December 22, 2016

RHTLaw Taylor Wessing Head of Regulatory Practice Nizam Ismail featured in Thomson Reuters

RHTLaw Taylor Wessing’s Head of Regulatory Practice Nizam Ismail was featured in an article published in Thomson Reuters titled “MAS's new accredited investor definition will require documentation and system change”. The article was first published on Thomson Reuters Accelus Regulatory Intelligence and Compliance Complete. MAS's new accredited investor definition will require documentation and system change Source: Copyright © Thomson Reuters 2016 Date: 22 December 2016 Author: Patricia Lee Singapore-based financial institutions can expect a degree of change to their documentation, systems, and policy and procedures following recent refinements to the definition of accredited investors at the first reading in parliament last month. The refinements to the definitions of accredited investors (AIs) and institutional investors (IIs) were part of the Monetary Authority of Singapore's proposed changes to its capital markets regulatory framework and followed a consultation paper issued on July 21, 2014. The second reading in parliament is expected to take place sometime this month or January 2017. The Securities and Futures (Amendment) Bill 2016 seeks to better reflect categories of non-retail investors identified based on their wealth or income and financial knowledge. Under MAS's existing capital markets regulatory framework, regulatory safeguards have sought to protect primarily retail investors. Intermediaries have so far been exempted from certain requirements if their customers are non-retail investors considered to be investment-savvy. Shift in regulatory thinking Under the proposed definition of AIs, the wealth criteria has been tightened such that the net equity of the individual’s primary residence can only contribute up to S$1 million of the current S$2 million net personal assets threshold. Alternatively, individuals will be able to qualify as AIs if they have S$1 million of financial assets (net of any related liabilities). Individuals whose wealth is largely based on their primary residence with little liquid assets will no longer qualify as accredited investors. Nizam Ismail, head of regulatory practice at RHTLaw Taylor Wessing in Singapore, said the regulatory thinking is that AIs were previously considered to be able to look after their interests by virtue of their wealth but such thinking has now shifted. Even if an investor meets the net asset or income test, he or she will no longer be automatically treated as an accredited investor unless they actively opt in to be one, in which case, they will lose protection from the regulatory safeguards accorded to retail investors. Reassessing customers, reviewing processes, policy and procedures What is most striking about the new accredited investors opt-out regime is that financial institutions, in particular, private banks, fund managers and wealth managers, can expect a good amount of work to be done, including re-assessing existing customers who are accredited investors and reviewing internal processes, policy and procedures to align them with the new requirements, said Hemali Mehta, senior consultant at Bovill in Singapore. Accredited investor reassessments will cover a number of areas including product suitability, risk profile and financial conditions. "For these financial institutions, they have to re-assess their existing AI clients to find out whether these clients want to be considered AIs and they have to notify them that they have the option to opt out of the accredited investor status. Full disclosure will have to be made to these investors that certain safeguards may not be available to them if they remain accredited investors," she said. Retail investor status as a baseline for new customers Mehta also pointed out that some financial institutions which are only licensed to deal with accredited and institutional investors may face the prospect of having to exit the relationship if some existing customers chose to opt out of becoming accredited investors. New AI-eligible customers whom financial institutions are onboarding for the first time will be treated as retail investors as a baseline unless they want to be treated as accredited investors, in which case they will have to opt in, she said. Mehta said MAS has been considerate and will not expect financial institutions to unwind past transactions involving products previously offered to customers when they were treated as accredited investors. MAS' proposals to introduce the enhanced safeguards under the new AI regime, she said, was a good move and was in line with similar regimes adopted in Europe and Hong Kong. AIs investing in Singapore dollar bonds MAS' proposed changes to the definition of accredited investors also took into consideration past instances where Singapore dollar bonds were sold to such accredited investors, said Lim Sin Teck, director, Morgan Lewis Stamford LLC in Singapore. While there have been no major issues so far, a number of bond issuers from the shipping and oil and gas sectors were known, in recent months, to be having difficulty making principal and interest repayments to their bondholders or otherwise in breach of certain covenants. "A substantial number of the accredited investor bondholders in the Singapore dollar bond market are individuals who find themselves stuck with defaulted bonds and are having difficulty recouping their investment. Accredited investors are meant to be investors with the ability to understand and, if acceptable to them, withstand and take on the investment risk, but in many cases, their investment evaluation process is at the level of retail investors and so they may not have the investment appetite nor investment sophistication that expected of such high-risk bonds," he said. Lim said some retirees, who may not necessarily be wealthy but own high value property, may seek high returns from their investment, but they may not be able to appreciate the risk in such bonds. MAS has therefore proposed to refine the definition of accredited investors and to limit the value of the primary residence of investors when financial institutions determine whether the former falls within the scope of accredited investors. ·  Patricia Lee is South-East Asia editor at Thomson Reuters Regulatory Intelligence in Singapore. She also has responsibility for covering wider G20 regulatory policy initiatives as they affect Asia.
December 20, 2016

RHTLaw Taylor Wessing’s Partners ranked as most influential lawyers aged 40 and under by Singapore Business Review in 2016

RHTLaw Taylor Wessing is pleased to announce that its Partners, Napolean Koh, Jack Ow, Suleen Ding and Dennis Tan have been ranked in the 2016 edition of Singapore’s 70 most influential lawyers aged 40 and under list published by Singapore Business Review (SBR). RHTLaw Taylor Wessing’s Litigation & Dispute Resolution Partner Napolean Koh, Intellectual Property & Technology Partner Jack Ow as well as Corporate Partners Suleen Ding and Dennis Tan and have been selected amongst a list of hundred nominees based on thought leadership, influence and success. Currently in its third year running, the list recognises 70 young lawyers who have the competency of not only representing themselves, but also Singapore. Napolean is a Partner at the Litigation & Dispute Resolution Practice. He specialises in Building Construction, Infrastructure and Engineering Disputes. His main areas of practice encompass both front-end advisory work for various construction, infrastructure and energy-related projects, as well as contentious work involving owner-developers, consultants and contractors at various stages of proceedings and forums. In addition to having an active court presence, Napolean has also dealt with disputes employing and/or involving alternative forms of dispute resolution, such as arbitration, mediation and adjudication under the Building and Construction Industry Security of Payment Act (Cap 30B). Jack is an Intellectual Property & Technology Partner at RHTLaw Taylor Wessing. He handles a broad spectrum of transactional and contentious matters in the areas of intellectual property (IP) and technology. He regularly advises on technology transactions, data protection and licensing, especially in the info-communication and technology (ICT) industries. As a Certified Information Privacy Technologist (CIPT) accredited by IAPP and having a keen interest in ICT developments, Jack believes in seeking customised legal solutions that take into account the challenges in design, deployment and auditing of IT products and services, while balancing the role that technology companies increasingly fill as arbiters of trust in today’s data-driven global economy. Suleen is a Corporate Practitioner who specialises in cross-border mergers and acquisitions, joint ventures and foreign direct investments across the ASEAN region. She has assisted clients in putting together various legal documentation such as investment agreements, subscription agreements, shareholders’ agreements, joint venture agreements and sale and purchase agreements. Suleen has also led legal due diligence teams and coordinated cross-border transactions with professional advisors located in other jurisdictions. Clients she has skilfully and successfully advised include multinational corporations, regional listed companies and shareholders of some of the largest private companies in ASEAN. Dennis is a Corporate Partner who specialises in Tax Planning & Advisory, Private Wealth and Corporate Technology. He has advised multinational corporate groups, sovereign wealth funds, PE firms, investment funds and financial institutions on international taxation issues. Dennis leverages on his international tax expertise in Private Wealth work, and advises ultra-high net worth families and their family offices on critical issues including private investments, governance, succession planning and wealth preservation. He also has an active US practice, and provides on-the-ground support to both US clients looking to grow internationally as well as international clients looking to further their US strategies. The full rankings can be found online in the 19 December 2016 edition of Singapore Business Review Exclusives - 40 and Under Section.
December 15, 2016

RHTLaw Taylor Wessing participated in the 21st ASEAN Banking Conference in November 2016

RHTLaw Taylor Wessing Managing Partner Tan Chong Huat and Deputy Head of Banking & Finance Ow Kim Kit participated in the 21st ASEAN Banking Conference held on 27 and 28 November 2016 in Bangkok, Thailand. Lawyers from various law firms in the ASEAN Plus Group, namely, Hanafiah Ponggawa & Partners, RHTLaw Taylor Wessing Vietnam, Siam City Law Offices and VDB Loi, also participated in the conference, which was organised by the Thai Bankers’ Assocation. Chong Huat was a speaker in one of the conference panel discussions titled “How can banks help to develop regional infrastructure?”. One of the issues discussed concerned the key impediments to private and commercial bank lending for public infrastructure projects.”
December 14, 2016

RHTLaw Taylor Wessing Head of Private Wealth Tan Choon Leng featured in Singapore Business Review

RHTLaw Taylor Wessing’s Head of Private Wealth Tan Choon Leng was quoted in an article published in Singapore Business Review titled “Slim pickings for private equity houses”. The article was first published in the December 2016-January 2017 edition of Singapore Business Review. Slim pickings for private equity houses PE houses face a scarcity of deals, but many remain hopeful given the high-growth trajectory of Southeast Asia and with international players setting up office in Singapore. Source: Singapore Business Review © 2016 Charlton Media Group Date: December 2016-January 2017 Edition When you ask private equity (PE) houses why they continue to flock to Singapore despite the dwindling number of deals in the country and in Southeast Asia, they will tell you that the short-term pain is worth the long-term gain. The region is primed for an upswing in PE activity in the coming decades as fast-growing markets become flush with investment opportunities, and a presence in the Singapore hub will ensure they can pounce on those lucrative deals. But, for now, PE firms are rolling with the punches and focussing on a few key plays, from privatisation of listed companies to technology acquisitions. “On a year-on-year basis there has been a marked slowdown both in terms of number of deals that get to completion as well as the number of new deals that PE houses are looking at,” says Tan Choon Leng, head of private wealth practice at RHTLaw Taylor Wessing LLP. “A near universal grouse that we hear from PE houses is the lack of appropriate targets and investee companies, especially in the healthcare and consumer sectors in Southeast Asia.” Tan reckons there has also been a perception of growing instability in the region, citing developments such as Thailand’s succession issue and Malaysia’s financial scandal involving 1MDB, which makes it trickier for PE houses to pick the right deals. There is a lot of “dry powder” in the industry – EY estimating around US$526.6b in September 2016 – but attractive deals providing healthy yields are harder to come by, says Bill Jamieson, partner, head, funds and financial services practice group at Colin Ng & Partners LLP. In fact, funds raised for Singapore had been increasing for years, notwithstanding a reverse in the first half of 2016, with many PE funds targetting Southeast Asia and using Singapore as a base for their business. “Despite the strong showing for funds raised, the challenge for many funds is finding the right investments in Singapore,” says Marcus Chow, partner at Bird & Bird ATMD LLP. “Funds are sitting on dry powder but the challenge is nonetheless in finding good internal rate of return (IRR) projects. Going private transactions and delistings from Singapore Exchange remain a growing trend for Singapore. We are acting on one such transaction now,” adds Chow. Privatisation picks up Singapore has seen a spurt of privatisation deals. This year, UOB Ventures backed the $269m privatisation of Eu Yan Sang, which specialises in traditional Chinese medicine. Other recent headliners include Northstar’s S$331m privatisation of Innovalues, and the Warburg Pincusbacked $1.78b privatisation of ARA Asset Management. “These are examples of classic PE plays on profitable but undervalued companies,” says Tan. “So long as the wider stock market remains relatively undervalued, it is likely that more such privatisation attempts will follow.” An increasing number of listed companies in Singapore are warming up to the idea of delisting due to taxing requirements and lower valuations, says Evelyn Ang, senior partner at Dentons Rodyk & Davidson LLP. “Singapore listed companies are subject to public scrutiny and are required to comply with numerous listing requirements including rules on public disclosure of material information, requirements for shareholders’ approvals for certain types of transactions and obligations to provide quarterly or half yearly reports to investors,” she says. “Combined with thin trading volumes and depressed valuations of companies listed on the Singapore Exchange (SGX), the option of delisting would and does appeal to founders and controlling shareholders.” Ang cites a Bloomberg estimate that around 13 companies with a combined market value of $4.5b have announced their plans to delist from the SGX in the first half of 2016. This year alone, OSIM International, Eu Yang Sang International, Goodwood Park Hotel Limited, SMRT Corporation and Tiger Airways Holdings Limited delisted from the SGX. Foreign buyers looking to establish a foothold in Asia have led the interest in Singapore listed companies, says Ang. In November 2016, Dutch coffee and tea firm Jacobs Douwe Egberts (JDE) made a cash offer for all shares of Super Group Ltd, which owns the popular Owl brand of coffee, for approximately $1.45b. Ang reckons the acquisition will extend the coffee and tea business of the European billionaire’s Reimann family into Asia. If the foray proves successful, she expects JDE to delist and privatise Super Group Ltd. Southeast Asia’s golden promise Aside from privatisation plays, PE houses in Singapore are also preparing for the shower of opportunities as Southeast Asian economies strengthen further. “This market is definitely receiving greater PE attention than it has in the past and is likely to keep PE houses very busy for the foreseeable future,” says Tan about the Philippines, citing Baring Asia PE’s US$137m investment in Telus International. The Philippine economy expanded at its quickest pace in three years, growing at 7.1% in the third quarter of 2016, making it one of the fastest growing economies in Asia. Tan reckons there are a lot of reasons for optimism in the Southeast Asian PE and mergers and acquisitions industry. Not only are the US elections and its destabilising effects over, but the Southeast Asian market will look relatively more attractive than Europe, which will face continued uncertainty and relatively low growth rates. Other than the Philippines, Indonesia is also attracting PE attention after the completion of its tax amnesty in the first quarter of 2017 and the increase in the number of sectors open to foreign investment. In addition, Jamieson says, “Singapore is the PE hub of Southeast Asia and a hub for PE firms looking to invest into India. Hence, when we discuss private equity in Singapore we must necessarily discuss the investment opportunities in the region.” He also points out that privatisation of state-owned entities in countries such as Vietnam presents “once-in-a-lifetime opportunities” for PE players to invest in. PwC predicts that seven of the world’s 12 biggest economies in 2030 will come from emerging markets, which is why PE houses are ramping up their presence in Singapore. “We are seeing a more active private equity market with more international PE players setting up office in Singapore over the recent years,” says Ling Tok Hong, private equity leader at PwC Singapore. “This demonstrates the keen interest of PE in Singapore and the region, in line with a megatrend – we are seeing a shift in global economic power from west to east as well as the growing middle class population in the region.” Ling notes that with a crush of PE interest in the region and the limited number of deals available, competition is becoming fierce and forcing PE managers to differentiate themselves by demonstrating their ability and track record in creating value. Key sectors Given the increased spending power of the growing middle class in the region, analysts identified key sectors driving activity in PE. These are infrastructure, healthcare, retail and e-commerce, financial technology (fintech), and food & beverage (F&B). The larger ticket transactions were in the traditional engineering, manufacturing, F&B, and logistics industries, including large ticket real property plays, notably in the acquisition of Asia Square Tower 1 by Qatar Investment Authority from Blackrock, says Sheela Moorthy, partner in the Singapore office of Norton Rose Fulbright. F&B businesses continue to receive interest among PE firms, notes Doris Yee, director at Singapore Venture Capital & Private Equity Association, as shown in Standard Chartered Private Equity’s investment into Phoon Huat, a family-owned business and leader in the baking ingredients sector. Similarly, PAG’s investment into Paradise Group, a homegrown restaurant chain with restaurants across Southeast Asia, is expected to help it expand into China. “This is perhaps a reflection of Singapore’s own foodie culture with very high expectations on quality which in turn pushes up the standards of food-related businesses in Singapore,” says Yee. Jamieson adds that there has been a trend towards picking undervalued F&B companies with potential for regional growth such as Viz Branz, F&N, and Super Group. A notable transaction was the investment by Hera Capital and DSG Consumer Partners into Salad Stop!, a local F&B chain with fast-growing regional franchises, and there will likely be more F&B transactions in the local market based on current valuations. Southeast Asia’s burgeoning and increasingly tech-savvy consumer market is also fuelling investments into the e-commerce and fintech sectors. Regional e-commerce retailer Lazada received a US$500m investment from Alibaba, which also bought additional stakes worth the same amount from early investors, including Rocket Internet. On the technology front, meanwhile, there was buzz around the acquisition of Singapore-headquartered and micro-optics and optical sensing leader Heptagon by Austria’s global sensor manufacturer AMS. Valued at approximately US$570m, with a potential earn-out of up to US$285m based on certain 2017 targets, the investment attracted the likes of Vertex, Granite Global Ventures, Credence, and Nokia Growth Partners. “Our clients have been investing private equity into fintech,” says Jamieson. “The support from the government for the development of this sector will encourage more financial investors into this space through Singapore.” There are excellent opportunities as well in the troubled offshore marine sector. “Companies under distress would present some opportunities for PE firms with the right expertise and appetite to pick up some acquisitions at attractive valuations,” says Jamieson.