in the trading department of Jardine Matheson.
"These guys couldn't get the price out of me that they wanted," Dines said. "So they kept on telling me,  `Sorry, there are no trains'. They virtually held me prisoner for a week."
Australian-born Dines, 52, is now executive chairman Asia for Caledonia Investments, which manages more than A$2 billion (HK$15.8 billion). He is raising money for an Asia hedge fund for Caledonia to tap growth in China.
Besides lessons learned from rough negotiations three decades ago, he is tapping contacts and experience from 21 years as the China president for BHP Billiton.
"He knows the Chinese domestic economy very well and the way China works more so than most," said Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group.
Dines ran BHP's business in China as its gross domestic product grew more than 90-fold since the late leader Deng Xiaoping initiated economic reforms more than 30 years ago. The nation will overtake the United States to become the world's largest economy by 2020, Standard Chartered says.
"We are investing in equities, companies that are leveraged to the China growth story," Dines said. "We will invest in markets in Hong Kong, the US, Australia and Singapore. We are looking across a lot of sectors."
The pork industry in China, the world's largest producer and consumer, is one, he said.
The fund, which aims to raise as much as A$500 million, may consider technology companies and gold  jewellery retailing as Sydney-based Caledonia looks to tap demand for China-based hedge funds.
Developing countries will be the main source of increased agricultural output, consumption and trade,  according to the Organisation for Economic Co-operation and Development and UN forecasts for 2010-19. As incomes rise, diets are expected to include more meat and processed foods, favouring livestock and dairy, they said.
There was likely to be more industry consolidation as the economy progressed and rationalised, said Dines, a Putonghua speaker and international management graduate of the Insead Business School in France.
"Agriculture is one. There are millions of farmers growing pigs."
Dines first went to China for post-graduate study in Nanjing in 1979 after graduating from Brisbane's Griffith University with a degree in Asian studies, focusing on Chinese economics.
Caledonia would not be looking initially at resources companies, Dines said.
"This is not a resources fund - this is a long-short hedge fund," he said. "We will have a conversation about how to play the resources space if we are happy to do that. Maybe in the future we'll go down that path."
At BHP, the largest global mining company, Dines helped drive an  almost fourfold increase in the company's sales in the past decade to China, now the world's biggest buyer of metals.
When Dines goes looking for potential investments for his hedge fund, he does not expect a repeat of an experience in Sichuan when he visited a lead-zinc mine for BHP. After driving eight hours up "hair-raising hairpin bends", the mine owners invited his group for dinner.
"They were so delighted to receive foreign guests that they had prepared a massive banquet for us - the local delicacy was tripe," Dines told a mining club dinner in Beijing in 2009.
"We might have had dishes made from about 10 different kinds of tripe - sheep tripe, duck tripe, cow tripe, pig tripe, deer tripe, goat tripe, etc. I actually found it to be delicious but some of my BHP colleagues who were visiting China for the first time were a little surprised."
Assets of Asia-focused hedge funds grew US$2.2 billion in the first nine months of last year to US$78.5 billion, according to Hedge Fund  Research.
"I have absolutely no doubt that the mid-term future for Greater China hedge fund managers is very rosy indeed," said Paul Smith, the chief executive of asset manager and hedge fund distributor Triple A Partners. "Investor demand for these funds is high."
Caledonia will avoid companies that do not meet international  accounting standards.
"There is a saying in China that most companies have four or five sets of books," he said. "You have got a set for the investors, a set the management look at, a set for the auditors, a set for the tax guy and a set for the wife in case she wants to divorce you and that's what you give her lawyer."