SHK Fund Management eyes Singapore expansion by suchenfz


									SHK Fund Management eyes Singapore
By Rita Raagas De Ramos | 8 January 2008

Singapore’s growing private banking business offers the company vast
SHK Fund Management is looking to expand its presence in Singapore, with an end-goal
of capturing more private banking business from that fast-growing market and from
nearby Malaysia, Thailand and Indonesia.

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 Singapore’s private banking industry has been SHK Fund
Management’s biggest motivation in stepping up business development efforts there.

“We have been dealing with Singapore investors and intermediaries from Hong Kong
since 2002. Singapore is not a new market for us,” says Christophe Lee, Hong Kong-
based CEO of SHK Fund Management, which had more than $800 million in assets
under management as of October.

“However, 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,” 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 company’s 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 company’s 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 “private labels”
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 Management’s end-clients are mostly high net worth individuals with an
average “ticket size” or investment of around $100,000 to $200,000 in the company’s

Several data released recently show SHK Fund Management’s 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 year’s time from
last year’s $140 billion – 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 company’s fund management side of the business is also another area of
potential growth in Singapore. SHK Fund Management has two Asian hedge funds –
namely the SHK Quant Asia Fund and the SHK Asia Dynamic Fund – 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.

“We fully intend to grow the fund management part of the business. The only constraint
is finding good people,” he says. “We 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

SHK Fund Management has been having ongoing discussions with “a lot of people about
coming to join our platform” 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 “is when some people are more open-minded
about joining a new company because they already got their bonus” 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 company’s overall business.

“In Singapore we’re probably punching under our weight. It’s more of a long-term plan,”
he says. “The 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

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