Clearer licensing rules, Greater Bay Area opportunities can turn Hong Kong into a family office hub, industry players say
- The securities regulator’s recent clarification of rules surrounding licensing is likely to attract more family offices – wealth managers who deal with ultra-rich dynasties
- The bay area could generate US$185 million worth of wealth management revenue by 2025, a sign of ‘how large and important’ the market will be, says Raffles Family Office boss
New regulatory clarity and business opportunities arising from the Greater Bay Area could turn Hong Kong into a hub for family offices, according to industry players.
The Securities and Futures Commission introduced guidance this month to clarify the licensing requirements for family office operators.
One set up purely to invest only for one or a handful of wealthy families will not need a licence from the SFC. However, should the family offices run as a business by accepting fees to invest for many families or other investors, it will need to get a licence from the SFC, the watchdog said.
Raffles Family Office founder and chief executive Kwan Chi-man agreed that clear regulation would help promote the city as a family office hub.
“A dedicated SFC regulatory framework is important as, unlike Raffles Family Office, many family offices are not licensed. SFC regulation is key to the healthy development of family offices in Hong Kong,” Kwan said.
Raffles Family Office, which was set up in Hong Kong by Kwan in 2016, has secured two investment licences from the SFC. The company expanded into Singapore in 2018.
It currently invests on behalf of around 90 wealthy families through its Hong Kong office and about 50 via its Singapore office, and has total assets under management in Asia of over US$2 billion.
With a population of over 70 million, the bay area has a combined gross domestic product of US$1.65 trillion, making it the 11th largest economy worldwide, bigger than Russia’s and behind Canada’s, if the region is counted as a single entity. The bay area has GDP per-capita of US$23,000, which is comparable to some middle-income countries.
Guangdong province, where nine of the 11 bay area cities are based, is China’s manufacturing hub, boasting the second-highest number of households, with investible assets of more than 6 million yuan (HK$6.57 million), just shy of Beijing, according to Hurun.
Kwan said the Wealth Management Connect scheme, which Beijing announced in June to allow cross-border sales of wealth management products through banks in the bay area will also create more investment opportunities for family office operators.
Raffles Family Office has signed a partnership agreement with Italian football club Juventus. As Juventus’ official partner in Asia, it is entitled to offer exclusive engagement opportunities for its clients across Asia, a region with one of the largest fan bases for the club.