Kenny Ho on Carret Private’s Differentiated Value Proposition and Competing Head-on with the Private Banks

​​​​​​​It was in September 2019 that Hong Kong independent wealth management firm Carret Private Investments and Singapore’s Lumen Capital Investors announced their merger, as part of a strategy to accelerate business growth in the fast-growing multi-family office segment in Asia. Today, they also have a presence in New York, adding that extra element of global capability and access. The concept of the partnership from the outset was their continued independence in each of their respective markets, but with efficiencies and greater negotiating power with, for example, the major custodian banks they work with. Hubbis recently met up again with Kenny Ho, Managing Partner and Founder of Carret Private, who, speaking to us from his Hong Kong home office, offered his latest updates on the development of the business, his views on the evolution of the Hong Kong wealth market, and how the firm differentiates itself to provide a platform to compete head-on with the private banks.

Ho reports that Carret Private is performing very well, with a nine-strong group of experienced RMs, and with the strategic stake in Lumen Capital – founded in 2010 by Wilfried Kofmehl, the former CEO of Julius Baer, Singapore – and with the Carret sister company in New York, the business activity has been robust since the trough of weak sentiment and negativity after the pandemic hit in 2020.

Powering ahead

“After that low point in March 2020, we began opening new accounts, clients became very active, and this past year has been very good in terms of new clients and general activity levels,” he reports. “With eight RMs also in Singapore now, we are very pleased with the AUM growth, and our total Group is now managing over USD3 billion.”

Ho is also Vice-Chairman of the Family Office Association of Hong Kong. “We helped to create this in order to become the voice of family offices and to work more closely with the government to help put Hong Kong in an even better position to develop this segment of the market,” he reports. “Helped by our efforts in this regard, we hope the government will develop its policies in this area, with Invest Hong Kong now having a department of around ten people in its Family Office Department to help promote, and they are making a big effort.”

Helping to raise Hong Kong’s sights

Singapore has done very well in this segment, and is highly coordinated, and Hong Kong is clearly elevating its coordination and learning from other jurisdictions to further develop what was already a very established and good proposition.

“Moreover,” Ho notes,

“Hong Kong is the pre-eminent capital markets hub for Asia and this initiative to drive family offices forward fits very neatly alongside that. Hong Kong has an outstanding services sector, with excellent advice available on matters of taxation, immigration, wealth structuring and trusts, and so forth. In short, we think Hong Kong is increasingly well positioned to benefit from the growth of wealth in the region.”

Carret Private also offers a funds platform. “This is a good area to compete in,” he reports, “especially with new initiatives such as the development of the Greater Bay, so we're seeing a lot more start-up fund managers wanting to set up private equity, venture capital or possibly hedge funds. We are part of that evolution with our own platform to support and develop these managers.”

Key Priorities

Ho shares his key priorities, starting with the firm’s major priorty of acquisitions. “We are keeping up our search for outstanding merger opportunities that will help us to grow our business, and we believe it is easier to scale the business through acquisitions than through hiring RMs.” Ho then elaborated on the fim’s other priorities. “Secondly, we continue to seek out outstanding deals that appeal to our clients and that perform well. And thirdly, he elucidated on the firm’s ongoing quest for outstanding RMs that match the firm’s entrepreneurial model since its creation in 2016. “But hiring the right talent, the right people is not easy at any time,” he remarks. “So far, we have been very fortunate, finding really senior and experienced bankers who are entrepreneurial, and so we continue with that search.”

The quest for differentiation

He draws the conversation towards a close by observing that the firm’s efforts to differentiate itself from competitors also centres on these priorities.

“My group of bankers here in Hong Kong and Singapore have on average over 18 years of experience in the private wealth sector, and we do not have junior bankers,” he reports. “Additionally, I've been very fortunate to be able to team up not only with a few outstanding people from Julius Baer, but also with some of my friends from other financial institutions that have linked up with us in our drive into the dynamic world of independent wealth management. For example, we have some outstanding partners, such as Kenny Gaw of Gaw Capital, which is the top private equity real estate from the region; he has joined us as a board member, and we have been doing some interesting real estate deals with our clients that are sourced by Gaw.”

Competitive edge

He closes his comments by observing that in the North Asia market that the firm mainly covers, he sees his competition more as the private banks than other independent players.

“Our focus is entirely on UHNW clients and ensuring that they receive optimal services, solutions and absolute objectivity and integrity,” he reports. “We believe we will continue to be successful as our value proposition centres on a much more customised approach with the private clients.”

“The private banks keep becoming much more restrictive in terms of how they deal with clients because they are interpreting the regulations in the most conservative way so as to protect their investment banking franchises. They've also hired many junior bankers, and I feel that, in general, their value proposition has diminished. Our clients feel special, and they are treated like real individuals; they feel like they are really valued, and that we represent those historical core values of private banking.”

Carret Private – a Brief History

Carret Private was fully licensed in 2018 and founded by Kenny Ho, who had at the time just left Bank Julius Baer. He partnered with Carret in the US to create Carret Private Capital in Hong Kong as a multi-family office asset manager focused on wealth management, principal investments and corporate advisory. Ho today works closely alongside his two fellow operating partners, Sam Chee and Mauricio Ribeiro, as well as six other senior partners. Indicative of the type of senior-level hires the firm has been seeking out for its expansion, Carret in recent years managed to hire well-known veteran bankers from Credit Agricole Indosuez, BNPP, EFG, and Julius Baer as partners.

Chee joined from BNPP, as a Managing Director where he had focused on managing portfolios for HNWIs from Greater China.  Prior to joining Carret, Ribeiro was a Managing Director, as well as Head of the International and Independent Portfolio Management Service Desk at EFG Bank Hong Kong.

Other arms of Carret Private today include Arocrest Capital Management, a Hong Kong-based company focused on private equity investments in mid-market growth and family businesses. Target sectors include consumer products, financial services, agribusiness, and natural resources. Geographically, Arocrest focuses on emerging markets in Southeast Asia, such as the Philippines, Indonesia, Thailand, Vietnam, Sri Lanka, and Myanmar.

Another vehicle is SBI Carret, a FinTech joint venture company between Carret Private Investments and SBI Hong Kong Holdings. Today, SBI is also a shareholder in the Carret Asset Management business in the USA.  The Carret website also highlights Hazelview Asset Management, a Canadian real estate fund manager, that aims to be a leading investment house for real estate exposure with its global experience and local presence.

Reminding us of some background on the September 2019 Lumen deal, Ho reminds us that Wilfried Kofmehl is the Founding Partner of Lumen and had worked closely with him for some 13 years prior to the merger - they were both founding members and executive board members in establishing Bank Julius Baer’s presence in Asia. Kofmehl had left Julius Baer in 2010, having been the Chief Executive Officer of the bank’s Singapore operation, then founding Lumen to provide independent wealth management, investment and advisory services amidst the fast-changing landscape in the private banking industry.

He explains that the merger was designed to encompass several areas, including portfolio management, research, business development and operational optimisation, with the two firms deciding that the sum of their parts would create a greater whole to help both expand in the future. “North Asian clients are increasingly looking for investment and custodial solutions in Southeast Asia,” Ho explains. “We believe that given its strategic positioning in Singapore, Lumen is perfectly situated to enhance Carret Private’s overall value proposition. Additionally, Carret Private and Lumen have a complimentary range of investment solutions.”

In terms of the current suite of Carret offerings, Ho explains that Carret continues to focus on particular niches where it can best compete and where its activities best suit its clientele. The firm seeks out a lot of opportunities in the middle-market, deals that are generally below the radar of the big private banks, but which offer appealing returns and low risk.

He also reports that the core USP of Carret Private from the outset has been the ability to manage multi-asset class portfolios for its wealth management clientele, but what differentiates it has been its ability to source and find interesting outstanding investment products in an alternative space which private banks do not typically source.

A key USP, Ho explains, is that the firm does not itself offer custody, but operates for its clients with a selection of top-flight custodians, selecting the best of breed and farming this function out to different banks, often on a multi-custodian basis from amongst the 13 different private banks and ‘pure’ custodians, such as State Street, BNY Mellon, Pershing, and others, the firm traditionally works with. He adds that the merger with Lumen has helped in areas such as automation and technology, and particularly the larger size and additional AUM of the combined entity are helping them to obtain better pricing from these big bank custodians with which they work.

Getting Personal with Kenny Ho

Ho was born in Delaware on the east coast of the United States and attended the University of Chicago, where he obtained his MBA in Finance and Accounting. His first job was with global management consultancy company McKinsey in Houston, Texas, before moving into investment banking with what was then known as Salomon Brothers on Wall Street.

“Salomons later brought me out to this fantastic opportunity we call Hong Kong,” he recalls, “to participate in the amazing growth of Greater China. Then in the early 2000s, I migrated from investment banking to wealth management where I was very fortunate to go directly into Credit Suisse Private Banking, heading up the Asian investment platform; and then from there a core team of us followed our CEO from Credit Suisse to build the wealth management business for Bank Julius Baer.”

He also today sits on the board for numerous companies, including being an active member of the Governor’s Advisory Board for the University of Chicago Booth School of Business and a member of the Church Council of Christ Church Hong Kong.

Married to a Hong Kong national, they have a 12-year old son, and in his spare time, he usually enjoys golf and tennis. He has in the past year moved to Portofino in Clearwater Bay and the Clearwater Bay Golf & Country Club has become his new favourite in Hong Kong.

He reports that he and the family have made the best out of the lockdowns, spending more time together and also enjoying more quality time with their closest friends, some of whom he works closely with in business. “When we can travel again freely, we are hankering after our villa in Bali,” he says. “Indonesia was really struggling with the virus, but things have improved markedly, so we hope to get there this December.”