Singapore Private Equity and Venture Capital Landscape Series – Limited Partnerships

Limited partnerships (LPs) are commonly used globally as fund vehicles for both private equity (PE) and venture capital (VC) funds. In Singapore, LPs were created as a business vehicle by the Limited Partnerships Act in 2008 (the Act), which came into effect on 4 May 2009 as part of Singapore’s efforts to become a fund management hub.

Those efforts have been supplemented by a myriad of other measures including (a) the creation of variable capital companies (VCCs) by the Variable Companies Act 2018, which came into force only on 14 January 2020; (b) the establishment of several classes of fund management licences including the venture capital fund management licence; and (c) a favourable tax environment that includes a one-tier system of taxation of income, no capital gain taxes and an extensive network of double taxation treaties, as well as several incentive schemes and grants. We will discuss these measures in more detail in other articles. Continue reading “Singapore Private Equity and Venture Capital Landscape Series – Limited Partnerships”

Down Round Fundraising: Some Insights

The spread of COVID-19 has undeniably driven the accelerated adoption of fintech solutions across Southeast Asia and leading fintech start-ups have in recent times found themselves to be in a good position to raise more capital. However, the harsher reality of the pandemic and the economic turmoil has in fact had a significant adverse impact on equity values and valuations of companies across the world, including Southeast Asia.

Start-ups looking to raise capital by across multiple rounds of fund raising may not be able to do so in the usual fashion where each subsequent round is closed at a higher price per share than the last. The spectre of “down rounds” or the issuance of shares at lower prices than previous rounds, is now an increasing reality.

For companies that have issued earlier rounds of convertible preferred equity, a down round is likely to result in the application of anti-dilution mechanisms attached to such preceding preferred equity.

This briefing will look into some anti-dilution mechanisms commonly adopted in convertible preferred equity, highlight the issues that both investors and issuers need to keep in mind when negotiating these provisions and briefly touch on possible alternatives to a down round.

Anti-dilution mechanisms

There are three common types of anti-dilution protection mechanisms used in convertible preferred equity. They are: Continue reading “Down Round Fundraising: Some Insights”

Navigating Crisis – Considerations for Private Equity and Venture Capital Funds

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Globally, private equity (“PE”) and venture capital (“VC”) funds ended April 2020 with a record $2.6 trillion in unspent capital at their disposal. With cash readily available, the ongoing coronavirus pandemic presents ample opportunities for well-managed PE and VC sponsors to capitalize on these trying economic circumstances. At the same time, the economic damage wrought by the pandemic presents significant challenges to sponsors and their portfolio companies. This article discusses some of the ongoing opportunities and challenges PE and VC sponsors face, with a focus on three broad categories: (i) considerations for existing portfolio companies, (ii) the impact on transaction execution and terms for new portfolio investments, and (iii) fund-level considerations.

Continue reading “Navigating Crisis – Considerations for Private Equity and Venture Capital Funds”

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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