Nature of Venture Capital Fund Managers (VCFMs)
Can a fund manager that manages both VC and PE funds operate under the VC Manager Regime?
It will depend on whether or not the fund managers investments meet the criteria under the VC Manager Regime laid out below.
According to MAS (FAQs)
last revised on 12 October 2021
A fund manager may operate under the VC Manager Regime if and only if all of the funds that it manages meet the following eligibility criteria:
(a) invest at least 80% of committed capital (excluding fees and expenses) in securities that are directly issued by an unlisted business venture that has been incorporated for no more than ten years at the time of initial investment (“qualifying investments”). Any follow-on investment in such qualifying investments will remain as qualifying, even if the portfolio company has been incorporated for more than ten years at the point of follow-on investment; and
(b) be allowed to invest up to 20% of committed capital (excluding fees and expenses) in other unlisted business ventures that do not meet subcriterion (a), i.e. they have been incorporated for more than ten years at the time of the initial investment, and/or the investment is made through acquisitions from other investors (e.g. other VC funds and existing owners) in the secondary market (“non-qualifying investments”). the funds must not be continuously available for subscription, and must not be redeemable at the discretion of the investor; and
(c) the funds are offered only to accredited investors as defined under the SFA or investors in an equivalent class under the laws of the country where the offer is made, and/or institutional investors.
For the avoidance of doubt, a VCFM’s funds can only make investments (non-qualifying or otherwise) in unlisted assets. The funds cannot invest in listed securities or initial public offerings. However, this does not preclude a VCFM’s funds from holding listed securities in portfolio companies, provided that the fund had acquired these securities prior to their listing. VCFMs are not expected to reclassify an investment from qualifying to non-qualifying if its portfolio company’s securities become listed.