Lion Global eyes Asean passport opportunities

Malaysia is the most obvious focal point for the Singaporean fund house under the Asean passport proposals, but the firm is also in early discussions with distributors in Thailand.
Lion Global eyes Asean passport opportunities

Like its peers in Asia, Singapore-based Lion Global Investors is mulling potential opportunities from planned regional fund passporting schemes and moving to expand its distribution network in Southeast Asia.

Like others in the industry, chief executive Gerard Lee is more bullish on the prospects for the Asean scheme than for the Asia Region Funds Passport, which encompasses Australia, New Zealand, Korea and Singapore. “The [ARFP] is still bereft of details, and involves such a diverse range of countries,” he says, “so it will take a while to figure out what it stands for.”

The release of details on the Asean passport in October “came as quite a surprise”, adds Lee, noting that the Monetary Authority of Singapore [MAS] was quietly working on it behind the scenes. “Talk had been going on for a few years, but nothing came to fruition, so we assumed nothing was happening.”

The regulator has been conducting briefings and meetings with fund managers on the plans, he adds, with a view to a scheme being launched in the first half of 2014.

For Lion Global to sell Singapore-registered unit trusts to Malaysia, Thailand or Malaysia, it will need MAS certification that it complies with standards under the Asean scheme that all three jurisdictions have agreed on.

It must then provide documents on its Singapore-registered funds to the Malaysian and Thai regulators. “This, of course, assumes you’ve got a distributor in Malaysia and Thailand,” notes Lee.

Lion Global is in preliminary discussions on distribution partnerships, particularly in Thailand. “Our low-hanging fruit is in Malaysia, so we will tackle that first, then Thailand,” he says.

A year ago, the firm bought 70% of Kuala Lumpur-based Pacific Mutual Fund, and there are already a few feeder-fund structures between the two managers. Moreover, OCBC Bank, Lion Global’s parent, has a network in Malaysia.

The first beneficiaries of the Asean passport will be Singapore asset managers, notes Lee, as they will already have Singapore-registered unit trusts. European and US firms tend to sell Ucits funds in Singapore, he points out, “but Ucits are not eligible for Asean passporting, and I assume they never will be”.

Lee is less focused on potential opportunities arising from Singapore receiving Rmb80 billion in RQFII quota from China. He sees little appetite in Singapore for launching RQFII products now

However, he does have ideas about what he would do with quota were Lion Global to receive it. They include launching an A-shares unit trust or an RMB bond fund, or providing quota to one of the firm’s institutional clients for segregated mandates.

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