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HNWIs investing in SG family offices to gain PR

HNWIs investing in SG family offices to gain PR

Singapore has been playing host to a growing number of rich Chinese and Indians in recent months, who are using the residence-by-investment program to invest in local family offices to win permanent residency (PR) in the country.

Launched in 2004, the Global Investor Programme (GIP), requires investors to invest a minimum of SGD 2.5 million in Singapore through a business, in a global investor-approved venture capital fund or a single family office in Singapore.

‘[For the family office route] most of our enquiries come from China and India. Clients from Malaysia and Indonesia as well,’ Dominic Volek, managing partner of Henley & Partners Singapore and head Southeast Asia told Citywire Asia.

Under the GIP’s family office option, an investor who wants to apply for PR must have at least five years of business or investment track record and a direct family net worth of SGD 400 million, in addition to the SGD 2.5 million in paid-up share capital.

The single family office, on the other hand, is required to have assets under management (AUM) of at least SGD 200 million.

The AUM includes all financial assets, such as bank deposits, capital market products, collective investment schemes, premiums paid in respect of onshore life insurance policies and other investment products. It excludes real estate.

‘The government has very good incentives for family offices to come in here,' said Volek. 'So with the regulations and tight controls, it’s a lot less risky to set up a structure here in Singapore, which is of course an international financial centre.'

According to local reports, until June 2017, 1,826 applicants had been awarded PR through the GIP scheme since its launch in 2004.

Even without the allure of permanent residency, Chinese and Indian high-net-worth individuals are coming to the city-state to manage their offshore money, given domestic capital controls and attractive tax exemption schemes for managing funds run by family offices based in Singapore.

In fact, some wealthy families are snapping up smaller firms to fast track the licensing and hiring process and gain market entry into Singapore.

‘They are interested in buying firms in Singapore to get licences. They are targeting the fund management companies or investing into those companies. It’s exactly the same in Hong Kong,’ said Steve Knabl, president of the Association of Independent Asset Managers Singapore.

‘They acquire large majority stakes, keep the business running for a few years, and then switch over to a multi-family office business.’

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