With economic uncertainty rising globally, alternative investments like private credit funds have been booming in Singapore. The Monetary Authority of Singapore (MAS) has explicitly supported the growth of private markets, noting strong inflows of foreign capital seeking investment opportunities in Singapore. This article will explore promising avenues like private debt funds, as well as benefits such as strong legal protections and talent programs. For investors, Singapore offers accessibility to regional deal flows, co-investment prospects, and new investor segments in a thriving financial ecosystem.
High returns from private markets increasingly attractive to institutional investors
Private markets like private credit have massively grown over the past decade, expanding from $2.9 trillion in 2011 to $11.7 trillion in assets under management by mid-2022. Over the past 10 years to June 2022, private capital has delivered an internal rate of return of 15.1%, outperforming public markets. Rapid growth is expected to continue, rising from $14 trillion in 2021 to $23 trillion by 2027. Thus allocation to alternatives looking beyond volatile public markets is an accelerating trend.
Singapore actively supports private credit fund managers
The Monetary Authority of Singapore (MAS) has explicitly supported private credit funds setting up in Singapore. Benefits highlighted by MAS include accessibility to regional deals, strong legal protections for limited partners, and development of local and foreign talent. MAS also collaborates with banks, asset managers and industry associations to provide manpower incentives for grooming benches of talent critical to the financial sector.
Attractive tax incentives offered under Variable Capital Company structure
Singapore offers tax exemptions for funds structured as Variable Capital Companies (VCCs) under its S13O scheme when investing into Singapore-based companies. The VCC structure also provides flexibility for private credit funds to cater to investor liquidity needs.
Due diligence access to high-growth SE Asian deals
As a leading financial hub plugged into rising Asia, Singapore offers private credit funds valuable proximity to high-growth opportunities in SE Asia. With a large community of PE/VC managers also based in Singapore, prospects for co-investing into promising startups and enterprises seeking alternative financing abound.
In conclusion, Singapore provides an attractive base for setting up private credit funds to access high-growth opportunities in Asia, with strong government support through initiatives like the Variable Capital Company structure and manpower development programs.