Significant Investor Visa investment framework
a. SIV Funds investing in Venture Capital and Growth Private Equity Funds (VCPE)
Note: Investments into VCPE funds may be for investment terms that are greater than the provisional visa period.
Compliance will consist of a three part test: proof that applicant monies are taken upfront in a specified vehicle; proof that the applicant has entered into a commitment with a VCPE fund(s) within 12 months from the grant of the provisional visa; and proof that investments in a VCPE fund(s) have commenced within four years from the grant of the provisional visa.
• Mandatory investment of at least $500,000 at time of investment in an AusIndustry registered fund(s) (either ESVCLP or VCLP)*.
• Applicant monies for the full amount of the commitment are to be taken upfront to satisfy issuing a provisional visa and deposited either in a Cash Management Trust (CMT) held in escrow, or an Australian bank account as security for a bank guarantee in favour of a VCPE, to meet capital calls by the VCPE over the investment horizon.
• Applicants will need to enter into a commitment with a VCPE within 12 months from the date they were issued a provisional visa.
Proceeds from the realisation of investments by the VCPE fund(s) before the provisional visa ends are to be reinvested in complying funds from a, b or c.
b. SIV Funds investing in Emerging Companies
Mandatory investment of at least $1.5 million at time of investment in an eligible fund(s).
• A complying fund must have the following:
– Investment in securities of companies that have a market capitalisation (mkt cap) of less than $500m at the time of first purchase by the fund. Investments are to be ASX listed or Australian unlisted companies, but unlisted are to be no more than 20% of the fund’s net assets. Up to 20% of the fund’s net assets may be in other Australian exchange listed companies.
– Up to 10% of the fund’s net assets may be invested in foreign exchanged listed companies (e.g. New Zealand) with a mkt cap of less than $500m at the time of first purchase by the fund.
– Up to 30% of the fund’s net assets can be in previously held assets who’s companies have grown their mkt cap above $500m.
– Must maintain a minimum of 20 investee companies from three months post the fund’s inception date.
– No further purchase can be made to any individual asset that exceeds 10% of the fund’s net assets.
– Cash is to be no more than 20% of a fund’s net assets.
– Derivatives are to be used for risk management purposes only.
• Managed funds** (open or close-end) or Listed Investment Companies (LICs) are eligible.
• Fund Managers are to have and maintain a minimum $100m in firm-wide funds under management (FUM) to offer a complying fund(s) to applicants.
c. Balancing Investment
SIV Funds invested in:
• Companies, A-REITs, infrastructure trusts including their ordinary equity, preferred equity, convertible bonds or corporate issued floating rate notes listed on an Australian securities exchange.
• Corporate bonds or notes issued by an Australian exchange listed entity (or wholly owned subsidiary of the Australian listed entity) or investment grade rated Australian corporate bonds or notes rated by an AFS licensed debt rating agency.
• Deferred annuities issued by Australian registered life companies but cannot commence paybacks during the provisional visa period.
• Real Property in Australia (subject to 10% limit on residential real estate).
upcoming 1 July 2015 changes