Private Funds and the Growing Importance of Private Capital
Over the last few years, public markets have experienced heavy volatility and uncertainty, with extensive global disruptions caused by the Covid-19 pandemic, escalating geopolitical tensions and inflationary pressures leading to spiking interest rates. Against this backdrop, private market fund-raising hit new records in 2021. According to Bain & Company’s Global Private Equity Report 2022, global funds raised across the full private capital spectrum hit US$1.2 trillion, a 14% increase from 2020 and the highest level ever reached.
With investors continuing to search for yield and returns to hedge against inflation, Singapore is well placed to capitalise on, and ride the momentum of, the growth of private markets. In 2021, Singapore’s assets under management (“AUM”) in the alternatives sector (including private equity, venture capital, real estate and hedge funds) grew 31% from 2019 to reach S$947 billion, as reported by the Monetary Authority of Singapore (“MAS”) in its 2020 Asset Management Survey. According to MAS, this trend has continued in 2021, with private equity and venture capital seeing robust AUM growth to hit S$555 billion, representing 42% year-on-year growth. As of June 2022, there were a total of 428 private equity and venture capital fund management companies in Singapore, up 27% from the start of 2021. In addition, Singapore has seen significant growth in the private wealth market, with the number of family offices based here growing from fewer than 100 five years ago, to approximately 700 in 2022.
With Singapore looking to further develop as a private markets hub, this article provides a broad overview of the key considerations that general partners and fund managers should consider in establishing a private fund in Singapore.
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