Singapore admits 45 new VCs in 2019

April 28, 2020

Singapore last year admitted 158 new entrants which will carry out fund management activity, of which 28% or 45 will operate under the venture capital manager regime, according to Monetary Authority of Singapore. There were a notable seven managers that applied to manage loan funds that provided consumer credit or business loans. Fund management made up 81% of the total 196 capital market intermediaries admitted into Singapore successfully. The remaining 19% of new entrants comprised mostly of those that deal in capital market products, including trust services and financial advisory.

MAS noted a number of applicants sought to use blockchain (distributed ledger technology or DLT) technology in their business models. “These applicants applied to operate platforms that would facilitate issuers to raise funds via tokenised securities, where the transactions for such securities are recorded on DLT. Some of these applicants also sought to facilitate secondary trading of the tokenised securities, to provide investors with avenues to exit their investments in issuers that raised funds through these platforms, MAS noted.

More than half (58%) of the new entrants had shareholders that were Singapore citizens or corporations. Sixty-seven or 34% had shareholders from Asia, from China, India, Japan to Australia. Majority were started by individuals, whilst foreign financial institutions formed a smaller group as many already have a presence in Singapore.

Incomplete applications, inadequate track record and adverse records concerning applicants’ shareholders and directors, which the applicant either did not declare or was unable to address satisfactorily were factors behind unsuccessful applications. The other reasons were: (i) the ability of the applicant to make use of an existing class exemption; and (ii) the proposed activity did not constitute regulated activity, according to MAS.

MAS will not grant a licence or registration to an applicant whose activities fall within an existing class exemption, or are not regulated under legislation administered by MAS. Prospective applicants may refer to the MAS website (https://www.mas.gov.sg/regulation/capital-markets) for more information about whether their proposed business activities require a licence or registration.