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The MAS has issued proposals to put in place a regulatory framework enabling retail investors to invest in private market investment (PMI) funds. The framework would allow fund managers to establish two types of authorised long-term investment funds (LIF) with appropriate safeguards in place.
In the consultation paper titled, ‘Consultation Paper on Providing Retail Access to Private Market Investment Funds’, the MAS seeks feedback on the appropriate regulatory requirements and the suitable types of PMI assets that can be offered to retail investors for the two proposed fund structures.
If enacted, the proposed changes will provide retail investors with the opportunity to tap into the private market to further diversify their investment portfolio. Fund managers will potentially be able to access the savings of retail investors, particularly the fast-growing affluent middle-class sector. This group has a higher appetite to invest in sophisticated investment products to facilitate higher yields and portfolio diversification.
What key considerations do I need to be aware of?
Structure of LIF
Two types of authorised fund structures have been proposed:
1. Direct Fund – A fund that invests directly in the private market investments
2. Fund of Funds – A fund that invests in private market investment funds managed by other fund managers.
Crucially, those other fund managers won’t need to be licenced to manage retail monies. Instead, the MAS will expect the manager of the retail Fund of Funds to invest in a lower risk, diversified portfolio which is suitable for the retail segment and perform appropriate due diligence on the underlying PMI funds.
Scope of PMI assets
Various types of assets for the two proposed fund structures are under consideration, including private equity, private credit, infrastructure and real estate, with a focus on lower-risk investments.
Manager requirements
- Licence and expertise
- Due diligence on investments
- Board independence
- Manager / institutional / accredited investors’ interest in the fund.
Product requirements
- Product differentiation
- Investment strategy
- Permissible investments
- Investment limits
- Diversification limits
- Compliance
- Valuation
- Related party transactions
- Leverage
- Redemption
Disclosure requirements
- Product risk warnings
- Information on the Product Highlights Sheet
- Additional disclosures in prospectus and periodic reports
- Product classification
Other requirements
- Disclosure of interests
- Short sell order disclosure / reporting
- Singapore Code on Take-overs
- Mergers provisions relating to compulsory acquisition
How can Bovill Newgate help?
With the consultation closing on 26th May 2025, it’s vital to get to grips with the potential implications and changes.
Since 2015, our team in Singapore has been actively supporting clients in:
- applying for Capital Market Services Licence or upgrading existing CMSL from Accredited / Institutional to Retail Licensed Fund Management Company
- providing appropriate and actionable advice (as part of our ongoing compliance support services) to help put in place appropriate compliance policies, monitoring programmes, and internal control measures
- carrying out periodic internal audits.
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