Boost for foreign investment

THE stated intention by government to reduce the regulatory burden for business investors, as announced by Finance Minister Pravin Gordhan in his budget speech, will help attract foreign and local investment into the economy.

According to Erika van der Merwe, CEO of the Southern Africa Venture Capital and Private Equity Association (Savca), this was one of the positives of the fiscal policy statement.

This move will boost investor confidence in the South African market.

“From the perspective of the private equity and venture capital industry, we welcome measures to ensure appropriate regulation is in place,” said Van der Merwe.

“That is, regulation that provides peace of mind to investors into private equity and venture capital funds, while not being onerous and impractical. ”

Also encouraging was the assurance provided that Treasury would look into measures to encourage venture capital funding for small businesses.

This would be done through an assessment of its Section 12J Venture Capital Company (VCC) Regime, introduced in 2008 to provide tax relief for investors into venture capital and SME investments.

According to Samantha Pokroy, a Savca director and CEO of Sanari Capital, there had been a positive uptake of the VCC regime since January 2015. But constraints remain, which Savca and its member practitioners had brought to the attention of Treasury.

Pokroy says “private equity and venture capital plays a critical role in helping to formulate effective and useful policy in partnership with government ”.

Van der Merwe says the announcement of increased capital gains tax rate for companies will have implications for investor returns from the disposal of assets.