Private banks – under pressure amid the rise of the family office segment in Asia – are alert to every opportunity to retain client assets. One way for them to do this is to set up a multi-family office (MFO) platform independent of the bank, but affiliated to it.
Several big private banks in Asia are looking at going down this route, according to Gordian Capital, a Singapore-based fund-infrastructure platform. One that has already done so is Switzerland's Union Bancaire Privee, whose new MFO unit is free to make use of other providers for services such as custody and trade execution.
Gordian has received enquiries from a couple of the larger global wealth managers with businesses in Asia about developing such an offering. It declined to identify the firms in question. The five biggest players in the region by assets as of March this year were, in order of size, UBS, Citi, HSBC, Credit Suisse and JP Morgan.
Another rising trend is for private banks or MFOs to use external firms to set up bespoke independent investment vehicles for clients on which they advise, said Mark Voumard, chief executive and co-founder of Gordian.
One or two large private banks have been active in establishing such platforms to run funds externally, as opposed to in-house, he told AsianInvestor. “We have been involved in two such structures and have a number of proposals on the table. We hope this will grow from there.”
Stan Howard, a co-founder of Gordian, added: “Some private bankers are spinning out as IAMs [independent asset managers] or joining platforms like ours, while their clients are saying ‘why don’t we have our own fund and get advice from the IAMs and private banks?'”
Such clients have portfolios run by four or five private banks but want to consolidate them into one fund, he added, something Howard saw as a likely trend.
In fact, Gordian has never had so many enquiries about potential fund launches, he added, citing 10 the firm has received in the past three months. These are largely from Singapore-based individuals and groups, despite the firm's experience in and strong ties to Japan.
The proposals include real estate, private equity, hedge, Asian and global long-only funds looking for a regulated solution that will save them the initial outlay of building their own infrastructure, added Voumard.
Gordian's clients tend to be small players – perhaps with an initial $10 million – and the firm looks to take on funds with relatively similar strategies. Currently it has eight Japan long/short funds.
A lot of potential business is expected to come from family offices. The segment has been tipped to boom by Credit Suisse Private Banking, which estimated in a July report that one-quarter of an estimated 34,000 ultra-high-net-worth individuals globally reside in Asia. Yet only around 3% of the estimated 3,000 single-family offices worldwide are in the region, the paper noted.
And a study in the same month from Swiss private bank Julius Baer forecast that the amount of assets run by independent asset managers – either external asset managers or MFOs – in Asia would double to $56 billion by 2020.