New SIV investment framework supports emerging listed Australian companies
Douglas Loh
The creation of an emerging companies category for the Significant Investor Visa (SIV) program has the potential to be an important source of capital for emerging listed Australian companies, said Mr Douglas Loh, head of equities, Acorn Capital.
Speaking at the Basis Point third annual Significant Investment Visa conference, Mr Loh said: “The changes to the SIV complying investment categories will provide a valuable additional source of funding for emerging listed Australian companies and will promote the growth of this sector.”
He said the target for the SIV is generally wealthy Asian investors looking to immigrate to Australia.
Mr Loh said, “Often they have children who have attended or are looking to attend universities in Australia and they are attracted to the lifestyle and opportunity here. The SIV program is a good way for them to understand a more mature and developed investment market and to eventually gain Australian residency.
“With residential property excluded from the categories of complying investment status for SIV investors, it removes the risk that SIV investors will drive up prices in an already hot property market.”
The Acorn Capital Microcap Fund is one of the few funds to invest in Australian emerging companies/microcaps that complies with the Government’s new SIV investment framework. The Fund has a 14-year track record of investing in microcap stocks and building a diverse portfolio that Acorn Capital believes can generate long-term outperformance.
By identifying and exploiting mispricing in the microcap sector, the Fund has successfully outperformed its benchmark over the long term, and has returned 9.2% p.a. since inception.[1]
Mr Loh said, “We believe SIV investors, in particular, will look to established and well known managers that can demonstrate longevity and good risk management controls.
“Previously, the bulk of money flowing into Australia through the SIV program was into passive investments, such as government bonds and residential real estate schemes, which already attract large capital flows.”
On 1 July 2015, the Government changed the SIV investment framework so that investors need to invest at least $5 million over four years into three categories of complying investments, which must now include:
- $500,000 in venture capital and growth private equity funds
- $1.5 million in emerging companies
- $3 million in balancing investments – complying investments include Australian corporate bonds, shares and property (excluding residential) through managed funds or listed investment companies.
