Singapore will launch a new corporate structure for investment funds in a bid to spur more inflow of private capital into the city-state.
Called the Variable Capital Company (VCC), the new structure aims to encourage fund managers to base their funds and run their fund management activities in Singapore. It is open to both open-end and closed-end funds, traditional and alternative strategies.
The structure was announced by Ong Ye Kung, a board member at the Monetary Authority of Singapore (MAS) and Singapore’s education minister, on Thursday.
Speaking at the annual Investment Management Association of Singapore conference, Ong said: “This will further deepen our fund servicing ecosystem, and create new business opportunities for a wide range of professions such as lawyers, accountants, tax advisors, fund administrators and custodians in Singapore.”
He added that Singapore will also partner the Singapore Venture Capital & Private Equity Association and Cambridge Associates to create performance benchmarks for PE and VC funds focused on Southeast Asia.
Singapore seeks to position itself as a capital and investment hub in Asia and has been making incremental moves to encourage the flow of private capital in recent years.
In 2017, the Monetary Authority of Singapore (MAS) simplified its regulatory scheme for VC fund managers to encourage more players to enter the market. Today, 57 managers are registered under the new scheme.
In 2018, Singapore launched a dealmaking platform called Meet ASEAN’s Talents and Champions (MATCH), which matches startups with investors. Over 17,000 matches from 380 investors have been generated so far.
Ong said that investment penetration levels remain low, with plenty of headroom for growth.
Assets under management in the Asia Pacific are projected to rise to $30 trillion in 2025, outstripping all other global regions.
Singapore is already reaping the benefits of this regional trend. Ong pointed out that Singapore’s investment management sector has expanded 15 per cent on-year between 2012 and 2017 to reach a total AUM of $2.4 trillion (S$3.3 trillion).
“Singapore is benefitting from this regional trend,” said Ong. “Within Asia, there will be a few major investment and fund management hubs, of which Singapore can be a significant one.”