The Variable Capital Company (VCC) structure was created in Singapore in 2018 as a flexible legal entity structure for investment funds. The goal was to encourage local and global managers to incorporate more investment funds in Singapore, and to position Singapore as a global fund domicile. We recently spoke to experts in the Singapore asset management sector—Billie-Jo Dixon, Practice Lead for Bovill Singapore, and Martin O’Regan, Managing Director for Solas—to discuss how the VCC has progressed on these goals.
The VCC concept was part of the trend of creating vehicles for passport funds, such as AIFMD in Europe, the Open-End Fund Company in Hong Kong and Corporate Collective Investment Vehicle in Australia. While Singapore had an existing fund framework, it wasn’t user-friendly or efficient, and there were issues around confidentiality and reporting. The VCC makes Singapore comparable to other main jurisdictions like the Cayman Islands, Dublin and Luxembourg. It’s also meant to enhance the expertise of investment professionals in Singapore and grow the asset management sector.
While the COVID-19 pandemic has had an impact on the number of VCC registrations over the past few years, the number is growing. Most of the 1,000 VCCs registered as of Q2 2023, most are small to medium AUM, with roughly half representing private family wealth and the other half evenly divided between hedge funds and private equity.
So what does the future hold for the VCC? There will likely be new features added, and we will see the VCC change as markets, sentiments and global regulators change. VCC 2.0, which incorporates features originally intended for the current version that couldn’t be included because of timing, could be introduced as soon as 2024 or 2025.
Unlike other fund domiciles, the VCC structure is in an onshore, regulated environment with a pragmatic, business-friendly regulator, achieving the best of both worlds. Given recent disturbances in digital currencies and banks, fund managers may be inclined to explore more regulated environments like Singapore.
SS&C is the world’s largest fund administrator and a leading provider of outsourced technology and operational services for the global investment management industry. Our operations in Singapore, combined with our offices and clients spanning the major financial centers of North America, Europe and Asia-Pacific, bring a global perspective to fund operations.