Changes to venture capital SIV rules will turn investors away from Australia: Ausin Group
The federal government’s proposed changes to the Significant Investment Visa (SIV) program has the potential to shut the program down, according to the property, finance and immigration firm Ausin Group.
From the 1 July the government is planning to force SIV clients into alternate asset classes, restrict investing in residential property and prohibiting the direct purchase of government bonds.
Joseph Zaja, the managing director of Ausin Group says the proposed changes are seeking allocations of up to 50% in venture capital and micro-cap companies, which are considered high risk investments.
“The Australian venture capital and micro-cap sectors are very small," Zaja said.
"It would be difficult to find investment opportunities and the expertise to significantly increase this allocation which would be required under the proposed visa guidelines in the short-term.”
“Under the proposed rules Ausin’s immigration consultants expect investors to shun Australia’s SIV program and start to look for more viable alternatives such as business visas or the Investor Stream Visa.
"They also expect interest in Canada and the USA’s comparable visa programs to increase as their programs are more affordable when compared to Australia’s visas.”
Ausin noted that according to Australian Private Equity & Venture Capital Association Limited’s (AVCAL) 2014 Year Book, over the last five years approximately $150 million per year was raised for venture capital funds in Australia by on average three or four managers.
“The proposed changes to the complying investment visa requirements for SIVs has the potential to significantly impact on foreign investment in this country," said Zaja.
"Limiting the venture capital and mico-cap allocations to 10-20% will deliver a manageable increase in capital for these investment sectors.
“Eliminating the small cap requirement and allowing clients to balance their remaining portfolio with assets of their choice would ensure SIVs remain a viable alternative in this country.”
The company is one of Australia’s largest privately owned companies providing property, immigration and financial services advice to both Australian and Asia Pacific markets.
Ausin sells properties for Australian Stock Exchange (ASX) listed companies and private property developers in Australia and New Zealand. Its offices are located in Sydney, Melbourne and 11 major capital cities in Asia. It employs over 350 staff across these offices.
Under the proposed rules, investors would also be forced to only invest up to 10% in residential property.
Zaja says he agrees that the SIV complying investment guidelines should restrict the direct purchase of existing residential property, "however investing in residential real estate projects should be encouraged".
“The additional residential housing investment generated from the SIV program provides significant benefits to the real estate sector and country including creating jobs, increasing housing supply and generating revenue from stamp duty," he said.