Asset managers flock to Singapore's new corporate structure: MAS

SINGAPORE - Singapore's central bank said on Wednesday (Nov 10) 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.

Assets under management in Singapore rose 17 per cent in 2020 to reach $4.7 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.

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