Opalesque Exclusive: Maples Brings Multi-National and Multi-Jurisdictional Approach to Asian Fund Business
14 Nov 2013
This article first appeared on Opalesque.
News came this month that the Maples Group is expanding its presence in the Asia Pacific region with the launch of the full service administration offering of MaplesFS in Singapore. The new Fund Services office is headed up by Eastern Fong, regional head of fund services, Asia, while the new Maples Fiduciary in Singapore will be under the leadership of Hugh Thompson, Global Co-Head of Fiduciary.
Fong explained that Maples arrived in Asia with the opening of an office in Hong Kong in 2006, which has grown from zero to staff numbers of 45 and had been looking to expand further in Asia. "Hong Kong is a different market from Singapore" he explained in an interview with Opalesque. "In Hong Kong you see a flow of mainland Chinese-based institutions and hedge fund firms, but you also have private equity business from South East Asia, family offices and wealth managers who typically have Singapore as their preferred jurisdiction."
Maples sent in Kate Colchester, business development expert in the region, who found that the firm should be in Singapore as well. Singapore famously loves the UCITS structure but it's not the primary focus of the new office, given that the firm has offices in Dublin and Luxembourg to deal with UCITS products. "In Singapore the main drive is not UCITS but family offices, private equity, private wealth managers" Fong says. "With Kate Colchester on the ground we have been able to build up a solid pipeline of business and in early October we closed our first Singapore domiciled fund with a sovereign wealth manager."
The firm dealt with Singapore through its original Hong Kong office so it is not an entirely new experience for them being there. "We do see a strong pipeline coming from private equity and family offices and we do see the hedge fund as still a stable flow of opportunities but we are not just doing Cayman funds in Singapore but also Singapore domiciled funds" Fong explains. Hugh Thompson explains that the fiduciary service in Asia has been slowly building, largely accelerated by the increase in regulation post global financial crisis. "We had a small client base in Asia, primarily down to the fact that Asian clients are cost conscious and there was not much value placed on the role of independent directors to offshore entities" he explains.
"Where people needed to have independent directors, they tended to use friends and families but since the crash, the governance debate that is common in Europe has started in Asia. In Hong Kong the typical board used to be friends or family going to Macau for the weekend for a board meeting" Thompson says.
"The governance focus means that all big allocators look at all of a fund's service providers and we are used to a rigorous due diligence exercise on potential directors which is now happening in Asia which means that fees are going up as client and investor expectations rise. The risk/reward of being a director shouldn't be affected by where you are and it shouldn't affect the fees."
Thompson believes that Maples should be in Asia. "We are a very client led major institution" he says. "We were increasingly seeing global clients with operations around Singapore and increasingly having to say: 'No we can't help you with certain services." So that's how we've come to be here."
Thompson believes that they are partly selling Cayman services from Singapore but also at the same time seeing a growth in use of Singapore entities as people move to better quality jurisdictions in a flight to quality. The big regulatory issues such as FATCA and AIFMD that are impacting Maples and its clients may help them to build their book in Asia due to the in-house expertise from the global business. "It's the nature of a fiduciary business that if we are providing directors to entities however active, you still have a primary obligation that you don't fall foul of FATCA."
Both find that the primary difference between Hong Kong and Singapore in the funds' space is that Hong Kong is a gateway in or out of China - which can be attractive or not. "If you are China-focussed then Singapore is a less likely base but if you are not, then Singapore becomes more attractive" Thompson says.
Turning to the development of a fund passport that represents the industry across Asia, Eastern says that if China is not a part of it then it is not meaningful. "It's good to create something marketable but China is a big source of capital and in Hong Kong we see lots of business coming out of China and if China is not part of those countries on the passport then it will be less meaningful."
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