Are you following the money?

In this issue:

• Singapore’s family office population continues to grow
• Microsoft and BlackRock mobilise funds for AI

Greetings dear reader,

The Monetary Authority of Singapore (MAS) has granted tax incentives to an additional 250 single family offices (SFOs) in the last eight months.

Chee Hong Tat, the second minister for finance and deputy chairman of MAS, revealed this figure in a speech at the Global-Asia Family Office Summit organised by the Wealth Management Institute last week.

This brings the total number of SFOs granted these incentives to 1,650, from just 400 at the end of 2020. Chee also said it is likely that more than 300 will receive these incentives this year.

Singapore will continue to enhance its ecosystem of service offerings, with a focus on “trust, strong regulation and supportive government policies”, he said.

“This is a place where you can put your money for investments for the long-term and be assured of the stability and trust here.”

Chee added that family offices have created good jobs in Singapore – through the direct hiring of professionals, as well as engagement with private banks, fund managers and legal and tax firms.

Have there been any benefits for the Singapore market, though? What are the implications for investors or market players? More on that as well as the potential from a new fund in the works.

What’s happening?

The global financial community began streaming into Singapore last week – partly to network at the Formula 1 race and partly to attend the Milken Institute’s annual Asia summit, which brings together government officials and leaders in business, finance and philanthropy.

Some of them may stay on for SuperReturn Asia, a private capital event taking place this week that will also draw crowds.

As a result, principals at FOs are having a particularly busy time. There are cocktails and launch events, and private conversations are taking place as asset managers pitch for funds.

Managers paying attention to market signals would have sensed a golden opportunity as risk-on sentiment grows. According to Citi’s 2024 Family Office Survey, 43 per cent of FOs surveyed globally have raised their exposure to public and private equity as they shift out of cash and into risk assets.

In public equity markets, 43 per cent reported increasing their weighting – up from 20 per cent in last year’s survey. In private equity, the figures were 42 per cent versus 38 per cent.

This would suggest that excess cash is more likely to be deployed towards public equities than into the private equity market, which makes sense because private equity tends to be a smaller proportion of most investors’ portfolios.

Why it matters

This year and the next may shape up to be golden years for private equity funds, and general partners (GPs) – who manage the funds – are well-prepared with the materials to demonstrate why FOs should be allocating money there.

Meanwhile, several public equity markets are successfully drawing huge sums of money from investors too. Malaysia’s IPO market has been on fire this year, for instance, as has India’s. Even the Chinese IPO market is showing hints of recovery.

The Singapore stock market, too, appears to be on a revival path. The benchmark Straits Times Index last week rose to its highest point since 2007 on the back of the United States Federal Reserve’s decision to cut interest rates by a higher-than-expected 50 basis points.

Singapore isn’t exactly a risky market with a lot of high-growth stocks, but it is able to draw investors who are looking for a slightly higher yield without taking too much additional risk.

The large number of real estate investment trusts listed here makes the Singapore market particularly attractive for such investors. Over the last six months, the iEdge S-Reit Index has gained about 11 per cent as investors priced in the higher potential of a rate cut.

As Singapore embarks on an initiative to revitalise its equities market, it may need to move quickly if it hopes to catch the current wind.

It may also need to be more aggressive in its courtship of FOs if it hopes to compete with the well-funded and sophisticated private equity market players. It would be a shame for Singapore to welcome so many SFOs without tapping that potential for the benefit of the local market too.

The big number: US$100 billion

That is how much tech giant Microsoft and asset management behemoth BlackRock hope to mobilise for investments in artificial intelligence (AI) infrastructure after including debt financing.

Last Tuesday (Sep 17), the two companies announced a plan to launch a more than US$30 billion fund to invest in AI infrastructure to build data centres and energy projects.

MGX, the Abu Dhabi-backed investment company, will be a GP in the fund; while AI chipmaker Nvidia will provide expertise.

The investments will be chiefly in the US, with some investments in “partner countries”. Participants along the entire supply chain for AI infrastructure are nevertheless likely to benefit.

5 big reads

• Vietnam seeks Singapore’s help as more firms here found linked to convicted tycoon Truong My Lan COURT documents contain evidence of links between Lan and Viva Land, which in 2021 and 2022 paid record sums for two properties in Singapore’s central business district. Both properties were subsequently reported to be on the market at discounts to their purchase prices.
• Flagging investor interest may make 2024 a fine vintage year for private markets WEAKER sentiment has lowered asset valuations in some parts of the private markets, suggesting that now is a good time to invest. Experts caution, however, that because of the way private market funds call capital and invest it, a consistent allocation strategy works better than trying to time the market.
• Private equity AUM to more than double by 2029, but Apac may lag global average GROWING interest from non-institutional investors – including family offices and individual investors – will help support a 106 per cent increase in private equity assets under management (AUMs) over the six years to 2029, said private markets data provider Preqin.
• DFI shrinking Giant’s footprint to focus on Cold Storage amid growing competition SUPERMARKET chain Giant has recently shuttered several outlets here. But market watchers believe there is little cause for concern, as it is part of DFI Retail Group’s right-sizing approach as it turns towards ready-to-eat and fresh produce in its other grocery brands Cold Storage and CS Fresh.
• Singapore regulators not tough enough on firms that break the law: governance body ASIAN Corporate Governance Association notes low penalties for high-profile corporate scandals, no progress on a whistleblower law and ombudsman, and the continued lack of a class-action framework.