The FIRB … Who is the Foreign Investment Review Board and why do they kill great deals?

Nick Sundich Nick Sundich, June 9, 2023

Investors may or may not know the Foreign Investment Review Board (FIRB), but those who do might know it for the wrong reasons. The FRIB is known for intervening in M&A deals on the ASX, sometimes blocking deals that seem a match made in heaven. But that is only part of what they do and they don’t just block deals for no reason.



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Who is the FIRB?

The FIRB is an Australian Government Board responsible for overseeing foreign investment into the country. Established in 1976, it is a non-statutory body chaired by the Treasurer and comprising representatives from Treasury, Department of Industry, the Attorney-General’s Department and other relevant government departments. Its primary purpose is to ensure that foreign investments are not contrary to Australia’s national interest and do not compromise national security or public confidence in the economy.

The Board reviews proposals from foreign investors who wish to invest in Australian companies or assets, as well as those who wish to acquire an interest of 20% or more in any existing company or business. The Board also considers requests from foreign investors for exemptions from certain requirements under the Foreign Acquisitions and Takeovers Act 1975 (FATA).


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Steering legislation as well

In addition to assessing applications on a case-by-case basis, FIRB plays a proactive role in controlling foreign investment flows by providing guidance on Australia’s policy approach and legislated requirements, which can be accessed through its website. It also works closely with government departments, academia and industry stakeholders to ensure that Australia’s foreign investment rules remain transparent and up-to-date.


Why might they intervene

The Foreign Investment Review Board (FIRB) has blocked a number of attempted takeovers in recent years. In 2017, the FIRB denied Chinese conglomerate HNA Group’s proposed $13 billion bid for Australia’s most valuable tourism company, AHL. The takeover was denied due to concerns that the company could be used for foreign espionage, with FIRB chairman David Irvine quoting ‘unacceptable national security risks’ as the reason for blocking the deal.

In 2018, the Chinese-led consortium Kidman Resources’ proposal to purchase 10% of a large cattle station in western Australia was blocked by the FIRB on national interest grounds. This followed reports that China would have control over parts of Australia’s agricultural land and water resources under this deal.

The FIRB also blocked a bid from Hong Kong-based CK Asset Holdings for Ausgrid, an electricity network in New South Wales, citing national security concerns as well as potential implications on infrastructure reliability and market competition in Australia.


Meddling in listed companies

But the FIRB can intervene in listed companies too. One high-profile case with a listed company involved Malaysia’s state investment firm Khazanah Nasional Berhad’s attempt to purchase ASX-listed energy services group Icon Energy in 2019. The deal was blocked due to Icon Energy having access to confidential data relating to Australian defence contracts.

A more recent occasion was where the FIRB blocked China’s Yuxiao Fund from increasing its 9.92% stake in Northern Minerals (ASX:NTU) to 19.9%. This was personally ordered by Treasurer Jim Charmers.


You should know about the FIRB, but not worry about them

The FIRB should be known by investors, but they shouldn’t fret over them. If you’re only owning a stock presuming it’ll be bought, you’re probably in the stock for wrong reasons and will likely be let down. And even putting that to the side, if it is a good asset – it’ll be bought by another buyer.


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