Quoteworthy: "This is not either a precursor, or intention, or preparation for any split." –— HSBC chief executive Georges Elhedery elaborating on the bank’s plans to divide its operations into “eastern” and “western” sections
MAS appoints ex-managing director Ravi Menon as chairman of new fintech group
The Monetary Authority of Singapore (MAS) has appointed its former managing director, Ravi Menon, chairman of a new entity focused on growing Singapore’s fintech ecosystem with the global community.
Called the Global Finance and Technology Network (GFTN), the entity “replaces and builds upon” Elevandi, the non-profit organisation set up by MAS in 2021 to organise and globalise the Singapore Fintech Festival (SFF). GFTN will continue to operate as a not-for-profit and will work with the MAS on industry and policy dialogues in the areas of payments, asset tokenisation, and AI and quantum.
Menon, who was the Managing Director for the MAS from 2011 to 2023, is now Singapore’s Ambassador for Climate Action and Senior Advisor at the National Climate Change Secretariat.
“The establishment of GFTN could not have been more timely. We are witnessing today rapid advances in several dimensions of technology that will have a deep impact on economies and societies,” Menon told reporters on Oct 30, explaining the setting up of the GFTN.
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As this is an additional role to his two existing portfolios, Menon says that both issues of sustainability and innovation are “very close to his heart”. “... As a retiree, I have a little bit of bandwidth, so I can also do this,” he adds.
“So this is unprecedented territory. These rapid changes demand closer and more meaningful engagements between countries, between the public and private sectors, and between finance and technology; policy, regulation, and industry practices must be coherent so that we can harness the benefits of these technologies while managing the advanced science,” says Menon.
He also announced that GFTN would include four strategic businesses, a step up from the only one that Elevandi had — forums, advisory, platforms and capital. Forums are meant to expand SFF’s global footprint into new geographies beyond the five existing forums, while the advisory business will provide practitioner-led consultancy and capacity-building services on fintech issues.
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Platforms will give market access and analytics to support areas such as sustainability reporting, while capital will help “catalyse” equity investments into early-stage and growth-stage start-ups that have the potential for positive social or environmental impact.
Menon says that this fund, which has yet to apply for a licence with the MAS, will come from limited partners around the world. The MAS will not be contributing to the fund. “MAS is a central bank; it does not invest in start-ups,” adds Menon.
Capital will also focus on innovations in the Global South, which refers to countries in regions such as Africa and Latin America that have fintech sectors that are expected to grow by 30% per annum by 2030.
For this reason, GFTN’s fourth line of business, capital, will run differently from the first three. Menon says it will have a different legal structure and will be run commercially. Meanwhile, the forums, advisory and platforms businesses will operate purely on a capped profit basis.
Like Elevandi, GTFN will strive to be financially self-sufficient and may not be able to break even during the initial period, but it has “every intention of breaking even over time”, according to Menon. The group has “initial financial projections”, but Menon stresses that it is more important that GFTN can return to being financially self-sufficient in three to five years.
“GFTN will be like Elevandi on steroids, without the negative connotation, of course,” says Menon. “The board of directors has just been formed, the management team is coming together… We need to spend the next few months sitting together and refining our strategies, translating those broad strategies into specific KPIs and goals for each year for the next five years.”
Menon says that more details about GFTN will be unveiled at the SFF happening next week. The GFTN now has about 40 people within the organisation. MAS’s current Chief Fintech Officer, Sopnendu Mohanty, will relinquish his role and join the GFTN on Feb 1, 2025, as the Group CEO. A release by MAS notes that Mohanty will continue to support MAS as the advisor to the latter’s fintech and innovation group.
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He will be succeeded by Kenneth Gay, who will be appointed as the designated Chief Fintech Officer from Nov 6, 2024, until Jan 31, 2025. Gay has been with MAS for over 20 years, holding various regulatory and technology roles, and is currently the Executive Director of the Enterprise Knowledge Department.
Meanwhile, the Deputy Managing Director of MAS, Leong Sing Chiong, and the non-executive chairman of Tikehau Capital, Neil Parekh, have been appointed as deputy chairmen of GFTN. Parekh is also a Nominated Member of Parliament and a member of the MAS equities review group.
Meno says: “As I’ve said at almost every fintech festival in the last few years, everything we do in fintech must have a larger purpose. It’s not just about technology. It is about creating economic opportunity. It is about strengthening resilience. It is about improving people’s lives. It is about securing a sustainable planet for the future. These have been the guiding principles underpinning Singapore’s fintech journey. They will guide GTFN, too, as we expand our global connections, forge partnerships and harness innovation for the greater good of communities in more parts of the world.” — Nicole Lim
Hongkong Land unveils new strategy
Hongkong Land announced its new strategy on Oct 29 release, following its long-awaited strategic review initiated by Michael Smith, the Group CEO appointed in April. A couple of surprises were in store for investors. For one, Hongkong Land announced a few numerical targets for 2035, which imply a 5.9% CAGR in ebit and dividends per share (DPS) and an 8.7% CAGR in assets under management (AUM).
The normally ultra-conservative property arm of the Jardine Group, which focused on share buybacks to create value in the past four years — bought back more than US$627 million ($830.1 million) of shares with little to show for it because of an impairment in China — announced dividend targets. Among its strategies is its own version of a model CapitaLand, GLP Capital, ESR, Goodman and the like have adopted in years gone by.
Under the new strategy, the group will no longer focus on investing in the build-to-sell segment across Asia. Instead, the group is expected to begin recycling capital from the segment into new integrated commercial property opportunities as it completes all existing projects.
According to the group, the new strategy aims to “reinforce Hongkong Land’s core capabilities, generate growth in long-term recurring income and deliver superior returns to shareholders”. It also says key elements under the new strategy, which is expected to take several months to implement, include expanding its investment properties business in Asian gateway cities through developing, owning or managing ultra-premium mixed-use projects to attract multinational regional offices and financial intermediaries.
Additionally, the group aims to focus on strengthening strategic partnerships to support its expansion. The group is expected to extend its collaboration with Mandarin Oriental Hotel Group and further collaborate with global leaders in financial services and luxury goods from among its more than 2,500 tenants.
Smith says: “Building on our 135-year heritage of innovation, exceptional hospitality and longstanding partnerships, our ambition is to become the leader in creating experience-led city centres in major Asian gateway cities that reshape how people live and work.”
He adds: “By focusing on our competitive strengths and deepening our strategic partnerships with Mandarin Oriental Hotel Group and our key office and luxury tenants, we expect to accelerate growth and unlock value for generations.”
“The company kept its DPS flat for the past six years without a concrete dividend policy, and thus we view the new commitment to deliver a mid-single-digit growth in annual DPS as a positive move, especially when most peers are cutting dividend or (at best) keeping DPS flat. We expect the payout ratio to be at 80-90% in FY2024-2026,” says an update by JP Morgan.
It believes that the long-term investment property growth plan will make the DPS commitment feasible. “Separately, up to 20% of capital recycling proceeds (US$2 billion) may be spent on share buybacks, which is equivalent to 23% of its current market capitalisation. Hongkong Land was active in share buyback in 2021-2023 and spent US$627 million,” JP Morgan adds.
The new strategy isn’t that different from the old one as development, in particular residential development in China, has come to a virtual halt. Instead, Hongkong Land will continue to focus on developing ultra-premium commercial properties in Asia’s gateway cities.
“We think this strategy is in line with our expectations (and will, in fact, happen naturally anyway in today’s environment), as Hongkong Land has long been positioned as a commercial landlord in Hong Kong and top-tier cities in Mainland China, with development property accounting for only 17% of its gross asset value,” JP Morgan says.
A new investment team will be established to source new investment property investments and identify third-party capital, with the aim of expanding AUM from US$40 billion to US$100 billion by 2035. Hongkong Land also plans to recycle assets (US$6 billion from development property and US$4 billion from selected investment properties over the next 10 years) into REITs and other third-party vehicles.
“While the direction is generally positive, we believe execution might face some hurdles. As evidenced by the slow progress in Link REIT’s similar strategy (Link 3.0) since 2023, sourcing value-accretive deals is challenging,” JP Morgan says.
Hongkong Land is valuing its investment portfolio at an implied capitalisation rate of 4.3%. Keppel REIT’s FY2023 results valued its one-third stake in Marina Bay Financial Centre at a 3.5% capitalisation rate and One Raffles Quay at 3.15%. This would make it quite challenging for Hongkong Land to “REIT” these properties. — Goola Warden and Ashley Lo
Risk of potential loss of MIT status has always been present; loss of status beyond REIT manager’s control: FHT
The loss of FHT Australia Trust’s (FHTAT) managed investment trust (MIT) status was beyond the control of Frasers Hospitality Trust ACV (FHT)’s managers. The managers of FHT announced this as part of their response to questions from the Securities Investors Association (Singapore) or SIAS. FHTAT is the wholly-owned subsidiary of FH-REIT. FHT is made up of Frasers Hospitality Real Estate Investment Trust (FH-REIT) and Frasers Hospitality Business Trust (FH-BT).
The responses came after FHT announced that FHTAT lost its MIT status on Oct 9. To qualify as a withholding MIT, FH-REIT cannot have a non-Australian resident with a stake of 10% or higher in FH-REIT at any time during the income year.
However, the completion of the share swap between InterBev Investment Limited (IBIL) and TCC Assets (TCCAL) meant that IBIL doesn’t have an interest in Frasers Property TQ5 (FPL) while TCCAL’s effective stake in FPL increased to around 86.89%. The increase in TCCAL’s stake in FPL resulted in FH-REIT’s failure to qualify as a withholding MIT.
In its Oct 9 statement, the REIT managers already stressed that the corporate action in relation to entities above FH-REIT’s unitholder’s level was beyond the control of the REIT and the REIT manager.
On Oct 28, the REIT managers also clarified that there was always the risk of a potential loss of MIT status since FHT’s initial public offering (IPO) in 2014, as there were no stipulated limits on how many units an investor may acquire.
However, FHT has been monitoring the percentage of foreign individuals’ stakes for each income period and has provided updates on its half- and full-year financial results on MIT.
The REIT managers added that there was no certainty in the loss of the REIT’s MIT status until the successful completion of the share swap on Sept 20. Furthermore, they were in no position to announce FH-REIT’s MIT status until they had “quantified and assessed” the financial impact for FY2024 ended Sept 30.
As the REIT manager and its parent company, FPL, also hold stapled securities in FHT, they are “similarly impacted” by the loss of the MIT status, and as such, it would “not be reasonable” for the REIT manager to waive its fees as mentioned by SIAS. — The Edge Singapore
