More demand felt for family office services in Vietnam

More demand felt for family office services in Vietnam, illustration photo

Vietnam-focused private equity firm PENM Partners is seeking capital for its fifth investment vehicle, turning to family offices amidst a challenging fundraising landscape.

While the firm has secured commitments from European and US pension funds previously, current market conditions, including rising interest rates and geopolitical uncertainties, have made traditional fundraising more difficult.

In a June discussion with Dealstreetasia, Hans Christian Jacobsen, managing partner of PENM Partners, emphasised the appeal of family offices, which are more receptive to higher risks and interested in Vietnam’s opportunities and diversification from China.

A family office is defined as a privately held company that handles investment management for a wealthy family.

“The fundamentals of Vietnam are still very promising. It is the right place to invest if you want to have an Asia exposure,” he said.

Domiciled in Denmark, PENM’s fundraising efforts have predominantly targeted Europe. The firm aims to raise $150 million to $200 million for PENM, targeting investors who recognise Vietnam’s potential and seek exposure to the Asian market.

Other Vietnamese companies, like ABB, which is associated with local investment banking company Asia Business Builders, are also approaching family offices and development finance institutions for funding. This trend is attractive to a new generation of family offices from the US and Europe, while ultra-high-net-worth (UHNW) individuals in Asia are actively diversifying their portfolios with a keen interest in alternative investments.

Elsewhere, Raffles Family Office, a multifamily office with full wealth management services for UHNW individuals headquartered in Hong Kong and Singapore, has intensified its commitment to private equity transactions within Southeast Asia.

Head of the firm’s Private Equity, Jo Huang, disclosed that Raffles Family Office has dedicated around 10-15 per cent of its substantial assets under management to investments in the private equity sector. Huang noted that the value of geographical and sectoral flexibility as a risk mitigation measure for the company’s investment undertakings, expressing a desire to expand its reach into various markets.

“We have invested more in Southeast Asia, and we have more exposure to global deals too. This year, we will continue to diversify into more markets,” she added.

Amidst this evolving financial landscape, Vietnamese UHNW individuals’ burgeoning interest in family office services in Hong Kong is significantly impacting the wealth management scene.

A representative from InvestHK, the government arm of investment, revealed in January the emerging interest of Vietnamese UHNW individuals in family office services in Hong Kong.

“We expect to see a more significant trend of Vietnamese wealthy clients seeking family offices in Hong Kong,” the representative stated. “Hong Kong’s reputation as Asia’s premier financial hub, offering a diverse range of professional financial services, makes it an appealing destination for individuals seeking sophisticated wealth management solutions.”

This appeal is bolstered by Hong Kong’s drive to attract 200 family offices by 2025, solidifying its position as a paramount wealth management centre. Additionally, FamilyOfficeHK’s proactive engagement with potential investors across key markets, including the mainland, Southeast Asia, and Europe, aims to underscore the advantages of establishing family office branches in Hong Kong, attracting diverse investors seeking comprehensive wealth management solutions.

In the context of this evolving landscape, Vietnam’s increasing number of ultra-rich individuals, according to an annual Wealth Report by Knight Frank, projected to reach 1,300 by 2027, signifies a burgeoning potential for family offices services in the region. This projection represents a 22 per cent increase from the 2022 figure and a 122 per cent increase over the span of a decade.

The report defines an ultra-rich person as someone with a net worth of at least $30 million, minus loans.

Additionally, Vietnam has experienced substantial growth in its population of high-net-worth individuals, defined as those with assets worth at least $1 million. Over the past five years, this segment has surged by 70 per cent, rising from almost 41,000 individuals in 2017 to around 70,000 in 2022.

Knight Frank further predicted that the number of high-net-worth individuals in Vietnam will continue to soar, reaching over 112,200 by 2027. This projection reflects a substantial 173 per cent increase over the course of a decade.

This trend dovetails with a robust sentiment expressed by data analyst Preqin, which views private equity as the premier asset class for the upcoming decade, as underscored by Preqin’s APAC Family Office Report 2023.

Raffles Family Office bolsters private equity focus in Southeast Asia In an effort to diversify its portfolio, Raffles Family Office – a prominent wealth management firm – is placing increased emphasis on private equity transactions within Southeast Asia. However, challenging conditions in 2022 have led to a decline in deal value and volume in Southeast Asia's private equity market, as reported by Bain & Co.