Singapore eyes VCC changes to reel in more family offices

The city-state is considering updating its recent variable capital company structure, a step that could enhance its allure as a destination for single-family offices versus Hong Kong.
Singapore eyes VCC changes to reel in more family offices

Singapore is looking at strengthening its appeal as a hub for single-family offices (SFOs) through potential updates to its new variable capital company (VCC) rules, AsianInvestor can reveal.

If implemented, the VCC changes could further cement the Lion City's allure as a base of operations for family offices over that of arch-rival Hong Kong, whose image as an international financial centre has been impacted by Beijing's political incursion into the city

“The Monetary Authority of Singapore [MAS] is aware that the situation is not perfect for SFOs now. It’s considering whether to amend the VCC framework to allow SFOs to set up their own VCC standalone or umbrella structures,” Mark Voumard, chief executive of Gordian Capital, told AsianInvestor.

Mark Voumard,
Gordian Capital

"Many SFOs would like to set up VCCs but don’t see the need to get licensed [as per the current requirement], as they only manage money on their own family’s behalf and prefer to retain privacy," said Voumard, who is also the founder of Gordian, a Singapore-based investment management platform. 

VCCs are a form of financial vehicle that can be used by alternative asset fund managers. The MAS introduced rules for them in January 2020 to lure private equity and offshore fund managers to use Singapore for their fund domiciles instead of offshore alternatives like the Cayman Islands (see box for more details).

However, the rules currently make it difficult for SFOs without a local asset management licence to establish VCCs. Voumard believes reforms to let them do so make sense, but may take some time. 

"I believe the MAS is just getting started on preparing the consultation process, so it will take at least one or two more years before it makes any material changes to the VCC Act," he said.

How SFOs can use VCCs 

Variable capital companies (VCCs) offer fund managers that use them benefits such as safeguards against the commingling of assets and liabilities between sub-funds, and the same tax incentives as onshore companies in Singapore. The framework offers an alternative to Cayman Island structures for alternative investment managers.

Mark Voumard, chief executive of Gordian Capital, says there are two basic types of VCC structure: a standalone single fund; and an umbrella structure under which a series of ring-fenced, segregated sub-funds are established. Under the current rules, single family offices (SFOs) can only operate a VCC if they have a Singapore asset management licence or if they use a licensed platform.

A spokeswoman for the Monetary Authority of Singapore said that private equity/venture capital and wealth management strategies, which are managed by regulated external asset managers or multi-family offices, each make up 30% of incorporated VCCs. The remaining 40% is comprised of traditional long-only funds, hedge funds and specialised funds such as ESG funds.

SFOs use Singapore’s VCC umbrella structure to allocate sub-funds under the umbrella to different family members, Voumard said. “The allocation can sometimes be due to risk appetite but often it is based on which assets are allocated to different members of the family by the patriarch and or matriarch.

“The board of directors at umbrella level can see all the assets in all the sub funds, so it works for SFOs but would not for multi-family offices [MFOs]. It would be slightly problematic for a MFO if each family wanted to sit on the board.”

An MAS spokeswoman confirmed to AsianInvestor the watchdog was studying the possibility of widening the scope of asset managers that could use VCC structures, on the back of rising demand.

It would do so "with adequate safeguards to minimise the risk of abuse of the VCC structure for illicit and fraudulent purposes", she said in an email.

She did not provide more details of the potential changes or when they might take place.


As of the end of March, some 250 VCCs have been established since the framework’s launch in January 2020, the MAS spokeswoman said – despite the Covid-19 pandemic. She added that there was plenty of desire for SFOs and fund houses to establish VCCs of their own.

“We have received keen interest from single-family offices as well as other asset managers that are not regulated by MAS, such as real estate fund managers that invest solely in immovable properties, to use the VCC structure," she told AsianIvestor

Voumard believes the MAS should update its rules to make it easier for SFOs to use VCC structures, not least because the city state has been trying to grow the number of such entities in the city state for some years now.

The regulator estimates that there were about 400 SFOs operating in the city as of end-2020. These include some Western families who have put a satellite family office there, noted the spokeswoman.

“I would estimate that 60% of those SFOs were set up in the past three or four years,” Voumard said. “My guestimate is that 10% to 20% of the VCC structures so far have been set up by or on behalf of SFOs."

Others in the wealth management space agree that Singapore is on the right track.

Steven Seow,
Singapore Consultancy

"MAS is doing more to make it easier for family offices to set up in Singapore. And Singapore is naturally more favoured than Hong Kong given the geopolitical factors we are seeing nowadays,”  Steven Seow, founder and head of Singapore Consultancy, told AsianInvestor.

“There are more Chinese family offices setting up in Singapore too,” he added.

Recent high-profile examples of family offices setting up in the Lion City include those of Bridgewater Associates founder Ray Dalio, vacuum cleaner tycoon James Dyson and Google co-founder Sergey Brin

Moreover, Shu Ping, one of the billionaires behind Chinese hotpot chain Haidilao International Holding, established Sunrise Capital Management in Singapore in 2019.

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