Visa reforms a boost for Australian funds

Australian growth private equity and venture capital funds are now open for investment from foreign high-net-worth individuals, thanks to changes to Significant Investor Visa (SIV) implemented earlier this month.

Under the SIV program, high-net-worth individuals from overseas are granted visas to live in Australia in exchange for a minimum investment of A$5 million ($3.65 million; €3.29 million) in a variety of asset classes. Previously, private equity and venture capital were not on the list of eligible industries.

Now, applicants will be required to invest at least 10 percent of their A$5 million, or A$500,000, in one or more Australian growth private equity or venture capital funds, as specified by the government’s Migration Instrument.

The move is good news for the industry, which has had channels of funding increasingly blocked off in recent years due to tightened regulatory constraints and shifting mandates of domestic superannuation funds to offshore managers.

Between September 2013 and March 2014, A$580 million was invested in Australia by overseas investors under the program, according to the Australian Private Equity and Venture Capital Association (AVCAL) chief executive Yasser El-Ansary. AVCAL said earlier that the industry was potentially missing out on hundreds of millions of dollars in capital commitments due to the exclusion of the asset class from the program.

AVCAL, which has been a supporter of the regulation since its proposal in October, will be making a list of SIV-compliant member funds currently open for investment for high-net-worth individuals to consult, and a list of members accepting expressions of interest in to-be-launched SIV-compliant funds.

AVCAL will also be sponsoring a series of public information sessions on the role of Australian venture capital and private equity in SIV portfolios, in partnership with Austrade. The next session is planned for Hong Kong on August 13.