From third world to “crazy rich”

Funds Europe, the magazine publisher of CAMRADATA, held its recent European FundTech Lab in London’s Arundel House, the home of the International Institute for Strategic Studies. It so happened that the space allocated for the event was the Lee Kuan Yew Room.

Though not a household name in Britain, Lee Kuan Yew (who died in 2015) boasts a titanic stature in his native land. The former prime minister of Singapore is famed for having taken his country “from third world to first in one generation”. In 2015, when the magazine interviewed a British old Singapore hand about the great man’s death, our source repeated the transcription on the tomb of the architect Christopher Wren, “If you seek his monument, look around.”

Lee Kuan Yew is legitimately described as the father of modern Singapore. Under his leadership, the country went from an impoverished ex-colonial possession, in which half the population was illiterate, to a modern and well-managed nation state, which now ranks ninth in the world by nominal GDP per capita.

Singapore’s stability and almost clinical levels of cleanliness have, understandably, attracted Asia’s super rich. (The recent film Crazy Rich Asians was set, and shot on location, in Singapore.) Recent research suggests one in 25 of Asia’s ultra-wealthy class – those with a net worth of more than $50 million – call Singapore home.

But despite the high levels of wealth, Singapore has not historically had a domestic fund structure that meets the needs of open-ended fund managers. The existing structures were so cumbersome that most Singapore-based fund managers chose to domicile their vehicles offshore, in jurisdictions such as the Cayman Islands.

Singapore hopes to change that. A new structure, the Singapore Variable Capital Company, or S-Vacc, is being discussed in parliament and may soon launch. When it does, it ought to provide a local fund vehicle that meets the needs of the regional funds industry.

At an event held in Singapore recently, The Lens heard that, although the current version of the legislation is not perfect (it was described as “version 1.0”), the S-Vacc would be an appealing structure for many local managers, who would no longer have to take long plane journeys to the Caribbean to meet their governance requirements under Cayman Islands law.

Perhaps the S-Vacc will spur the next stage of Singapore’s funds industry development. Lee Kuan Yew, whose policies helped create a vibrant banking sector in the country, would no doubt approve.