Boutique alternative fund administrator Equinoxe says it is expanding into Asia as it expects Singapore to grow into the region’s major hub for larger alternative firms.
This follows the city-state’s introduction in August last year of more stringent capital requirements for managers.
Equinoxe’s establishment of its Singapore office this month follows that of a mid-market player in the region, MainstreamBPO. The Australian firm opened in the Lion City in April 2012, as reported by AsianInvestor.
Director Liam McHugh says Equinoxe is servicing two clients in the region with combined assets under management of over $1 billion. The two managers run both hedge fund and private equity strategies.
Headquartered in Bermuda and founded in 2007, the new Singapore office gives Equinoxe seven locations, also including Atlanta, Dublin, Mauritius, Sligo (also in Ireland) and Malta, the latter having opened in September.
McHugh says there is a general expectation that new fund managers starting up in Singapore will be at the better-capitalised end of the scale. New regulations implemented by the Monetary Authority of Singapore in August last year had the effect of discouraging smaller start-ups from setting up there.
“Over the longer term, the regulations would attract larger fund managers; and smaller fund managers would stop operating out of Singapore,” says McHugh. He expects the benefit of the new regulations to take hold early next year, once they have been in place for some 18 months.
The new rules effectively set a minimum capital base requirement of S$250,000 ($202,000) for any hedge fund manager that wants to register with the MAS, but not actually get licensed.
Such firms are limited to a maximum of 30 qualified investors and S$250 million in assets. They must also comply with more stringent requirements for investor protection, such as segregation of investors’ assets, independent custody and valuation.
McHugh says he foresees a pipeline of business to come from Europe, based on discussions over the past two years with prime brokers, audit and legal firms in the region. Subsequently, a decision to expand to Singapore was made in January along with chief executive Stephen Castree.
The company will stick to its tradition of achieving “controlled growth” will remain – that each office targets to only serve up to three new clients per quarter to ensure consistent service quality – but will look instead to serve larger hedge fund clients.
Hence it will target those with at least $100 million in AUM, on top of its usual $15-30 million managers, he says.
Over the past 18 months Equinoxe has posted business growth, with assets under administration reaching $13.2 billion, from $7.5 billion in January 2012. McHugh attributes this partly to its shift to target mandates with larger fund managers.
The Singapore office – manned soley by McHugh, after his relocation from Dublin this month – will hire more account managers by January, so that all Asian clients will be served locally. The existing two Asian clients in the region are serviced out of Dublin.
Equinoxe, which employs a total of 75 people, uses Advent's Geneva fund accounting software.