Lower barriers for PE and VC needed
A private equity (PE) and venture capital (VC) body has called on the Government for a fast-tracked limited partnership vehicle to encourage foreign investment into high-growth businesses.
The Australian Private Equity and Venture Capital Association Limited (AVCAL) said foreign investment rules should be relaxed to encourage a new wave of offshore funding, and quarterly research and development tax credits should be introduced to help innovate cash-poor firms.
AVCAL chief executive, Yasser El-Ansary, said the current framework did not have the right balance between welcoming overseas capital, and ensuring Australia's national interests are protected.
"The reality is that foreign investment is crucial to the funding of small and medium sized Australian businesses," El-Ansary said. The body also called on the incoming government to remove regulatory impediments to superannuation funds investing more money into PE and VC.
"We could do a much better job of re-casting our superannuation policy and regulatory framework to drive more meaningful economic outcomes for Australia -- the opportunity to unleash the power of superannuation is right in front of us," El-Ansary said.
"Super funds are telling us they want to invest more in PE and VC as they see value for members."
AVCAL said research showed that young small and medium enterprises were the engine of employment growth -- between 2006 and 2011, 40 per cent of new Australian jobs were created by these enterprises.
AVCAL's key recommendations included:
- Relaxing existing foreign investment rules;
- Fast-tracking the introduction of a streamlined and simplified limited partnership vehicle;
- Removing regulatory impediments to Australian super funds investing more capital into high growth Australian business through PE and VC, but shifting the focus of regulation towards net returns and long-term growth; and
- Broadening support for a world leading scale-up ecosystem through measures including:
- Government funding for commercialisation and business skills courses;
- Introducing quarterly research and development credits for innovative, cash-poor businesses;
- Establishing the biomedical translation fund; and
- Exploring further opportunities for long-term private/public co-investment pathways.
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