Andy Chen, DL Family Office
Registered in Hong Kong in 2012, DL Family office is a multi-family office that oversees about $1bn assets. It provides services to more than 30 family offices, most of which are from mainland China and Hong Kong, Andy Chen, chief executive and co-founder of DL Holdings, the controlling shareholder of DL Family office, told FSA
Chen said its Hong Kong clients are usually well-established family offices, and their wealth had passed down to the second or third generation. In contrast, its clients from China are usually first generation money-makers.
“Our clients from the mainland are usually successful entrepreneurs in their 50s and also the owners of one or more listed companies,” Chen said.
Clients from the mainland usually have their own investment philosophy, like to make their own investment decisions, expect high returns and have a preference for real estate.
“It took us a while to educate and convince our clients about asset allocation and diversification. But it was not easy when house prices were jumping in China, and the renminbi was appreciating more than 5% against the US dollar every year.”
DL Family Office gained several clients in the summer of 2015, as the stock markets in China plunged and the renminbi depreciated against the US dollar. “That’s when most of our mainland clients came to us,” said Chen.
The firm currently allocates about 30% of its assets in fixed income, and another 30% to funds managed by leading firms such as Blackstone, Blackrock and Franklin Templeton. It also invests in private equities – but not in cryptocurrencies.
Chen explains to his clients — who typically own assets worth between $30m and $300m — that the aim of a family office is to help wealthy individuals allocate their assets globally to minimize risks, rather than chase after short-term returns. It is also about safeguarding the family wealth so it can be passed down to the next generation.
Regional family office hub
Meanwhile, Hong Kong has the potential to become a family office centre in Asia, according to Chen.
First, Hong Kong’s legal system is based on the common law, which protects the business environment for small and individual investors, he argued — despite international concerns about the rise of Beijing’s interference. Second, Hong Kong enjoys a free flow of capital and information; investors want to know that they can move around their capital quickly, he said
Third, Hong Kong has a large talent-pool, and most people speak English, which is convenient for international investors. Finally, Hong Kong’s proximity to the Chinese mainland means that for international investors who want to have exposure to the Chinese market, Hong Kong is their first choice, said Chen.
Chen praised Hong Kong government’s effort in promoting the city’s status of international asset and wealth management centre,
DL Family Office is a member of The Hong Kong LPF Association, and Chen believes that the recent the introduction of the limited partnership fund (LPF) regime is a milestone for family offices in Hong Kong, because the costs to launch LPFs are low thanks to tax exemptions.
However, Chen also called for stricter government regulation on family office industry as he believes that with specific rules, families offices in Hong Kong can compete and learn from each other in an orderly manner.