At the time of writing Australia is bunkering down to deal with the inevitable impact of Covid-19. Sunday it was announced that all people entering Australia from overseas would need to go into 14 days compulsory isolation. New Zealand had earlier announced, with the exception of some Pacific Islanders that anyone returning coming from overseas will need to go into 14 days mandatory isolation. South Korea, Italy, France and Spain are in self-isolation with the US blocking flights from the UK and the EU. Effectively each closing the country to the world. This has already occurred in parts of South America. Singapore and Hong Kong are braving the world but unfortunately is not business as usual.

Each day we hear of more countries closing their borders to prevent the spread of the disease they feel they cannot control. In Latin America, In the case of El Salvador, this is because it could not afford an outbreak and many of the countries surrounding them have a poor health system. In the case of Colombia, it announced a closure of its borders with Venezuela due to the fear of spreading disease.  Daily, the list grows.

Again, overnight the US stock markets have fallen substantially. There is much talk of recession, as if we would like to talk ourselves into one. Journalists and other commentators are sensationalising maybes. Government policy to reduce the spread of Covid-19 is having a direct impact on industries such as aviation which are essential to national economies. Such industries are seeking support from government. LatAm is forecasting the cancellation of up to 90% of its flights whilst Qantas is talking of up to 75% of its flights.

Yes, we need to be ready but we need continuing do what we do.

State of Play

Whilst we have a few extra items in the pantry and some additional cleaning products, we haven’t rushed out to buy everything on the shelves. There are genuine consumer concerns. In Melbourne the Grand Prix was cancelled, in Sydney the Easter Show has be cancelled and nationally, Anzac Day, our celebration of the selflessness of our military, has been cancelled. Gatherings of over 500 have strongly been prohibited and is proposed that our national football codes be played and televised but with no audience. There is now talk of when schools and universities will be closed. We are heading to social and economic isolation.

I am planning to be careful, as I contracted pneumonia in China in December 2017. I was hospitalised in Fundación Santa Fe de Bogotá University Hospital and was afforded the most wonderful care before being allowed to convalesce in Cali. I think the Professor was a little disappointed that I did not have an exotic Asian disease. Carmenza was stressed by the process and was by my side for the week, something that would not be allowed in Australia.

Australia is not on a war footing but the implications are widely understood, as is the fact that we will bounce back after the virus has its impact.

Like in so many countries, Australia, is trying to delay and spread the inevitable impact so it can prepare for it and manage the huge number of cases, and suspected cases, that will inevitably emerge. At the time of writing, Australia has 298 confirmed cases of the virus, of which have 27 recovered and 5 are dead.[1] There is now expectation of a number of deaths that would not otherwise come from serious flues at this time of year in Australia. The real issue is community concern management. Unfortunately, we do not yet have an immunisation which can be distributed to those most at risk. Generally, in Australia an annual flu vaccine is widely made available and subsidised by government. It is generally available from GPs and pharmacists. We are fortunate to live in a country with high quality medical services and where the University of Melbourne was one of the centres critical in the understanding the virus and the University of Queensland is one of the three collaborative universities working on a vaccine.

It is somewhat ironic, and around the world, several commodities have been rushed on including toilet paper. No one in Germany, Hong Kong or Canada, let alone Australia, can explain to me why we are rushing to buy this commodity. Like the rest the global community we have seen rushes and quickly production increased to meet an unseasonal demand.

Australia Government Policy is clearly to stretch the impact of Covid-19 so as to reduce any sudden shock to the medical system. This impact could occur during up to 6 months. Business and life will need go on.

Australia is entering into its second month of autumn which really starts around 22 March. Easter will be celebrated on the 5th April, based on current studies by immunologists Australia should come out of the Covid-19.

What are we seeing?

At Projects RH is business as usual. We will continue to deal with our clients using the available technology.

Australian business people are still continuing to meet and shake hands. In the last week we have seen more virtual meetings and less shaking of hands. I suspect that this trend will continue for the next month or so. There is a clear reluctance to do unnecessary travel and I expect we will see that increase; however, necessary business travel continues. We continue to see clients and investors continue to seek opportunities. The recent decline in the Australian dollar has led to a number of contacts from parties overseas seeking mineral and agricultural assets. Domestically Australian clients dealing with local institutions seems unaffected.

We are definitely seeing less people travel both internationally and more importantly domestically. Significantly, Sydney – Melbourne sky bridge seems to have slowed down and people are holding more virtual meetings. I think this trend will continue for some time especially where the parties already know each other.  Business is being a little more careful about how it spends money; some clients are paying a little slower. Both the human nature and our reaction to the media.

Australia’s 14 day  mandatory  self-isolation  after returning from overseas  places a heavy cost  on those seeking  to have meetings to do business  overseas .  Tonight we have a  virtual meeting  with parties overseas on a significant energy project. Normally such meetings would be face-to-face. I believe all the parties concerned are keen to make this meeting a success.

We are seeing some evidence of a flight to quality with people looking to sustain cash flows. There is some reluctance to invest in early stage tech projects but interest when they are producing some cash.

Within the domestic economy there is less interest in buying small businesses and by this, I mean less than $5 million.

What to do?

For people seeking investment it is really back to basics. They need for documents:

• a financial model
• an information memorandum containing their business plan
• as pitch deck which is focused on
  1. what the opportunity is
  2. what is needed to realise the opportunity
  3. what’s in it for an investor
• a one-page teaser document.

The story has not changed, what is important is that the willingness of investors to invest requires that promoters engage professionally with the investors. Their materials must be first class and they may need to communicate using modern technology rather than face-to-face. In any hard market you need to work hard. They need to be willing to knock on lots of doors get rejections and start again in the morning. Generally, at each stage a promoter only needs one yes.

What is interesting is that given the fall of the Australian dollar and the recognition of Australia’s high-quality technical skills and natural resources there is a lot of international interest in what is happening and what is available.

Parties looking for investment need to engage with people who can link them to international as well as domestic investor opportunities. Again, nothing is really changed, but in the uncertain markets those seeking investment need to be able to cast a wide net.

For companies to link projects with finance we need to be willing to connect early and late in the Australian day and often with people who have different weekends to us. Companies like projects RH need to continue to be culturally sensitive and guide their clients in how to deal with different markets. When I look at my diary from last week, we had Skype calls, WhatsApp calls and texts, Zoom calls and conference calls spread across the UK, Switzerland, Germany, the UAE, Canada, USA, Hong Kong, mainland China, Singapore, Malaysia and Latin America. Networking has never been as important as it is today.

At Projects RH and our sister company in Singapore, Tabatinga, we invest a lot of effort in communications, social media and message delivery. As we tell our clients, they need to have a strong presence on the Internet, social media coupled with a good website. We believe that as the world increasingly works under their business continuity plan that they will turn to their phones and their laptops to understand business opportunities. Incredibly this increases our opportunity to network our clients with money opportunities because investment is increasingly global.

As at today

We remain optimistic as we see an increased demand as the world recovers from the virus. There are already signs of increased demand from China.

For many people Covid- 9 will prove to be very serious if not terminal. But sadly, and realistically, every year major flus occur and they claim many lives.

Covid-19 is nobody’s fault. It just is and we have to deal with. Business has slowed in some parts but we are seeing clients that want to engage in opportunities. They want to engage now.  We need be ready for the bounce back. Generally, however, we will proceed as normal but using “social distancing” techniques.

Covid-19 from the beginning demanded more than the stiff upper lip and get on with. It originated from a transport hub in China and has spread to the world. It is clearly highly contagious and for certain people with respiratory conditions or old-age it is life-threatening, however, many people in their 60s get it and that does not seem to impact them seriously.

Our lessons learned have not come from a family member or a staff being impacted by our personal experience, rather it is come from what we have observed in our business community and family lives. Increasingly what we are seeing is less focus on the physical community and local family but increased focus on our special interest groups and the wider family. Like so many people in Australia we have family spread around the world.

Corporately we have seen mixed reactions from investors saying we are keeping our cash to clients coming in to say we need more cash.

Observations

We all need be patient and tolerant. Business will need to be done. We will need to be practical and pragmatic.

We are all learning that our supply chains need to be diversified. We cannot have everything made in China. One of our clients decided to source windows for their new building from Japan only to be advised that the spares had to come from China. It may well be that Chinese companies need to build plants in Africa, Asia and Latin America. This is a trend that has commenced.

Many of the implications of Covid-19 will not be felt for several months as companies review how and where they do business. At Projects RH we have already trailed our business continuity plan and quite frankly it went very well. I do see huge challenges for the co-working space and small corporate offices. We have relocated our small video equipment so that we can conduct our fortnightly broadcasts on Facebook live from our home. Secondly, we have looked at managing our external meetings to either three or two days a week. This would allow each of us at least 2 * 8 hours days a week to work with scheduled phone and email times. It did remind me of having worked for an organisation where 10:00 am- 12:00 noon was meeting and phone free.

I expect shortly there will be a further set of lesson learned. What is important is we communicate and get on with business.