MAS to beef up financing channels for Asian growth companies

16 February 2017   Category: News, Asia, Singapore   By Asia Asset Management

The Monetary Authority of Singapore (MAS) is set to help “next-generation Asian growth companies” to secure financing for their businesses, while taking steps to spur innovation in a bid to strengthen the country’s role as a leading financial hub.

These companies range from start-ups to small and medium enterprises (SMEs) to early-stage large enterprises, and often have a strong focus on innovation or technology, the regulator announced.

This is in response to the recommendations of the Lion City’s Committee on the Future Economy (CFE), which were unveiled last week, advising companies with strong growth potential to scale up and internationalise their operations.

To support start-ups, MAS stated it would look to simplify the authorisation process and regulatory framework for venture capital (VC) managers, which could help nurture the start-up culture with their know-how, business networks and capital.

“VC and Private Equity (PE) assets under management in Singapore have grown by an average 30% per year in the past five years. But the industry is still at an early stage and there is scope to expand both the number and variety of VC managers”, the regulator said in a statement.

Meanwhile, MAS will study the introduction of dual-class share (DCS) structures to support the growth of high-tech companies.

“By reducing short-term pressures on financial performance, DCS structures can potentially help the owners of high-tech companies to incubate innovations that require time to develop before generating tangible revenue”, the statement claimed.

Other initiatives to gear up the financing options include enhancing the ability of finance companies to meet the financial needs of SMEs and exploring the scope to develop private market financing platforms, allowing entrepreneurs to unlock capital for new and innovative businesses.

MAS reported that it would be announcing specific initiatives to strengthen funding for such growth companies shortly.

Initiatives to drive innovation are also on the way, as the regulator pointed out that the country aims to become the financing hub for the next-generation Asian growth companies. This is in line with the CFE’s recommendation on harnessing the transformative potential of digitalisation for innovation and growth.

Among these initiatives are working with a local finance technology firm to develop an electronic marketplace for trade finance assets, while promoting electronic trading platforms for foreign exchange (FX) to maintain its edge as Asia’s leading FX hub.

“The underlying thrust of MAS’s various initiatives is to provide a conducive environment for innovation – which is critical for the future of financial services,” Ravi Menon, managing director of MAS, said. “We [will] do this through a judicious regulatory framework and enabling technology infrastructure. And even as we allow more risk-taking, we want to do so without compromising the safety of financial institutions and the stability of the financial system.”