An asset management house taking aim at fintech intends to make the most of the Singapore authorities' efforts to boost the sector, as this interview highlights.

Singaporean asset management firm Golden Equator Capital, which recently launched a second technology and innovation fund two-and-a-half times the size of its two-year-old predecessor, spoke to this news service about how intent it is on making this the beginning of a long relationship with fintech, a sector “in its natural element in Asia’s largest financial centre”.

The S$100 million ($72.2 million) fund, Technology & Innovation Fund II, was launched a month ago and is scheduled to close in the first three months of 2017; the $40 million Fund I boasts a 40 per cent valuation rise since inception.

“We take a very hands-on approach with our investments, guiding chief executive officers of invested companies, taking on board membership, to help their companies grow and pivot," said Shirley Crystal Chua, Golden Equator Capital's chief executive.

Firm’s strategy
GEC pursues a smaller number of companies than the average investment fund, but claims it is very stringent in its selection process. “We only invest in companies which are past the seed stage and have already proved they were in a position to expand, with a strong growth potential,” Chua said.

“We offer high risk/high return strategies, which further explains why with only four out of our ten invested companies showing progress, we are already starting to reap very satisfactory results,” she said. The fund's value has risen 40 per cent.

“In the coming months, as investments start maturing, you will see more of these companies joining the four,” she said.

Return promises on yields for the five-year vehicle (extendable twice on a yearly basis) are softer than those made in 2014, with a 10 per cent target, compared to Fund I’s 12 per cent target. Internal rates of return, however, are still set at 25 per cent, and the manager hopes a few of the companies in its portfolio will be floated on the stock market. One of the differentiating strengths of the firm, according to its CEO, is the fact that it holds a Capital Markets Services licence, which the firm said is rare in Singapore.

The latest fund is one of three ongoing offerings, which also include Development Fund I, which focuses on real estate development projects in Asia that have potential for capital appreciation. These include opportunities in emerging cities as well as those in the developed Asian markets.

The firm’s Prime Currency Income Fund employs a strategy that combines investment in debt instruments with the trading of major currencies.
 

All out for technology
The T&I Fund II will invest in the three core sectors of fintech, the digital marketplace, and B2B enterprise solutions.

“Asia has a huge technology gap, and our focus on technology for the second fund is greater than for our first fund,” said Chua.

Whereas Singapore is ahead in the region for its push in technology, with the “smart nation” motto it has been advertising, it is still catching up on smart city infrastructure. Because of this gap in development and the fact that the firm said it needed a much longer investment horizon timeline to put money into the asset class; it is focusing its offering on real estate, PE and hedge funds.

One of the reasons to be bullish on technology is the strong support Singapore shows the fintech industry, she said.

From white paper feedback and programme planning recommendations, to partaking in a variety of fintech events, the firm is showcasing an all-consuming dedication to the sector, seeing potential for exponential growth, fuelled by a belief that the city-state’s government has all it takes to lead in the fintech revolution. Further innovation initiatives are soon to be featured by the firm, which is looking to become the leading asset manager through comprehensive services available to start-ups.

The firm was set up after the financial crisis to fill a gap in the multi-family office wealth management space, observing that one-stop shop ventures to advise wealthy families were lacking in Singapore. Before the financial crisis, most family offices sought advice and asset management services from a variety of banks.

There was also a cross-generation management requirement which at the time was unfulfilled, according to the CEO.

"There is now in Asia a much better understanding of why comprehensive asset management services for family offices is needed, of how much is required to set up, and not least of factors behind our firm’s growth is the fact that wealth has been growing substantially in the region,” Chua added.

(The author is a journalist based in Hong Kong.)