Co-invest plan to grow Singapore into world competitors
The government has announced the launch of a S$500 million co-investment programme.
The programme aims to provide growing Singapore enterprises that have successfully gone past the start-up stage with a source of capital that isn’t impatient for returns.
Deputy Prime Minister Teo Chee Hean announced the launch of the programme at the Ernst & Young Entrepreneur Of The Year award dinner on Thursday.
He said that 40 percent of the capital will be directed to “growth-oriented” SMEs with annual revenue below S$100 million, with the rest going to companies with revenue below S$500 million.
The government will provide half the capital, with the remaining S$250 million coming from the private sector.
Mr Teo said that “the investment of government funds under the programme will be made primarily through private equity fund managers, who will seek matching capital.”
“This approach leverages on the expertise and business networks of private fund managers, and ensures commercial discipline in investments,” he said.
The S$500 million programme is the first phase of a broader proposal to mobilise up to S$1.5 billion of new, long-term growth capital over the next 10 years to create a pipeline of Singapore-based globally competitive companies.
This first phase of the programme will be managed by Temasek Holdings, which separately announced that it welcomes proposals from private equity investors who have “experience in SME investing and the ability and aspiration to grow Singapore-based SMEs into globally competitive companies.”
Heliconia Capital Management, a fully-owned subsidiary of Temasek, will oversee the programme.
Temasek said that to qualify for funding, a company must have its headquarters in Singapore, with the chief executive and three other strategic decision makers residing in the Republic.
Phillip Overmyer, chief executive of Singapore International Chamber of Commerce, said that the government’s financial backing will “give private investors more confidence in putting money into SMEs”.
Analysts say the programme will primarily benefit companies that are more mature and need some mid-stage funding when they hit annual revenue of around S$60 million.
This is in contrast to seed funding, which is currently available via IE Singapore programmes.
Victor Tay, chief operating officer of Singapore Business Federation, said that in long-gestation businesses such as biomedicine, venture capital is almost non-existent.
“Private sector funds need very early returns, and they won’t look there,” said Mr Tay.
He added that the co-investment programme “marries the best of both worlds — the government’s financial strength and stamina to withstand a longer-drawn exit cycle and the private sector’s savvy.”