Equiom is an international professional services provider with a strong presence in Europe, Asia, the Middle East and the Americas. The company specialises in providing bespoke solutions to both private and corporate clients to assist with all of their financial planning and wealth protection requirements. Here, Richard Tribe, Head of Equiom Private Office and Laura Brown, Senior Manager, Equiom Jersey discuss what’s involved in offering a premium service to clients.

What are the typical challenges that clients approach Equiom with in relation to the management of their finances?

Richard Tribe: Equiom Private Office deals with the more complex wealth structuring cases, where clients are seeking completely bespoke solutions.Typically this would involve a wide range of assets, often spread internationally, that perhaps need consolidating into a structure (typically a trust or foundation) that both protects the assets and affords sensible future succession planning.

Laura Brown: Confidentiality is another consideration. Many of our clients are residents in countries where significant wealth can be a security issue and so, utilising suitable structures can reduce, or remove, such concerns. Of course, the clients are always fully aware of their obligations around full disclosure and transparency for tax reporting purposes, and we work very closely with their legal and tax advisers to ensure any structuring is compliant and fit for purpose.

Can you outline the process you go through to assess your clients’ current financial situation and assist them with identifying financial goals and concerns?

Richard Tribe: We are often asked to review a client’s current situation, which can be quite an involved process. If there are structures already in existence, these will need to be looked at carefully to ensure they are still providing suitable protection. Then, we will discuss with the client their future plans and requirements, and ultimately determine how best we can achieve their goals.

Laura Brown: The concerns of wealthy families are often very similar, regardless of their nationality. As mentioned previously, protecting the family wealth is often the main priority, but educating existing and future generations is always an important consideration, as is philanthropy. We are seeing more and more families who want to give something back to society and so part of our remit is to work with them to put suitable plans into operation. Impact investing is gaining real momentum at the moment and a lot of my clients are increasingly interested in structuring part of their wealth into these areas.

Tell us about Equiom’s Private Office services. What is the typical client that they are aimed at?

Richard Tribe: Equiom Private Office (EPO) was launched earlier this year. It is not a product offering, but more specifically a specialist team dedicated to providing clients with the highest levels of professionalism and personal service. Once we understand the client needs, we can draw on the variety of expertise across the entire Equiom Group to establish the most appropriate team to provide the optimal solution. Transparency and trust are fundamental to this approach and these are established through building a deep understanding of clients’ needs and their ongoing objectives. EPO has been very well-received in the market as it is an entirely unique approach, which I believe is unmatched among other service providers.

What are the most common tax planning solutions that you offer to your clients?

Laura Brown: When sitting down with both current and prospective clients to discuss their requirements in terms of wealth and estate planning, we first have to consider the tax implications both in Jersey and in any other jurisdictions where the client resides or holds assets. Where a client is considered tax resident is an important consideration, as is where a client is considered domiciled or deemed domiciled. The changes to the UK domicile laws and how UK property is taxed when held in offshore structures, which became effective in April 2017, have had a significant impact on wealth planning for clients who either reside in the UK or hold assets there. Aspects such as these greatly influence the advice we provide to clients.

What options are available for those who want to manage tax on their estate in Jersey?

Richard Tribe: From a Jersey perspective, Equiom can offer a range of solutions to clients who are looking for effective wealth and estate planning options. One such option is a Jersey trust. The trust is Jersey law governed but does not have to have Jersey resident trustees, though in many instances having Jersey resident trustees can be beneficial. The Jersey Government does not levy fees or any other duties when creating a trust or during the life of the trust. In addition to this, Jersey law contains specific provisions which do not comply with forced heirship laws (laws of certain countries which require specific portions of a person’s estate to be left to specified persons). To put this more plainly, a settlor can transfer his or her assets to a Jersey trust during their lifetime and Jersey law will not give effect to any rule of another country relating to inheritance or succession which says that such a transfer is not allowed. This means that a Jersey trust allows the settlor the absolute freedom to decide who will inherit the trust assets.

Laura Brown: Another option is the Jersey Foundation.The Jersey Government enacted the Foundations (Jersey) Law in 2009. Foundations are required to have a charter (which is open to public scrutiny) and a set of regulations (that are private). A foundation is a legal entity that is managed by a council of persons who can be natural persons or corporate bodies though at least one of the council members must be a Jersey regulated entity (known as the qualified member).The foundation has beneficiaries but the Foundations (Jersey) Law stipulates that the foundation council will not owe fiduciary duties to beneficiaries nor will beneficiaries be entitled to information about a foundation’s assets unless the beneficiaries have a vested interest. Jersey foundations have characteristics of both a company and a trust which makes them interesting entities for taxation purposes. A Jersey foundation can be drafted in various ways which affects the tax treatment in different jurisdictions.

About Equiom

Equiom has been advising wealthy families and multi-national businesses for decades. The services we offer have evolved over the years with changing market needs. With a thorough understanding of the current generation and the most experienced professional team across the globe to cater to each individual situation and client, we are well placed to find the optimal solution for our clients’ needs.

For more information on Equiom Private Office or to connect with a member of the team, contact privateoffice@equiomgroup.com.

Website: www.equiomgroup.com

Equiom (Guernsey) Limited and Equiom Trust (Guernsey) Limited are licensed by the Guernsey Financial Services Commission. Equiom (Isle of Man) Limited is licensed by the Isle of Man Financial Services Authority. Equiom (Jersey) Limited is regulated by the Jersey Financial Services Commission. Equiom (Luxembourg) S.A is supervised by the Commission de Surveillance du Secteur Financier (CSSF), the supervisory authority of the Luxembourg financial sector. Equiom (Malta) Limited is authorised to act as a trustee and fiduciary services provider by the Malta Financial Services Authority. Equiom Trust Services Pte. Ltd. is licensed by The Monetary Authority of Singapore. Equiom Trust Services (BVI) Limited is regulated by the British Virgin Islands Financial Services Commission. Equiom S.A.M. is authorised to act as a trustee and fiduciary services provider by the Ministry of Finance in Monaco. Equiom Trust (South Dakota), LLC is licensed in Guernsey by the Guernsey Financial Services Commission and in South Dakota by the South Dakota Division of Banking.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.

Based in Liechtenstein, Incrementum AG offers wealth management services for private clients, as well as a range of investment funds and investment solutions.

To hear about Incrementum’s wealth management offerings and services, Finance Monthly caught up with the company’s CEO and Co-founder Stefan M. Kremeth.

What inspired you to found Incrementum?

Our objective when founding Incrementum AG was to offer first-class services to private clients and investment fund investors at fully transparent and competitive prices and to work with an inspiring team, in a fun environment.

What would you say are the key issues that you assist clients with regarding asset management?

Our investment team is very interested in and has a profound understanding of monetary history, combined with out-of-the-box reasoning and prudent, fundamental financial research, purposely avoiding daily chatter and noise. This offers a distinct skillset that has proven to be utterly valuable for our private clients and investment fund investors alike.

What strategies do you implement to ensure that your clients’ goals and objectives are achieved?

We only offer cashflow generation and capital preservation strategies. Participation in listed companies is very tangible to us and equities therefore belong to our core investments. We are building truly customised client portfolios according to our clients’ requirements, needs and willingness to accept risk. We are long-term investors and we invest solely in equities of listed companies with a proven track record of producing net-free cashflows over years, happy to share those cashflows, at least partially, with investors in the form of dividends and/or capital reductions. On the other hand, and after many years of extraordinary money supply and ultra-low interest rates, we do not invest in government bonds, as we do not feel comfortable with the current risk reward profile offered by them. Large-scale monetary policies are difficult to judge and while we are not entirely certain that the increase in global debt will be sustainable, we are humble enough to recognise that so far, the leading central banks seem to have dealt with the 2007/2008 financial crisis rather well. Either way, at Incrementum, we see money only as a means for facilitating global trade, consumption, potentially storing short-term value and thus - as a lubricant for the global economy.

How important is a maintenance strategy for optimising asset value?

At Incrementum, we very much believe in an active portfolio management approach. We cut back positions that have reached our price targets and we are interested in buying into companies that have sound underlying business models, but have missed their targets for a quarter or two. We are very patient investors.

What are your hopes for the future of Incrementum?

We are happy with what we have achieved so far but are constantly striving for innovative growth. Last year, we entered a new business field by setting up our Crypto Research report, which swiftly became the most read research report in the crypto currency field.

Website: https://www.incrementum.li/

Finance Monthly speaks to Pierre-Noël Formigé, the Founder and CEO of Swiss company SEQUOIA, about the wealth management and estate planning solutions that his company provides, as well as his tips on maintaining and growing wealth for future generations.

Can you tell us about the core services that SEQUOIA offers?

SEQUOIA offers a holistic approach of wealth management thanks to a genuine "open architecture" which includes: wealth management, establishment of funds, management of funds - advice and follow-up, estate planning (trusts, foundations, companies), services of family offices, life insurance, financing (real estate, aircrafts, boats), reports and record keeping, risk management, compliance and regulatory assistance.

What would you say are the particular benefits for individuals of having professional assistance in relation to managing their wealth?

There are numerous benefits for individuals that decide to trust SEQUOIA with their wealth management. Our aim is not only to offer financial services, but also a financial experience and networking. Each solution and experience that we offer are specifically and uniquely tailored. SEQUOIA’s modularity and extensive experience allow for easy adaptation to our clients’ expectations.

What strategies do you and your team at SEQUOIA implement to ensure that your clients’ goals and objectives are achieved?

At SEQUOIA, clients are in the centre of our decision-making processes - they are our key priority. We have developed a well-informed overview of each of our clients’ financial situation, as well as a better understanding of clients’ goals and limitations.

Every portfolio construction starts with a discussion with the client or its representative, in order to fully understand their objectives and deliver a tailored-made investment proposal, allowing to approach and negotiate with partners. Our team can, at the request of the manager, take on a direct role in the relationship with customers, in accordance with their objectives and needs.

In your experience, are individuals fully aware of their assets and worth so that they can take advantage of tax planning?  Which types of assets are usually missed?

SEQUOIA’s clients are fully aware of their assets, however, they might not be fully aware of their tax impact. We ensure that clients have better tax awareness, as it does have the potential to improve individuals’ returns. According to surveys, while many factors impact investors, the majority of high-net-worth investors say that it’s more important to minimize the impact of taxes when making investment decisions, thus we offer the right measures to help high-net-worth clients reduce the taxes owed on income and investment gains.

In order to do so, we put a lot of effort in selecting the right investment products. We try to take advantage of some losses, and implement additional strategies that can help our clients to manage, defer, and reduce taxes. However, sometimes, clients do not mention their real estate assets, which could have an effect on tax planning; we provide advisory services in relation to that too.

What solutions do you offer in respect of maintaining and growing wealth for future generations of the same family?

Transmitting heritage built from generation to generation and building a better future for entrepreneurs is the essence of SEQUOIA Group. Our team of professionals provides high-quality services in order to manage our clients’ wealth, taking future generations into account.

From portfolio management - with tailor-made investment solutions matching the clients’ needs, to liability management - which includes heritage planning, distribution agreements, trustee and real estate project management, SEQUOIA provides a cost-effective turnkey solution based on legally compliant practices to deal with the impact of new regulatory landscape and the different legal, technical and operational risks.

How challenging is it to work in an ever-changing regulatory environment?

It is obvious that the status quo cannot be maintained in this ever-changing regulatory environment, however, SEQUOIA’s approach regarding this is to constantly adapt and understand those changes to serve our clients better. Choices that have been made in the past may not be completely relevant in today’s environment or vice versa, but our job is to continuously develop strategies that are relevant to our clients.

Website:

http://www.sequoia-ge.com

Sandy Tao Chen serves as Executive Director – Head of Trusts of the First Advisory Group’s Hong Kong branch and its entities. First Advisory Group is a wealth planning group that was founded in Liechtenstein in 1954.

Sandy’s professional career has been split between New York and Hong Kong, having accumulated more than 20 years’ experience in the provision of wealth planning solutions, specializing in asset protection and succession planning.  She is a full member of Society of Trust and Estate Practitioners, the NYS Certified Public Accountant (CPA) and is a member of AICPA. Below, Sandy speaks to Finance Monthly about First Advisory Group and trust and wealth planning trends in Hong Kong.

Tell us about First Advisory Group and its mission?

First Advisory Group is a leading independent financial services provider with offices in Geneva, Hong Kong, Panama, Singapore, Vaduz and Zurich and has more than 300 experienced employees working around the world to fulfil this commitment. With expertise backed by 62 years’ experience and a diversity of external specialists, the Group offers an independent, one-stop and results focused advisory service for its clients’ wealth management needs.

Furthermore, the Group has formally operated in Hong Kong as a jurisdiction for a number of years, establishing a physical presence in 2010. First Advisory is present and active in all-important financial and business centers worldwide. With its head office in Vaduz, Liechtenstein and further offices in Zurich and Geneva, Switzerland, the Group offers unique locational advantages to its clients, i.e. banking and professional secrecy, highly flexible company law, high legal certainty, high political and economic stability and continuity, highly professional approach to financial services and central location in the heart of Europe.

First Advisory Group offers further attractive locations to its clients in Asia, namely Hong Kong and Singapore, as well as in Central America.

How can trusts be set up and structured in Hong Kong?

• English common law concept;
• One party (Settlor) has a fiduciary arrangement with another party (trustee);
• Settlor transfers legal title of assets to the trustee to hold “in trust”;
• Trustee Holds in trust for the benefit of a third party (beneficiary);
• Protector may be appointed to safeguard interest of beneficiaries.

How can trusts provide tax efficient solutions for clients?

• Minimization of income, estate and inheritance tax;
• Pre-immigration tax planning or planning for returned citizens.

What other wealth planning structures are available in Hong Kong?

At First Advisory, we offer clients diverse and innovative wealth planning services through a single platform. These include international asset structuring by using trusts, foundation and/or corporate solutions. The Group is positioned to deliver a dynamic and sophisticated service, precisely tailored to client needs.

Can trusts be structured in such a way that they can be open to abuse? Which preventative measures can be taken?

Although under the modern trust laws, settlors are given certain powers (i.e. investment power) on the trust, to executive certain investment decisions. The Group’s compliance has taken precautious measures to make sure that we, as a trustee, have the full discretionary power on the trust fund distributions. The investment powers given to the settlors/beneficiaries are only at the limited power of attorney basis. If there is a private company held under the trust structure, one of our Group subsidiaries must act as the director and shareholder of the company. Our compliance department has implemented a strict and powerful system to monitor our clients on an ongoing basis to make sure they are not involved in any legal transactions i.e. money-laundering, drug-tricking, etc.

What makes First Advisory’ services unique when compared to your competitors in Hong Kong?

First Advisory Group offers an independent, one-stop advisory service for our clients’ wealth management needs.

The wealth planning solutions that our Hong Kong office offers are flexible and enduring, aiming at smooth transitions of wealth from generation-to-generation. As all the services derive from one single platform, the Group’s offices can guarantee a seamless and effective solution for our clients. We are one of the very few independent trust companies in Hong Kong that can provide both trust and foundation wealth solutions to high-net-worth clients.

Contact details:

Telephone:  +852 2537 9478

Facsimile:   +852 2537 9476

Email: sandy.chen@first.li

Tim Leeming is the Chief Administration Officer and Business Development Head for Riva Financial Systems, as well as one of the four founders of the firm, Director and Board Secretary. With about 30 years in the industry, he’s held responsibilities in various aspects of the transfer agency space, including over 13 years in the offshore funds back office operations of Global Asset Management, followed by many years in the business analysis, system selections and requirements, system implementations and data conversions at many of the leading organizations in the asset management and service provider organizations, working in the United Kingdom and Luxembourg.

Founded in 2002 and incorporated in the Isle of Man, Riva Financial Systems offers the asset management industry a unique global transfer agency solution supporting multiple jurisdictions, currencies and product types on a single platform. Here Tim tells us more about it.

What were Riva Financial Systems’ beginnings back in 2002?

At the time of Riva’s inception, fund houses and service providers were relying on 20+ year old legacy systems supporting single jurisdictions, single product lines and over the years, being used for business models they were not designed to support. As founders of Riva, we had the vision of creating a state-of-the-art, global platform to replace the multiple legacy systems being used by global organizations, across jurisdictions and product types, yet deliver a solution to the local markets and introducing operational efficiencies. The product that was created, Riva TA, is currently being deployed in many jurisdictions and has already demonstrated how its licensees are able to generate significant cost savings from their current business model.

It should be noted that the first 4 years of Riva’s foundation were spent strictly in design and development mode without the influence of a particular client. This period allowed the Riva team to design a best practices solution rich in integrated functionality and efficiencies opportunities.

How did you improve on the existing market offering?

The key attribute was that the system was designed from day 1 to fully accommodate both managers running their own book of business and Third Party Administrators supporting many clients. We had experience of working on systems that were being used within TPAs but were never designed to support that business. The system database structure affords very strong and flexible data segregation and functional access rights delivering specific data access and processing authority to users and potentially TPA clients direct through menu of service.

Further, all four of us had hands-on experience gained in the business and especially the importance of cash management and controls within the transfer agency ensured that the system was extremely strong in these areas.

The key concept of having a global solution replaces multiple legacy systems - the Riva solution uses core building blocks to construct specific business rules and controls in support of the multi-jurisdictional products and structures on a single database. As a result of this aspiration, the system has been designed to be scalable and all subsequent design decisions have ensured that the high-volume scalability has not been compromised.

Can you tell us about the software solutions that Riva offers to the asset management and investor servicing industry?

Riva offers a fully integrated TA solution that can be tailored to fit the requirements of a small boutique organization or that of a multi-jurisdictional manager or TPA. The system is highly configurable with users able to define the structures, static data tables and processing rules. As I mentioned earlier, the system user authority structure, again controlled by a client system support user, determines the functional authorities and also the access rights to the shareholder data on which that processing should occur.

What is the Riva Transfer Agent solution?

Riva TA provides the transaction and record keeping system for a Transfer Agency delivering:-

• Strong dealing and pricing and registration controls involving KYC, investor stops, and investor watches, four eyes verification , rekey and checking.
• Rigorous processing controls – together with extensive operational processing warnings to the users.
• Robust automated distribution processing for both equity and interest accrual funds offering automatic cash and reinvest options.
• Strong commission processing initial, pre-paid and trail with the structures delivering a very flexible but controlled solution.
• The system has an integrated FX module removing operational risks associated with settlement of any client receipt or payment in currency other than fund currency.
• The system has a real-time client and broker “Cash Account” which tracks all TA cash movements and entries to and from these enabling client service queries to see at a glance what is outstanding.
• The system has integrated Case Management again enabling client service teams to take, track and follow up interactions with clients on the same system as the core processing functions.
• Riva also offers an integrated image and workflow solution – the key benefit of which is the auto-indexing of the images when processing occurs using the images.
• Riva TA a full settlements module, for receipt matching of  bank files and a payment manager which controls all external payments which are generated in a swift format to link to fund administrator preferred banking system.
• Underpinning the system is an integrated general ledger which again enables users to interrogate the ledger balances and drill through the underlying trades that have given rise the balances.
• The client document management process generates XML output that can be sent to print vendor to disseminate or can be run through client specific stylesheets to customize the client facing documents.
• The system is a browser-based solution and also offers portal access for clients and brokers.

Can you briefly describe your business model?  

Our business model is to offer asset managers and third party service providers a completely integrated and global transfer agency solution, with the aim to lower their existing total cost of ownership while introducing operational efficiencies. We target our business development efforts towards both large global organizations as well single jurisdiction fund houses. Our focus in the first few years has been the United Kingdom and Europe but we are now expanding our offering into North America - starting with a deployment in Canada to be followed by the United States of America.

We recently released a Riva Cloud offering aiming to serve small to mid-range firms that do not wish to own or manage the infrastructure around the application. This is also an opportunity for Riva to discuss this offering to alternative, hedge and private equity firms that wish to support that part of their business while having the option to launch regulated UCITS funds.

What have been your company’s major achievements in the past 15 years?

Over the past few years, we saw Riva TA being deployed in over 14 global locations for a single asset manager, replacing legacy systems in Europe, the UK and Canada. Riva has seen complex implementations with high volumes. All of our implementations were achieved in a timely manner, without any data conversion reconciliation issues. All of Riva’s existing on-going production installations are running without any significant production disruptions.

Where do you see Riva in 3 years?

In the next 3 years, Riva will be a true alternative solution in the Canadian transfer agency space where the majority of the firms are still utilizing TA solutions build in the 1980s. In addition, initial efforts for a USA deployment will be under way.

We also expect to be at the forefront of any blockchain initiative as our proof of concept efforts in this particular space is demonstrating that Riva TA is uniquely positioned to belong in any of the asset management industry private blockchain infrastructures, offering full transfer agency processing.

Kicking off our November Game Changers feature is an interview with Dr Stavros Siokos who is the Managing Partner of Astarte Capital Partners LLP - a specialist alternative co-investment platform focusing on the real assets space, with offices in London, New York, Zurich and Sydney.

 Astarte identifies and partners with experienced real asset operators to establish specialist asset management businesses of an institutional standard, in niche real asset strategies, targeting private equity-type returns. The company combines their experience of building multi-billion niche asset management businesses with the know-how of established real asset operators and a strong track record in the specific sector. Astarte targets full alignment of interests and transparency, with only success-based fees.

What have been the current trends in the real assets space?

The real assets space is very broadly defined and as a result, it includes an extensive spectrum across various different products. It ranges from large-scale core infrastructure assets, that demand a lot of capital (e.g. airports, ports, electricity plants, etc.), to typical real estate (e.g. housing, commercial), and all the way to value added infrastructure (e.g. planes, shipping vessels, mobile phone antennas, advertising billboards, etc.) that demand specific expertise according to both the asset and the local market.

Each of the above groups have their own dynamics and follow different economic cycles. Most of the large private equity firms tend to focus on core infrastructure opportunities where larger pools of capital can be deployed. Astarte focuses on value added infrastructure prospects in areas and products that are supported by global megatrends such as demographics, digitalisation, the need for energy and the management of natural resources (e.g. water, waste, etc.).

An obvious trend is how affluent ageing populations in the developed world are generating a demand for retirement housing. Astarte is evaluating investment in high-end retirement accommodations in the United Kingdom, Spain, Portugal and Switzerland. Digitalisation offers enormous potential. However, industries such as advertising billboards in the UK are only just waking up to the trend, with only 5% of UK advertising billboards being digital. Astarte is also attracted to complex areas, such as acquiring aircrafts to dismantle them and resell the parts. I believe Astarte will see potential to pick up quality assets at distressed times in very cyclical industries, such as the shipping sector. Currently, we’re on the lookout for opportunities in renewable energy and industrial assets.

In all of these areas, it is critical to find strong operators to partner with. For instance, shipping, which as mentioned is a highly cyclical industry, has strong barriers to entry where a robust owner/operator makes the difference between success and failure. The Astarte model is to team up with the best operator possible and build a fully transparent platform where we, as the asset operators, together with external investors, all contribute capital, and all share in the economics of each project: both the costs, and the upside. The aim is to have all interests fully aligned and deliver the best results possible within an institutional framework.

When we last spoke, you mentioned that your goal for Astarte is to establish the company as one of the leading co-investment platforms for niche real assets. How has that been going? What have been the company’s recent achievements?

Astarte is growing its geographic reach and team to stay close to its investors, partners and deal flow. The headcount is around 15 professionals, as of November 2017. The founding team and the head office are in London, from where Teresa Farmaki, myself and Spiros Skordos are running the business. Our vision is to differentiate Astarte from other private equity and real asset managers. This is something that we have managed to achieve in a very short space of time.

We were delighted to be recognised as the “Most Innovative Manager of 2017” at the Institutional Asset Management Awards in New York earlier this month, which confirmed our achievements thus far. Winners of the Institutional Asset Management Awards were determined by votes from a selection of institutional CIOs of foundations and endowments, as well as with input from the editorial teams of Money Management Report and Foundation & Endowment Report. Criteria included information submitted with entries, as well as direct experience with the manager, industry reputation and past performance. We are very proud that in less than three years, the industry has recognised the ethos and the innovation behind our approach. Full transparency, full alignment and strict ESG compliance are the pillars that drive our growth.

We have also managed to attract world-class talent and experience in our advisory board. The advisory board currently comprises three top professionals and will soon grow to five. Phillippe Costeletos, who’s also an Astarte Investment Committee member, was previously Head of TPG Capital in Europe, and International Chairman of Colony Capital. Andrew Wynn advises family offices and has spent his career in equities, including at ADIA in Abu Dhabi and SAMBA in London. He has strong connections in the Middle East. Bev Durston (who featured in The Hedge Fund Journal’s’ 2015 ‘Leading 50 Women in Hedge Funds’ survey, in association with EY) was previously Head of Alternatives for the British Airways pension fund in London, and continues to advise many large pension funds in Australia, is an investment committee member. Another two highly experienced professionals with strong track record in the European and North American markets will join us by the end of Q1’18. All team members come from an alternative investments background, where they have close relationships with institutional investors’ demands, in terms of due diligence, reporting and governance.

How has the company grown in terms of operations or service offerings in recent times?

Astarte is aiming to close its flagship fund called Astarte Access Fund in the first quarter of 2018. At around $200m. The fund does not change any management or carried interest fees and only shares the profitability of the businesses that we build.

We have also identified the next strategies and the partner-operators that we will work with. They are in the areas of shipping, renewable energy, luxury senior accommodation in central London, and organic farmland.

For example, in the dry bulk shipping area, we partnered with the Tsakos Group (TG), a family run and owned entity with several generations of shipping tradition and a flawless global reputation. TG is one of the leading operators in the world with strong experience across different sectors and cycles, along with a long track record of successfully managing institutional capital. The Group controls a diversified fleet of 90+ vessels which includes 8 privately owned dry bulk carriers and a listed tanker entity (est.1993) (NYSE:TNP) with 2000+ employees.

By the end of 2018, Astarte is targeting assets worth $500 million, including its own multi-strategy vehicle investing across all deals, in addition to co-investments.
Can you detail any projects that Astarte Capital Partners have worked on recently and the challenges that you were faced with? How did you overcome them?

As mentioned, one of our first projects is related to dry bulk shipping. This is a highly cyclical industry that has been under extreme pressure for almost a decade. We believe that this is the right time for investors to come in, given the current and predicted demand-supply imbalance and the fact that we are close to an all-time low point on valuations. The potential for upside is significant and the key to success is based on who the operator is.

The challenge we faced was that a lot of investors have timed their entry into the sector poorly and had exposure already. This happened at a time when a lot of private equity capital was invested without the right structure in place, a few years back.

Having a great partner and investors that trust our judgement and structures is how we manage to overcome the difficulties that we’re faced with.

When working in an industry that is constantly changing, what do you do to ensure that you are at the forefront of any emerging developments?

It is very challenging to stay at the forefront of emerging developments. Especially with a model like ours, which requires reaching out to multiple industries and a wide range of jurisdictions that need local expertise and presence.

From our experience, we have discovered that it makes most sense to reach out to experts and outsource the functions and operations that stand outside our core business of investing. For issues related to investments, we follow a three-step approach, assuming that there are many things that we do not know and that we need to learn.

Our aim is to first recognise what we do know and what we can perform well. After this is established, we try to learn and use the best experts in each area where we’d like to deploy capital. Finally, we try to find the best partner we can team up with and explore opportunities together.

All of the above fall within a well-defined ESG framework. ESG is essential within our investing. Astarte and our portfolio businesses are all UN PRI signatories, applying ESG principles to their private equity investing. When directing capital, we do it to minimise side effects or complications. We address the environmental aspects early on and do not invest if the company does not have the right approach.

We place strong emphasis on governance, particularly in terms of how Astarte structures its fee model and relationships with investors. Alignment of interests is very important to us.

The private equity industry has been criticised for both the level of fees and costs, and the way in which they are apportioned between managers and investors. Indeed, there have been many public cases in the US suggesting that private equity firms did not allocate certain expenses in the past, such as broken deal costs (in the most equitable way). Consequently, every line item is now being closely scrutinised by those allocating to PE funds.

Astarte charges only success fees, with no management fees per se. Certain operational costs are transparently disclosed and shared with other stakeholders. This is only one facet of Astarte’s transparency. Co-investors also get full access to all data.

The fee structure is not the only innovative aspect of Astarte, which invests in niches that are often neglected by other asset managers. Everyone talks about real assets and understands the benefits of including them in asset allocation. Tangible, hard assets offer downside protection and a low correlation to capital markets. However, Astarte’s approach is different. We focus on less well-understood, specialist, below the radar areas that are more operationally complex and therefore face less competition from other investors.

What does a typical day look like for you as a Managing Partner of Astarte? What daily challenges do you encounter and how do you resolve them?

My biggest challenge is time. No day in the office is like any other day. We are building a business from scratch and this creates numerous challenges daily.

Finding the time between building and managing Astarte, identifying opportunities and partnerships and structure the business development is a challenge. Thankfully, my experience has helped me to be able to be multi-tasking and efficient at the same time. They key is to focus for specific amounts of time on specific tasks and make sure that priorities are right. Prioritisation is the key to success in a business like ours. This is a trade you learn through mistakes and experience. I believe the 25 years in the industry have taught me a lot on that.

The industry we are in is based on people and trust. Bringing the best talent on board and helping young people grow professionally is very important for me. It is very challenging to find the time for that but the results are truly rewarding.

If you could share one piece of advice with Finance Monthly’s readers, what would it be?

Setting up a new business is hard and no one can prepare you for this.  A few people realise how many sleepless nights it takes to become an apparent overnight success. Time will be the judge of the overall success of Astarte, but our achievements so far proved to me that nothing is impossible and that the improbable is worth chasing.

The biggest lesson I’ve learned is that starting a new business in a competitive landscape is usually hugely against all odds. It takes double the anticipated time, double (or much more) the anticipated capital and most likely, losing half of the people you once thought were your friends. However, the journey is worth it and is the biggest lesson that one can learn.

What is the motivation that drives you?

In a few years, I would like to look back and be able to say that Astarte and the team brought a new level of innovation on how business is done in the private equity and real assets space. The private equity industry hasn’t changed much since its inception, almost half a century ago. If we achieve this and deliver the returns we hope to deliver, based on ESG framework, I will be a happy man.

Website: https://astartecp.com

Dallas J. McGillivray is an experienced international regulatory and business manager.  He is a Fellow of the Institute of Chartered Accountant, Member of Institute of Directors and a Member of the Chartered Institute of Securities and Investment. He has extensive regulatory experience in senior management roles including as a Director and Trustee. 

He is also the Managing Director of FMConsult– a company that provides compliance, regulatory, product development and risk management services to a range of large international and start-up financial services companies since 2004.

On top of that, Dallas serves as Global Compliance and Operational Risk Director at a major asset management company for all business outside the Americas for 17 years with experience in global regulatory issues, covering both retail and institutional. He’s also a Director of UK Asset Management Companies and Trustee of UK Pension Schemes. 

Here he speaks to Finance Monthly about asset management and tells us more about his company – FMConsult.

What attracted you to the consulting sector?

 What brought me to the sector was an invitation to work with a small consultancy, with the objective to grow it. We binned the company and set up FMConsult. The work is varied and you meet a lot of bright entrepreneurs that are just starting out who need a bit of “grey hair” to help them along.

What are the key sectors that you provide asset management services to? What are the unique challenges of each sector, from an asset management perspective?

 We have a very wide range of clients from start-ups (that want a collective investment scheme set up, introductions to management companies, investment managers to attach to, etc.) to very large mature businesses that need some support during periods of change ( e.g. interim Head of Compliance role ). We are in the asset management space from wealth management to institutional asset management and everything in between.

What strategies do you implement to ensure that your clients’ goals and objectives are achieved?

 At FMConsult, we adopt a risk based approach to assess those business functions that have the largest impact on the business. Where are the issues? That’s what we need to know to be able to add real value.

 What are the challenges that your clients typically face in relation to meeting regulation?

 In the smaller entities, it may be capital resources and regulatory knowledge. They rely on FMConsult to add the regulatory knowledge. Outsourcing compliance is an economic way of delivering compliance standards, but it cannot replace senior management understanding that they are responsible and need to understand their responsibilities. Outsourcing compliance is not an abdication of regulatory responsibility.

 What were your main objectives when setting up FMConsult?

 Our main goal was to be a well-respected, independent regulatory and operational & investment risk consultancy firm, committed to working with clients to assist them in aligning financial services processes with ongoing regulatory requirements. 

 We also wanted to provide compliance solutions that enable senior management of financial services firm’s to demonstrate that they and their firm are currently and will continue to be aligned with UK and other regulatory requirements.

 How would you evaluate your role within FMConsult?

 My role at FMConsult encompasses a focus on business development and looking after a range of clients. I’m proud that the company punches above its weight in the industry. We have a very diverse range of clients that do take compliance seriously.

Dr Stavros Siokos is the Managing Partner of Astarte Capital Partners - a specialist alternative co-investment platform with a focus on the real assets space. The company, whose team is spread between London, NYC, Zurich and Sydney, identifies and partners with experienced real asset operators, establishing institutional standard specialist asset management businesses in niche real asset strategies that target private equity-type returns. Astarte’s team combines their experience of building multi-billion niche asset management businesses with the know-how of established real asset operators with strong track record in the specific sector. Astarte’s target is full alignment of interests and transparency with only success-based fees. Here Dr Siokos talked to Finance Monthly about the future of international finance and Astarte’s beginnings, achievements and goals for the future.

How did your career path lead you to your current role as a Managing Partner at Astarte Capital Partners?

I was originally educated as a Computer engineer. My first two degrees were pure Computer Engineering while my Ph.D. from the University of Massachusetts focused more on Financial Engineering. Structured approach to the solution of any problem was the best skill that my education gave me.  My non-academic career started as a quantitative analyst at Salomon Brothers (later Citigroup) in the mid-nineties. I quickly became managing director, responsible for the global portfolio trading strategies and all pension fund solutions. This period of my career was the best education that I ever received.

My career on the sell side lasted for almost fifteen years. Before the crisis, I decided to move to the buy side, recognizing that the sell side was ready to move into a different stage where entrepreneurship was to be challenged. Later on, I became the CEO of a small boutique asset management firm where, together with the team, we managed to build innovative alternative investment platforms and grow the assets exponentially – from a few hundred million to several billion within a few years. All the above was achieved by raising long term capital from global institutional investors. In early 2015, we decided to create a new platform, based on an innovative and disruptive model. We managed to establish this ambitious plan within a few months.

As a co-founder of Astarte, how did the idea about the company come about?

As an entrepreneur, I am constantly trying to expand my horizons. Our initial goal with Astarte was to create something that was fairer to the investors and will have a significant impact in the world of investing. We were eager to bring together the best professionals under an umbrella of full alignment and transparency. For a number of months, we worked on identifying the optimal team and the fairest structure for co-investments, and the outcome of this hard work was Astarte.

What have been the company’s biggest achievements in the past two years?

For a newly established firm, no matter how experienced the team is, the first couple of years are very challenging. I’d say that our first big achievement is managing to stay on track, since building an innovative and disruptive business in a highly competitive environment is a challenge. However, we managed to launch the firm by simultaneously attracting top talent, long term capital and excellent deal flow, which I think are the key components of any asset management business. Currently, I’m delighted to say that we are in a position where all the important ingredients are in place.

What is your vision for the future of Astarte? What do you hope to accomplish in the next three years?

Our aim, although quite ambitious, is to establish Astarte as one of the leading co-investment platforms for niche real assets. We hope to see private capital working smarter and fairer in the future, with Astarte playing a significant role on this.

What is your brief outlook on the future of international finance?

We are living in an ever-increasing regulated environment where restrictions and regulations are creating a very controlled environment that supports large firms and kills entrepreneurship. Margins are shrinking and opportunities are reduced. Thus, it is my belief that in a decade the asset management market will only consist of huge players and a limited number of niche strategy participants.

Somewhere on every asset manager’s wishlist has been a FinTech solution that fosters a more direct connection to their end-users. After all, bankers have gotten big data and artificial intelligence tools, investment specialists have gotten robo-advisors, and compliance officers are getting plenty of RegTech offerings.

We are pleased to announce that a blockchain-driven product for fund managers has arrived. (A live demo was held in December 2016 on KPMG’s premises in Kirchberg, Luxembourg). The result of a collaboration between Fundsquare, InTech (subsidiary of POST Group) and KPMG Luxembourg, the platform will allow asset managers to sell funds directly to investors, which in turn will dramatically reduce the cost of administration and the time taken to process transactions.

Said Fihri, KPMG Leader on Digital Ledger Technology (Blockchain), explains:
“The platform, which could perhaps be better called an ecosystem, aims to streamline a whole range of fund administration and order-routing tasks by using blockchain to automate several processes in a secure manner. In other words, the messaging that must occur amongst the investor, the asset manager, the custodian bank, and the transfer agent is about to become much simpler. Whereas the time between an investor making a decision and a transfer agent executing it currently takes up to about six days, this new fund distribution product will do it in a couple of hours. And in the not-too-distant future, seconds.”

Naturally, these six days, and the money invested in them, is something that many fund managers and investors are eagerly looking forward to getting back.

Notably, unlike similar products recently launched, this fund platform will ease AML/KYC fund data look-through and MiFID verification by standardising it and allowing the factorisation of such repetitive tasks. These capabilities draw on smart contracts which are considered to be the utmost in cyber-secure transaction technology. This feature should answer one of asset managers’ main compliance bugaboos.

The dawn of an ecosystem

As a market infrastructure, Fundsquare is ideally placed to offer a fund blockchain for investment professionals. Olivier Portenseigne, Managing Director of Fundsquare, described the company’s role in administering the distributed ledger:

“Since blockchain’s original usage with Bitcoin, we have been wondering how we could unlock the technology’s potential for investment funds. We soon realised that it had the potential to revolutionise not only one part of the distribution process, but the entire supply chain—the difficulty, however, lay in turning the talk into action. This is how our small commando team was born. With InTech and KPMG Luxembourg, we were able to take a pragmatic approach to the project, and in doing so, speed up the development process. The live demo today is a real milestone in this process.”

InTech, a Luxembourg-based IT company, has been working on blockchain codes, smart contracts, and user interface. Fabrice Croiseaux, CEO of InTech, explained how the new product would revolutionise the industry:

“By combining our expertise around distributed ledger technologies, Fundsquare’s vision, and KPMG’s deep understanding of the fund market, we have been able to deliver the foundation of a new generation platform in a very short time. It is not only the investor and asset manager that can plug into the system: everyone in the fund distribution supply chain, from custodians, to transfer agents, to asset service providers, can benefit. It really aims to connect the dots, by harmonising a currently fragmented fund distribution process.”

KPMG Luxembourg, for its part, advises on user experience based on our knowledge of the asset management industry. We also wrote the business requirements for the development of the product. If the analogy can be forgiven, we are the glue combining the IT engineers and the order-routing specialists to ensure that the end product is exactly what asset managers want.

Luxembourg’s back-office crown

Naturally, the new product augurs a broader change in Luxembourg’s pool of expertise. Intermediaries like transfer agents have great stores of knowledge and are well placed to be an active part of the industry’s revolution. However, they also have the most at stake when it comes to the brand new world of digitalised fund distribution. We hope that transfer agents will work with us to build a new generation of back office technology.

Alex Zeeh is the Chief Executive Officer of S.E.A. Asset Management in Singapore and Chairman of the Board of S.E.A. Alex has more than 20 years of industry experience both in investment banking as well as in private banking. He gained his work experience in the USA, Switzerland and Germany before moving to Singapore. Alex and his colleague Gallen Tay (Chief Investment Officer of S.E.A. Asset Management) look after the funds’ investments and monitor its asset allocation.

What are the key sectors that S.E.A Asset Management provides asset management services to? What are the unique challenges of each sector from an asset management perspective?

S.E.A. primarily manages two Luxembourg UCITS compliant SICAV funds besides segregated accounts. Our specialty are Asian small midcap equities as well as Asian short duration high yield bonds. To discover under-researched and overlooked equities that have quality management and strong market positions or niche products is always a challenge. Bonds require even more in-depth research including company visits and thorough scrutiny of financial reports given that many of the issues we look at do not bother to obtain credit ratings and hence often secondary research is not an option. And with Asian credits you need to do a lot of fundamental analysis. That is why our approach to credit selection is fundamentally driven. We buy to hold until maturity so repayment ability at maturity is the top priority. We try to avoid defaults at all costs and have had none so far. However defaults can still happen for reasons beyond our control so we maintain a high level of portfolio diversification to lessen potential impacts and still achieve positive absolute returns on an annualised basis. Investors like alternative investments as they tend to be uncorrelated to more traditional asset classes.

As a thought leader, what strategies do you implement to ensure that your clients’ goals and objectives are achieved?

Clients struggle to protect their capital, let alone get decent returns given low or even negative interest rate environments in many parts of the world. I personally believe that large parts of the world’s economy will continue to linger in a “lower for longer” interest rate environment. Often the low rates have driven them into long-dated investment grade bonds or even high-yield bonds. The risk is now that US interest rates rise and investments in longer dated bonds - including high-yield bonds - will suffer price declines that may not be compensated by coupon payments anymore. The only choice they have is to retreat into short duration bonds that are protected from rate hikes in terms of price volatility. This is where our short duration high-yield strategy comes into play. We target 6-10% net returns p.a. which is achievable less so from credit spread tightening but more from oversold bond price levels and high coupons as well as special situations. With such high absolute return potential we do not add FX risk and always hedge non-USD currencies back into the fund’s reference currency. Underlying fundamentals in Asian economies are also good. Over the past 10 years many Asian economies have seen rating upgrades from the major credit rating agencies and have achieved investment grade while many developed nations have dropped dangerously close to being downgraded to non-investment grade ratings.

What cost improvement initiatives does your company offer and work on with your asset clients?

Regulations and costs involved with implementing them are on the rise not only in Singapore. This impacts us as well in areas such as AML/KYC or outsourcing only to name a few. We are trying to keep compliance costs as low as possible without compromising strength of internal policies and procedures. We do so by outsourcing to highly competent external providers to keep non-core know-how outside of the firm as we want to run a lean cost structure. This is the most efficient way to do what we are best at in-house and keeping costs for clients in check.

What lies on the horizon for S.E.A. Asset Management in 2017?

We are continuing to increase the assets under management from internal sources and seeders to reach a more significant level of at least 50 mln USD on an individual fund level at which smaller institutions, wealth managers and family offices can make allocations when we have our first three years track record completed.

Tim Orme is the Managing Director at BRT SA, running the UK arm of a Swiss BPO and Wealth Management technology business. The company provides outsourced middle and back office services to investment managers, as well as the bespoke technology platforms. Tim joined the company at a nascent stage and has dedicated the past 4 and a half years to leading the strategic and operational development of the firm, alongside his three colleagues on the executive team. As the UK business expands and continues to roll out BRT SA’s award winning solutions to more clients across the globe, a combination of high customer satisfaction and the firm’s healthy pipeline gives Tim and his colleagues continued confidence.

 BRT came to life as a spin-off from Swiss asset managers Bedrock in 2007. Drawing on over 60 years of experience in private banking, the company has been growing profitably from the very beginning. Today, BRT has a staff of around 50 and serves 35 major clients who oversee more than 45 billion USD in AUM. We operate out of two offices, one in Geneva and a second in central London. Here Tim tells us more about the company, trends within wealth and asset management and his views on the future.

What is driving the current outsourcing trend within wealth and asset management? Subsequently, what are the key considerations for COOs considering BPO?

As the wealth and asset management industry becomes increasingly client orientated, the issue of which functions remain part of the core internal operation are being reassessed. Once coupled with downward pressure on operating margins and the increasing burdens of regulatory and compliance requirements, firms wanting to grow must consider innovative ways to manage operational expenditure, while maximising their efficiency and scalability.

Importantly the scope and interconnection of a BPO service needs to be closely tailored to each company’s unique procedural, investment and management philosophies. Non-differentiating generic activates such as reconciliation, price sourcing, report generation and data management can be easily transferred to specialist service providers, who can enrich them with best practices and scalable security of service, for example via an SLA. In the case where a service provider can combine established working methods with client specific customisation, firms can achieve a safe and reliable handover of these tasks without compromising on client experience & operational efficiency or undertaking cumbersome business transformation projects.

What are the key benefits for investment managers utilizing BPO service providers such as BRT?

When selecting an operational service provider that will play such a vital role within the business, it is absolutely key the solutions they provide are scalable, secure, capable and cost effective. All four of these aspects are mastered once the provider has gathered working methods from collaborating closely with its client base, as well as the additional positive externalities of critical insight and specialist process engineering. By working with an expert, investment managers can be sure they are staying up to date with technology and operations, while also freeing up time and resources to focus on their core activities of client relationships, research and generating alpha.

What is unique about the BRT approach to the market?

We work with our clients in two different modes, depending on their requirements. Firstly, we offer mature and dependable outsourcing services. This means our clients relinquish the burden of their back and middle office processes, as well as their IT and technology needs if necessary. As we cover the whole operational side, our clients don’t need to employ multiple service partners for this. Secondly, we offer the state of the art technology we developed for our own use, on a licensed basis. This allows those organisations who prefer to keep operational staff and processes in house the option to improve their overall operational functionality through customised software implementations. Over the years, BRT has established operational solutions boasting a well-established fleet of tools and services, and regardless of the role we play with each client, the core values of service, skill, discretion & integrity are ubiquitous.

What do you hope to achieve in the next few years?

Our shared goals for the company will continue to focus on the development of our product and service offering, essential to solidifying our position as the preferred partner to the wealth management industry. There is evidently strongly growing appetite for outsourced operational services, and as we build on 10 years of experience in this area we are confident of staying ahead of the curve and offering best in class solutions to wealth mangers, family offices, hedge funds and more. Our mobile solution, Fortress is also set to feature as a revolutionary private banking product, offering a simple, secure and totally white-labelled online portal, anywhere, anytime and on any device.