The government will set up a $1 billion private credit growth fund to help finance local companies with the promise and ambition to grow, says Prime Minister Lawrence Wong.
The government, complemented by various entities such as Temasek's 65 Equity Partners and Heliconia Capital, are already investing in such companies via other funds.
However, some of these companies require a longer growth trajectory and thus some form of "patient capital" is needed.
"Globally, we have seen the emergence of a private credit market which offers innovative financing solutions to enterprises. But few of these private credit funds focus on Asia, much less Singapore-based enterprises," explains Wong in his Budget 2025 speech.
This private credit growth fund will provide more financing options for high-growth local enterprises, he reasons.
Desmond Teo, Asean EY private tax leader says the private credit growth fund will provide broader funding channels for startups and small businesses and build up the private credit market in Singapore.
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"This will likely have a catalytic and rippling effect as well, attracting other forms of capital, such as family offices and high net worth individuals," he adds.
Now, the investors of such companies, at one point, will want an exit and make their returns and nudging the companies to go IPO is one common route. By doing so, they can raise new capital to fund the next chapters of their growth.
Wong notes that there has been feedback that Singapore is not an attractive listing destination, even for companies that are focused mainly on Singapore or Southeast Asia.
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That is why there is an ongoing top-level effort fronted by Second Finance Minister Chee Hong Tat to review the local equities market ecosystem.
As announced by Chee last week, certain tax incentives will be introduced to induce Singapore-based companies and fund managers that choose to list in Singapore and grow their economic activities here.
"I will also introduce a tax incentive for fund managers which invest substantially in Singapore-listed equities, to encourage more investment in our capital markets," he adds.
According to the Ministry of Finance, three tax incentives will be introduced.
The first is a Listing Corporate Income Tax (CIT) Rebate for new corporate listings in Singapore.
Next, an enhanced concessionary tax rate (CTR) for new fund manager listings in Singapore will be introduced.
Last but not least, there will be tax exemption on fund managers’ qualifying income arising from funds investing substantially in Singapore-listed equities.
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