Monday, November 23, 2020

"For Asia’s super-rich, Singapore family offices keep the wealth churning – but Hong Kong wants a piece of the pie too"

From the South China Morning Post, November 21:

James Dyson and the couple behind hotpot chain Haidilao are among those who have set up units in the city state to safeguard their family fortunes

Hong Kong also aims to become a hub for family offices, eyeing the almost US$2 trillion in wealth set to change hands in Asia over the next decade

Singapore is popularly known as an Asian financial hub where companies set up regional headquarters and rich individuals park their wealth. In recent years, it has also been attracting another sort of investment through a vehicle that is just gaining popularity in the region: corporate entities called family offices that moneyed families use to structure the way they invest and preserve their riches.
From 2017 to 2019, the number of family offices in Singapore grew by five times as the region got wealthier. Some of these offices were set up by Singaporean families who want to manage their assets better, but many were set up by foreign millionaires and billionaires lured by the city state’s financial reputation, its tax incentives, and the safe environment with a stellar education system it offers their children.

There are about 200 single-family offices in Singapore, according to a written answer to a parliamentary question in October. Tharman Shanmugaratnam, minister in charge of the Monetary Authority of Singapore, estimated that these 200 offices manage a staggering US$20 billion in total.

Hong Kong has also been rolling out the red carpet for wealthy families to set up such offices. The Securities and Futures Commission issued the first licensing guidelines for the industry in September and, in two months, 50 family offices had signed up for licences. Five major family offices have also come together to set up a guild called the Family Office Association of Hong Kong to represent the industry’s interests.

Family offices are attracted to Singapore because of Asia’s growth potential, and they see the city state as a gateway to the region, said Lee Woon Shiu, the regional head of the wealth planning, family office and insurance solutions department at DBS Private Bank.
“Family offices putting their money to work in Singapore are looking for investment opportunities across Asean – not just in regional financial markets and real estate, but also in opportunities with local business owners from business lines that are similar to theirs,” Lee said.
And Asia’s wealth is growing. In a June report, Boston Consulting Group said its modelling suggested that wealth across Asia excluding Japan would grow at between 5.1 and 7.4 per cent annually over the next five years, and overtake western Europe as the second-wealthiest region in the world by 2022.

Family offices are common in Europe and the United States, where some rich, established families trace their wealth back more than 10 generations, but they are new to Asia, where family wealth usually only reaches back a few generations. A report by DBS and the Economist Intelligence Unit released on November 19 noted that of the billionaires in China today, 95 per cent are self-made and acquired their wealth within the past two or three decades....


 The single-family family offices, whether licensed as such or not, are running a lot more than $20 billion.