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Providing a Nascent solution in Asia

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Interview with Ralph Chicktong – An increase in Asian start-up hedge funds helped regional assets grow 15 per cent to USD152billion last year. For fund administrators like Custom House  Singapore, this growing client base is largely emerging out of Hong Kong and Singapore.

“We see a lot of fund managers establishing themselves in Asia. As the Asian economy evolves, global fund managers are establishing a presence here both to take advantage of the increasing Asian-based investor appetite and to broaden their investment opportunities,” says Custom House Singapore Managing Director, Ralph Chicktong (pictured).

With over 95 start-ups in 2010, competition amongst fund administrators to win new mandates is increasing. “Asia has always demanded a high level of service at a competitive price,” says Chicktong, confirming that Singapore was chosen because of its stable legislative and financial infrastructure and well-educated workforce. “Both English and Chinese are the official languages and it’s very easy dealing with the external world from here,” explains Chicktong.
Custom House opened its Singapore office in April 2008. “The regulators were very accommodating,” says Chicktong. “They’re very receptive to fund administrators and the fact that we spent time establishing contacts with intermediaries such as, brokers, lawyers and accounting firms has paid off; we have a very solid reputation in Asia now and the recent receipt of the Hedgeweek Best Asian Fund Administrator Award recognises our efforts and growth to date.”
In addition to obtaining new clientele, processing funds managed by Custom House’s other offices from a lower cost centre like Singapore has proven to be an effective business model. “We’re ever expanding the model and I believe it’s one that’s being increasingly replicated by other fund administrators in Asia,” Says Chicktong.
New fund regulations centred around competency and capital requirements are expected to be introduced in Singapore in 2H11. Whilst seen as fair, they could have the effect of causing small start-up managers to look at alternative platforms.
Given the market for Asian start-ups, Custom House recently launched an open-ended Malta domiciled segregated cell structure – Nascent Fund SICAV Plc. The aim is to provide a low-cost off-the-shelf fund vehicle for the first one to two years when a fund is endeavouring to establish a track record.
“The fund can then transfer out of Nascent into a stand-alone fund taking the trading company and track record with it,” says Chicktong, who believes Asian fund managers are now looking for more of a one-stop shop approach.
Chicktong confirmed that CH is in the process of replicating the structure in the US and is also looking at doing so in Asia for Shariah-compliant funds. 
Moving forward, Custom House Singapore is streaming its systems towards providing more flexible and timely information to service both fund managers and funds. “It’s important that we keep pace with the evolving demands of fund managers. Whereas investors may only require valuations monthly, fund managers may require portfolio reconciliation and pricing daily. The industry is demanding timelier reporting from service providers and we’re rising to the challenge,” explains Chicktong. 

Chicktong expects the firm to grow both organically through fund performance and increasing subscriptions in traditional product areas:“Our relationship with our parent company, Equity Trust, provides us with additional capability to deliver products such as Family Office and Private Equity which are enjoying significant growth post ’08. Although we already operate in this space, our goal is to increasingly synergise with Equity Trust to provide as broad a range of services as possible to the alternatives industry.”

Ralph Chicktong is the Managing Director of Custom House Singapore

Please click here to download a copy of the Hedgeweek special report: Asia Hedge Fund Services 2011

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