Wealth & Finance April 2014 by AI Global Media

April 2014

www.wealthandfinance-intl.com

Wealth

& i

f i n a n c e

Profit From Your Passion How to Attract Angel Investors Why Women Mean Business

Making the move into alternative investments

• Alternative Investments: Not Just a Hobby • Enjoy Investing Your Pension • Investing in Diamonds • Fine Wine Trends

Plus...

2014’s Top Tested: Top Wealth Luxury Trends Management Apps

Investing in Paradise: A Prime Real Estate Opportunity...

April 2014 | Contents

Contents News & Appointments 4-9 Feature 10 Why Women Mean Business Women in business may still raise an eyebrow with the traditional, old-fashioned types, but the truth is that women now occupy 20.7% of board members, according to a recent report. Funds 12 Enjoy Investing Your Pensions Wealth Corner 14 Profit From Your Passion Alternative investments can be much more than a hobby. 16 Fine Wine Trends The Asset Ripe for Investment. Banking Zone 18 £450m Levy on High Cost Lenders Would Fund 1.5m New Affordable Loans Credit unions in Post Office branches could offer affordable loans. Markets Matters 20 Investing in Diamonds by Salim Hasbani, from Hasbani UK / Tresor Paris. 22 Report Predicts Slow Recovery for Wind Energy Market Finance Focus 24 Wealth Management and Impact Investing By Clare Jones, ClearlySo. 26 How to Get Investment: Angel Investors By Aaron Etingen.

Editor’s comment Our April issue has a distinctly alternative flavour as we take a look at some of the more left-field ways to invest your money. We hear from David Fox from Dentons Pension Management Ltd on some of the more interesting – and fun – ways to invest your pension talk to Nick Howard from Wine Owners about the most significant wine investment trends in 2014 and catch up with Salim Hasbani, from Hasbani UK/Tresor Paris to get the lowdown on why diamonds could be a savvy investor’s best friend. We have some valuable insights from Aaron Etingen on how would-be entrepreneurs can make themselves a more attractive proposition for angel investors and we find out if tax reforms in Cambodia point to the first green shoots of recovery for the country’s economy. Ian Marsh, Head of Asset Management at Fleming Family & Partner’s is on hand with some advice on how to avoid the most common pitfalls of transferring investments between generations, we review the top 10 wealth management apps available today and luxury lifestyle gurus Caroline Hurley and Anabel Fielding give us the heads up on the top Luxury Trends to look out for in 2014.

Taxing Times 28 Tax Reform in Cambodia Are we witnessing the first green shoots? 30 EU Commissioner: Tax Policy Set for Critical Role in Growth

And, of course, we’ve got the usual round-up of the news and views affecting the major regions and markets from across the globe.

Wealth Management

We hope you enjoy it.

32 Transferring Investments Between Generations 34 Top Ten – Apps for Wealth Management We check out the best wealth management apps available.

Mark Toon, Editor mtoon@wealthandfinance-intl.com

Relax 36 Top Luxury Trends 2014 38 Investing in Paradise A Prime Real Estate Opportunity Awaits in a Secluded Corner of the Caribbean.

Wealth & Finance | April 2014 |

News & Appointments | April 2014

Research Reveals Insurers’ Legislation Struggle Only one in three (32%) insurance intermediaries believes insurers have coped well with the raft of new legislation they have had to face in recent years while one in five (21%) believe they have been poor in dealing with changes.

for the survey believe that poor information or data management has had a big impact on the ability of insurers to implement recent new regulation, with one in three (35%) intermediaries agreeing with them.

The findings are taken from new research by information management specialists, EDM Group, who also surveyed insurance executives, revealing corresponding figures of 35% and 16%.

Craig Campbell, Head of Insurance Sector at EDM Group, said: “New legislation has been one of the biggest challenges facing insurers, and our research suggests that poor management of information and data has had a negative impact here.

Alarmingly, 73% of insurance intermediaries believe that customer service levels have suffered as a result of the resources insurers have had to dedicate to dealing with the new legislation. The corresponding figure for insurance executives is 23%. Some 68% of insurance executives interviewed

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“However, one key way in which insurers are addressing this issue is by digitising more of their information and relying less on paper-based sources of data. This will not only improve their levels of efficiency and reduce costs, but also help ensure that they are compliant with all of the legislation they have to adhere to.”

EDM Group currently generates around 10% of its revenue from the insurance sector but because of the huge challenges facing insurers with regards to information management, the firm is forecasting a dramatic increase over the next three years. EDM Group provides companies with effective and efficient ways to manage the rapidly growing volumes of information flowing into and through their businesses every day. Clients include Legal & General, Friends Life, Bupa, Nationwide Building Society, Companies House, Lloyds Banking Group, Grant Thornton, Towers Watson, Ensign Pensions and numerous healthcare providers, including NHS Trusts and BMI hospitals.

April 2014 | News & Appointments

Optimism Among Manufacturers Sees Fastest Rise in 40 years Survey sees strong growth reported in orders and jobs, with 41% of businesses more optimistic about the business situation than three months ago. Business optimism among manufacturers saw its sharpest improvement since 1973, on the back of strong growth in orders at home and abroad, according to the latest Confederation of British Industry (CBI) quarterly Industrial Trends Survey. The survey of 405 manufacturers found that in the three months to April 2014, growth in total order books and domestic orders was the fastest since 1995. Export orders grew strongly, while investment intentions for the year ahead remained particularly robust. Output growth was solid again for the second consecutive quarter, while numbers employed rose at the strongest rate since October 2011. Firms are upbeat about the next quarter, according to the survey, with growth expectations for domestic orders and output also the highest since the 1970s. Optimism about export prospects for the year ahead also rose strongly.

Signs of a continued recovery in the manufacturing sector appear to be feeding through to investment plans over the next 12 months, with plans for capital expenditure on plant and machinery (relative to last year) the highest for 17 years. Investment plans for innovation and training and retraining also remain robust. Katja Hall, CBI Chief Policy Director, said: “Confidence is rapidly rising among British manufacturers, with a real sense of business optimism. Our industrial base is seizing a bigger role in the UK’s economic recovery, with output, orders and hiring all on the up. “There are still bumps in the road ahead, with only a tepid recovery likely in the Eurozone, the pound creeping higher and a rapidly evolving situation in Ukraine,” Hall added. “However, expectations for growth in the coming three months are positive and manufacturers plan to significantly ramp up investment in the year ahead.”

Appointments Stephen Reed becomes Corporate Finance partner at Price Bailey Corporate Finance specialist Stephen Reed has been promoted to Partner at chartered accountancy practice Price Bailey. Stephen originally joined Price Bailey in May 2012 as Corporate Finance Director. In the past two years, Stephen has been key to the development of the firm’s Corporate Finance offering across the whole of East Anglia and London. His wealth of specialist knowledge and experience has already proven invaluable to a number of businesses. Commenting on his promotion, Stephen said: “I am delighted to be in a position to help develop with the continued development of Price Bailey’s Corporate Finance proposition. The team and our service offering have grown significantly over the past few years. As the largest SME-focussed Corporate Finance team based in East Anglia, we’re perfectly placed to help business owners and investors take advantage of market opportunities – whether this is by helping to grow businesses through acquisition, better planning and investment or by achieving optimum value from their business sale.” Price Bailey’s wider Corporate Finance team is going from strength to strength, and Stephen is supported by newly-promoted Manager, Iain Murrell in the Norwich office. Meanwhile, Rob Smith at the practice’s Bishop’s Stortford office is promoted to Senior Manager, under supervison of Simon Blake, Head of Corporate Finance. Simon comments: “The team has been doing a fantastic job this year, with a very significant increase in activity levels in all areas, including selling businesses, acquisition strategy, search and advisory, due diligence for acquirers and funders, business plan development and securing equity and debt funding for growing businesses.“

Wealth & Finance | April 2014 |

News & Appointments | April 2014

Imagine Publishing Appoints Two Non-Executive Directors, Earns Place in Profit Track 100 Imagine Publishing has been recognised for the second successive year by the annual Sunday Times BDO Profit Track 100 league table as one of the UK’s best performing private companies in terms of profit growth. According to accounts audited between 2010 and 2013, Imagine demonstrated a profit growth of 43.2%. This remarkable performance was achieved against the background of a tough publishing market and was driven by Imagine’s clear focus on overseas growth and successful print and digital launches, including knowledge magazines How It Works and All About History. Imagine was formed by members of the current management team in 2005 and is now a worldwide content producer with key brands in print, online and on digital formats. Imagine has a successful portfolio of magazines, bookazines, digital editions, websites, apps and eBooks focusing on four key technology market sectors (technology; knowledge and science; photography; and videogames). An Imagine magazine is purchased every 10 seconds and the company has a monthly reach of 5.7 million readers.

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Imagine has a long track record of organic growth, delivering revenues of £18.5m, and industry leading EBITDA margin of 30.3% in FY13, achieved due to its multiple profit streams, alongside strong operational efficiency and tight cost control. Damian Butt, Group Managing Director, commented: “To appear on this well-respected list for a second year is another ringing endorsement of Imagine’s success and ability to monetise its content worldwide and deliver class-leading margins whilst maintaining a high quality portfolio of print and digital products. I would like to thank our 150 dedicated employees who strive every day to create the best content possible.”

April 2014 | News & Appointments

Appointments John Spink joins Ashcourt Rowan Financial Planning as Area Director Ashcourt Rowan Financial Planning, part of the wealth management group Ashcourt Rowan plc, has hired John Spink as Area Director reporting to Financial Planning Managing Director Steven Midgley. John has over 20 years’ experience in the financial planning industry and joins from Royal Bank of Scotland Group where he was most recently Regional Director, London. John is the second Area Director to join since the turn of the year. Stuart Moment joined in January from Broadstone where he was Head of Northern Region. Prior to this he was Regional Director at HW Financial Services. “The Area Director Team is key to our growth plans across the UK,” commented Steven Midgley. “They lead and mentor our planners, playing an important role in developing and growing our people and ensuring the quality of client experience and outcomes. Following the completion of our acquisition of UK Wealth Management Limited we are seeking to take advantage of opportunities in the personal and workplace pension markets and ensuring our planners are appropriately supported is part of that.” Commenting, John said: “Ashcourt Rowan is a firm that has a clear idea of where it wants to be and how to get there. It has already taken advantage of the consolidation opportunities with the recent acquisition of UKWM and I am very excited to be involved in the next chapter as it looks to develop its financial planning proposition further.”

Wealth & Finance | April 2014 |

News & Appointments | April 2014

Pine Brook Opens Houston Office New York-based investment firm, Pine Brook has announced the opening of a new office in Houston, Texas. “Pine Brook professionals spend a great deal of time in Houston,” said Rich Aube, Managing Director of Pine Brook’s energy investment team. “We have a strong network of management teams, investors and advisors in and around the area, so opening a Houston office is a logical next step in our firm’s expansion.” “The Texas economy has been booming over the last several years,” added William Spiegel, Founding Partner and Managing Director of Pine Brook’s financial services investment team. “Having a permanent presence in Houston allows our investment teams to take an even more active role in a region where we see continued opportunity to make great business building investments.” Pine Brook’s Houston office will act as an additional base of operations for supporting the firm’s current and future investments in the region, including Common Resources III, LLC, Green Bancorp, Inc., GR Energy Services Holdings LLC, Community Trust Financial Corp. and Stonegate Production Company, LLC.

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The office will be staffed by Michael McMahon, a Founding Partner and Managing Director of the firm, Senior Advisors Richard Stoneburner and Martin Houston, and Claire Harvey, a Vice President on the energy investment team. McMahon’s energy investing and advising experience spans nearly 40 years. In addition to representing Pine Brook as a Director of Forge Energy, LLC, GR Energy Services Holdings, LLC and Stonegate Production Company, LLC, he has served on the Board of Directors of several public energy companies. Stoneburner joined the firm in April 2013 and is an energy industry veteran with more than 35 years of experience as a geologist, holding senior management roles in major oil and gas corporations and independents. Most recently, he served as President of BHP Billiton’s North American Shale Production Division. Prior to BHP Billiton, Stoneburner was President and Chief Operating Officer of Petrohawk Energy Corporation.

Houston joined the firm from BG Group PLC and its predecessor companies. During his international career, which spans more than 30 years, he has managed a variety of enterprises in the energy industry and has established a strong reputation in the international gas business. Houston is largely credited with being the key architect of BG Group’s world class LNG business. Harvey recently joined the energy team from TPH Partners, an affiliate of Tudor, Pickering, Holt & Co., where she was a Principal specialising in investments in the upstream, midstream and oilfield services sectors. Pine Brook’s investment professionals have a track record of creating value in many notable energy companies; including Brigham Resources, LLC, Elevation Resources Holdings LLC, Saguaro Resources Ltd, Antero Resources Corp. I, Bill Barrett Corp., Encore Acquisition Partners, Inc., Gryphon Exploration Company, Kosmos Energy Holdings, LLC, Latigo Petroleum, Inc., Newfield Exploration Company, Spinnaker Exploration, Inc. and Targa Resources, Inc.

April 2014 | News & Appointments

Data Efficiency Technology Leader Expands Operations Move addresses rising demand for the technology in Asia Pacific-based companies Permabit Technology Corporation, a leader in data efficiency technology, has expanded its presence in the Asian and Pacific Rim marketplace with a new public customer, and has also added an experienced Asia Pacific sales executive to its team. Data efficiency is increasingly considered a must-have feature for the latest generation of disk and flash, primary, archive and backup storage across the data centre and the cloud. South Korea-based Samboo System Corporation recently integrated Permabit’s Albireo Virtual Data Optimizer (VDO) into its Any Storage Dedupe Software (ASDS) in order to provide customers with advanced data reduction benefits, thus substantially reducing effective storage costs. Yoo Chulho, CEO of Samboo, said: “Our customers have sought ways to reduce storage expenditures without sacrificing storage capabilities. To meet these expectations we are offering Any Storage Dedupe Software, which incorporates

Permabit’s leading data optimisation technology that helps us deliver highly efficient storage at extremely competitive prices. While there were alternatives available, only VDO provided us with the complete, ready-to-run data optimization capabilities we were looking for that would allow us to quickly meet our customers’ needs.” Permabit has also brought on Duk Chun, who has a wealth of experience in managing and growing technology businesses in the region and previously served as Vice President of Asia Pacific for Fast Search & Transfer, a subsidiary of Microsoft. “Enterprises the world over who are looking for ways to overcome the increasingly prohibitive costs of traditional storage have come to view data efficiency as key to this objective,” said Tom Cook, Permabit CEO. “We have seen tremendous interest in our data efficiency technologies from OEMs across the Pacific Rim, and the addition of Duk Chun to our team will greatly accelerate our adoption in this region.”

Appointments Molly Mulloy Joins MWW’s San Francisco Office as Executive Vice President and General Manager MWW one of the top-five global independent public relations firms, has announced that Molly Mulloy has joined MWW as Executive Vice President and General Manager of the San Francisco Office and Western Region Technology Practice Lead. Mulloy, who comes to MWW from Zeno Group, brings more than 15 years of in-house and agency experience leading technology, consumer and corporate practice groups. In her new role, she will manage MWW’s San Francisco office and co-lead MWW’s global technology practice. “Molly is a natural leader and proven strategist in the consumer and B2B technology space, the perfect individual to lead the marked growth of our San Francisco office,” said Michael W. Kempner, president and CEO of MWW. “Molly’s deep understanding of Silicon Valley and the tech space will be a major asset as we embark on a new stage of expansion.” Prior to joining MWW, Mulloy served as Executive Vice President at Zeno Group’s Los Angeles office, where she led its consumer technology practice group with clients including 3LCD/Epson, Expedia, Redbox, T-Mobile and Wargaming among others. Previously she served as Director of Edelman’s technology and digital marketing practice in Hong Kong, China, where she oversaw all technology clients and drove digital programs across the agency’s entire client base. She also worked as Vice President for Zeno Group in San Francisco where she established the consumer technology practice and developed its digital program agency-wide. Mulloy served in-house as the Global PR Manager for the DLP Products Group at Texas Instruments and earlier in her career, also worked at Rogers & Cowan.

Wealth & Finance | April 2014 |

Feature | Why Women Mean Business

Why Women Mean Business Women in business may still raise an eyebrow with the traditional, old-fashioned types, but the truth is that women now occupy 20.7% of board members, according to a recent report.

The UK in particular is enjoying a culture change with a growing number of women in decision making roles. Last week, Lord Davies stated that he wanted to see women occupying a quarter of all board positions by 2015 and Business Secretary, Vince Cable, agreed, saying that the figures showed businesses were getting the right mix of talent “around their boardroom table”. He stated: “98 of the FTSE 100 boards are now made up of at least one woman and we need fewer than 50 new women appointments to FTSE 100 boards to reach our target of 25% of women on all FTSE 100 boards in the next year. “This is a huge improvement from where we started just three years ago.” With these comments ringing fresh in our ears, let’s take a look at some of our most influential female contemporaries in the business world. #1 Sheryl Sandberg The Chief Operating Office of Facebook, Sandberg was elected to the board of directors in June 2013 by other board members becoming the first woman to serve on Facebook’s board. Prior to her involvement with Facebook, Sheryl was Vice President of Global Online Sales and Operations at Google. In 2012, Sandberg was named in Time 100 as one of the 100 most influential people in the world. As of January 2014, she is said to be worth more than $1bn, due to her stock holdings in Facebook and other companies. #2 Indra Nooyi Indra Nooyi is Chairman and Chief Executive Officer of PepsiCo. Nooyi leads one of the world’s largest convenient food and beverage companies, with annual revenues in the billions and the company’s products sold in over 200 countries. Consistently ranking in the World’s 100 Most Powerful Women, Indra was responsible for PepsiCo’s worldwide strategic planning function, including developing and co-ordinating business plans for PepsiCo’s operating divisions.

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#3 Irene Rosenfeld As chairman and Chief Executive Officer of Kraft Foods (Modelez International), appointed in 2006, Rosenfeld has led the restructuring and turnaround of key business in the US, Canada and Moscow, culminating in the split of the North American grocery business and the global snacks business in late 2012. She also served on the team that spearheaded the company’s initial IPO in 2001, and successfully integrated the Nabisco, LU and Cadbury businesses. Irene began her career in consumer research before joining General Foods, which later became part of Kraft Foods, and is thought to be worth around US$19.3m. #4 Virginia Rometty Virginia ‘Ginni’ Rometty is an American business executive and is current Chairperson and CEO of IBM – the first woman to head the company. Beginning her career with the company in 1981 in Detroi, Michigan, Ginni held a series of powerful positions within IBM until being appointed to the top in 2012. Over the years she was responsible for business results in the 170 global markets in which IBM operates and pioneered IBM’s rapid expansion in the emerging economies of the world. As part of this, she established IBM’s Growth Markets organisation, which is expected to contribute as much as 30% of IBM revenues by 2015. #5 Ursula Burns Head of Xerox, Ursula Burns is notorious for being the first African-American woman to head up a Fortune 500 company. She is also the first woman to succeed another woman as head of a Fortune 500 company. Burn’s story is a heart-warming tale of rising through the ranks as she first joined the company as a mechanical engineering summer intern. Today, she leads 140,000 employees and serves clients in more than 160 countries.

#6 Meg Whitman As a graduate of Princeton University and Harvard Business School one could argue that Meg was always destined for great things, but as president and CEO of Hewlett-Packard she has been instrumental in the reinvention of the company. Having held prestigious posts at Hasbro, Disney, Proctor & Gamble and eBay before joining HP, Whitman’s shares in her past companies still make up the bulk of her fortune today. #7 Maria Das Gracas Silva Foster Brazillian business executive and chemical engineer, Maria Das Gracas Silva Foster, occupies the role of Chief Executive Officer at Petrobas-Petroleo Brasil, based in Rio de Janeiro. Known as ‘The Iron Lady of Oil’ Maria is the first woman in the world to head a major oil and gas company, and was ranked as Most Powerful Woman in Business (outside of the US) in 2012 for the second year running, as well as being regularly listed in the Time 100. #8 Marissa Mayer Mayer joined Google in 1999 as its 20th employee and was the company’s first female engineer, but she stunned them all in 2012 when she announced she was leaving to become President and CEO of Yahoo! Innovative reforms introduced by Mayer have seen the transformation of Yahoo!, with the company making several major purchases, including the acquisition of Tumblr in 2013. In September 2013 it was reported that Yahoo! stock prices had doubled in the 14 months since Marissa’s appointment. #9 Anne Sweeney American businesswoman Anne Sweeney is Co-Chair of Disney Media and President of the Disney-ABC Television Group. Having enjoyed nearly 20 years with The Walt Disney Company, during which she oversaw the successful launch of the 24-hour animation channel Toon Disney, Sweeney announced in March of this year that she intended to leave the group to pursue a career as a television director.

Why Women Mean Business | Feature

#10 Angela Braly Having run the second largest health insurer in the US, WellPoint, since 2007, Braly stepped down from her position as Chief Executive Officer with shareholder criticism being cited as the reason. Despite her hasty departure, Braly had regularly been listed among the worldâ&#x20AC;&#x2122;s most powerful women, culminating in her being positioned in fourth place in 2009. Braly has since been elected to the Board of the Indiana Economic Development Corporation, the first high profile position she has held since she was ousted from WellPoint.

Wealth & Finance | April 2014 |

Funds | Enjoy Investing Your Pensions

Enjoy Investing Your Pension Following on from the exciting pension proposals announced in the recent UK Budget many of you may be taking a renewed interest in your pension. Below, David Fox, Director of Sales and Marketing at Dentons Pension Management Ltd explores two of the lesser known but more interesting ways it is possible to invest your pension fund: direct property and private equity investments. Property is a very popular investment – in fact it is often the largest single investment that any of us make. So why don’t more of us use our pension money to buy property? A self invested personal pension or SIPP is a highly flexible way to take control of what your pension is invested in and is very popular with business owners and higher net worth investors as it can allow investment in a wide range of assets classes. There are some exclusions, such as residential property but there are a whole host of options, from warehouses, industrial units, offices and shops through to farmland, forests and orchards. You can also buy marine moorings, public houses, nursing homes, student accommodation, hotels and even football grounds and zoos. It really does provide an interesting and creative way to invest money that is held in a pension – which I’m sure you will agree, isn’t always considered the most exciting or engaging investment vehicle.

Some firms that offer a self invested personal pension may create their own property syndicates where they offer their SIPP investors the opportunity to participate in a purchase. Using a syndicate approach means that you are able to purchase a share in a much bigger property or help you to diversify any risk by having an interest in a portfolio of properties.

There are lots of ways to consider buying property; it doesn’t have to be only you making the purchase, you can also bring a group of like minded people together or even people you don’t know and do what is known as a property syndication.

SIPPs also make it possible to purchase shares in companies that aren’t quoted on a recognised stock exchange. This type of investment is known as private equity.

| Wealth & Finance | March 2014

You may want to purchase a commercial property owned by your company. This can create liquidity and improves cash flow for the business by releasing the value of the property back to the company. Many commercial properties held within a SIPP are therefore occupied by the SIPP owners business. This can be appealing as the tenant is ‘connected’ to the SIPP and the rental income may be considered more stable and certain than letting the building to a totally unconnected third party.

The main restriction with purchasing unquoted shares is that neither you, nor the SIPP can already have, or purchase, a ‘controlling’ interest in the company into which the SIPP is making the investment. This can create an opportunity for the more entrepreneurial amongst you to use your pension fund to take advantage of opportunities you may see in smaller but fast growing companies. Employees or directors of a company who have been granted share options can also use their pension fund to exercise the option even if they do not have the personal assets to purchase the shares. There are many tax benefits to using a SIPP. If you choose to invest in property or unquoted shares, there is no capital gains tax (CGT) liability on any growth in the asset value when you sell it, unlike an investment held outside the pension. By letting a property, the rental income is paid into the SIPP tax free.

Enjoy Investing Your Pensions | Funds

13 Pre retirement, the value of the assets held within the pension also sit outside of your estate for inheritance tax calculations. Commercial property and unquoted shares are just two of the lesser known asset classes allowed by many SIPPs. They clearly will not be suitable for all but if you are a sophisticated investor with particular knowledge in these areas they may be worth considering alongside the more conventional asset classes used within pensions such as stocks and shares, bonds, gilts and unit trusts. Not all SIPP providers will allow these â&#x20AC;&#x2DC;esotericâ&#x20AC;&#x2122; asset classes - however a fully bespoke SIPP will allow you to invest in both straightforward investment strategies and be flexible enough to allow assets such as commercial property and unquoted shares should this become a future requirement for you.

Wealth & Finance | April 2014 |

Wealth Corner | Profit From Your Passion

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Profit From Your Passion | Wealth Corner

Profit From Your Passion Alternative investments can be much more than a hobby... The term “alternative investment” is a wide-ranging one. It covers a whole spectrum of options that spread far beyond those of traditional investment types. As well as private equity and mutual funds, alternative investments can include collectibles (including fine watches and wine) and commodities (perhaps timber or industrial metals). They’re diverse not just in terms of their sectors, but also in the investment strategies and returns they deliver. The steady growth in popularity of alternative investments saw a significant spike after the 2008 economic downturn. Following the crash, an increasing number of financial advisors turned to alternatives in an attempt to mitigate against a further drop in their clients’ portfolio value -diversifying risk exposure away from traditional fixed income and equity assets. The rise in popularity of alternative investments has led Coutts, the private banking and wealth management firm, to launch the Coutts Passion Index. This tracks the value of 15 “passion assets,” including watches, stamps, classic cars and bottles of wine. The arrival of the Passion Index was significant. It reflected a perceptible shift amongst a generation of retail investors towards alternative investments as a viable investment vehicle. A subsequent piece of research, the Alternative Investment Index (AII), was developed to help understand the mindset of investors towards some of the most prominent alternative investment vehicles around today, as well as to gather insight into the factors influencing investors, ranging from their interest in the ethical credentials of a product, to the financial returns. That research, commissioned by Avacade Investments, outlines the investment perceptions and decisions - both retrospectively and forthcoming - of the UK’s alternative investor. Avacade spoke to over 200 investors with portfolios ranging from £1,000 to over £200,000 to investigate which alternative assets retail investors and high net worth individuals are looking to invest into during the coming year. It hardly needs to be said that art can be extremely valuable. And as an investment, its popularity is set to continue growing. In fact, February 2014 was a record month so far for fine art sales and a record £413m worth of impressionist and modern art were sold at Sotheby’s and Christie’s in just one week. The AII supports a growing optimism towards art, with 4% of the sample having invested in art in the last year, but with 5% looking to do so in the year ahead. Like fine art, stamps offer much more than just aesthetic appeal: to many, they offer excellent financial returns. An unused Penny Black (the first adhesive stamp) from 1840 is worth around £30,000 today. Still, just 1% of the AII sample purchased stamps as an investment and the same percentage are looking to invest in the year ahead.

But in wine, investor enthusiasm is down. Whether investing in individual bottles or cases of wine, the market offers investors the opportunity to be part of a fascinating industry. But according to the latest Liv-Ex report (the wine industry’s benchmark) trading is at a three-year low. The AII reports this falling enthusiasm with the fact that although nearly one in 10 investors (7%) invested in wine in the last year, only 6% are looking to invest in the next 12 months. Likewise, investor enthusiasm in collectable watches is down. According to the Coutts Passion Index, timepieces returned 176% from 2005 to June 30 2013, making them a more successful investment than the traditional stock market. However, the AII has revealed that investor interest is depleting for the year ahead - down to just 1% intending to invest compared to 2% who stated they had in the previous 12 months. Some of the AII’s findings are more surprising, with investor enthusiasm in digital currency Bitcoin on the up. Despite often hitting the headlines for the wrong reasons recently (so far this year, Japanese-based Mt. Gox, once the largest Bitcoin exchange, has filed for bankruptcy) the AII revealed an increasing optimism in Bitcoin from UK self-investors, with an increase of 5% intending to do so in the next 12 months. The overriding picture from these findings is one of a personally interested investor, an investor passionate about the product itself, whether because of its green credentials, or because it is of personal interest, or the ability for an investment to allow them to pass something physical onto a future generation – and such focus on sustainable investment can only be a good thing.

The arrival of the Passion Index was significant. It reflected a perceptible shift amongst a generation of retail investors towards alternative investments as a viable investment vehicle. A subsequent piece of research, the Alternative Investment Index (AII), was developed to help understand the mindset of investors towards some of the most prominent alternative investment vehicles around today, as well as to gather insight into the factors influencing investors, ranging from their interest in the ethical credentials of a product, to the financial returns.

Wealth & Finance | April 2014 |

Wealth Corner | Fine Wine Trends: The Asset Ripe for Investment

Fine Wine Trends: The Asset Ripe for Investment High net worth investors are increasingly looking at more lucrative sources of investment due to low interest rates. They are also attracted to diversification of one form or another as a hedge against inflation and global macro-economic risks. Post 2008 holding onto cash has been an increasingly unattractive option, so the trend has been for sophisticated investors to put more of it into hard assets. Relative scarcity and demand drive collectible investment markets and fine wine fits the bill as an investment solution due to its relative liquidity compared to other collectible hard asset classes. Wine may not be fungible but has characteristics that are more commodity-like than most other treasure asset categories.

The trends of wine investment mirror other collectible alternative investment classes which happen chiefly when a) Markets are globalising b) Supply is limited and c) Markets are transparent. Active Self-Management The first key trend in this asset class is that ‘active self-management’ has great appeals to the collector. Collectors are very often also wine enthusiasts. Part of their interest is in doing the research and reaching their own conclusions about which wines they wish to buy. But they lack the organisational tools, information, access to market and settlement mechanisms to be able to do so. Wine Owners (www.wineowners.com) finally makes it possible for collectors to do so.

Buying the best you can afford Wines are stored in bonded warehouses, where they can be kept for years or even decades without requiring tax and duty to be paid. It’s worth considering that when buying wine for investment since storage charges of around £10£12 per case can disproportionately eat into the profits of the best values. Thinking of future liquidity With the advent of self-serve exchanges and greater market transparency, top, sought-after wines are reasonably liquid. If priced to market level an investor can expect to typically cash out within one to four weeks. The further down the pecking order the investor goes, the propensity to liquidate as quickly decreases.

The related challenge collectors face is keeping on top of their collections - knowing what they bought, from whom, what it’s worth, when its ready to drink, what to keep for longer, when is the optimal moment to sell. They have so little time free outside their demanding jobs.

Buying In Bond

Diversification The trend is not to put all your eggs into one basket. Wine should generally not exceed 5-10% of your total net asset value.

Storing fine wine in bond means not paying VAT and duty, which makes it much more attractive to a global audience. It also tells the buyer that the wine has been professionally stored its whole life, which helps establish good provenance and makes your wine more desirable on the secondary market.

Taking a portfolio approach

Buying wine you might like to drink

Build a diversified portfolio of fine wine - spread your bets since fine wine is not one homogenous market. It’s sensible to think of wine investments as for a minimum period of around four to five years. Just like any other investment class, it’ll have periods where it outperforms and periods when it doesn’t. A portfolio’s core will include Bordeaux, Burgundy, and might encompass top Italians.

Your own preferences or interests should quite rightly influence your portfolio. So for example if you are familiar with top Californians, you might choose to buy Harlan, Phelps, Opus One etc.

London is the centre for fine wine trading. It’s a market that is truly global, and buyers can span Asia, The Americas, Europe and parts of Africa.

Being aware of cold-callers Don’t buy wine from cold-callers, or at least not unless you know them or have satisfied yourself that they are reputable and that prices of their ‘picks’ are competitive.

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Fine Wine Trends: The Asset Ripe for Investment | Wealth Corner

17 Moez Seraly, CEO, The Perfect Cellar “The Perfect Cellar procures wines from boutique vineyards in Europe and an area we specialize in is creating ‘drinkable wine’ portfolios; wines that you can lay down or enjoy without making a huge financial commitment. We work with the best wine producers in each region and due to their size they deliver a limited number of bottles at a very reasonable price point and we are already seeing huge growth in awareness and demand.

Typically these calls come from ‘wine investment companies’, a great many of whom would not qualify for sophisticated investor status. Were these businesses operating In an FSA regulated market, many might be open to accusations of mis-selling. Collectives options The wine investment market for ‘collectives’ is really quite small as a percentage of the whole - roughly £120M goes into funds in the UK out of a total fine wine market of circa £1bn. There are very few that are FSA regulated (eg WineSource) and there are some that operate EIS funds that provide tax breaks (eg Vindemnia, WIF).

For example the Tronquera 2009 by Eric Boissenot was selling for 30GBP in 2013 and it’s already at 55GBP today; this is a great investment that you don’t feel guilty for opening. With all bottles allocated we envisage seeing it reach over the 200GBP mark in the near future. Whereas the Chateau Le Puy 1961 has great growth potential at £5,000 and the 1982 vintage at £1,200. I would also recommend Chateau Jean Faure 2009, their next door neighbour is priced at £1,100 – this is a wine we expect to reach the four to five digit mark in the coming years.”

If you are thinking about going this route, ensure the fund’s projected returns are realistic, be aware of the fund management charges, and understand the differences in the way that EIS funds have to be managed versus non-qualifying funds – there are pros and cons to each model. Checking reputations Some funds have run into trouble, leaving investors out of pocket. If in doubt visit http://investdrinks-blog. blogspot.co.uk to see which firms are causing concerns among their clients.

Wealth & Finance | April 2014 |

Banking Zone | £450m Levy on High Cost Lenders Would Fund 1.5m New Affordable Loans

£450m Levy on High Cost Lenders Would Fund 1.5m New Affordable Loans Credit unions in Post Office branches could offer affordable loans A one-off levy of £450m on Britain’s £180bn consumer credit industry could create enough affordable lenders to take on Britain’s legal loan sharks, according to a report from the think tank IPPR. The report says that as well as a new legal cap on the total cost of credit, Britain needs a new generation of not-for-profit affordable lenders with enough capital liquidity and geographic coverage to compete with firms like Wonga, Quick Quid and Payday Express. The new report is the latest in a series from IPPR’s flagship ‘Condition of Britain’ project on social policy. The final report from the Condition of Britain project will be published in June. According to the report, local, not-for-profit lenders and credit unions could be hosted in Post Office branches or partner with Church of England parishes. It says that £450m of capital could support over

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one and a half million loans of up to £250 at any one time. The report says that lender should charge a maximum of 3% a month, or 42.6% APR. This would mean borrowing £100 for one month under this new plan would cost just £3 but currently costs over £30 with a similar loan from Wonga. The report shows that Wonga’s representative APR is 5,853%. The report argues that the £450m ‘windfall tax’ should be levied across the consumer credit industry, structured on a ‘progressive polluter pays’ principle, with firms with the largest turnover and doing the most harm paying the highest price. This level is equivalent to the amount of direct consumer detriment caused by this industry in just one year. The report says government and regulators

should assess the harm that each lender causes and design the levy appropriately, so as to raise up to a total of £450m. The report also argues payday lenders should: • Provide a clear ‘pounds and pence’ cost for any potential loan, plus the payment rate and the term length. • Make affordability checks mandatory before a payday loan can be agreed. • Enforce a 24-hour ‘cooling off’ period between a loan request and that cash being paid, giving borrowers the chance to think again and firms the chance to conduct proper affordability checks.

£450m Levy on High Cost Lenders Would Fund 1.5m New Affordable Loans | Banking Zone

19 The payday lending industry now supplies over 8 million loans annually, expanding from an estimated £100 million worth of loans in 2004 to over £2.2 billion in 2012/13. Two-thirds of those who take out a payday loan have a household income of less than £25,000.

And the report recommends, new responsible lenders should: • Cap the maximum loan at £250 (mirroring the average size of current payday loans). • Limit people to one loan at a time and prevent lenders from ‘rolling over’ loans. • Allow a backstop reclaim mechanism through the benefits system, as a last resort to reduce the risk of default and bring down the cost of loans The report also suggests new government backed saving incentives for people on low incomes, to support asset-building and reduce demand for payday loans. It says that 20p could be ‘matched’ by the government for every £1 saved up to the first £20 deposited each month. The report says, if such a saving incentive were targeted at those in receipt of benefits or tax credits, and third of them were to take maximum advantage of it, 3.5 million people would gain £48 a year, at a cost to the taxpayer of just under £170m.

More than two out of five borrowers (41%) are using payday loans to pay for everyday expenses such as groceries. Almost a third of borrowers (32 per cent) are using payday loans to pay utility bills, like gas and electricity. While one in five borrowers (22 per cent) have funded Christmas presents and food. The polling also shows that more than a third of borrowers (35 per cent) use payday loans in an emergency. According to the OFT, 90% of the payday loans market were found to be non-compliant with OFT guidelines

The report shows that two-thirds of low-income households have less than one month’s salary in savings at any one time, and 3.9 million families have insufficient savings to cover their rent or mortgage for a month should their income disappear. Almost 9 million people already consider themselves to have ‘serious’ financial issues, with half of the ‘over-indebted’ population living in families on incomes under £20,000. Mat Lawrence, IPPR Research Fellow, said: “A return to rising living standards will reduce households’ reliance on debt, but it will not eliminate their need for it. The payday lending industry has grown in large part because of a gap in the credit market that mainstream banks are unwilling to fill. Regulation can reduce the harm done by payday lenders but it alone cannot ensure that the public interest is properly served in the provision of affordable credit. “Britain needs an initial capital injection to expand the provision of affordable credit and new ‘match saving’ incentives for people on low incomes to enable people to build up a stronger asset base of their own and reduce their reliance on credit. We need a strategy for spreading capital, building the assets of communities, and engaging citizens in forms of local democratic finance in which power and control resides with them, rather than with government agencies or unaccountable financial institutions.”

Wealth & Finance | April 2014 |

Markets Matters | Investing in diamonds

An Investorâ&#x20AC;&#x2122;s Best Friend by Salim Hasbani, from Hasbani UK / Tresor Paris When you think of diamonds, you think of jewellery, adornment and decoration. But diamonds can also be a pretty investment for your pounds and pennies. Diamonds are durable so they can be a somewhat safe asset to invest in. The stone weight is recognised internationally and is generally measured by fixed criteria so they can be easy to monitor. Diamonds and gold will always have an intrinsic value, unlike other luxury items which can depreciate so they can protect an investorâ&#x20AC;&#x2122;s wealth. Rare colours and stones or pieces of jewellery set with precious stones that have provenance tend to achieve high prices as one would expect. Thus diamonds can be very discreet to invest in should you wish to do so. As these rare pieces are sought after, be it for pleasure or for investment, so prices are pushed up with less being available. Amongst those operating in the trade, the prices are very much correlated as you cannot put a price on something that does not exist. However amongst investors in equities, they can become rather extreme, due to lack of understanding in the diamond trade and a hankering after something truly unique. Another attractive reason to invest can be for a tax benefit as some investment schemes are tax efficient.

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So just how much are the price of diamonds increasing? From September 2009 the price of diamonds has been rising on the whole, with sizes from 3 â&#x20AC;&#x201C; 4 Carats in the D to G colour and VS + gaining the most value. Indeed there has been a good 30% to 40% increase in prices in the last few years. Rarer and more collectable stones have been easier to sell. The economic downturn has driven the prices up as wealthier clients opted for investing in more precious materials including gold and diamonds. The high value of diamonds and their very low weight make it a much easier commodity to transport, also the loss of trust in financial institutions made alternative investments such as diamonds a more attractive option. Investing in diamonds is less volatile than the precious metal market. When discoveries are made, as they are rare and so are the individual stones, the prices tend to go up more as fewer rare stones are unearthed. Over the last 10 years there have been minor dips in the market for certain sizes. As with anything, overproduction drives down prices and produces less demand. This can also be attributed to trends in gems and stones. For example at the moment, the trend is for fancy coloured diamonds, yet in times gone by, not much value was placed upon these.

Investing in diamonds | Markets Matters

But what does the future hold for the price of diamonds? Well, we predict that prices will continue to rise at slower pace over the next couple years, and as we continue to proceed fully out of the recession and more emerging markets continue to develop. They will then stabilise and it will remain a steady form of investment for buyers over a medium term.

Wealth & Finance | April 2014 |

Markets Matters | Report Predicts Slow Recovery for Wind Energy Market

Slow Recovery Predicted for Wind Energy Market The wind energy market is being affected by various factors such as reduced government support and incentives. Following a period of decline in 2013, the worldwide composite materials consumption in wind energy market is expected to recover during the next five years, albeit at a slow pace, according to a report. The report by global management consulting and market research firm, Lucintel notes that the wind energy market is being affected by various factors such as reduced government support and incentives, decline in the prices of solar photovoltaic, grid connectivity issues and others, driven by reduced market for wind turbines in the US, India and other countries. The composite materials market for wind application includes various raw materials, such as polyester resin, epoxy resin, glass fibre, carbon fibre, adhesive, coating and core materials. The composite materials market in wind applications is expected to be an attractive market in the future as wind energy capacity installation would grow globally. European and US-based material suppliers are likely to face threat from new suppliers of China and other nations, the report notes, adding that material suppliers would have good opportunity in this growth market - working with new and existing blade manufacturers. Although composites are gaining popularity in the wind energy market, technological changes are creating new set of challenges, says the report. Some of the key challenges are achieving adequate stiffness to prevent excessive blade deflection, preventing buckling failure, and ensuring adequate fatigue life under variable wind loading conditions. To solve these challenges, blade manufacturers have started using high performance materials such as carbon fibre, but carbon fibre is eight to 10 times more expensive than glass fibre, hindering its extensive use in turbine blades. During the forecast period, average cost of composite materials would increase as more carbon fibre and improved resin formulations will be adopted by blade manufacturers.

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The wind energy industry is passing through uncertainties, which create a challenge for the composite material suppliers. A huge layoff of approximately 3,200 employees in 2012 by leading players in the US wind energy market reflects declining confidence of industry players, notes the report. India wind energy market is also suffering with policy inconsistency affecting the new capacity installations. China wind energy installation is losing its attractiveness, the report says, although significant investments towards grid connectivity indicate gradual improvement in the market in the coming years.

Report Predicts Slow Recovery for Wind Energy Market | Markets Matters

Wealth & Finance | April 2014 |

Finance Focus | Wealth Management and Impact Investing

Wealth Management and Impact Investing by Clare Jones, ClearlySo

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Wealth Management and Impact Investing | Finance Focus

25 Through recent shake-ups in the financial sector, private investors and institutions are exploring new ways to manage risk and return, innovative options for managing assets – from Crowdfunding to peer-to-peer lending – but one of the biggest questions is around impact. Investors throughout the world, but particularly in the UK, are also looking for social and environmental returns on their investments. With some seeing this as the ‘third dimension’ – risk, return and impact – impact investing has moved on from ‘responsible investing’, where investors screen their portfolio for negative environmental, social or governance (ESG) impacts, and into proactive social impact investing. This can mean investing directly into businesses that generate social value through debt or equity, or through investing in funds. Big Society Capital, an investment bank with a £600m investment fund to grow the infrastructure in this space, found over £200m was invested into this market in 2012 alone, as part of a wider global impact investing market of over $9bn per year. While big institutions are starting to enter this space (notably through impact funds such as Berenberg/ LGT’s Impact Ventures UK (IVUK) Fund, which reached a first close of over £20m in December 2013), it has largely been led by private investors who are proactively moving their capital into businesses that offer strong commercial returns while generating social or environmental impacts. The potential in the market has now been bolstered by the Social Investment Tax Relief that was announced in March’s Budget, which allows private investors who want to invest into social enterprises to claim income tax relief. Through intermediaries such as ClearlySo, and through funds such as IVUK, investors are able to move their capital into business that are creating strong positive impacts for people and their communities, whether locally or globally. For some investors, this is a com-

plement to their philanthropy, where they are able to ‘recycle’ their money into more than one cause, while for others it is about the financial return as much as the social one. Suzanne Biegel, lead angel at Clearly Social Angels, explained why she has been investing for impact for the last thirteen years: ‘Impact investing allows me to invest in promising entrepreneurs who are solving the social and environmental issues of our time; it’s one of the most exciting ways to both make a difference and, hopefully, a good return’. Biegel built and sold a successful e-learning company with a partner and now supports entrepreneurs through her angel investing. She set up Clearly Social Angels to work with other values-aligned investors to move capital into businesses that create sustainable change to long-term problems. With many successful exits from companies she has invested in through the impact angel Investors’ Circle network in the US, Biegel and the Clearly Social Angels are investing into deals in the UK that have positive environmental and social impacts at home and abroad. Last year, Biegel invested alongside other angels from the group into several deals, including into company Insane Logic, which creates innovative iPad applications to allow children and adults with speech and communication difficulties to communicate. Through selling packages and training to schools and other institutions, the company creates opportunities for those with disabilities, while offering their investors the opportunity to make financial returns. Another example of an impact investment was the investment made by the Clearly Social Angel group into green business Exosect. Exosect develops platform technology to protect food from pests and diseases while protecting the food chain, water supply other insects and the wider environment. With investment of just under £1 million led by four angels in 2013, the team is now able to scale and grow their already successful business.

For investors who are time-poor but still want to be involved in investing for impact, investing through an intermediary allows them to invest for financial and social return without the time commitment of angel investing. Similarly, funds such as IVUK – which will invest into businesses that help the most disadvantaged in the UK while aiming for a 7% return for investors – offer an opportunity to invest for impact across a range of sectors and enterprises. The introduction of Social Investment Tax Relief, which came in on April 6th, is a timely response to the growing demand for deals in this space. For qualifying enterprises, it allows investors to offset up to 30 percent of the amount they invest against their tax bill for that year. For example, if an investor puts in £50,000 into a social investment deal, they can reduce their tax liability by £15,000. This relief (SITR) will sit alongside the existing EIS and SEIS schemes. Eligible businesses are regulated social enterprises; they must be charities, community benefit societies (BenComs) and community interest companies (CICs). It will also apply to investment in social impact bonds (SIBs) where the special purpose vehicle is a company limited by shares and accredited by a Government-run accreditation scheme. This tax relief now ensures that investors are incentivised to invest – through debt or equity – into early-stage businesses that are creating strong social value while making returns for their investors. It is the latest development in a rapidly expanding market, encouraging more private investors to consider impact alongside risk and return when deploying their capital. ClearlySo is a financial services firm, specialising in social impact investment. They provide capital raising and advisory services to funds and entrepreneurs that generate social value, helping investors discover innovative opportunities to make social and financial returns. They also run Clearly Social Angels, the UK’s first angel group for social impact investment.

Wealth & Finance | April 2014 |

Finance Focus | Securing Investment: How to Attract Angel Investors

Securing Investment: How to Attract Angel Investors

By Aaron Etingen Bio Entrepreneur Aaron Etingen, at just 33, heads an education-focused business empire. From starting his first business at age 11, to being the youngest person (amongst staff and students) at his own business school at 24, his determination to seek out and grasp opportunities has gone hand-in-hand with his rapid business success. This has seen his empire grow from one room in London to 14 thriving organisations and a presence in every continent across the globe, beginning with the London School of Business and Finance (LSBF) in 2003.

I just came back from Singapore, where LSBF recently opened some brand new facilities to accommodate a fast growing number of students and entrepreneurs who come to us to acquire new skills. It’s great to see young people going after their dreams, and whenever I have chance, I share some of my personal experience with them as well.

Being able to demonstrate competitiveness is no doubt vital when it comes to seeking investment. At the same time it is important to show how your business has an edge, something that makes it stand out. A useful exercise is to ask yourself from time to time whether your business competes on product, price or quality and what you are doing to achieve that.

The most common questions I come across are related to funding and investment-seeking. Incubators, venture capital, angel investors, crowdsourcing... the choices here are numerous. Raising money for SMEs and start-ups, however, is not an easy job, especially because it tends to be a rather underserved sector here in the UK. In such a competitive environment, information is your best tool. It’s similar to a treasure hunt: you need the correct map, a competent team and the right tools.

Despite the growth of tech start-ups in the last few years, you don’t have to be the next Mark Zuckerberg in order to secure investment for your business. An experienced investor knows when a business is worth their capital – and it can be in any industry. Smartphone apps are still very popular, but some angel investors also see great potential in fast-growing sectors such as green energy, biotechnology, services, healthcare, science, entertainment, education and e-commerce.

When looking for opportunities to invest their capital, innovation is an angel investor’s favourite word. Eager to invest their solid capital in promising opportunities, they tend to place their bets on businesses where they see real potential for high return on investment. As an entrepreneur you’ll need to do more than just pitch your business; you need to convince potential investors that the business will be successful. As a high risk investment, it is natural for investors to be cautious. In the US, for example, where majority of funding comes from private investors, more than 50% of angels don’t have the expected return on investment.

In practical terms, the biggest risk to a start-up is not achieving a viable business model. Therefore, the best way to get investment is to prove that there is viability on a small scale, and that you just need the financial input in order to increase volume. Having an initial client-base that demonstrates a clear demand for your product is definitely the best way to show investors that the risk is small enough to justify the investment. It is unquestionably much easier to build an initial client-base first than get investment. Whatever your strategy is, make sure you are well prepared and get your numbers, facts and figures right. The recipe to success is based on your ability to inspire confidence, reliability, passion, intelligence and integrity.

Although your business idea is important, the ‘people factor’ plays a massive role here. Having the right people around you is essential – they’re the ones who will take care of your day-to-day and, with it, your Good luck and, whatever the outcome, never give up! investors’ money. Due to the difficulty in evaluating the real potential and risks of a business, it is common Aaron Etingen is the Founder and Executive Chairman practice for angels to invest in the potential of an of London School of Business & Finance (LSBF) entrepreneur, rather than the proposal itself. While some give preference to start-ups in a very early stage, others want to build up on SMEs with a successful track record. Therefore knowing what the investors are looking for is essential in this process.

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Securing Investment: How to Attract Angel Investors | Finance Focus

Wealth & Finance | April 2014 |

Taxing Times | Tax Reform in Cambodia: Are we witnessing the first green shoots?

Tax Reform in Cambodia:

Are we Witnessing the First Green Shoots? By Clint O’Connell Cambodia is booming. This Southeast Asian country of 14 million is rapidly transforming into an economic hotspot and is completing with its regional rivals to be one of the leading destinations for foreign investment in South East Asia. While its larger neighbors get more headlines, the Kingdom of Wonder is quietly leading in growth of foreign direct investment (FDI) amongst all ASEAN nations, jumping 73% from 900 million in 2011 to 1.56 billion in 2012. With the recent 2013 election behind it the government is now looking to further develop reforms and tax incentives for incoming FDI. It is expected that in the years to come post-election 2013 will be seen as the starting point of one of the most significant periods of tax reform in Cambodia. The tax reform that is being contemplated is not just an overhaul of the existing regulations, but rather a change in the mentality as to how taxes are collected and how tax regulations are enforced in Cambodia.

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With the release of Notifications (1734 and 2172), the General Department of Taxation (GDT) made it clear that it will no longer be sympathetic to those businesses that should be registered and which should be issuing valid invoices. Notification 1734 is a restatement of taxpayer registration requirements that are currently in place in the Cambodian tax regime. The salient points being that entities required to register under the Real Regime of taxation include:

250 million Khmer Riels (approx. US$62,500) for the provision of services and 125 million Khmer Riels (approx. US$31,250) for contracts with the State; and • All other business operators shall register in the Estimated Regime.

Business operators that fail to register shall be subject to penalties in accordance with the Law on Taxation (LOT). The penalties include an additional tax of 2 million Khmer Riels (approx. US$500) for Real Regime and 500,000 (approx. US$125) for Estimated Regime taxpayers. More • All kinds of registered companies, religious organisations, charities, non¬profit organisa- importantly, if the business operator does not co-operate with the GDT, the GDT can unilatertions and similar; ally register them as Real Regime or Estimated • Other business entities that have annual revenue of 500 million Khmer Riels (approx. Regime taxpayers and can also issue a unilateral tax assessment. In practice, unilateral tax assessUS$125,000) or more for sales of goods, ments are likely to result in the most onerous tax obligation possible under law.

Tax Reform in Cambodia: Are we witnessing the first green shoots? | Taxing Times

29 Notification 2172 provides a reminder to all Real Regime registered taxpayers that is necessary to issue proper value added tax (VAT) invoices to all Real Regime taxpayers and a proper commercial invoice to all Estimated Regime taxpayers. In addition, VAT invoices must include the VAT number of the buyer. The notification also reminds all Real Regime taxpayers that properly issued VAT invoices must be sequentially numbered and kept for 10 years from the date of issue. The failure to comply with these standards will result in penalties under the Law on Taxation (LOT), which may include the suspension or cessation of business, reassessment of tax obligations and even criminal prosecution with a potential fine of up to 10 million Khmer Riels, up to one year in prison, or both. Analysis For some time there have been signals issued by the GDT that it intended to crack down on those unregistered operators in Cambodia to ensure a level playing field for those who wish to conduct business activities in Cambodia. It would now appear, albeit with the encouragement of the government in a new post-election world, that the GDT is now starting to practice what is preached.

The net result of these reform incentives should be a win-win for the Cambodian people. In theory the wider the net is cast with respect to tax registration the larger the tax base should be resulting in higher tax revenues and increased tax compliance. In addition businesses can operate in an environment whereby the tax burden is shared by all – not just by some – as has been the case in the past. There is no doubt that the pro-active stance taken by the GDT with respect to ensuring that invoices are issued correctly by real regime taxpayers, have to be applauded. Yet, resources should also be put in place regarding the refund mechanisms for VAT input credits that arise from the issuance of valid VAT invoices. One of the most important considerations behind receiving a valid VAT invoice for a real regime taxpayer is the ability to claim a corresponding VAT input credit. The Law on Taxation clearly states that a taxpayer who has three successive months or more of VAT input surplus should be able to obtain a VAT refund – however in practice this rarely happens. Another point that has to be addressed is the inclusion of religious organisations, charities, non-profit organisations and similar in the list of entities that are required to register with the GDT. The Law on Taxation provides for certain tax exemptions for non-profit organisation’s etc. however this does not over-ride the underlying registration requirement. These entities stated in Notification 1734 will need to register with the GDT then apply for specific tax exemptions as provided under the Law on Taxation.

The general reference to tax re-assessment, penalties, business cessation or suspension and even criminal prosecution should leave all business operators in little doubt that this matter needs to be taken seriously and should be reviewed on a regular basis. With so much at stake one of the first priorities of taxpayers in 2014, if not sooner, should be a review of the invoices issued and received by it in the 2013 tax year. By all means the GDT has to be encouraged to enforce the existing regulations to ensure that taxpayers issue valid invoices, but in doing so they need to apply those same standards to themselves when entertaining valid VAT refund requests. VDB Loi is a leading law and tax advisory firm with more than 60 transactional lawyers and tax advisors across our offices in Cambodia, Indonesia, Laos, Myanmar, Vietnam and our liaison office in Singapore. We provide the highest quality solutions for transactions and taxation. Should you have any questions on this or any other tax developments, please don’t hesitate to contact Mr. Clint O’Connell at clint.oconnell@vdb-loi.com.

Wealth & Finance | April 2014 |

Taxing Times | EU Commissioner: Tax Policy set for Critical Role in Growth

EU Commissioner: Tax Policy set for Critical Role in Growth Tax harmonisation is still the best way to achieve results, claims Algirdas Ĺ emeta.

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EU Commissioner: Tax Policy set for Critical Role in Growth | Taxing Times

31 The EU Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud has outlined the critical role EU tax policy will play in bringing Europe back to growth.

On competitiveness, Šemeta believes that the work done at EU level to ensure growth-friendly, competitive and smart taxation has to be underpinned by complementary measures at national level.

Speaking at a hearing before the Senate of the French Republic ahead of the upcoming European Parliament Election on May 22nd, Algirdas Šemeta noted that over the past few years, EU tax policy has been propelled to the heart of the political agenda. “This created new opportunities and new impetus for progress and consensus in taxation, that we couldn’t have imagined a few years ago,” he said, while conceding that voting on EU taxation is still subject to the unanimity rule, which yields slow results.

“Business-friendly VAT legislation and EU initiatives to tackle loopholes will not compensate for national tax systems that are instable or imbalanced, unfair or misdirected.”

However, there is also a new understanding that the biggest threat to tax sovereignty is an isolationist approach. “Our shared goals for stronger growth, and our intertwined economies, demand a common approach,” Šemeta said. “This has prompted a shift to more tax coordination and, indeed, more harmonisation in some areas.” Šemeta also noted that investors need stability, legal certainty, less administrative burden and fewer compliance costs when working within the EU and that improving the tax environment is core to this.

Change in this field will be felt gradually, he said. “Tax reforms cannot be made overnight.” Much has changed and much has been achieved, said Šemeta. “But it doesn’t stop here. Coming closer together as a Union on tax matters reinforces every Member State’s capacity to offer a sound and competitive business environment. “It strengthens every Member State’s ability to deliver a fair and equitable tax burden in our societies. “EU tax policy will remain central to our shared route towards greater economic well-being, sustainability and dynamism – now and long into the future.”

“Tax harmonisation is still the best way to achieve results,” said Šemeta. “Harmonised VAT rules, for example, are the only way to avoid major distortions between businesses and between Member States. Since 2010, we have done a lot to create a simpler, more efficient and more robust VAT system.” He also pointed to new VAT e-invoicing measures, which he said can save companies €18bn a year, while the standard VAT declaration that I proposed will eliminate one of the biggest problems cross-border businesses face. “From 2015, we will have a mini one stop shop for e-services, broadcasting and telecommunication service providers – making it infinitely easier for them to work cross-border,” said Šemeta. In the medium term, he also recommended placing greater harmonisation in VAT as a core objective. “It is well documented that VAT implementation still ranks amongst the top administrative burdens for businesses. At the same time, the revenue raising capacity of VAT is increasingly compromised by the proliferation of exemptions, reduced rates and exceptions, which vary from one Member State to the next. Also addressed was Financial Transaction Tax, which Šemeta said also contributes to the idea of a more stable and predictable business environment and can avoid a patchwork of national approaches, as well as responding to citizens’ demands for fairer taxation. However, he added that he does expect Member States to invest properly in order to facilitate quick progress. In this context, said Šemeta, France can play a decisive role as it has always been supportive, persuasive and assertive in the tax field. He again addressed the issues of unanimity in EU voting. “The reality of our decision-making process is that the convoy currently moves at the pace of the slowest ship,” he said. “We have to ask whether that is sustainable in the long-term, as our economic and monetary integration becomes ever deeper.”

Wealth & Finance | April 2014 |

Wealth Management | Transferring Investments Between Generations

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Transferring Investments Between Generations | Wealth Management

Transferring Investments Between Generations By Ian Marsh, Head of Asset Management at Fleming Family & Partner’s. The successful transfer of wealth between generations is fraught with difficulty. FF&P has just completed a proprietary review entitled “The world in 2043: Wealth strategies for intergenerational success”. This report involved canvassing 90 UHNW families and advisers who collectively are responsible for overseeing assets of at least £100bn. The surveyed audience identified “six horsemen of the wealth apocalypse”, in other words the biggest threats to success of intergenerational wealth transfer. These are: lack of strategic planning, family disputes and divorce, excessive risk taking, fragmentation on inheritance, inflation and taxation. It is vital that families plan for all six. Family constitutions are at the centre of planning for the successful wealth transfer. These constitutions can take the form of structured written creeds (FF&P’s report mentions Japan’s Mogi family who have adhered to the same family creed since the mid seventeenth century) to much looser family agreements and understanding. The common feature of most successful families is communication, with regular family meetings that involve all generations and allow the development of the entrepreneurial talents of the next generation. Too often when the children of successful parents are not included or are not aligned with the strategy of a family, wealth can soon dissipate.

Gold is still perceived as a suitable asset class – almost 90% of the surveyed audience said so. The surveyed UHNWs and advisers ranked highly physical assets, including agricultural land which attracts (in the UK) specific tax reliefs and real estate which is regarded favourably on account of its inflation hedging potential. The highlight remained central London residential property: 91% of the surveyed respondents In a low income, low return and possibly high inflation world, asset allocation is key for capital believed that this category would be a good preservation. FF&P believes in diversification and investment over the next 30 years. Average forecasts (from the survey) of central London builds multi asset class portfolios for its clients property prices in 2043 were £6.5m against who are usually focused on preserving wealth today’s average of £1.5m. for the next generation. The focus on capital preservation was often emphasised by those Outside of “real assets”, hedge funds and UHNW families participating in FF&P’s survey. private equity still score well with UHNWs; This reflects the respondents’ concern about a however the focus on hedge funds now is more recurrence of a major financial crisis, high ininclined towards liquid solutions i.e. UCITS-reguflation and asset correlation which are possible lated funds that trade in liquid markets. UHNWs outcomes of Quantitative Easing, where policy still find illiquid private equity attractive but this makers have directed liquidity at markets via requires patience and discipline as the investcentral bank purchases of sovereign bonds. ment cycle can last as long as 15 years. FF&P believes that asset correlation particularFF&P believes that alternative investments are ly between equity and bond performance has reduced the natural diversification properties of very important in an environment where bonds and equities do not (in our opinion) represent conventional multi asset class portfolios and as good value. As well as private equity hedge a result we have been increasing weightings in funds and gold, portfolios of UHNW clients tend alternative investments. Indeed most of the adto include, amongst others, insurance bonds, visers and UHNWs we spoke to would allocate a surprisingly high proportion of their portfolios, aircraft leasing funds, mezzanine debt funds. 25% on average, to alternative assets. The report highlights that enormous wealth is expected to be handed down to the next generation, as much as £5 trillion in the UK alone. It is not surprising that 71% of the surveyed audience identified real capital preservation as their number one challenge when planning for intergenerational transfer of wealth.

Wealth & Finance | April 2014 |

Wealth Management | Top 10 – Apps for Wealth Management

Top 10 – Apps for Wealth Management Whether you’re a high earner, or always living on a budget, the digital age we have entered now means that managing your finances has become even easier with a range of downloadable apps for your smartphone.

We check out the best wealth management apps available: HomeBudget Price: £2.99 (iTunes), £3.92 (Google Play) Available on both iOS and Android It’s been a favourite in the US for some time, and now UK users can fully enjoy all the benefits of this integrated expense tracker. This app quickly and efficiently handles recurring bills and income streams, all at the touch of a button. Just enter your incomings and outgoings and HomeBudget will provide a graphical breakdown of how your money is performing, complete with predictions on how much you can expect to have in six months’ time. One of the coolest features is the ability to sync this app with other devices, so both yourself and your partner can use the account and see the results. Expensify Price: Free Available on iOS, Android and Windows Phone Travelling for business can often be a chore, and with the addition of keeping up-to-date with expenses it can become one big headache. Expensify eliminates a lot of the hassle of travel expenses, tracking what you spend and letting you keep a photo log of your receipts (which are automatically scanned and added in to your expense records). It also imports bank and credit card data from most major providers. What could be easier?

| Wealth & Finance | April 2014

Spendee Price: £1.99 Available on iOS and Android If managing your money and balancing your budget seems more of a hinderance, this app could be the answer. Spendee’s simple user interface is much less complicated than many financial apps available, but is still extremely useful. Rather than overwhelming users with category upon category of expenditure, Spendee groups your expenses into larger buckets, such as entertainment, family, car and personal, and allows you to see clearly where the bulk of your There’s also great multimedia components so us- finances go through the easy-to-use overview page. A great app which will really give a simple ers can watch videos, listen to audio and swipe insight and help users change their habits for through slideshows. the better. PayPal Manilla Price: Free Price: Free Available on iOS, Android and Windows Phone Available on iOS, Android and Windows Phone You may already be familiar with PayPal as for Manilla is a Hearst-backed money manager most retail websites it is often the payment and sends push notifications when bills are due method of choice, however the app allows you to keep an even closer eye on your expenditure. or late. But what makes Manilla that little bit different to other money management apps is Designed as a digital wallet, PayPal can be used the fact that it displays everything from your bank and credit card balance, to your Groupon to buy goods from the high street as well and account or travel rewards programme. a useful list of all those accepting the service is provided. The app also lets you monitor your Not only will you see what you owe and where, activity and transfer funds to friends quickly you’ll also be able to view the amount of reward and easily. points you have accrued and when they expire, with more than 3,500 business and services Check registered. Price: Free Available on iOS, Android and Windows Phone So there you have it, whether you want to Check is a free app that lets you stay on top of keep an eye on what you, or your better half, your bills and your money. Not only does the app notify you of bills which need paying, it will is spending; check your stocks and shares; or simply make sure you never miss a bill payment also let you pay them from your phone, either manually or via scheduled automatic payments. again, there’s something for everyone to help manage their finances. It’s all tied to your bank and credit accounts, which also means you know when your funds Seen an app we’ve missed that you’ll think are getting low. we’ll like? Let us know by emailing us at: info@wealthandfinance-intl.com Bloomberg Price: Free Available on iOS, Android and Windows Phone For comprehensive access to global business and finance news, market data and portfolio tracking tools you can’t beat the world’s most trusted source, BloomBerg. You are able to personalise your account too, including choosing which key statistics to display on the home screen, with colour-coded highlights for tracking stock market movement, plus a rotating ticker at the bottom of the screen.

Top 10 â&#x20AC;&#x201C; Apps for Wealth Management | Wealth Management

Wealth & Finance | April 2014 |

Relax | 2014’s Top Luxury Trends

2014’s Top Luxury Trends Experiential luxury Today’s luxurians want to gain exclusive access to a unique set of memories and emotions and build a deep connection with their brand of choice through a sense of timelessness, craftsmanship, and investment. Experiential luxury now accounts for almost 55% of total luxury spending worldwide and, year-on-year, has grown 50% faster than sales of luxury goods. Immersive and Personalised Experience Brands need to seek more unique and personalised shopping experiences that can represent themselves on an emotional level. A great example of this is Louis Vuitton’s Mon Monogram service, which allows customers to add their initials to their bags. Adoption of technology and mobile content to deliver brand engagement and tell the brand story Marketers now need to impress with an element of surprise, immersive experiential marketing tactics, digital and mobile touch points. Increasingly, they will need to use new technology to create true digital experiences, and will turn to apps and sensors that enable consumers to immerse themselves fully in the brand wherever they go. For example, French fashion house Lanvin posted a series of black and white photography on photo sharing platform Pinterest to celebrate the little black dress, a staple design for the brand. Slowdown of luxury brands in China A slowdown in Chinese spending, or a change in shopping habits has hurt Chinese retail and a more sophisticated clientele has moved away from logo-branded goods. Overall spending by wealthy Chinese also fell by 15% in 2013 and over two-thirds of luxury spending by mainland Chinese was overseas in 2013. Not only this but 4% of HNW Chinese millionaires have either emigrated or plan to emigrate and China’s luxury sales last year fell 15% — the biggest drop in over a half a decade. Spending on gifts, which made up a sizable portion of luxury sales also fell 25%. A new breed of shoppers – fashionably chic yet budget-conscious are thriving in China. These people are no longer concerned that a luxury handbag is “gently used” as it can be bought at a fraction of the price. Logo Fatigue Logo fatigue has also set in amongst China’s consumers. Two brands known for insignias on their products, Louis Vuitton and Gucci, are “moving away from logos and trying to be more discreet in their designs,” said Shaun Rein, founder of Shanghai-based China Market Research Group. Hotspots for luxury events: London continues to be to global magnet for HNW’s The UK government has now started to relax the visa policy to Mainland Chinese, meaning there has been an influx of HNW Chinese individuals locating to the UK.

| Wealth & Finance | April 2014

2014â&#x20AC;&#x2122;s Top Luxury Trends | Relax

37 The UKis also set to create an extra 45,000 millionaires as the economy continues to improve, showing the highest percentage growth in Europe. London also boasts 4,224 residents worth more than $30m or ÂŁ19.2m and the British luxury sector is forecasted to achieve double-digit growth each year for the next five years, bringing it from $10.2bn in 2012 to $18.9bn in 2017. Russia Two-thirds (67%) of Russian and CIS consumers, worried by political and economic uncertainties at home, are considering changing their country of residence or origin. Many are moving to London: the number of visas issued to wealthy foreigners grew 78% to 419 in the 12 months to the end of June 2012, and Russian millionaires represented nearly a quarter (24%) of successful applications, according to information gathered from the UK Border Agency. Brazil/ Turkey The average Kazakhstani travels to Turkey or Asia for tourism. With further developments in the tourism segment, Kazakhstan has large potential to attract foreign leisure travellers as well Prime Aviation is fully incorporated in Kazakhstan, which is operating on behalf of the high-net-worth individuals in the country Brazil is set to double high net worth population by 2014, with the population expected to reach over 29 million, a population nearing the size of Canada, in the country which allegedly produced 22 millionaires a day in 2010.

Quintessentially Events is one of the many sister businesses of Quintessentially Lifestyle and boasts a wide range of luxury brand, corporate and wealthy private clients. Quintessentially Events was established in 2005 and has offices in London, Cote Dâ&#x20AC;&#x2122;Azur, Baku, Geneva, Dubai, New Delhi, Hong Kong and Singapore. It is an international, award-winning event management company, defined by their highly personal and creative approach, producing high-end occasions from private parties to award ceremonies, fundraisers to corporate communications. Caroline Hurley (46) has been creating fabulous events around the world for the past 15 years. Having started her career in hospitality, Caroline worked on events for top end international brands including Roberto Cavalli, De Beers, Armani and Gucci. It was in 2005 when she and fellow renowned producer Anabel Fielding established Quintessentially Events, and has remained one of the founders ever since. As a respected veteran of the events industry, Caroline has now become a leading social commentator for events on radio and television. Anabel Fielding began her career in the music industry, where she built an impressive portfolio working with reputable companies such as Chrysalis/EMI and ZTT Records, culminating in the launch of her own DJ management agency. Anabel then moved into high-profile fashion and press events, working on key launches for luxury brands such as Louis Vuitton and Perrier Jouet. In 2005, Anabel co-founded Quintessentially Events with Caroline Hurley and as testament to her experience and professionalism, has been voted in the Top 15 most influential people within the Events Industry for 2 years in a row. www.quintessentiallyevents.com

Wealth & Finance | April 2014 |

Relax | Investing in Paradise

Investing in Paradise A prime real estate opportunity awaits in a secluded corner of the Caribbean At approximately 18 degrees, 48 minutes North, and 64 degrees, 30 minutes West lies Virgin Gorda. Said to have been given its name (which translates, charmingly, as “The Fat Virgin”, owing to the resemblance of the island’s profile to a fat woman lying on her side) by Christopher Columbus, it’s the third largest and second most populous of the British Virgin Islands . Nestled on a private peninsula of the eastern tip of Virgin Gorda, Oil Nut Bay offers the ultimate in luxury accommodation. Across its exclusive villas (there are only 88 home sites) set on 300 acres of shoreline among stunning topography, white sand beaches and turquoise waters, it’s the last word in privacy and exclusivity.

| Wealth & Finance | April 2014

Oil Nut Bay is one of the Caribbean’s most exclusive destinations - and boasts property prices to match. Houses at Oil Nut Bay can tip the scales at an eye-watering £33m and, if you’re not looking to invest in a property, luxury travel agent Carrier offers seven nights’ accommodation at the resort from £4,355 per person during high season, including flights and boat transfers. The community offers a number of unique neighbourhoods, each one designed to complement the owner’s lifestyle - whether they prefer to live mere footsteps from the idyllic white sand beaches or within a short stroll to the marina. Each site has been sculpted to fit perfectly into Oil Nut Bay’s overall plan - providing enduring, spectacular views for countless generations to come, while maintaining and preserving the privacy of the natural landscape. The community also benefits from low-density development - 50% of the resort’s land has been designated as open

Investing in Paradise | Relax

39 space. The resort’s main buildings are anchored by a dramatic open-air pavilion, three stunning pools, catering for every age, as well as worldclass dining with exceptional service. Buyers have a choice of sites, with locations at the resort’s beach, ridge, marina and estate, ranging from 1.26 acres to 7.36 acres and varying in price from £2.21m to £9.63m. At the beach villa sites, shallow waters provide a tropical playground, with the properties overlooking the white sand beach and a sublime ribbon of reef-lined water, and offering convenient access to the resort’s Beach Club. The ridge villa sites are tucked discreetly into the hillside, offering spectacular views across the turquoise waters of the Eustatia Sound. Estate villa sites are individually placed to take advantage of the natural features of the landscape, combining the ultimate in privacy with breathtaking and expansive views. Finally, there are the marina village sites, overlooking the 88-slip Oil Nut Bay Marina on Deep Bay and providing easy access to your boat along with snorkelling, kite surfing and sailing activities. As soon as designs - either with Oil Nut Bay’s in-house designer or the customer’s own preferred designer - have been finalised, homes can be built within 12 to 18 months.

There’s no question that Oil Nut Bay’s natural landscape is utterly awe-inspiring. But equally astonishing is the seamless operation of its infrastructure network, developed so as not to intrude or interfere with the surrounding land and sea. This has resulted in a quietly powerful and state-of-the art destination, which despite its remote location, always boasts enough power to keep every single electrical device, light and appliance at the resort switched on and fully- powered in over 100 homes, at the same time. Cleverly, the resort’s developers have also worked out a way of producing enough fresh water for the entire resort, using two on-site reverse osmosis systems to produce fresh water from salt water. This fresh water is then supplied to all Oil Nut Bay home sites through a system of underground pipes that use strategically placed pumps and tanks to regulate water pressure. To help conserve water, rainwater is also collected from roofs for landscaping and irrigation needs. Additionally, the developers have worked with leading telecommunications partners from around the world to keep the island connected, accommodating landline telephones, cell phones and internet so - if you want it to be - your office is never very far away. And there’s some good news for weary city-dwellers: there are no automobiles at Oil Nut Bay - with the resort’s fleet of zero-emission electric carts, there’s no need for them.

Wealth & Finance | April 2014 |