Asset managers flock to Singapore’s new corporate structure, central bank says

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People walk past the skyline of Marina Bay central business district in Singapore

SINGAPORE – Singapore’s central bank said on Wednesday that more than 400 variable capital companies (VCCs) have been set up or re-domiciled in the city-state in less than two years since the new corporate structure was launched to cement its position as a financial hub.

The framework gives fund managers more flexibility in share issuance and dividend payment, and allows them to set up multiple funds in a single VCC to reduce costs.

VCCs can be used to set up a corporate structure for a stand-alone fund or for an umbrella fund with multiple sub-funds. They can be used for both traditional and alternative investment funds. Hong Kong also provides a similar structure.

About 300 Singapore-based global and regional asset managers had incorporated or re-domiciled more than 400 of these companies by mid-October, the Monetary Authority of Singapore (MAS) said in an asset management survey.

The new fund vehicle was launched with 20 VCCs in January 2020. Singapore also provides a grant to encourage more such funds to locate to the country.

MAS is studying possible enhancements to the framework, including facilitating the conversion of existing investment fund structures, and allowing a wider range of entities to set up and manage a VCC, it said in the survey.

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Assets under management in Singapore rose 17% in 2020 to reach S$4.7 trillion ($3.5 trillion) from the year ago, driven by net inflows of funds and valuation gains, the central bank survey showed.

The VCC structure has proved popular across a wide spectrum of asset managers, including family offices, hedge funds and private equity. Singapore’s allure has also been growing amid political uncertainty in rival hub Hong Kong.

(Reporting by Aradhana Aravindan in Singapore; Editing by Sanjeev Miglani)