Private equity, as a term, gained prominence in the 1980s and 1990s, when industry titans such as Kohlberg Kravis Roberts (KKR) and Blackstone went on buying sprees, privatising companies and selling them off for astounding profits through methods such as leveraged and management buy-outs. Such approaches are still very much in play, but the private equity scene has made a strong shift towards venture capital. Venture capital, which is capital provided to young companies for growth, helped fuel the growth of technology behemoths in the business world such as Facebook and Google. With the ever-accelerating progression of technological integration and dependency, venture capital firms place a huge focus on technological companies, searching for the next piece of disruptive technology.
Singapore is commonly referred to as the regional hub of the private equity industry due to the country’s favourable geographical position as well as free economy. The country boasts low tax rates, transparent financial legislation, as well as stable infrastructure – qualities that make a good platform for reaching out to the surrounding emerging markets throughout Asia. These factors attract a large number of businesses (including PE funds) to the country.
While Singapore holds second spot on the World Economic Freedom rankings, Hong Kong holds first place, an honour which represents the country’s positive attitude towards the business and investment sectors. According to Hong Kong’s 2013-2014 Budget, the government plans to amend and extend the current offshore fund exemption to private equity in order to attract more of such funds to be set up in Hong Kong.