D.E. Shaw & Co. plans to open a new office in Singapore next year, making it the largest international hedge fund to expand in the Asian city-state as it continues to lure financial firms away from turmoil-ridden Hong Kong.
The New York-based hedge fund, which has over $50 billion in investment capital, follows competitors like billionaire Ken Griffin’s investment firms Citadel and Citadel Securities, which plan to open a joint office in Singapore later this year. Citadel, a hedge fund, had $35 billion in investment capital as of Sept. 1.
The move, which reflects a deeper commitment to the region by financial institutions, comes more than a decade after D.E. Shaw opened a Hong Kong office. More recently, the territory has been engulfed by civil protests against a controversial security law sponsored by the Chinese government. The unrest has made Singapore a more appealing Asia-Pacific hub for some firms.
“Opening an office in Singapore will further enable us to tap into the region’s talent, capital and investment opportunities,” said Kevin Patric, general manager of D.E. Shaw in Asia Pacific. “This is a logical next step in the growth of our geographic footprint.”
Its new office, the firm said, will serve a “range of investment-related and other capabilities” in the region. The move is subject to approval from the Monetary Authority of Singapore, and the hedge fund has begun preparing its fund management license application.
With this latest expansion, D.E. Shaw will have 13 offices in North America, Europe and Asia, the company said. It opened offices in Hong Kong in 2007 and in Shanghai in 2010. But the firm has been investing in Asia for at least three decades, said Julius Gaudio, a member of D.E. Shaw’s executive committee.
Last year, the company acquired a license to offer investment products in mainland China, joining a handful of other hedge funds like Bridgewater Associates which received similar nods as the country opened up its financial markets. The firm has been actively investing in China since the mid-2000s, it said.
The license allowed D.E. Shaw to establish its first onshore China fund, DE Shaw Razor China Fund, which closed on “substantial” fundraising in late May. The firm did not disclose how much money the fund raised.
Hedge funds have been mulling an exit from the Hong Kong market this year as disputes between the U.S. and China continue to flare up over trade and political flashpoints.
On Wednesday, the U.S. State Department warned global banks they could face sanctions as a result of assisting China’s crackdown on protesters in Hong Kong.
“Hong Kong as we know it is dead,” one hedge fund adviser in the city told the Financial Times in June. “It will become just another city in China. The hedge fund community will move on to Singapore and elsewhere.”
In the fallout of growing uncertainty, Singapore has emerged as a possible new financial hub in Asia as a number of major U.S. and European banks launch new products and branches in the island city-state.
Last week, Brussels-based Society for Worldwide Interbank Financial Telecommunications said it partnered with Singapore to potentially integrate its financial messaging platform with the country’s digital trade finance program.
Citigroup said in late September that it plans to open its largest global wealth advisory hub yet in Singapore, eyeing a double-digit growth in its market share in the local wealth sector. Goldman Sachs has plans to set up a foreign exchange trading and pricing platform there in the first quarter of 2021.
--Additional reporting by Theo Wayt, Minyoung Park, Robert Philpot