- November 15, 2018
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Connecting global capital with enterprises
By Peter Ong
Peter Ong, Chairman of Enterprise Singapore and Board member of Monetary Authority of Singapore spoke about ASEAN growth and enterprises during his speech at the Global Investor Summit during the Singapore Fintech Festival 2018, 13 November at Singapore Expo.
I would like to warmly welcome you to the Global Investor Summit. In this 3rd edition of the Singapore Fintech Festival, organized by Monetary Authority of Singapore, we have brought together the investment and the enterprise communities, showcasing the best of ASEAN growth ASEAN enterprises over the next 3 years. The interest shown by the investors in our region is indeed encouraging.
Strong momentum in private equity and venture capital investments in Asia & Asean
2017 marked the first year when Private Equity and Venture Capital investments into Asia overtook Europe for the first time. Investments into Asia grew 40% last year to reach US$ 160 billion, constituting some 28% of global investments. Fund-raising in Asia rose 6% to US$66 billion, indicating stronger interest and more dry powder to be deployed in the region.
ASEAN prospects have also improved. Private Equity and Venture Capital investments into ASEAN almost tripled to reach US$23.5 billion in 2017. Prominent deals included the US$2 billion funding round of Lazada by Alibaba, Grab closing its last funding round at US$2 billion and Go-Jek’s last funding round closing of US$1.5 billion
Going forward, momentum in ASEAN Private Equity and Venture Capital is expected to remain robust due to three main reason:
i) On the back of strong ASEAN economic growth, there is a rising need for capital to finance the regional expansion of high-growth companies.
ii) Companies are staying private longer. There is now a greater recognition among ASEAN companies that private capital is not simply just another source of funds, but also a form of ’smart capital’ that comes with technology, business knowhow and networks useful for companies to grow and scale.
iii) ASEAN immense infrastructure needs offer opportunities for investors to channel funds into bankable projects.
Launch of MAS US$5 Billion Private Market Programme
In Singapore, the Private Equity and Venture Capital scene is evolving rapidly. There are currently more than 220 Private Equity and Venture Capital managers located in Singapore and for the past 5 years, their assets under management grew at a CAGR of 28% to reach S$190 billion. Around 85% of their investments are invested in Asia, with ASEAN, followed by India and China as top investment destinations. This suggests investors’ increased awareness of ASEAN’s strong investment potential.
Singapore stands to ride the momentum of these developments in the private markets space. To further enhance the financing ecosystem and position Singapore as a leading global financial centre in Asia, I am happy to announce that the Monetary Authority of Singapore (MAS) will launch a new US$ 5 billion private market programme.
Under this programme, MAS will allocate US$5 billion of its own funds as part of its investment portfolio into the private markets asset class. These funds will be placed for management with top global Private Equity and Infrastructure fund managers who are committed to deepening their existing presence or establishing a significant presence in Singapore.
This builds on the success of MAS’ existing external fund manager programme for the public markets asset class which has anchored global asset managers in Singapore and catalysed the growth of our asset management industry.
Through this US$5 billion programme, a stronger platform for growth finance and infrastructure development will emerge. It is complementary to the MATCH initiative that I spoke about and MAS’ collaboration with the industry to establish private market platforms to connect growth companies with investors. Collectively, these initiatives will catalyse a deeper and more vibrant private markets ecosystem in Singapore that will strengthen the financing channels to support enterprises.
The draw of Singapore lies in her open and innovative ecosystem:
To complement Singapore’s role as a leading global investment gateway in Asia, we are also working to develop an ecosystem of innovative companies and organisations which are experimenting new ways to solve the most challenging problems in the world today. From start-ups to multinationals, founders and enterprises are choosing Singapore to create, test and export innovation solutions to Asia and beyond.
Enterprise Singapore has been developing this enterprise ecosystem by riding on the ease of doing business in Singapore, the availability of world class infrastructure and collaborative spaces, robust IP protection laws and access to international markets.
There are now 130 co-innovation incubators, venture builders and accelerators anchored in Singapore. These players are revolutionizing how enterprises start-up and scale internationally.
In addition, Singapore is encouraging more corporates to set up their in-house co-innovations incubators and accelerators here, to bolster the Singapore innovation ecosystem. While start-ups bring in new technology and agility to the fore, corporates bring experience, industry know how, access to market and distribution capabilities.
Zicom Medtacc is one such mid-sized corporate innovation accelerator established by a Singapore precision engineering specialist. Its mission is to discover and develop new technologies and solutions to solve the medical technology sector and they have committed S$15m for investments into medtech start-ups. Their portfolio companies include a cancer diagnostic start-up Histoindex, a medical-imaging start-up Pellucid and surgical robot start-up BioBot.
For venture builders, their business model is built around quickly and efficiently getting new enterprises off the ground by leveraging on highly-skilled talents and meshing them with viable and scaleable business models.
An example of a venture builder is Antler. It was founded in Singapore in 2017 by tech leaders who have built successful enterprises around the world. They are creating a global innovation platform to build, invest in and scale new companies by training local talents and bringing in top technology entrepreneurs from around the world. Antler provides these talents with the resources to work on ideas that can address the world’s biggest opportunities and challenges to create value for both businesses and society.
A distinctive element of Singapore’s thriving ecosystem is the international diversity of launch pads that connect to key global innovation hubs. We have anchored overseas partners from Australia, France and Israel amongst others, to enable two-way exchange of enterprises and to serve as a point of entry into their markets.
A recent highlight is Singapore’s collaboration with the German Accelerator Southeast Asia (GASEA). GASEA will partner Enterprise Singapore and EDB to organise a two-year programme named “Scalerator” to support more than 40 Singapore-based enterprises to access the German and wider European markets. They will have the chance to plug themselves and gain first-hand experience of the market, build connections with local mentors and suitable German Mittelstand, as well as understand local employment and regulatory guidelines. The “Scalerator” programme, will commence in Q1 2019.
The results of our start-up enterprise development has been encouraging. We have grown the ecosystem from 2800 tech startups in 2006 to 4300 tech startups in 2017 of which 30% are deep tech startups.
All these will not be possible without access to relevant talent. To access the global talent pool, MAS together with the Ministry of Manpower, will provide flexibility in the hiring of foreign specialists. Concurrently, MAS will build capabilities in the local talent pool through education, mid-career training and capability transfers.
A key characteristic in this industry is speed. To reduce transaction costs and shorten the time needed to close investment rounds, The Singapore Academy of Law, together with the Singapore Venture Capital and Private Equity Association, jointly developed a Venture Capital Investment Model Agreement (VIMA) for early stage VC transactions. This is a set of standardized investment documentation that can be used in seed rounds and early stage financings in order to allow start-ups to focus their time on their business.
The 2017 report from Startup Genome, a US based organisation, credits Singapore government’s policies in this field. It ranked Singapore as the world’s No 1 location for start-up talent and the third highest for global connectedness out of 20 global startup ecosystems. Singapore is also ranked as the most innovative city in Asia-Pacific according to Bloomberg and INSEAD. But there is still a lot we will need to do to make Singapore an even more innovative ecosystem that startups and enterprises will find attractive and call home.
This year’s Global Investor Summit will be an interactive platform where global thought leaders from both the investment and business communities are gathered to share important insights on how investments can be catalysed for high growth enterprises.
Having a thriving private markets financing ecosystem work in tandem with a vibrant enterprise ecosystem enables global capital to connect with enterprises more efficiently and effectively. I am confident that the insights derived from the Global Investor Summit will provide useful advice for us in Singapore to make some small strides in this virtuous cycle.
May I wish all of you a fruitful Summit. Thank you.
Peter Ong is the Chairman of Enterprise Singapore and Board member of Monetary Authority of Singapore
Keywords: Accountability, Charity, Corporate Social Responsibility, Environment, Social And Governance (ESG), Impact Investing, Philanthropy, Transparency
Institution: Monetary Authority Of Singapore, Lazada, Grab, Alibaba, Go-Jek, Antler, Enterprise Singapore, EDB, Startup Genome, Bloomberg
Region: Asia Pacific