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The Cayman Islands will open an office in Singapore by the end of this year, as the Caribbean offshore financial services hub seeks to gain more business from Asian hedge funds and wealthy families.
Opening an office in Singapore will enable the Caribbean region to “better take advantage of the many new business opportunities…” . . Cayman Islands Financial Services Minister Andre Ebanks said on Friday.
Ebanks added that the city-state’s connectivity and “relatively neutral position in the region” made it the right choice for the country’s first Asian base. Cayman has also considered Hong Kong, which he said remains an “important location”.
The opening of the office also represents a pushback against Singapore and Hong Kong, which in recent years have stepped up competition with traditional tax havens to serve Asia’s growing pool of wealthy investors.
According to a McKinsey report last year, the Asia-Pacific region accounts for about 42% of global wealth, or $218 trillion, a four-fold increase since 2000. The wealth of Asia’s households with investable assets of $100,000 to $1 million totaled in 2021, with this figure expected to rise to $4.7 trillion by 2026 as incomes in the region continue to grow, the consultancy said. .
With the move to Singapore, “Caymanians have not only rolled out the red carpet for Asia’s wealthy; They are paving runways for private jets,” said Kher Shen Lee, co-chairman of the Asia Alternative Investment Asset Management Association.
Singapore and Hong Kong have launched fund structures in recent years to attract business from low-tax havens such as the Cayman Islands, Mauritius and the British Virgin Islands. These schemes allow investors to hold their money in low-tax investment vehicles that are generously subsidized by the government.
Singapore has long thrived on a stable and predictable business environment and has been more successful than Hong Kong in attracting managers and wealthy family offices to set up funds.
Singapore’s new “variable capital companies” have grown in popularity rapidly since their launch in 2020, with 937 established as of August. Data from Dejin Law Firm shows that the development speed of “open-end fund companies” in Hong Kong is slow. As of the end of last year, 112 companies had been registered on the Hong Kong Securities and Futures Exchange. Hong Kong’s OFC system was launched in 2018.
These tools are popular with family offices, hedge funds and other private equity firms that manage money.
“While Cayman fund structures remain the gold standard, new products from Singapore and Hong Kong are welcome challengers,” Lee said.
“Investors have good reasons to consider the Cayman Islands, given its proven fund structure. Singapore’s VCC and Hong Kong’s OFC offer new avenues, while the Cayman Islands brings a proven legacy.”
Lee said the new Cayman office will target a wide range of opportunities in Asia, extending from finance to maritime and other strategic areas.
Cayman’s efforts may also benefit from a recent crackdown in Singapore, which last month arrested a series of Chinese nationals in a money laundering probe, according to two people familiar with the matter, including an adviser to a wealth management firm. Some Chinese citizens are uneasy. Providing services to Chinese family offices.
“I’ve spoken to some People’s Republic of China citizens who live here who are considering moving their money elsewhere because they’re worried about their assets being seized,” the consultant said.
Additional reporting by William Langley in Hong Kong
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