How can family offices strategically navigate Singapore's regulatory landscape?
Globally, family offices are shifting out of cash and into risk assets, but Asia is the only continent that's doing the opposite. Asia's equity market has been dropping, with Hong Kong's Hang Send index decreasing15% year-to-date. In comparison to Wall Street's S&P 500 rallying at 23%, it's no wonder why the Asian market is playing it safer now.
We got the inside scoop from Dick Catlin, Head of Private Investments at Le Mercier's Capital. With investments across Southeast Asia specifically in technology, alternative-proteins, and commodities, he dives into how the regulatory landscape in Singapore is changing the scene, if all family offices are moving to risk off, and quickfire insights!
Tell us a bit about yourself and your role as Head of Private Investments in Le Mercier Capital?
I work actively with the family Principal, managing both the liquid and private portfolios. We are actively involved in forming and executing strategy for our key businesses and routinely sit of the boards and EXCO’s our major businesses.
I come from an institutional finance background with a career focus on private equity and growth capital across Asia Pacific. In addition to investment discipline, my current role involves getting much deeper into our businesses, helping management teams and developing long-term solutions to complicated problems.
What’s fuelling the Inflow of Family Offices in Southeast Asia and why will Singapore remain the ideal home?
Inflow of family offices into SEA/Singapore: There are several parts to this question:
- There are an increasing number of families with sufficient assets to warrant the creation of a family office, hiring portfolio managers and building investment platforms to make the investment decisions in house, while reducing reliance on 3rd party managers.
- Southeast Asia including Singapore has seen a large amount of organic wealth creation which is growing the number of family offices within the region. Additionally the migration of UHNW families into the region is bringing additional AUM into Singapore from further afield.
- The creation of a clear regulatory framework for family offices by Singapore, in addition to Singapore’s strong rule of law and sophisticated banking framework makes Singapore an attractive destination for family offices.
What are the challenges and opportunities due to the tightening criteria for family offices in Singapore?
The key challenge here is for new family offices setting up and existing family offices that only just met the previous criteria to begin with. There is a rising hurdle which may require sub-scale offices to re-consider their approach.
The increase in time taken to complete the application process also requires persistence from newly formed offices. The opportunity for existing offices and those which do meet the criteria is that it increases the value of having a Singapore family office, which enhances access to dealflow and services from counterparties. Singapore continues to increase its prominence as a deal-making hub.
What has been some shift in roles of banks For Family Offices and in your opinion what do Family Offices expect from private banks?
Family offices are becoming increasingly sophisticated and no longer just want white glove service and structured products. Family office principals want access to tech founders and deal flow on the private side and institutional level of coverage in liquid markets. This necessitates private banks delivering the a combination of a corporate finance and institutional markets coverage.
Give us some insights on,
Technology Challenges
The greatest technology challenges we face is the integration of portfolio information to provide real-time visibility on both liquid and private positions.
Top technology project of 2024
Creation of a platform to capture movements in the liquid portfolio in real time, integrating communication with brokers as well as market data feeds.
Pros and cons of having only 1 portfolio manager
- Benefit: The clear benefit of a single PM for a family office is the ability to run a holistic strategy for the overall portfolio, without requiring consensus building between multiple PMs.
- Necessity: The larger scale require to properly compensate good PMs is a challenge for some family offices.
- Cons: The obvious downside of having a single PM is key man risk and lack succession planning inherent with only having one PM within the platform
At a time when many investors are pulling back, family offices are moving into “risk on” mode – how and why do you think this is such?
Family offices are moving to risk on. Family offices are typically conservative, which means that a lot probably sat out the more speculative phases in both public and private markets in the period following the injection of Covid stimulus. This means that while institutional platforms are re-assessing their existing positions, many family offices have better balance sheets and fewer problem assets.
How would you advice family offices in navigating the space between traditional finance and the digital assets landscape?
The challenge in the digital asset landscape (as with all asset classes) is to understand what you are doing and why. Education and domain expertise are therefore extremely important.
What are 2 key things you find most valuable being a part of Fixed Income & FX Leaders Summit Asia?
Fixed Income & FX Leaders Summit Asia was great for meeting peers and understanding challenges faced after several extremely challenging years for the Asian fixed income space.
Dick Catlin, Head of Private Investments at Le Mercier's Capital