The Singapore government is setting aside S$1 billion ($745 million) to provide financing for local enterprises through a Private Credit Growth Fund. The measure, announced by prime minister and finance minister Lawrence Wong in his 2025 Budget speech, takes its cue from the emergence of the global private credit market.
“Few of these private credit funds focus on Asia, much less Singapore-based enterprises,” Wong said.
The new private credit initiative follows some S$1.8 billion that the government has set aside to catalyse growth through private investment funds over the last five years, he added.
It is a timely boost for the private markets in Singapore, following the last two years of poor funding conditions, said Loh Yee Chuan, Partner, Corporate Finance at KPMG. Private credit strategies would have a place particularly in end-of-life funds facing valuation gaps in their assets, he explained.
Separately, Singapore state investor Temasek has been investing in credit funds for over a decade. In December, it launched a dedicated private credit platform with an initial portfolio of S$10 billion. This is in addition to SeaTown Holdings, a Temasek-owned investment firm, which closed its second private credit fund at over $1.3 billion to offer private credit solutions in Asia.
The new S$1 billion private credit fund will complement these efforts, as the various strategies serve different market segments and geographies, Loh added.
At the same time, Singapore is recognising the challenges faced by its public market, a key liquidity option for private investors.
Said Wong: “There has been feedback that the Singapore Stock Exchange is not attractive, even for companies that are focused mainly on Singapore or Southeast Asia.”
To that end, the government is offering tax incentives for Singapore-based companies and fund managers that choose to list in the city-state. It will also incentivise fund managers “to invest substantially” in Singapore-listed equities.
“However, while tax incentives are a crucial element, they are not the sole factor in attracting companies to list in Singapore,” said Jimmy Seet, Capital Markets Partner at PwC Singapore. “To be a truly attractive listing destination, Singapore must offer a robust, liquid, and responsive market environment.”
Other Budget 2025 initiatives on the cards include extending support schemes for internationalisation, mergers and acquisitions, and a Global Founder Programme to encourage entrepreneurs to set up their ventures in Singapore.
Further details of these initiatives will be announced during the upcoming Parliament sittings.
The Singapore government has been committing billions of dollars in past budgets to help drive growth in the private markets and catalyse further capital.
In 2010, it launched a co-investment programme for small-to-medium local enterprises, channelling S$250 million through Temasek unit Heliconia Capital to be matched 1:1 by private capital. That effort was shored up in subsequent years to about S$1 billion by 2023.
In 2023, the government also announced a S$1-billion programme to help larger companies with their efforts in innovation and international partnerships and expansion.
Ultimately, through these initiatives the Singapore government is demonstrating that in challenging times, it is willing and able to support smaller local enterprises which may not have access to critical funding or financing otherwise, observers say.
