Teaming up: Joint ventures on the rise

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Joint ventures are growing in popularity and becoming increasingly common in a range of new sectors, according to a lawyer and editor of a new book on the subject.

According to Herbert Smith Freehills partner Tony Damian, while joint ventures have always been popular in the resources industry, they are becoming increasingly common in other sectors as well. 

“One of the key trends is that joint ventures have always been a popular deal structure in the resources industry, in mining, in oil and gas.  The reason for that is those industries often have projects that require really significant amounts of capital and often too much for one company to take on so there’s a sharing of risk, a sharing of cost and a joint venture is a nice way of doing it,” he said. 

Part of the reason for the growing popularity of joint ventures in Australia, is the increasing trade and investment overseas.  Damian said Australian companies are increasingly agreeing to joint ventures with overseas partners.
“The joint venture has become quite a popular structure for Australian companies investing overseas,” he said. 
“Sometimes that’s due to the fact that under local laws, you can’t just own the whole of an investment in an overseas country, and so they’re forced to joint venture, other times it’s about sharing and finding a good local partner.”

In recognition of the rapidly changing landscape for joint ventures Damian and Herbert Smith Freehills consultant John Carter have edited a book on the topic. Launched last night, Before You Tie the Knot, examines a number of issues currently facing joint ventures in Australia.

Damian believes there is a need to loosen some laws around joint ventures to allow for healthy competition.  He hopes the book will draw attention to some of the shortfalls in the current law.

“It’s a book that asks some hard questions in different areas so we hope that it is something that will promote a discussion.”