Family Offices in Singapore
Family Office Industry Growth in Singapore and Southeast Asia
Download the Singapore Family Offices Whitepaper in PDF format. I recently was asked to speak at a few investment conferences for IQPC in the Cayman Islands this month and Singapore next month. The following is a short whitepaper/report that I typed up for them explaining what really makes Singapore such a unique location for family office and fund management activities.
Background on Singapore
A brief introduction to Singapore: international trade has helped jettison Singapore above leading Western countries in terms of GDP per capita (the IMF and World Bank both place Singapore in a range of three to five in the rankings and consistently ranked above the United States, Switzerland and other wealthy, developed countries). Singapore has a healthy, free-market-based economy that has excelled in recent years.Singapore’s economy has grown significantly in the last decade (as evidenced by Figure 1) with financial services playing a vital role in that growth. However, like other international business and financial-focused economies, Singapore’s economy was hurt by the global financial meltdown, but it has managed to rebound impressively by earning more than 14% GDP in 2010.
Figure 1; Source: Singapore Dept. of Statistics
In fact, Singapore has the highest concentration of millionaire households, with15.5% of all households having at least $1 million in AUM; Singapore has the ninth highest concentration of ultra-high-net-worth households that have over $100 million in AUM, according to the Boston Consulting Group. As you can see in Figure 2, Singapore is perhaps the most vital access point to high net worth families due to its high proportion of wealthy households and its proximity to other key locations like Hong Kong, Tokyo and Taiwan.
Figure 2; Source: BCG
Family Offices in Singapore
As the amount of wealth in Singapore has steadily grown, so too has the need for family offices. Asia is, of course, a region of great wealth and Singapore is one of the wealth capitals for the region. It is estimated that there are 17,500 ultra-high net worth individuals in Asia and the region accounts for 18.5% of ultra-high net worth individuals in the world. In Asia, Singapore serves as one of two primary hubs for Asian family offices–the other being Hong Kong. Singapore has developed a reputation among the high-net-worth community as a financial capital and a popular destination for wealthy families, so many family offices have established offices in the country to service local families and individuals.
Singapore has been attracting a great number of these ultra-high net worth individuals and more and more are moving from mainland China to reside in Singapore. Accordingly, the number of family offices in Singapore is growing; however, many high-net-worth individuals and wealthy families have relied less on typical single family offices in favor of a different model. One study by VP Bank found that wealthy Asian families turn to “‘a plurality of players that are independently (e.g. global banks) or collaboratively (e.g. asset managers, lawyers and independent advisors) providing family office services for wealthy Asian clients … these structures work as a dynamic network of different players’ discussed as a ‘Hybrid network Family Office Model.’” Yet, as single and multi-family offices gains traction among the Asian investment community, we expect Singapore to fully embrace the more traditional family office model.
We asked one fund of funds manager based in Singapore to list some of the advantages to managing and investing wealth in Singapore, he listed a number of advantages, “the tax and regulatory regime is favorable, it’s an excellent location in Asia in terms of proximity to other countries, infrastructure, and ancillary services to investment firms also have offices in Singapore.” This reflects a growing consensus among fund managers and alternative investors that Singapore is a great location for investing and wealth management and the opportunities here are only growing.
Why Are We Focused on Singapore?
Despite the huge number of high-net-worth individuals and billionaires currently residing in the country, there are relatively few family offices, but that is expected to change in the coming years. As one report on Singapore family offices concluded: “Even if only a few family offices are identifiable in Singapore today, the market will clearly play an important role in the family office business for Asian clients in the future.” It is clear that Singapore will continue to play a big part in the future growth of the family office industry. According to Singapore-based hedge fund manager Anson Zeall Partner at Stoxster Capital LLP there is a continuous rise in money flowing into the area, which is fueling demand for family offices.
Anecdotally, when I attended past conferences in Asia, I was always surprised by the relative lack of family offices compared to other ultra-high-net worth hotbeds around the world. However, in my most recent trip to Singapore, I saw mounting evidence that Singapore is on the cusp of a surge in the local family office industry. For one, there are already dozens of family offices working in Singapore and has made the concept more familiar to Singapore and Southeast Asia’s wealthy, laying the groundwork for future family office growth. Furthermore, I met with several family offices considering or actively establishing an office in Singapore because they, too, see the huge growth potential in the region.
You can see other signs of this coming boom by the number of family office and wealth management conferences in Southeast Asia and Singapore and the number of hedge funds and private equity firms setting up new offices to service clients in the region. I am constantly talking to hedge fund and private equity marketers who are eager to find new investors for their funds and yet few have a clear strategy for targeting family offices and even fewer have a specific plan for raising capital from Singapore investors. The fact that investment funds are undervaluing Singapore is not atypical; for years, investors in Singapore and, more generally, Asia, have been underserved and overlooked in favor of investors more local to American and European funds. However, this trend is reversing as forward-thinking hedge funds and private equity firms realize the potential in Singapore and Southeast Asia.
At the Family Offices Group association, and at my capital raising firm, Richard Wilson Capital Partners we are looking to Singapore as one of the top emerging hot beds for family office activity. For those looking for a foothold in Asia and an access point to under-served wealthy investors, you need look no further than Singapore. If you would like to discuss the Singapore family office marketplace or learn more about the Family Offices Group please email me at Richard@RichardWilsonCapital.com, download our report on family offices, or visit our About Us page here.
Richard C. WilsonFamily Offices GroupRichard@RichardWilsonCapital.comRichard Wilson Capital Partners, LLChttp://FamilyOfficesGroup.com/about-us
