SEC supports Private Equity for business growth
Bangkok, August 28, 2012 – “It is necessary to expand access to sources of fund for business of all sizes, especially SMEs. The capital market can offer diverse financial vehicles and one of the suitable sources for new businesses with high growth potential is private equity (PE),” said SEC Secretary-General Vorapol Socatiyanurak at today’s seminar on “Private Equity: Business Alliances for Business Growth.”
PE is an investment of institutional investors or high net worth individuals who commit their money into targeted business having high growth potential and demanding funds for improving its working structure, business expansion or production capacity. Such PE investment in newly established business or non-listed company is called venture capital (VC).
An investment of PE aims for making profits and high returns. PE focuses on long-term investment with a specific period of time in a start-up or high potential businesses. The funds will be managed by professional finance manager supervising for favorable returns. Some SMEs operators see PE as treat to the ownership of the business or as possible business takeover. In fact, PE will facilitate strengthening of businesses in terms of funds, management, structure, and provide useful advice for achieving business objectives. When achieving the objectives, PE will sell out the shares to any particular group of investors or via the Stock Exchange of Thailand (SET) in case the business is listed on the SET.
To support SMEs to fully make use of PE, the SEC has carried out five actions:
(1) Revising rules to allow exemption for PE manager from holding securities licenses;
(2) Allowing PE to establish in form of trust for flexibility;
(3) Coordinating with the Revenue Department to propose for an exemption of capital gain and dividend taxes for investors investing in PE, while such PE must invest in government supported businesses under the specified conditions, which must be 1) technology-based business creating added value, 2) business that enhances competitiveness of the country’s technology and 3) environmental friendly business;
(4) Coordinating with the Revenue Department to propose for tax privileges for PE with no specific time period for PE in investing in the targeted business and;
(5) Discussing with National Science and Technology Development Agency (NSTDA) about the support for PE on an investment in technology-based business.
“We expect businesses to make use of PE. Apart from business growth, innovative and high-technology businesses will certainly strengthen the country's competitiveness,” said SEC Chief Vorapol.