More wealthy Chinese have been setting up family offices in Singapore, which appears to have become the country of choice since the massive protests in Hong Kong coupled with Beijing’s thrust toward “common prosperity” aimed at creating moderate wealth for many instead of just a few.
The number of affluent Chinese seeking to set up family offices here — commonly beginning with US$5 million (SGD 6.8 million) in assets — has increased lately, several Singapore firms helping to open family offices here told CNBC.
Many among these well-heeled newcomers see Singapore as a safe haven.
The country has also drawn many families and individuals from countries other than China because of the absence of a wealth tax.
One notable example among global billionaires would be Google co-founder Sergey Brin, currently ranked as the seventh richest man in the world, according to the latest Bloomberg Billionaires’ Index.
It was reported early last year that Brin, whose net worth is US121 billion (SGD 164 billion) was opening a branch of his family office in Singapore to manage his wealth.
UK inventor Sir James Dyson’s company, Weybourne Group Ltd., also set up a family office in 2019, the same year he paid a whopping S$78 million on one unit at the top of the tallest building in Singapore, Guoco Tower. Mr Dyson’s net worth is estimated at US$8.4billion (SGD 11.3 billion).
Hedge fund billionaire Roy Dalio (net worth US$22 billion, or SGD 29.8 billion), the founder of Bridgewater Associates, also opened a family office in Singapore, Bloomberg reported in November 2020
And for wealthy families from mainland China, Singapore’s sizable Mandarin Chinese-speaking community is also a big part of the draw.
Jenga, a local accounting and corporate services firm, says that inquiries about setting up a family office here – primarily from China– have doubled over the last year.
They “believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there,” CNBC quotes Jenga’s founder Iris Xu, as saying.
Ms Xu said that about 50 of her clients who have opened family offices in Singapore have each at least US $10 million (SGD 13.5 million) in assets.
A family office is a private wealth management firm that caters to ultra-high-net-worth individuals — people who have $1 million ior more n liquid financial assets. such firms manages the investments and finances of well-heeled individuals or families, and offer consultancy services on such varied aspects of finance including taxes, insurance, donations, and wealth transfer.
There are single family offices, as well as those that serve multiple clients.
CNBC’s report also quotes Mr Ryan Lin, a director at Bayfront Law in Singapore, which handles clients from all over the world, as saying that much of his firm’s new work concerning family offices have been for Chinese clients.
Several clients from China, he said, had placed part of their assets in Hong Kong prior to 2019, only to move them to Singapore “when many Chinese had a second thought about asset safety.” Freedom of movement could also be a factor as China’s Covid-19 movement policy could mean restrictions on issuing and renewing passports.
Business Times reported in December that Singapore had become more prominent as the “preferred base” for family offices, and that the number had doubled to 400 between 2019 and 2020.
And last year, when China’s President Xi Jinping emphasised the importance of “common prosperity” in an important speech, this influx increased even more.
In a meeting on Aug 17, 2021, President Xi emphasized the need to curb “excessive” income in line with fulfilling the Marxist vision of common prosperity and decreasing wealth inequality.
CNBC reported that the sudden crackdown in Beijing last year on the education and technology industries, as part of the push toward common prosperity helped fuel the uptick in wealthy Chinese families wishing to set up family offices in Singapore.
But for these families, Russia’s ongoing invasion of Ukraine may prove to be an issue.
Singapore has been among the first countries to condemn the attacks and has imposed sanctions on Russia, to the extent of freezing local accounts of sanctioned Russian individuals and entities.
This caused some hesitation among Jenga’s possible clients from China wishing to open a family office here, said Ms Xu.
Financial professionals from Hong Kong have a better track record in managing money, she said, and warned that “If Singapore cannot catch up in providing [quality] wealth management services, Chinese assets will still be managed by professionals from Hong Kong. After all, family offices are not restricted in where they invest.”
/TISG
https://theindependent.sg/worlds-9th-richest-tycoon-googles-sergey-brin-sets-up-family-office-in-singapore/