Sponsored feature - Successful family office investing in Asia

Wealth Funds for the Long-Term

The most sophisticated family office investors are investing in the best opportunities available globally, many of which are in businesses benefiting from ongoing development of the fastest growing major region in the world – Asia.

Charles-Lim Capital, an independent Asia-based investment firm, manages focused portfolio funds that invest in listed equity securities with a distinct emphasis on businesses in Asia that are well-positioned to benefit from the region’s ongoing development.

Keiren Charles, founder and Executive Chairman, says: “We view the capital we manage as wealth funds for the long-term. We seek to invest in the best Asia exposures globally and focus on our highest conviction ideas. We employ a global value investing philosophy combined with quality discipline and a deep understanding of long-term economic and industry drivers.”

Like many family offices, Charles-Lim Capital’s guiding objective is to compound wealth intelligently and carefully for the long-term.

The principals of Charles-Lim Capital have achieved exceptional results investing in Asia through independent thinking, value discipline and by adhering to common sense principles.

A family-owned firm, Charles-Lim Capital accepts co-investments from institutions, family offices and high net worth individuals globally, and commits to investing personal capital alongside clients.

The Family Office Advantage in Investing in Asia

In the experience of Charles-Lim Capital’s principals with investors in Asia (including strategic investors, sovereign wealth funds, hedge funds, family offices and mutual funds), sophisticated family offices can be well-positioned to invest in many of the best listed opportunities in Asia.

The principals of the firm recently wrote a detailed research article entitled “The Family Office Advantage in Investing in Asia” which discusses the traits of successful family offices investing in Asia, as well as common pitfalls that family offices may face, extracts of which are discussed here.*

Investing in Tomorrow’s Asia ... The Long-Term Investment Thesis

“If you’re growing at 10% per annum in China, you are nobody”, according to a senior representative of a leading Chinese corporation that the principals of Charles- Lim Capital met with recently. Such is the reality in many parts of Asia, where whole industries are emerging on a large scale, and certain enterprises with strong businesses in fast-growing economies and industries may gain in value substantially in years to come.

Relative to most developed countries globally, populations in emerging Asia are younger, are growing more rapidly and have significantly lower per capita incomes. This will likely support ongoing GDP growth and per capita income “catch-up” that is happening more rapidly than many appreciate. Rising incomes are increasing demand for goods and services ranging from cars, household items, food and beverages, to banking services and healthcare, to luxury goods, travel/tourism and others.

Family offices and family businesses can appreciate the investment significance of economic growth in Asia, often having capitalised on long-term trends in building businesses over decades even centuries, and having seen profound changes in societies, economies and industries.

Successful family offices investing in Asia recognise the importance of in-depth, first- hand knowledge of diverse and evolving economies, industries and companies
in the region. The principals of Charles- Lim Capital have extensive investing and business experience, and unique insights across the Asia-Pacific region (including China, India, South-East Asia, Japan), having held various senior corporate and strategic roles including advising CEOs, CFOs, governments, boards and sovereign wealth funds on landmark business purchases/sales and capital-raisings.

In its work with family offices, Charles- Lim Capital combines deep fundamental analysis, value-oriented strategies, corporate strategic understanding and industry selection with proprietary economic and quantitative models which have been developed over years.

Seeking the Best Asia Exposures... Global Approach, Original Thinking

An important natural strength of successful family offices is the ability to invest in the best exposures across Asia and global markets. Such family offices can maximise their opportunity set in seeking under- valued and quality Asia businesses, and also take advantage of inter-country pricing inefficiencies.

It is important for family offices to appreciate that the best Asia exposures are often in quality companies that are under-researched or not well-understood – Asia’s “blue-chips of tomorrow” are not necessarily the high-profile Asian companies today. However, finding value does not require investing in small-cap or low liquidity companies; Charles-Lim Capital’s investment universe has an average market capitalisation of approximately US$30bn.

Investing Like Business Owners

Successful family office investors in Asia use the same logical principles and sound business strategies that have led the family business to be a successful creator of wealth for the family. Put simply, such family offices invest “like business owners” and without the use of leverage, providing them with another important advantage when investing in Asia, holding power.

Value Investing, Quality Discipline

Experienced family offices investing in Asia focus on simple, under-valued opportunities and quality businesses. They reject the mindset that higher returns requires higher risk and complexity, and avoid any poor “required” exposures.

While great importance is placed on buying “low”, investment quality is just as important in Asia, and knowing what to avoid is critical given rapid growth in Asia and the numerous IPOs in recent years that have resulted in large numbers of publicly listed companies, some of which are relatively untested.

Genuine Alignment of Interests

Family businesses are typically led by a family member with significant shareholdings and therefore trusted by the family to make the right decisions given aligned interests.

Successful family offices investing in Asia apply the same principle and select investment managers who treat them as true partners and “eat their own cooking” by investing personal capital alongside the family office.

Conclusion

Sophisticated and forward-looking family offices have natural strengths that can enable them to invest successfully in Asia and compound wealth for decades to come. It is important for family offices to invest with the right principles and with the right partners.

* For further information please contact:
Keiren Charles: kcharles@charleslimcapital.com
Lim Shueh Yung: sylim@charleslimcapital.com
Level 15, 100 Queen’s Road Central, Central, Hong Kong T. +852 3180 9245
www.charleslimcapital.com

As published in Issue 11 of CampdenFO, Summer 2011