Friday, 28 January 2022

Maitri Asset Management’s Tibrewal: “Sustainability is in its nascent stage in Asia”

5 min read

By Foo Boon Ping

Manish Tibrewal, CEO of Singapore-based wealth manager Maitri Asset Management, discussed the ever-expanding wealth management industry landscape that represents a waterfall of opportunities for every advisor and their high-net-worth clients. He talked about how sustainability is critical to attracting investor capital regardless of sector and how the next generation is driving this change.

Tibrewal shared their commitment to becoming carbon neutral by 2050. Maitri started as a single-family office for the Tolaram and by 2019 became a multi-family office. Tibrewal stressed the importance to integrate sustainability across their portfolio as it has been deeply rooted in the ethos of the organisation since its inception. They have developed their own environmental, social and governance (ESG) integrated approach that includes a negative screening list which ensures their investments create a positive impact.

Due to the negative impacts of the pandemic, Tibrewal observed that private investors have become more sensitised about the impact of their financial investments. He added that the conversations with his clients now revolve around how to make portfolios more sustainable rather than merely understanding the definition and meaning of sustainability.

The following key points were discussed:

Below is the edited transcript

Foo Boon Ping (FBP): Today, we are very happy to be speaking with the CEO of Maitri Asset Management, a multi-family office and an asset management firm based out of Singapore, and I am speaking with the CEO, Manish Tibrewal. Manish, a pleasure to speak to you and thank you for taking the time to speak to us. We're very interested to find out more about Maitri Asset Management.

Manish Tibrewal (MT): So, we started as a single-family office for the Tolaram, around the same time in 2015, but in 2019, we became a multi-family office under the brand of Maitri Asset Management. Our key focus areas are two-fold: one is sustainability. It is very high on our priority and the other one is servicing family offices. So, we act as an outsource family office for families who would not want to set up their own family office for a variety of reasons.

FBP: Okay. And you mentioned ESG, or impact investment, when you became a multi-family office (MFO), that became the focus, tell us in terms of ESG, impact investment why that particular focus? Or was it something that developed as a focus of the Tolaram family, and that kind of became the mission of Maitri Asset Management as well, because of the expertise of the experience that you gained, managing the assets for the Tolaram family?

MT: When we became an MFO, sustainability was always our focus. As I mentioned, our foundation is the single largest beneficiary of Maitri. So, it started as a negative screening, because the foundation is supporting a good cause so they didn't want to be associated with what they thought was not good for society. And that's when we started with a negative screening list, which included tobacco, alcohol, gambling, weapons, and a few other categories. So, we started with a negative screening that we will not invest in these sectors or the companies who have significant exposure to these sectors. And then, over time, we refined the process and got our proprietary ESG integrated approach, wherein for our sustainable funds, we apply it to our sustainable funds. And wherein every company that we invest in whether equity or debt has to go through our ESG due diligence, before we put in the money in that company.

FBP: And your ESG and your sustainability funds. In terms of the process, they're all proprietary?

MT: Yes.

FBP: Okay. So you created your framework. Of course, you're a signatory of UNPRI as well.

MT: We are a signatory to UNPRI, we are a signatory to Singapore stewardship principles, we are part of the TCFD task force for climate-related disclosures. We recently got certified B Corp. So that again, it is a great testimony of our adherence to higher standards in terms of social and environmental impact. We are a signatory to the net zero initiative. So, we are committed to making our portfolio carbon neutral by 2050. So, we mean what we are doing.

FBP: Tell us a bit about the impact of the pandemic on the investment attitude of the client.  And also the attitude towards sustainable investments.

MT: I think COVID-19 has been a game-changer for sustainability, as we can see from the press. Before COVID-19, because we are on the sustainability path pretty early, as far as Asia is concerned, I mean, it is well established in Europe and parts of the western world. As far as Asia is concerned it was still very evolving and in a nascent space. So, in 2018, or 2019, when I speak to people about ESG, they will ask what is ESG? They don't even know. But after COVID-19, thankfully, I don't have to explain to them what ESG is. What they say is that we understand sustainability is important, ESG is important, how do we do a sustainable investment? Or how do we integrate sustainability into our portfolio? So those are the conversations we are having with our clients at the moment.

FBP: And obviously, one aspect of investors who are looking to invest sustainably is to find out how much impact their investments are creating, right? So, you have your sustainability or impact integrated funds. The perennial challenge has always been how do you tell your investors, of their investments, what kind of impact they are creating? How do you go about doing that in terms of measuring the impact and disclosing and reporting?

MT: So, the parameters that we track, for example, as I mentioned, we are a signatory to the TCFD and the net zero initiative. And definitely as a part of that, we track the carbon footprint of our portfolio companies. They are transitionary. So, some companies on paper, again, the data is evolving, right? So on paper, some of the companies may look very good. And some companies initially may look very bad, but from very bad, how good are they going to be in the next 10 years or 20 years is what we do during the internal assessment and that becomes the criteria for us to engage and invest in those companies, especially companies in Asia, for example, companies in China, a lot of those companies when we approach them, do you have any ESG policy or sustainability policy, they probably may not even have it right, it's the first time they hear from us, we are creating an impact in that way, creating a lot of awareness and making the companies realise that sustainability is very important for them to attract investor capital. So if they want to have investor money flow, then they have to make sure that they adhere to the highest standards of ESG.

FBP: You are a multi-family office business. You're dealing with a lot of the first generation, wealth owners, so to speak. Tell us in terms of and the business started in 2019. And apart from the wealth management service, which is a big part of it, and also other services like looking at philanthropy, or sustainable investing, what other family offices related services do you provide today and what are in demand? By that, I mean, there are also wealth fund administration reporting, tax planning, estate planning, succession planning, and so on, so forth, giving us a fuller flavour of the entire family office services.

Offering bespoke family office services

MT: So what we call our offering is a bespoke outsource family office offering. Somebody who is looking to set up their family office may not even set up one, right, so they can come to us and we will be the outsourced family office for them. As part of that, we hold their hands. So we don't provide tax advice or legal advice, but we know who are the best tax advisors, who are the best legal advisor, who are the best structuring experts. So we hold their hand and create a very suitable, so we sit down with our clients and understand what are their needs and requirements. What are the long-term plans? What are their philanthropy needs, impact investing needs? For kids, how do they want to structure and things like that. And based on that we create a kind of panel of advisors from various expertise and help set up the whole structure for them.

FBP: In terms of setting up family offices in Singapore, obviously MAS, the authorities have introduced a lot of incentives or to set up wealth management, the unit outfit in Singapore. How is that driving the growth of the business, there are things like the variable, capital company and other incentive schemes as well?

MT: Right, it is a very big factor. So, families who are into emerging economies are looking to get into a jurisdiction, which is a lot more legally stable and has robust infrastructure. And Singapore checks all the boxes. Singapore ranks consistently in the top two or top three across any metrics or parameters that you use. So, most of these families are very comfortable in terms of setting up their family office here and that is aided by the 13X and 13R schemes of the government. And then there's another leg of family offices. We have seen some very prominent US and European families setting up a family office in Singapore because they see this as a gateway to Asia, and like a second family office as well. So we are seeing trends on both sides, both on the developed world as well as emerging world setting up in Singapore. And it is not just the incentive from MAS or even the VCC, the general infrastructure is excellent, the talent pool is very good. The laws and regulations are very clear. So, we know there's no dispute or anything. So, these are the things most families would look for or worry about.

FBP: So in terms of your proposition for sustainable investment, that is very strong. Is that the reason the strength that you're building on in terms of your overall wealth management proposition in this area of sustainable investments?

Sourcing global products for clients

MT: Definitely, it is one of the strong pillars. So, the three broad strong pillars are a strong investment team, which understands the markets that we invest in, then our connections on the ground because there is nothing like talking to people on the ground and getting the pulse of the state of the affairs rather than reading an analyst report or things like that's the investment stronghold. Then like you rightly mentioned, the sustainability stronghold, which is we are embarking on this journey of sustainability. We won three awards this year in sustainability and then got the B Corp certification, which gets us a great deal of confidence that it's an independent validation that what we are doing is on the right track. And the third is the family office ecosystem. So having evolved from a single-family office, we understand this ecosystem very well. We are the official partner of family business networks, family office community. So Maitri is a steering committee member on that, as part of that, we are helping them design the whole family office community launch and the programme itself. 

So again, we have a great deal of thought leadership because a family office or legacy is not just about money or wealth management, it entails a lot of issues, which could be hard issues as well as soft issues. For example, how do you make your next generation interested in your family business or your family office? So things like that can't be taught by investment managers or things like that you need to have that family office DNA and scan these issues and accordingly advise the client because when clients come to us they seek a holistic solution not a piecemeal. So if we can be a one-stop-shop where they can get everything. And on top of that, we are an open platform so it's not restricted to just our products. We can pretty much source any good product available globally on the platform that we have is very good. We are connected to most banks and fund houses across the globe, US, Europe China, India, Southeast Asia, any part of the world, we have many connections to sell the private deal, that is a very big attraction for a lot of the families, where the wealth is going into private equity, venture capital, pre IPO kind of deals, because those are mature businesses.

And so we have seen a great deal of interest in that. We again have phenomenal contacts to get access to those kinds of deals, either primary or secondary in the market. So that is what makes a very compelling proposition for the families

FBP: Tell us in terms of the investment trends that you're seeing from your investors, obviously, as the thought leader, as the expert in that area, you are carrying a lot of that recommendation. Tell us in terms of, now there has been a lot of interest in large tech, private equity, venture capital opportunities, increasingly, in the crypto or the decentralised finance area, are those opportunities actively pursued by investors?

MT: No, definitely, while you pretty much summed it up. So, these are very critical opportunities. And I'll just add that, again, sustainable investment is also on the mind of a lot of investors, especially for the younger generation. For the older generation, it's nice to have, but for the younger generation, it's a non-negotiable, so, they are focusing a lot. They ask a lot of questions around how, when sustainable, what are these guys doing? What is their assessment, methodology or process? So, private markets, technology, has been a big, big force, internet and other things in Southeast Asia has been too many unicorns emerge. So historically, you know, China used to have the largest number of unicorns. Asia, was pretty low, but you can see a lot of unicorns emerging out of India, a lot of emerging unicorns emerging out of Indonesia, out of Singapore. So, you know, this trend is pretty strong for Asia, generally speaking, why investors in our part of the world are now very much interested in it because earlier it was happening mostly in the US, so, they would hear about it, they not be identifying with it, but they live now like in the second degree of connection, or third-degree of connection, these founders or somebody related to these companies are either working or are the owners. So that is what is, you know, picking up the interest of the investors in Asia.

FBP: And in terms of, we are also going into this big transition, from first-generation wealth owners to the second generation. And they're kind of coming to age in this environment where there's a lot of growth coming out from startup, a lot of entrepreneurial ventures, the kind of the first generation, the baby boomers tend to be more conservative, kind of want to preserve wealth. The next generation is living amidst all these opportunities for growth, not just growth, but exponential growth. The startup unicorns and so forth. What big trends do you see in terms of differences as they go through this big transition?

Increasing awareness on alternative investment opportunities

MT: Asia has seen the rise of wealth only in the last, let's say, 30 years or so, compared to Europe, or the US where the wealth creation started in the 16th to 17th century. So, there are a lot of wealthy families, a lot of families have been wealthy for maybe four or five, six generations whereas in Asia, like you also mentioned a lot of wealthy people are still first-generation entrepreneurs. The difference is that because they have built the business themselves, they are still very conservative in terms of how they look at investments because that was the brick-and-mortar model they followed and when they built those businesses, now the times have changed. And if they have exited or if they have accumulated financial or liquid wealth into either dividends or profits or even exits, the second generation probably has not been so hands-on in the legacy business. What that does is give them a lot more breadth and open sky thinking and not restricted to just their sector or just the family's business or geography, expertise area and other key differences like, because they're very wealthy families, a lot of these kids are Western-educated as well. So they have their friends in the US, in Europe, in the Silicon Valley, they exchange a lot of notes around that. And that's what raises a lot of awareness around technology and startup investments. And that gets them a lot more interested compared to their previous generations.

FBP: The first generation, most of their wealth came from the business. So, a lot of focus is on running the business and making sure the business remains healthy, profitable, whereas the later generation is more open to different investment approaches, making their money work for them. And as a result, kind of more disengaged from the business or the core family business, and now creating a structure to manage just the fruit from the business, rather than running the business itself.

Youth make up one-third of boards of family offices 

MT: Just to add to that, so that's an interesting point. I touched upon it briefly about engaging the next generation. A lot of the next generation gets disinterested in the legacy business. Broadly, I'll say for two reasons. First, some of them don't find it very glamorous because it might be minting a lot of money, but it might be null and boring from their perspective. Another is that, I think, the next-gen is a lot more aware, or as they call it, in modern terms, a lot more woke, compared to the previous generation. So, they want to have a sense of purpose in what they are doing. That's very important for them that, you know, what am I doing? I mean, my family has enough money, I know that, but whatever I'm doing, will it create an impact on society, whether it's a strong environment front, or whether it is helping the underprivileged. So, it's a very good and very healthy trend, and I'm very happy to see this trend coming up in the next generation because when the transition happens, they would be at the driver’s seat of all these investments. I was reading an interesting statistic that millennials hold only 10% stake or beneficial ownership and access, but they are on one-third of the board's of most family offices. So, you know, there they are, they are critical decision-makers and influencers when investment decisions are concerned. And that's why increasingly we will see this trend in terms of aligning profit with a purpose for the future.

FBP: You expect, they're so wealthy that they are kind of planning right but only one quarter is doing succession planning.

Succession planning is important

MT: It's you know, if you draw on X-axis and Y-axis, it sits into the important but not urgent. Well, so a lot of families think, we will deal with it right, our fathers didn't do it. So why do we need to do it, kind of an attitude and sometimes when they get into discussions, even the thought of meeting the lawyers and all that can be cumbersome. So, and if they don't have somebody in the house, whether a family member or a professional who can hold their hands again, they get a bit uncomfortable reading all this stuff, that am I getting the right advice, what if somebody gives me the wrong advice, and I create a wrong structure. So, there are a lot of apprehensions and doubts about how to go about it. And that's why we think that we can add a lot of value. And that's why I'm very excited about the business prospects of what we are trying to build and distinguish ourselves with because we understand these issues and the various points that might come up in great detail. So, when we speak to somebody, we can see that they understand that, you know, we know our subject, and we can add value to that.

FBP: Some of the more complex family structures that you may need to have a complex trust structure, but not all jurisdictions do recognise some of this legal identity structure, right? Does it make certain locations within Asia better to top us out some of this structure or even overseas?

MT: What we do is really hold the hands of the clients and then speak to the legal and structuring expert to see what are the variety of options available. And depending on the needs and the wishes of the family, then we shortlist maybe two or three jurisdictions and the pros and cons of each of them. Explain them in detail, what does that entail? Not just in short term, but in the longer term, right. So, two generations down the line, what can be the impact of you making a decision now. We don't know the consequences of a lot of decisions that we make today, especially if we are thinking in terms of generations.

FBP: What are your growth plans going forward in terms of growing the multiple family office as well as the sustainable investment fund?

MT: So on both fronts, we are very bullish. So, we are expanding the team, we will be hiring more people to develop our business.

Same with sustainability, so sustainability for us is a journey. It's not a destination. We keep refining our process, we keep learning new things. We keep observing new trends, new technology and incorporate them into our methodology.

And make sure that we keep improving over time, so it is like any other machine or technology. When the car first started with just four tyres and a basic engine. And the idea was that it can beat the horses in the New York states, that was the first idea of a car, but now we have autonomous driving and self-driving cars and all have come up in the last couple of decades. So, we see a similar journey for sustainability, I think it's still at a very nascent stage, there will be a lot more development and innovation. What is important for us is that how do we keep up with that and how do we be at the forefront of whatever we are doing in this space.

BP: Okay, great. Thank you. Thank you so much.



Keywords: Asset Management, Family Offices, Impact Investment, Net Zero, Private Investor, Startups, Sustainability, Technology, Wealth, ESG, Tolaram
Institution: Maitri Asset Management, MAS
Country: Singapore
Region: Asia
Guest: Manish Tibrewal
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