In brief

On 31 August 2012, Australian Treasurer Wayne Swan approved the acquisition of Cubbie Group Limited (Cubbie) by a joint consortium held by Shandong Ruyi Scientific & Technological Group Co. Ltd (Shandong Ruyi) and Lempriere Pty Ltd (Lempriere) (together, the Consortium). The approval was given on the recommendation of the Foreign Investment Review Board (FIRB). The acquisition has also received strong endorsement from Australia’s Foreign Affairs Minister, Senator Bob Carr.

This approval demonstrates both that foreign investment is welcome in Australia, in sectors such as agribusiness, and that the current foreign investment policy and legal framework has the flexibility to address national interest concerns.


Shandong Ruyi, a Chinese textile company, currently owns 80% of the Consortium which has acquired Cubbie. Lempriere, an Australian-owned wool and grain marketing company, owns 20%.

Key conditions

The approval is subject to key conditions, including:

  • Shandong Ruyi is to sell down its proposed 80% stake in Cubbie to no more than 51% within 3 years, and ensure that its board representation is proportionate to its shareholding following the sell down, and
  • Lempriere will manage and operate Cubbie, including the marketing and sale of its cotton production on the international market.

FIRB Policy

The approval of the acquisition is consistent with FIRB’s policy and principles, as set out in the ‘Foreign Investment Review Framework’ (see below), as they apply to State-owned enterprises (SOEs), including the following considerations:

  • maintaining a market-based system of investment and supply in Australia, including ensuring proposed investors are acting commercially, and not likely to be subject to strategic or political considerations,
  • the impact of the investment on the general economy, including the nature of the funding of the acquisition and the level of Australian participation in the enterprise after the foreign investment, and
  • favouring diversity of ownership within Australian industries and sectors to promote competition.

This approval demonstrates that, despite recent press and political comment:

  • the Australian Government welcomes foreign investment in Australia, and
  • Australia’s current foreign investment policy and legal framework has the flexibility to address legitimate national interest concerns.

What does this mean for foreign investors, particularly SOEs and sovereign wealth funds?

Foreign investors, particularly SOEs and sovereign wealth funds, should expect FIRB and the Australian Government to assess proposals against the factors set out in the ‘Foreign Investment Review Framework’1, and should consider, and preferably discuss these factors with FIRB before making formal application for approval of investments by the Australian Government. These factors include:

  • the existence of external partners or shareholders in the investment,
  • governance arrangements for the investment, and
  • ongoing arrangements to protect Australian interests from non-commercial dealings.