Singapore is now home to almost 60 per cent of Asia’s family offices. - ST
SINGAPORE: A new cohort of young and successful Indian business elites are joining the Ambanis, the family behind Indian conglomerate Reliance Industries, in setting up their family offices in Singapore to preserve and grow their wealth.
The Ambanis, one of India’s wealthiest and most influential families, set up a family office here in 2022.
Many have humble beginnings, and now want to ensure their prosperity is passed down to the next generation along with the values that helped grow it.
To avoid family feuds, they are setting up family offices here for effective governance, communication and decision-making. An estimated US$4 trillion (S$5.2 trillion) of wealth among the Indian diaspora will be transferred from one generation to the next in the coming decade, according to DBS.
“Singapore is a top destination for ultra-high-net-worth individual Indian families looking to establish a family office outside of India, thanks to its stable political and economic climate, favourable business environment and tax regime,” said Shee Tse Koon, head of consumer banking and wealth management at DBS Bank.
Arvind Tiku, founder and group chairman of investment firm AT Capital, added that Singapore’s regulatory environment, as well as its credibility and transparency, places the Republic ahead of other destinations.
Singapore is now home to almost 60 per cent of Asia’s family offices. The number of wealthy families coming into the country is projected to have risen from 2,800 in 2022 to 3,200 in 2023, DBS said.
The bank on Nov 5 launched its sixth annual family office report, with this year’s edition examining the Indian family offices.
It estimated that there are more than 13,200 Indians with a net-worth greater than US$30 million, and the number is expected to increase rapidly.
In 2023, around 6,500 high net-worth Indians were estimated to have left India for destinations such as Dubai, Singapore, Europe and the United States.
As their wealth increases, many wealthy Indians seek a formal family office structure to avoid compliance and governance issues.
“Typically, what you’ll find in the joint family system is that the operating company will also manage the family’s investments,” said Amit Patni, founder and director of RAAY Foundation.
“People tend to use company cash flow to keep expanding without thinking about safeguarding enough money for the family,” he added.
Patni’s father and his brothers started Patni Computers in the 1970s, and were one of the pioneers in the information technology space in India.
Over the decades the company grew to close to US$1.5 billion. They sought a public listing in 2004, and in 2011 IT firm iGate bought Patni Computers for US$1.5 billion.
After the sale of the business and the division of wealth, Patni set up a single family office - RAAY Global Investments - to ensure his inheritance became a vehicle for growth and entrepreneurship.
“My family office has done all the trust management and estate planning for my children, so if anything happens to me, it will continue working for the family without any confusion,” he said.
Rich Indian diaspora who are not yet in the billionaire category - typically families with more than US$5 million in investible assets - make their first foray into more formal office structures through a multi-family office (MFO), which have emerged as a fast-growing segment of the industry.
An MFO enables different wealthy families to pool their resources to access high-calibre, personalised financial advice while remaining cost-effective.
Vimal Shah, chairman of East African fast-moving consumer goods company Bidco Africa, relies on a network of MFOs scattered across Singapore, Mauritius, Dubai and Switzerland, rather than establishing a single-family office.
“They provide us with all the details and advice about where to invest, which the family then digests before deciding what we want to do,” he said.
This international approach is increasingly applied by super rich Indians in the diaspora who are seeking opportunities beyond their homeland.
When it comes to parting with their money, the younger super rich Indians and those living overseas are increasingly investing in technology-based startups to build wealth.
Over the past two decades, Indian family offices have backed more than 200 startups, and remain active participants in startup funding rounds, DBS’ report said.
Until recently, wealthy Indian families were most likely to invest their wealth in physical assets like real estate and gold. Around a third of their assets comprise residential real estate properties, both at home and abroad.
However, high interest rates and soft property markets post-Covid have left some families rethinking the value of their real estate investments.
“Investing in real estate in India isn’t as easy as it might be in Singapore or elsewhere, and it’s also a very volatile sector,” said Patni.
“I thought for a long time that the real estate environment in the UK was very good, and then Brexit, Covid and the Ukraine war hit, and suddenly the returns weren’t great.”
Today, Indian diaspora family offices are diversifying their asset mixes to incorporate more public and private equity market investments, including alternatives.
Geography also matters. Super rich Indians prefer the US for global investing, although some also showed interest in emerging markets like India and the Middle East.
Rich Indians living overseas also tend to prefer investing outside of India, compared to those who reside at home. - The Straits Times
