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Next to Hong Kong, the biggest push SHK Fund Management is making in Asia is in Singapore. The company, a subsidiary of non-banking financial institution Sun Hung Kai Financial, quietly set up its office in Singapore in mid-2007 and is now looking to aggressively expand its distribution network in that market.
The strong growth of SingaporeÆs private banking industry has been SHK Fund ManagementÆs biggest motivation in stepping up business development efforts there.
ôWe have been dealing with Singapore investors and intermediaries from Hong Kong since 2002. Singapore is not a new market for us,ö says Christophe Lee, Hong Kong-based CEO of SHK Fund Management, which had more than $800 million in assets under management as of October.
ôHowever, we felt that we were already at a stage where we needed local presence to make the business grow. Covering Singapore from Hong Kong, even with regular trips, was no longer doable,ö he adds.
Lee notes that the number of private banks in Singapore has more than doubled to 42 in December 2007 from 20 in 2000, while private banking assets have grown to $300 billion from $50 billion over the last decade. These growth figures represent the vast opportunities available to companies such as SHK Fund Management, whose end-clients are mostly high net worth individuals.
So far, SHK Fund Management only has two people on the ground in Singapore: Andrew Ang, the companyÆs director for business development, and office manager Wei-Ling Tan. The company is looking to hire additional staff in Singapore, possibly even hiring a fund manager to be based there, Lee says.
Lee says having both people on the ground in Singapore has already done a great deal in increasing the companyÆs client base and improving overall client servicing.
SHK Fund Management has two business models: one involves distribution, which is what it has in Singapore, and another involves fund management.
On the distribution side, the company works with global hedge funds and ôprivate labelsö or repackages their products before selling them to intermediaries, primarily private banks, brokers and independent financial advisors. At present, it has six global hedge funds in its roster.
Repackaging global hedge funds allows investors in this region to gain access to such portfolios at a lower minimum investment. Most of the global hedge funds that SHK Fund Management has in its roster have a minimum investment of around $1 million, but after repackaging, are made accessible to clients for as low as $50,000.
SHK Fund ManagementÆs end-clients are mostly high net worth individuals with an average ôticket sizeö or investment of around $100,000 to $200,000 in the companyÆs funds.
Several data released recently show SHK Fund ManagementÆs timing in expanding in Singapore in favourable.
London-based market research firm Datamonitor has reported that the number of wealthy individuals living in Singapore will rise in number to 600,000 by 2011 from 410,000 in 2007. The combined assets they hold will grow to $210 billion in four yearÆs time from last yearÆs $140 billion û an average annual increase of more than 7%.
The latest World Wealth Report compiled by Merrill Lynch and Capgemini showed the number of millionaires in Singapore grew more than 21% to 66,600 in 2006, outstripping a 10.5% rise across the region as a whole.
Research firm Cerulli Associates has reported that showed that assets under management of recognised funds in Singapore that target the high net worth population more than doubled to S$8.6bn in 2006 from S$3.3bn in 2004.
Meanwhile, the companyÆs fund management side of the business is also another area of potential growth in Singapore. SHK Fund Management has two Asian hedge funds û namely the SHK Quant Asia Fund and the SHK Asia Dynamic Fund û which are managed in Hong Kong by a combined team of seven investment professionals.
Lee notes that having an office in Singapore will make it easier to hire a fund manager on the ground.
ôWe fully intend to grow the fund management part of the business. The only constraint is finding good people,ö he says. ôWe have a reasonable amount of capital to put to work, but the challenge is a matter of finding the right people in Singapore as it is in Hong Kong.ö
SHK Fund Management has been having ongoing discussions with ôa lot of people about coming to join our platformö and some of them are from Singapore, Lee says. He notes there has been a huge turnover of staff within private banks and many are leaving to consider other options. The start of the year ôis when some people are more open-minded about joining a new company because they already got their bonusö in the fourth quarter of the previous year, he adds.
Lee declines to quantify the contribution of the Singapore office to SHK Fund Management, noting only that it is still a growing part of the companyÆs overall business.
ôIn Singapore weÆre probably punching under our weight. ItÆs more of a long-term plan,ö he says. ôThe numbers that we are looking at are the big picture numbers on the growth of the private banking industry in Singapore and the growth of the alternatives industry in general.ö
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