By Michael Foster
As global tensions escalate, Emissary Partners has developed a base in Singapore to help family offices manage troubled overseas assets through a new partnership.
The partner, Pine Capital Management, has bought a minority interest in Emissary, as part of a fundraising. Founded by South Korea’s Hyuktae Kwon, it advises Asian family offices on venture capital deals and asset management.
McGrath started the firm in 2018, building on his early career in politics and dispute resolution. Its team already operates in the US, UK and the Middle East.
It is effectively an investment-banking boutique advising family offices on ways to recover value from legacy assets, often due to theft or mismanagement.
McGrath adds: “You might think you’re going from A to B with a deal, but you might end up with C further out in the future – and far lower in terms of value created.”
Clients have also started to ask Emissary for help in finding the safest possible way to invest in overseas assets.
McGrath says 5% to 8% of portfolios comprise legacy assets which need attention. The proportion rises to 10% in the Middle East, where record keeping has become better structured in recent years: “We know that legacy assets are issues which families also recognise in Singapore.”
According to its website, Emissary’s negotiations include a $9 billion US family office which received tens of millions from a hedge fund manager who underpaid a fund redemption; a European family office reasserting its equity interest in a Middle East company after a takeover, and a US family office unwinding a private equity position in China.
McGrath recalls his early years, when US families were keen to build relationships in emerging markets, including China: “The consensus was that globalisation was only moving in one direction. Now you need to know whether soft power can help to resolve things. How helpful is it to be an American investor in China, right now? How helpful is it to be a Saudi investor in the US?”
McGrath says it is crucial to understand the exact nature of bilateral relations between countries. Asking your ambassador for help may not be enough. “There’s a whole new analysis you have to carry out.”
Families have their own preferences on ways of dealing with a troubled situation. They would be keen to understand their legal position but would be ready to negotiate a fair settlement to avoid shame.
Changes in bilateral relations between countries, and tighter portfolio audits have led to a sharp increase in Emissary’s workload. “We’re not a scale business, but we’re looking at doubling it year on year.”
Market volatility and greater investment in private assets could further increase the scale of opportunities. And experience counts: “We can point to more and more deals showing that new legacy issues are not dissimilar to others we have worked on.”