The Australian government’s Innovation Statement made last week, which is part of its agenda to foster entrepreneurship, included proposals with important long term implications for private equity, said Australian Private Equity & Venture Capital Association chief executive Yasser Al-Ansary.
The government is focused on incentivising greater early stage investment into high growth Australian businesses, which will create a pipeline of enterprises that could be backed by growth capital private equity firms, Al-Ansary said.
“More so than ever before, we know that today's start-ups could be tomorrow's multinationals – at the end of the day, policy changes which have the effect of boosting the depth and quality of Australia's business talent is good news for PE,” he said.
Some mid-market firms might take the opportunity to raise capital to invest in high-growth business in sectors like digital or consumer services, Al-Ansary speculated.
“For too long, Australia has lacked a clearly defined ambition for a more dynamic economy that better supports high growth potential businesses,” Al-Ansary said. “We have had the economic luxury of relying on strong global commodities markets for a decade now, but what we have to do at this point is pivot our economy towards new corridors of growth for the future.”
The statement also included proposals for changes to tax laws concerning venture capital limited partnerships that will make it easier for LPs to invest in private equity, as well as other changes that will allow managers to grow portfolio companies “more freely”, Al-Ansary said.
One of the new tax incentives will provide investors with a 20 percent non refundable tax offset based on the amount of capital invested either directly in a qualifying start up, or, indirectly through a fund, up to A$200,000 ($144,000; €132,000) per investor per year, according to the statement.
The proposals will apply from the date of Royal Assent, expected to commence from 1 July 2016.
The initiative also includes the introduction from November next year of a new entrepreneur visa that will be available to people with “innovative ideas and financial backing”.