First-generation rich Asians are increasingly looking to realise the value of family businesses via such as public listings or reverse takeovers. And family offices are responding by building up their corporate finance capabilities.
“The whole thing right now in Asia is monetisation,” says Michael Tan, managing director at Singapore-based multi-family office CS Partners*. “You might have a patriarch who says ‘my son has been running a new business for six years and he is looking at doing something else’. We might help them to do a listing or an RTO [reverse takeover]. Those are things we’re talking about on a regular basis now.”
Others make similar points. “We are at the point where that post-war wealth-creating generation is ready to pass on the reins, so the succession issue is ubiquitous,” says Steve Diggle, Singapore-based founder of family office Hrothgar and Vulpes Investment Management.
Investors into the region welcome this trend. “Doing deals in Asia used to be a lot tougher, but now people here are more receptive as the population ages and all these very wealthy families owning major conglomerates are looking at succession and simplifying their corporate structures,” says Neil Petroff, chief investment officer at Ontario Teachers’ Pension Plan.
The $130 billion Canadian state fund last year set up an office in Hong Kong and expects to boost its exposure to Asia and other emerging markets.
Family offices are responding to this trend among the region's wealthy. Thirdrock Capital, a Singapore-based MFO, is buying a stake in a corporate finance boutique, ISSEA Advisory. This part of a buildout of the firm’s financial services capabilities, notes chief investment officer Melvyn Yeo. The aim, he adds, is to boost recurring fee-based revenues and create a better diversified revenue stream.
Ong Iu-Jin, who founded Singapore-based Deauville Private Office and last year sold his stake in it, is working towards launching a new business in 2015. It will be “far less focused on public markets and asset allocation [than Deauville] and more on private equity and corporate finance”.
And William Chan, founder and chairman of Stamford Privée, a Singapore-based MFO, says: “By and large we invest in public markets, plus a large pool of real estate. We have been moving a bit more aggressively on the corporate finance side in the last couple of years.”
*Michael Tan was speaking on a behind-closed-doors roundtable, along with other family office executives, hosted recently by AsianInvestor.