Based on an interview with
Koby Jones, Managing Director
The SILC Group is a specialised financial solutions provider servicing wholesale private, commercial and institutional clients. It offers corporate, capital and portfolio solutions across the full spectrum of investment, lending and financial markets products. The SILC Group commenced scoping as part of its China market expansion strategy by focusing on Shanghai and Hong Kong in 2013. From 2015, after the analysis stage, it commenced establishing relationships and working with local intermediary advisors and associations in the market.
ESTABLISH RELATIONSHIPS AND THEN FORM PARTNERSHIPS
Koby Jones, Managing Director of The SILC Group says: “Asia is so big you can’t not be there! The decision to invest in Asia was not difficult. As a financial services company focusing on wholesale markets, Australia is not large enough and there is a critical need to find new markets.”
The company’s first visit to China was through a trade mission organised by the Victorian government with a focus on the infrastructure sector. This provided the opportunity to be introduced to different companies and was also a great opportunity to explore the culture, size and appetite of the market. Jones explains that he used this approach to visit China several times through trade missions organised by the Victorian government and Austrade and each time focused on strengthening existing relationships and developing new ones. Once the relationships were firmly established, the company leveraged them to start identifying local intermediary advisors in the market it could partner with.
The SILC Group currently has a network of approximately 20 local intermediary advisors who have access to more than 200 relevant clients in Asia. Partnering with the right intermediary advisor who is trusted, can negotiate, communicate and engage with the local market was essential and key to building a sustainable and successful strategy.
THERE ARE WAYS TO INTERNATIONALISE AND STILL MANAGE YOUR CAPITAL OUTLAY
The business model operates by having a presence in Australia that has a connection to the intermediary advisors in their respective local markets, who in turn have access to the relevant potential clients. The strategy to use only local intermediary advisors has allowed The SILC Group to minimise financial risk and capital outlays. The intermediary advisors in the relevant markets work directly with the local clients. Jones refers to this approach as a soft entry approach that minimises his company’s risk exposure and ensures warm introductions. Intermediary advisors get paid a success fee percentage based on the amount invested by their clients. There are no local offices in offshore markets at this stage to keep costs low, but Jones ensures he undertakes regular visits to meet his local advisors. His management team in Australia is also in constant contact with the team in China and Hong Kong and other markets in Asia.
The SILC Group is continuing to invest in technology to offer more products and services to increase its reach as it is not possible to be in all the markets. The focus of the technology is on efficiency by reducing the number of physical touch points, improving velocity by increasing the speed at which responses and engagement can be provided, and enhancing scalability by increasing the reach to cater to a wide range of markets, not only in Asia but globally. As a result, the company has actively been investing in technology to achieve its growth strategy and is collaborating with a major university in Melbourne to develop its platform. Relationships are what matter in these market segments and The SILC Group is using technology as part of the solution, which is combined with a novel distribution strategy. Diversifying and being international can be done with limited capital investment and continuing to maintain a low operational risk profile.
TAKE TIME TO BUILD A PRESENCE AND THEN ACCELERATE
Jones first visited China in 2013 to understand and explore the market and build relationships. From 2015 he started identifying who The SILC Group could be working with and then built partnerships with the local intermediary advisors. The company has grown its presence in Shanghai and in Hong Kong, which is now the hub for the company in North Asia, and also has networks in South-East Asia, particularly in Singapore and Malaysia. The SILC Group also has connections in Beijing and Guangzhou and has explored 11 cities in total in China.
COVID-19 has fortunately not impacted the business. Instead, it has grown its client base during this period, given their focus is on alternative assets and wholesale investors who are mature in their outlook and are focused on long-term outcomes. Alternative assets are gaining more interest and popularity with the firm’s client base in Asia. Within alternative assets The SILC Group is attracting investment from clients in Asia related to private debt, private real estate, private equity, infrastructure and agriculture. The current environment has produced a positive outcome for the business, as Jones explains there is also a rapidly growing middle-class in Asia that is demanding more access to and choice in these solutions.
He says Australia has a strong reputation as a well-regulated, transparent, stable and trusted destination for capital, and The SILC Group needs to be ready to provide its services and solutions to clients. “There is a market for it in Asia and we need to strongly engage as it is no longer going to be optional, but essential for our long-term sustainability. Asia is the future and it is right on our doorstep ready to engage.”