MAS allocates $1 billion to global credit fund managers to develop Singapore as a private markets hub
The Monetary Authority of Singapore is allocating $1 billion to the world’s top credit fund managers as part of broader plans to transform the city-state into a full-service private markets hub, the chief executive of Singapore has said. MAS, Ravi Menon.
“There are opportunities for private credit to play a bigger role in financing Asian businesses, much like its private equity counterpart,” Menon said at the SuperReturn Asia conference being held in Singapore. Event organizers said some 1,500 private equity and venture capitalists have registered for this year’s conference, more than double the number of delegates when it was last held in 2019, just before the pandemic wreaks havoc on the global economy.
As the global economy faces many headwinds, including a severe downturn, soaring inflation, growing geopolitical tensions and heightened risks from climate change, Menon said private credit investors are well positioned to seize lending opportunities in Asia and globally. “Because private credit occupies a higher place in a company’s capital structure than private equity, the former can also offer investors better protection in a downturn,” he added.
MAS allocates funds to private credit investors under its Private Markets Program which was introduced in 2018 with initial funding of $5 billion. Since then, around $2.2 billion has been allocated to private equity and infrastructure fund managers, who have pledged to expand their assets under management in Singapore, with some designating their office in Lion City as their regional headquarters. .
“Singapore’s connectivity and ecosystem is the perfect springboard for private equity and venture capital managers to seize opportunities in Asia,” Menon said. “Singapore has political and economic stability, well-regulated financial markets, excellent transport and digital connectivity, a pool of skilled talent and extensive trade ties with ASEAN.”
In 2021, assets under management of private equity and venture capital firms in Singapore grew by 42% to reach S$555 billion ($394.4 million), according to the MAS. As of June this year, there were 428 private equity and venture capital managers in Singapore, up from 336 at the start of last year, he said.
The growing presence of private equity and venture capital investors in Singapore has spawned the growth of startups in the country. The city-state is home to some 12 unicorns and more than 9,300 startups, the most of any country in Southeast Asia, according to research published by KPMG and HSBC in July. “To make private equity and venture capital investment opportunities more accessible, we now have private market platforms in Singapore such as ADDX and CapBridge,” Menon said. “MAS is working to anchor more such platforms here.”