How Singapore is Becoming Asia’s Family Office Hub

According to Wealth-X’s 2021 Billionaire Census, Asia’s billionaire population increased by 16.5 per cent last year. The continent is now home to more than a quarter of the world’s 2,754 billionaires, and is projected to account for one-third of the world’s billionaires by 2023.

This explosive growth of wealth and a proliferating network of contacts has expanded direct investment opportunities for Asian families.

Given that 70% of families lose their wealth within a generation, many families are engaging professional help to preserve wealth for future generations. This has created a regional boom of both single family offices (SFOs) and multi-family offices (MFOs). The former offers total wealth management for a single family, while the latter supports more than one family — similar to traditional advisory firms like hedge funds — but offers economies of scale through cost-sharing among clients.

“As clients hand over their reins to the next generation, that generation is seeking to institutionalise the family office, hiring professionals with experience in the financial sector and putting in place sophisticated disciplined investment mandates,” says Desmond Teo, EY Asia Pacific Family Enterprise Leader.

Singapore, in particular, has seen its number of FOs multiply fivefold from 2017 to 2019. There are currently about 700 SFOs in Singapore as at end 2021. This surge encompasses new Asian FOs as well as satellite offices of FOs from Europe and North America keen to tap on regional growth and explore co-investment opportunities.
 

Why companies like Tolaram choose Singapore as a family office base

As one of Asia’s most politically stable, well-regulated, and competitive economies, Singapore is an ideal base for family offices to centralise global portfolios spanning diverse interests.

One of the FO landscape’s notable success stories is Tolaram, a family-owned business which relocated its headquarters to Singapore from Indonesia in 1975. Singapore’s established business networks allowed Tolaram to expand its operations across several continents, with interests spanning consumer goods, logistics, and increasingly, financial services.

Tolaram has benefitted from Singapore’s strong regulatory frameworks. The high standards of transparency to which the company is held has given its operating business credibility in markets like Nigeria, Ghana, and Egypt, and made it an attractive partner for global names like Kellogg’s and Colgate-Palmolive.

With decades of earned confidence in Singapore’s operating environment, Tolaram sought to leverage the countless investment opportunities offered by the country’s status as Asia’s largest forex centre and a key wealth management hub. To that end, it launched its own single family office, Tolaram Family Office in 2015. Tolaram Family Office also sought to facilitate the entry of the family’s fourth generation into the family business, and to enact a long-term vision for the family’s legacy.

Soon, other families began approaching Tolaram Family Office for collaborations and investment advice, prompting its transformation into a multi-family office (MFO) and licensed fund manager known as Maitri Asset Management in 2019. “Collaborating with other like-minded family businesses expands our access to capital, which gives us more bargaining power to grow our investments,” shares Maitri CEO Manish Tibrewal.

Diversifying into third-party asset management meant that Maitri had to apply for a license with the Monetary Authority of Singapore (MAS). Trust in Maitri’s investment strategies have only been strengthened under the MAS’s watchful oversight, increasing its appeal to family businesses. Maitri’s heightened visibility in Singapore’s financial community has also led industry leaders such as DBS Private Bank’s former Global Head Lawrence Lua to join the firm as an Independent Director in 2021.

Within just a handful of years, Maitri Asset Management has grown into a specialist in sustainable investing. Maitri is Asia-Pacific’s first MFO to earn B-Corp certification, a designation that verifies companies’ high standards of performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices. It is also among the first Asia-headquartered asset managers to commit to net zero targets under the Net Zero Asset Managers initiative. Meanwhile, Maitri remains at the forefront of Singapore’s environmental risk regulations, having consulted with MAS on its upcoming Guidelines on Environmental Risk Management for Asset Managers.

These initiatives validate Maitri’s high standards of social and environmental performance, accountability, and transparency, dovetailing with Singapore’s own progress in becoming Asia’s green financial hub. Looking towards the future, Maitri is investing in emerging areas such as clean energy, cybersecurity, and Industry 5.0 technologies including machine learning and the Internet of Things (IoT), all of which are also key areas of interest for Singapore.

Within this business-friendly and collaborative environment, family offices such as Maitri can seamlessly and securely invest in up-and-coming industries through strategic partnerships or diversification into new sectors. 
 

How Singapore catalyses philanthropic activities for families

Philanthropy is also a growing interest for many second-generation family leaders, many of whom are actively seeking to preserve their family legacy. As FOs mature, their focus may sometimes expand beyond capital growth to include philanthropy and social enterprises. According to the Milken Institute, 71% of FOs are engaged in philanthropy.

“Responsible stewardship has always been a part of the Tolaram ethos,” explains Tibrewal, “we were responsibly stewarding our businesses even before ESG was popularised”.

This ethos fuelled Tolaram’s decision to restructure from a shareholding company to a trust, comprising Tolaram’s operating business, Maitri Asset Management, and the philanthropic organisation Ishk Tolaram Foundation, established in 2015.

Ishk Tolaram Foundation operates as a beneficiary of this trust, providing access to quality education, healthcare, and skills training to underserved individuals in Indonesia, Nigeria, and Singapore. “The Foundation is focused on strategic and progressive philanthropy,” shares the Foundation’s Communications Manager Madhurya Manohar.

“We identify gaps where we can apply our in-house expertise, resources, and local networks to develop our own programs or support existing non-profits such as Daughters of Tomorrow and Halogen Foundation”.

In setting up its headquarters in Singapore, Ishk Tolaram Foundation is able to access a well-developed social infrastructure and an experienced network of philanthropic players, while benefiting from robust governance standards. “Singapore’s social sector is small but progressive, and because of the government’s proactiveness in its own initiatives, there’s a wealth of information and data available to help make our work more efficient,” says Manohar.

Building a connected FO industry in Singapore

To accelerate the growth of the FO industry in Singapore, EDB and the MAS have formed the Family Office Development Team (FODT) as a strategic partnership.

The FODT will continue to develop Singapore’s FO ecosystem across three pillars: enhancing the operating environment for FOs, developing capabilities in financial and professional services, and building a connected FO community.

With a conducive business environment, an abundance of wealth management talent, and a high standard of liveability to offer, Singapore will continue to be an ideal launchpad for regional family offices.