The sources of Private Equity Funds in Singapore are Banks, Financial Institutions, Insurance and Investment Companies having special funds to invest in businesses. They are instrument in providing an alternative source of equity finance other than angel funding or venture capital funding. However, it is difficult to gain direct entry into these sources of funds, unless it's a well established business or a prominent entrepreneur.
There are four different types of private funds to tap:
- Institution Funds
- Independent Funds
- Corporate Funds
- Fund-of-Funds
Institution Funds
They are set up by financial institutions such as banks and insurance companies.Typical institutional funds have higher minimum investments but lower fees than the retail funds that are available to the general public. Among the reasons institutional funds may cost less to operate is that they tend to have low turnover rates.
Some examples are:
- Citicorp
- Development Bank Of Singapore (DBS)
- Morgan Stanley
- Standard Chartered
- OCBC Bank
- United Overseas Bank (UOB)
Independent Funds
These funds are usually set up by wealthy individuals, companies and family groups to invest in specific activities e.g. infrastructure projects.Most independent funds aim to generate a steady flow of income through investments in a diversified portfolio, that consists of high grade fixed income investments instrument and securities.
Some examples are:
- Ayala
- Astra and Lippo
- NatSteel
- Wearnes
Corporate Funds
- These funds are set up by corporations to invest in smaller companies that are related to their business.
- They are often used to finance smaller companies who are developing products and innovations that would benefit the corporation.
- Corporations usually finance ventures that have been turned down by banks or other financial institutions.
Some examples are:
- Hewlett-Packard
- Microsoft Corporation
Fund-of-Funds (FoF)
- FoF is different from other private equity funds in the sense that it doesn't invest directly into businesses. Instead, FoF invests into venture capital and private equity funds that invest in businesses.
- In other words, FoF co-invests in businesses through venture capital and private equity funds.
- FoF is generally diverse in nature - it invests across industries using a variety of investment strategies
FoF benefits businesses in two ways:
- It is a source of fund for venture capital and buyout fund managers investing directly into business.
- FoF would manage the funds invested by businesses.
Government Fund of Funds
TIF Ventures Pte Ltd (TIFV)
TIFV is a government owned fund of funds Management Company. It is organized as a wholly owned subsidiary of the Singapore Economic Development Board (EDB).TIFV manages the US$1.3 billion Technopreneurship Investment Fund, which invests globally into venture capital and private equity funds.
