Budget 2025: Quick takes on S$1 billion private credit growth fund

A S$1 billion private credit growth fund will be introduced to provide more financing for high-growth local enterprises, Finance Minister Lawrence Wong announced in the Budget speech on Tuesday (Feb 18).

Globally, a private credit market is emerging, which offers financing for enterprises, but few of such funds focus on Asia, much less Singapore-based companies, said the prime minister.

More than S$1.8 billion over the past five years has been set aside to support the growth of enterprises by way of investment funds, he noted.

“We now have a more vibrant financing ecosystem, backed by a growing network of angel investors, venture capitalists, and private equity firms,” he said, adding that companies need capital to grow.

Here are what analysts and other experts said in response to this new initiative.

Clifford Lee, global head of investment banking at DBS

• The introduction of a private credit growth fund and measures to rejuvenate our equity market reinforce Singapore’s position as the region’s premier financing hub.

• By complementing Singapore’s existing strengths in debt markets, private capital and bank financing, these developments provide our local businesses with more wind beneath their wings to soar overseas.

• These initiatives also enhance Singapore’s attractiveness to businesses in the region seeking to tap our financing capabilities to accelerate their growth.

• This in turn generates a flywheel effect that further attracts deeper pools of capital, contributing to a more vibrant financing and enterprise ecosystem here.

Girish Sahajwalla, Southeast Asia Corporate Finance Leader, PwC Singapore

• Additional capital deployed by the government in private equity and private credit will create more funding options for local enterprises.

• Efforts to enhance the Singapore Exchange as a listing venue will provide local enterprises with a stronger capital-raising alternative alongside private equity and credit markets.

Loh Yee Chuan, Partner, Corporate Finance, KPMG Singapore  

David Sandison, head of tax at Grant Thornton Singapore

• Depending on the restrictions, the fund will be an additional avenue for capital. The appeal of credit over equity is that it tends not to be shareholder dilutive.

• The effectiveness of the fund will be greatly influenced by the restrictions and how ‘innovative’ the options will be.

Paul Ong, partner at InnoVen Capital SEA

• By enhancing access to private credit, the fund will empower local enterprises to scale effectively, drive innovation, and contribute to Singapore’s economic growth.

• The establishment of the Private Credit Growth Fund not only complements our efforts but also underscores the critical role of alternative financing in an emerging new digital economy.

Kok Ping Soon, chief executive officer of Singapore Business Federation

• We also welcome measures to strengthen the business ecosystem including measures to support enterprises to internationalise and to facilitate inorganic growth strategies, such as through mergers and acquisitions, which were among our Budget recommendations.

• We also highlighted the importance of financing to support growth and scale, and welcome initiatives to support access to alternative financing options such as private credit. We look forward to more details from the government in these areas.