reporter2
23-05-22, 10:00
China’s new rich drawn to Singapore
Recent tightening of tax perk criteria for family offices has also made the Republic more attractive for HNWIs seeking diversification, exclusivity
May 23, 2022
SINGAPORE has seen an influx of wealth from Greater China in recent years, as newly minted millionaires and billionaires seek to spread their assets across more markets and diversify their holdings.
A recent tightening of conditions for family offices (FOs) to qualify for tax incentives has also made Singapore more attractive to some high net worth individuals (HNWIs), and industry watchers expect continued strong inflows.
“The raised bar makes having a FO in Singapore even more coveted among the newly rich. It is something that they can now boast of to their other rich friends,” said Loh Kia Meng, chief operating officer and senior partner at law firm Dentons Rodyk.
The stricter conditions include larger fund sizes, higher assets under management (AUM) growth targets and higher commitments to business spending.
For instance, applications for funds managed and/or advised directly by a FO must have a minimum fund size of S$10 million at the point of application and S$20 million within two years.
“Nobody puts all their wealth into an FO. So if one can set aside the minimum S$20 million, their net worth would be much more,” Loh added.
The number of new FOs setting up shop here has increased significantly in the last three years – from 27 in 2018 to 453 in 2021, according to data from analytics platform Handshakes.
The proportion originating from China, Hong Kong and Macau, in particular, has been on the rise of late. In 2019, about 30 per cent of the new FOs here originated from the region. As of April this year, about 44 per cent, or 63 out of 143 new FOs here, were from Greater China.
Angie Han, Pictet’s head of wealth planning for South Asia, said the government’s tightening action is in fact “a reflection of the fast-growing and maturing family office landscape in Singapore”.
“This boosts confidence in investors who have expressed great interest to participate in this growth story,” she said.
https://i.imgur.com/Hcmyzjs.png
Push and pull factors
Industry professionals said Singapore is a popular destination for wealthy individuals because of its political, financial and cultural stability. It runs in a similar time zone, and is culturally familiar to many of these HNWIs.
Singapore also offers a springboard for these entrepreneurs to invest in and do business with entities in the rest of South-east Asia, said Edwin Tan, chief operating officer at asset management firm Prime Asia.
Prime Asia’s AUMs have grown by a double-digit percentage in the past three years, with half the growth coming from the Greater China region.
Some observers said the prolonged Covid-19 lockdowns in China and changing political temperature in Hong Kong have also spurred these movements.
Manish Tibrewal, chief executive of Maitri Asset Management, said enquiries from Greater China have increased after the government’s crackdown on its technology sector last year. The proportion of Greater China-originated wealth being brought onto Singapore’s shores has likewise increased “in a meaningful way”.
“The steep sell-off in Chinese equities and bonds has led to a harsh realisation, among families in that region, that they are heavily exposed to local markets, prompting their desire to diversify in order to preserve their wealth,” he said.
Young, rich, willing to take risks
The recent crop of HNWIs from Greater China tend to be younger with higher risk appetites, said industry players.
Kiow Wei Hao, a partner at Hong Kong-based financial services group DL Holdings, said such individuals typically move 10-20 per cent of their portfolios to Singapore.
“Most of these people still have well-established businesses in China, and people still believe that China is going to grow. Singapore is very attractive, but there are still some limitations given the size of the country,” he said.
White & Case’s executive partner Jonathan Olier said his firm has observed a “relatively gradual” shift in FO teams in Singapore. “It is more about one or two relocations of key executives, and then hiring locally in Singapore to replace attrition in the teams in Hong Kong, rather than a wholesale transfer to Singapore,” he said.
Singapore’s organised re-opening of its borders this year has facilitated the shift, he said.
The objectives of the Greater China-orignating FOs may also differ slightly from the “more established” FOs originating from Europe and the US, said Pictet’s Han. The latter group primarily moves wealth here to access the private markets and direct investment opportunities in the region.
“They are generally very focused and know exactly what they want, their investment parameters and objectives,” she said.
In contrast, the “new rich” have less well-defined parameters. “Their FOs’ set-up and objectives can be very varied, from investment management to meeting the family’s long-term goals such as succession, philanthropy, family governance and legacy, as well as the re-domiciliation of their family members.”
Prime Asia’s Tan said some clients are also uprooting themselves to do business here.
“We are seeing people put money here not just for asset management. Many of them are pretty young (compared with) clients from other jurisdictions. Some are serial entrepreneurs. When they move to Singapore, they look for businesses that they can buy and run, or they may start something from scratch,” he said.
And their interests can range from traditional sectors such as real estate and consumer goods to newer sectors such as digital assets and digital banking.
https://www.businesstimes.com.sg/banking-finance/chinas-new-rich-drawn-to-singapore
Recent tightening of tax perk criteria for family offices has also made the Republic more attractive for HNWIs seeking diversification, exclusivity
May 23, 2022
SINGAPORE has seen an influx of wealth from Greater China in recent years, as newly minted millionaires and billionaires seek to spread their assets across more markets and diversify their holdings.
A recent tightening of conditions for family offices (FOs) to qualify for tax incentives has also made Singapore more attractive to some high net worth individuals (HNWIs), and industry watchers expect continued strong inflows.
“The raised bar makes having a FO in Singapore even more coveted among the newly rich. It is something that they can now boast of to their other rich friends,” said Loh Kia Meng, chief operating officer and senior partner at law firm Dentons Rodyk.
The stricter conditions include larger fund sizes, higher assets under management (AUM) growth targets and higher commitments to business spending.
For instance, applications for funds managed and/or advised directly by a FO must have a minimum fund size of S$10 million at the point of application and S$20 million within two years.
“Nobody puts all their wealth into an FO. So if one can set aside the minimum S$20 million, their net worth would be much more,” Loh added.
The number of new FOs setting up shop here has increased significantly in the last three years – from 27 in 2018 to 453 in 2021, according to data from analytics platform Handshakes.
The proportion originating from China, Hong Kong and Macau, in particular, has been on the rise of late. In 2019, about 30 per cent of the new FOs here originated from the region. As of April this year, about 44 per cent, or 63 out of 143 new FOs here, were from Greater China.
Angie Han, Pictet’s head of wealth planning for South Asia, said the government’s tightening action is in fact “a reflection of the fast-growing and maturing family office landscape in Singapore”.
“This boosts confidence in investors who have expressed great interest to participate in this growth story,” she said.
https://i.imgur.com/Hcmyzjs.png
Push and pull factors
Industry professionals said Singapore is a popular destination for wealthy individuals because of its political, financial and cultural stability. It runs in a similar time zone, and is culturally familiar to many of these HNWIs.
Singapore also offers a springboard for these entrepreneurs to invest in and do business with entities in the rest of South-east Asia, said Edwin Tan, chief operating officer at asset management firm Prime Asia.
Prime Asia’s AUMs have grown by a double-digit percentage in the past three years, with half the growth coming from the Greater China region.
Some observers said the prolonged Covid-19 lockdowns in China and changing political temperature in Hong Kong have also spurred these movements.
Manish Tibrewal, chief executive of Maitri Asset Management, said enquiries from Greater China have increased after the government’s crackdown on its technology sector last year. The proportion of Greater China-originated wealth being brought onto Singapore’s shores has likewise increased “in a meaningful way”.
“The steep sell-off in Chinese equities and bonds has led to a harsh realisation, among families in that region, that they are heavily exposed to local markets, prompting their desire to diversify in order to preserve their wealth,” he said.
Young, rich, willing to take risks
The recent crop of HNWIs from Greater China tend to be younger with higher risk appetites, said industry players.
Kiow Wei Hao, a partner at Hong Kong-based financial services group DL Holdings, said such individuals typically move 10-20 per cent of their portfolios to Singapore.
“Most of these people still have well-established businesses in China, and people still believe that China is going to grow. Singapore is very attractive, but there are still some limitations given the size of the country,” he said.
White & Case’s executive partner Jonathan Olier said his firm has observed a “relatively gradual” shift in FO teams in Singapore. “It is more about one or two relocations of key executives, and then hiring locally in Singapore to replace attrition in the teams in Hong Kong, rather than a wholesale transfer to Singapore,” he said.
Singapore’s organised re-opening of its borders this year has facilitated the shift, he said.
The objectives of the Greater China-orignating FOs may also differ slightly from the “more established” FOs originating from Europe and the US, said Pictet’s Han. The latter group primarily moves wealth here to access the private markets and direct investment opportunities in the region.
“They are generally very focused and know exactly what they want, their investment parameters and objectives,” she said.
In contrast, the “new rich” have less well-defined parameters. “Their FOs’ set-up and objectives can be very varied, from investment management to meeting the family’s long-term goals such as succession, philanthropy, family governance and legacy, as well as the re-domiciliation of their family members.”
Prime Asia’s Tan said some clients are also uprooting themselves to do business here.
“We are seeing people put money here not just for asset management. Many of them are pretty young (compared with) clients from other jurisdictions. Some are serial entrepreneurs. When they move to Singapore, they look for businesses that they can buy and run, or they may start something from scratch,” he said.
And their interests can range from traditional sectors such as real estate and consumer goods to newer sectors such as digital assets and digital banking.
https://www.businesstimes.com.sg/banking-finance/chinas-new-rich-drawn-to-singapore