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Singapore: The rising hub for family offices in Asia

The Covid-19 pandemic has seen some ‘accidental’ beneficiaries including technology giants Amazon, Netflix and Apple following changes in consumer behaviour. Billionaires like Jeff Bezos, Elon Musk and Bill Gates have seen their wealth grow during the pandemic and they are not alone.

The Covid-19 pandemic has seen some ‘accidental’ beneficiaries including technology giants Amazon, Netflix and Apple following changes in consumer behaviour. Billionaires like Jeff Bezos, Elon Musk and Bill Gates have seen their wealth grow during the pandemic and they are not alone.

More than five million people became millionaires across the world in 2020 despite the economic fallout from the Covid-19 pandemic, according to Credit Suisse.

This has increased the demand for family offices as the new wealth created needs to be managed. While global markets fell sharply at the onset of the virus outbreaks, they have broadly rebounded to hit all-time highs. The rich have got richer.

This surge in wealth has been felt across the globe, including Asia’s ultra-high net worth individuals which has become a boom for family offices in the region. Prof Denise Kenyon-Rouvinez (pictured) called this growth “unbelievable”.

Kenyon-Rouvinez is a family office veteran. Based in Switzerland, she has worked extensively for more than 25 years with very large global family businesses and specialises in dealing with complex governance and wealth situations. Before the pandemic struck, the professor had been travelling to Singapore at least three times a year, working with a growing number of ultra-wealthy families across Asia. Most of her clients fall into the ultra-wealthy bracket with manageable wealth of $500 million or more.

Family office boom

The number of family offices has “exploded” in the last two decades, with a significant spike after the Global Financial Crisis of 2008. In the two years from 2017 to 2019, single family office numbers increased worldwide by 38%, according to family office specialist Campden Wealth.

Specifically, there’s been a huge increase in the number of multi family offices (MFOs) which offer a lower entry point for some wealthy clans. Typically, a family office will look after clients with $50 million to $100 million in assets. But MFOs, because they can handle multiple clients, will accept families with assets of around $50 million, or even lower.

Many people still confuse family offices with family business, although the two structures are very different.

“The family office is often the safety net for the business in case of collapse of the economy,” Kenyon-Rouvinez said.

“It can be a source of cash flow.”

While there are connections between the family office and the family business, she was quick to point out they should be run separately.

“For many wealthy families in Asia, the family office is a way of diversifying assets away from the family business.”

Singapore rising

One trend she has seen is Singapore moving up the ranks in terms of establishing itself as a family office hub.

“I have big admiration for the Singapore government,” Kenyon-Rouvinez said.

“When they decide to do something, they really go for it. Singapore decided it wanted to be the number one family office hub in Asia and it is moving in that direction. Singapore is clearly speeding up and grabbing opportunities. It is a safe place to establish a family office. It has a stable political landscape as well as a system that fosters transparency which reassures investors.”

One area she is passionate about is sustainable finance which involves making investment decisions that consider not only financial returns, but also considering, environmental, social and corporate governance factors (ESG). One of its principle aims is tackling the effects of climate change. Singapore wants to play a key role in this new financial sub-sector and the Monetary Authority of Singapore is actively taking steps to promote sustainable financing within the financial sector.

Sustainable finance is different from philanthropy as investors are still looking for a return on their investment while having a positive impact on society.

“There are many worthy causes such as food sustainability and climate change that require billions of dollars of investment,” Kenyon-Rouvinez said.

“This is about impact investing. I’m really excited about the potential of family offices for sustainable finance.”

Republished with permission from Millionaireasia.

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