UBS discusses helping hedge funds in Asia Pacific
Vasundhara Pradeep, business consultancy sales for Asia-Pacific at UBS Prime Brokerage, answers questions on providing solutions to hedge funds to establish, expand and manage a successful business in the region.
The growing ranks of hedge funds in the region require a range of services to help them get established. Vasundhara Pradeep, business consultancy sales for Asia-Pacific at UBS Prime Brokerage, discusses some of the biggest challenges they face.
How does UBS's Prime Brokerage differentiate its consultancy services? And why is yours the best?
UBS's Business Consultancy Services is an integral part of our prime brokerage offering. Through our consultancy offering we aim to partner with start-up and established hedge fund clients to create long-term sustainable businesses.
Our proactive approach, deep industry knowledge, strong service provider relationships, an on-the-ground team in Asia-Pacific and hands-on experience with a spectrum of start-up and established hedge funds in the region are the key differentiating factors that help us add value to our prime brokerage clients.
When consulting for start-ups, we often work with managers who have limited experience on the non-investment side of the business. We closely advise our clients, providing them with a structured approach and project plans to ensure a timely launch. We have developed toolkits based on best practices that can save clients significant amount of costs and time in the start-up process.
Established hedge funds also value our extensive industry and market knowledge when looking to enter new markets, attract a different investor type or deal with a fluid regulatory environment. We organize a number of industry events to ensure that our clients are abreast of the latest industry trends.
With a consultancy team located in Asia-Pacific and integrated with our teams in London and the US, UBS offers clients global expertise and coverage.
How has the level of expertise from start-up hedge funds evolved over the last five years and how much more complex have their questions become?
We have seen two distinct trends in start-up hedge funds in Asia. Firstly, the average size of start-up hedge funds in Asia-Pacific has increased substantially over the last five years. Secondly, barriers to entry in launching a hedge fund business in Asia-Pacific have gone up due to higher start-up costs and increased investor scrutiny on hedge funds when making allocation decisions.
These trends have contributed to start-up managers becoming more sophisticated in Asia-Pacific. This has made the role of Prime Brokerage business consultancy teams even more important.
When working with start-ups, we work on a range of areas such as designing business plans, creating budgets, planning the optimal approach to business structuring, navigating clients through regulatory applications and selecting the right service providers.
Start-ups now have questions focusing on complex fund terms, seeding and shareholder agreements, risk culture, valuation approaches, systems and operations infrastructure through to compensation and benefit plans for employees.
What is your service offering for mature funds in a growth phase?
For our established hedge fund clients, we offer bespoke consultancy services. We advise these clients on how they can scale their businesses as they grow in asset size, complexity of strategy, transaction volumes and diversity of investor base.
Key areas where we help our established hedge fund clients with expanding their business infrastructure include integrating a streamlined front to back infrastructure, outsourcing strategies, control policies and procedures, a sound compliance regime, business continuity planning and a comprehensive risk management approach.
We are also very strong in providing in-depth expertise in Asia-Pacific markets from regulatory, tax, operations and business management perspectives. This helps our established hedge fund clients adapt their business models to the changing regulatory environment and respond actively to market trends in the hedge fund industry.
How do you answer suggestions that consultancy services at PB act as little more than referral agencies?
Our service goes well beyond directing clients to third party vendors. While we maintain deep relationships with service providers across the region, service provider referrals are a small aspect of our offering.
We advise our hedge fund clients on projects as diverse as marketing in Japan to accessing a new market such as India to establishing a business presence in China and so on û we can help manage each of these engagements in a turnkey manner by leveraging on our on-the ground presence and through our local relationships with regulators, service providers and investors.
Do UBS consultants have the relevant backgrounds? Does it matter if they are bankers rather than specialists?
Our team comprises of specialists whose experience ranges from management consulting, accounting and tax, regulatory and compliance, IT and operations. We have selected people from diverse backgrounds to make sure we have an extremely client centric team with all the requisite skills.
What system and technology infrastructure issues do new managers need to be aware of?
There has been increased scrutiny from investors in their operational due diligence process. Consequently, it has become important for hedge funds to create a streamlined front to back operational and system infrastructure with strong internal control mechanisms to effectively manage their overall risk.
We recommend that hedge funds consider either a proprietary or a third party vendor solution for maintaining their books and records and build robust processes to reconcile with the prime broker and administrator. Risk management is another area that new managers must focus on. UBS prime brokerage provides managers with in-house risk tools. We also work with a number of third party risk vendors. Disaster recovery and continuity planning also need to be addressed at the outset when starting a hedge fund.
When selecting the right systems for their technology infrastructure, managers must consider suitability of the solution to the fund strategy, asset class coverage, trading volume, cost and scale of their business.
When deciding whether to set up in Hong Kong or Singapore, what specific issues should a hedge fund manager consider?
Hong Kong and Singapore are the preferred hubs in Asia for Asian hedge funds and global funds looking to establish a footprint in the region. In 2007, Hong Kong remained the largest hedge fund hub with 15% of Asian assets under management followed by Sydney with 14% and 11% in Singapore1.
Hong Kong has a favourable tax regime, strong regulatory framework with access to major service providers and Asian markets. Funds with a focus on Greater China often prefer to be located in Hong Kong. Singapore has a comparable tax regime and a more flexible regulatory regime than Hong Kong, where managers can opt for exemption from licensing. Competitive costs also make Singapore an attractive destination. We see hedge funds with a focus on Japan or South East Asia preferring a business presence in Singapore.
Both the Monetary Authority in Singapore and Securities and Futures Commission in Hong Kong are very open to hedge funds and managers should discuss their plans with both regulators before arriving at a decision.
How do you help hedge funds find quality staff?
We draw upon our resources both within UBS and our network of industry contacts to help our clients find talent across a range of roles from portfolio managers, analysts, dealers, chief operating and financial officers and operations staff. Based on a hedge fundÆs strategy, geographical focus and requirements, we actively match their requirements to candidates in our network. We also get reverse enquiries from prospective candidates whom we refer to our hedge fund clients.
In addition to helping our clients attract good talent, we also assist with advice on compensation schemes and mechanisms to retain talent.
What trends do you see in Asia-Pacific hedge funds in the future?
Going forward, we expect to see the Asia-Pacific hedge fund industry continuing to mature with hedge fund investors raising their benchmarks when selecting managers to invest in. Consequently, we will see better managed hedge fund businesses with greater focus on best practices, better control infrastructure and well rounded approach to risk management. We also expect additional due diligence of service providers.
Prime Brokerage business consultancy teams will continue to play a significant role in helping hedge funds build and manage successful and sustainable businesses.
¬ UBS 2008. All rights reserved. This material does not constitute an offer to sell or a solicitation to offer to buy or sell any securities or investment instruments, to effect any transactions or to conclude any legal act of any kind whatsoever. Neither UBS AG nor any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this material.
1 Eurekahedge, 2007
How does UBS's Prime Brokerage differentiate its consultancy services? And why is yours the best?
UBS's Business Consultancy Services is an integral part of our prime brokerage offering. Through our consultancy offering we aim to partner with start-up and established hedge fund clients to create long-term sustainable businesses.
Our proactive approach, deep industry knowledge, strong service provider relationships, an on-the-ground team in Asia-Pacific and hands-on experience with a spectrum of start-up and established hedge funds in the region are the key differentiating factors that help us add value to our prime brokerage clients.
When consulting for start-ups, we often work with managers who have limited experience on the non-investment side of the business. We closely advise our clients, providing them with a structured approach and project plans to ensure a timely launch. We have developed toolkits based on best practices that can save clients significant amount of costs and time in the start-up process.
Established hedge funds also value our extensive industry and market knowledge when looking to enter new markets, attract a different investor type or deal with a fluid regulatory environment. We organize a number of industry events to ensure that our clients are abreast of the latest industry trends.
With a consultancy team located in Asia-Pacific and integrated with our teams in London and the US, UBS offers clients global expertise and coverage.
How has the level of expertise from start-up hedge funds evolved over the last five years and how much more complex have their questions become?
We have seen two distinct trends in start-up hedge funds in Asia. Firstly, the average size of start-up hedge funds in Asia-Pacific has increased substantially over the last five years. Secondly, barriers to entry in launching a hedge fund business in Asia-Pacific have gone up due to higher start-up costs and increased investor scrutiny on hedge funds when making allocation decisions.
These trends have contributed to start-up managers becoming more sophisticated in Asia-Pacific. This has made the role of Prime Brokerage business consultancy teams even more important.
When working with start-ups, we work on a range of areas such as designing business plans, creating budgets, planning the optimal approach to business structuring, navigating clients through regulatory applications and selecting the right service providers.
Start-ups now have questions focusing on complex fund terms, seeding and shareholder agreements, risk culture, valuation approaches, systems and operations infrastructure through to compensation and benefit plans for employees.
What is your service offering for mature funds in a growth phase?
For our established hedge fund clients, we offer bespoke consultancy services. We advise these clients on how they can scale their businesses as they grow in asset size, complexity of strategy, transaction volumes and diversity of investor base.
Key areas where we help our established hedge fund clients with expanding their business infrastructure include integrating a streamlined front to back infrastructure, outsourcing strategies, control policies and procedures, a sound compliance regime, business continuity planning and a comprehensive risk management approach.
We are also very strong in providing in-depth expertise in Asia-Pacific markets from regulatory, tax, operations and business management perspectives. This helps our established hedge fund clients adapt their business models to the changing regulatory environment and respond actively to market trends in the hedge fund industry.
How do you answer suggestions that consultancy services at PB act as little more than referral agencies?
Our service goes well beyond directing clients to third party vendors. While we maintain deep relationships with service providers across the region, service provider referrals are a small aspect of our offering.
We advise our hedge fund clients on projects as diverse as marketing in Japan to accessing a new market such as India to establishing a business presence in China and so on û we can help manage each of these engagements in a turnkey manner by leveraging on our on-the ground presence and through our local relationships with regulators, service providers and investors.
Do UBS consultants have the relevant backgrounds? Does it matter if they are bankers rather than specialists?
Our team comprises of specialists whose experience ranges from management consulting, accounting and tax, regulatory and compliance, IT and operations. We have selected people from diverse backgrounds to make sure we have an extremely client centric team with all the requisite skills.
What system and technology infrastructure issues do new managers need to be aware of?
There has been increased scrutiny from investors in their operational due diligence process. Consequently, it has become important for hedge funds to create a streamlined front to back operational and system infrastructure with strong internal control mechanisms to effectively manage their overall risk.
We recommend that hedge funds consider either a proprietary or a third party vendor solution for maintaining their books and records and build robust processes to reconcile with the prime broker and administrator. Risk management is another area that new managers must focus on. UBS prime brokerage provides managers with in-house risk tools. We also work with a number of third party risk vendors. Disaster recovery and continuity planning also need to be addressed at the outset when starting a hedge fund.
When selecting the right systems for their technology infrastructure, managers must consider suitability of the solution to the fund strategy, asset class coverage, trading volume, cost and scale of their business.
When deciding whether to set up in Hong Kong or Singapore, what specific issues should a hedge fund manager consider?
Hong Kong and Singapore are the preferred hubs in Asia for Asian hedge funds and global funds looking to establish a footprint in the region. In 2007, Hong Kong remained the largest hedge fund hub with 15% of Asian assets under management followed by Sydney with 14% and 11% in Singapore1.
Hong Kong has a favourable tax regime, strong regulatory framework with access to major service providers and Asian markets. Funds with a focus on Greater China often prefer to be located in Hong Kong. Singapore has a comparable tax regime and a more flexible regulatory regime than Hong Kong, where managers can opt for exemption from licensing. Competitive costs also make Singapore an attractive destination. We see hedge funds with a focus on Japan or South East Asia preferring a business presence in Singapore.
Both the Monetary Authority in Singapore and Securities and Futures Commission in Hong Kong are very open to hedge funds and managers should discuss their plans with both regulators before arriving at a decision.
How do you help hedge funds find quality staff?
We draw upon our resources both within UBS and our network of industry contacts to help our clients find talent across a range of roles from portfolio managers, analysts, dealers, chief operating and financial officers and operations staff. Based on a hedge fundÆs strategy, geographical focus and requirements, we actively match their requirements to candidates in our network. We also get reverse enquiries from prospective candidates whom we refer to our hedge fund clients.
In addition to helping our clients attract good talent, we also assist with advice on compensation schemes and mechanisms to retain talent.
What trends do you see in Asia-Pacific hedge funds in the future?
Going forward, we expect to see the Asia-Pacific hedge fund industry continuing to mature with hedge fund investors raising their benchmarks when selecting managers to invest in. Consequently, we will see better managed hedge fund businesses with greater focus on best practices, better control infrastructure and well rounded approach to risk management. We also expect additional due diligence of service providers.
Prime Brokerage business consultancy teams will continue to play a significant role in helping hedge funds build and manage successful and sustainable businesses.
¬ UBS 2008. All rights reserved. This material does not constitute an offer to sell or a solicitation to offer to buy or sell any securities or investment instruments, to effect any transactions or to conclude any legal act of any kind whatsoever. Neither UBS AG nor any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this material.
1 Eurekahedge, 2007
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