Josh Frydenberg reveals $520m for business growth fund
The government is going into the business of investing — with the Big Four banks — to the tune of $520 million. Together they will buy stakes in fast-growing small and medium-sized businesses, The Daily Telegraph can reveal.
NSW
Don't miss out on the headlines from NSW. Followed categories will be added to My News.
The federal government has convinced the big banks to pump $400 million into a new fund that will invest in high-potential small and medium-sized businesses desperate for dough to grow.
The Daily Telegraph can reveal Treasurer Josh Frydenberg will bring legislation to parliament next week to establish the Australian Business Growth Fund after overcoming resistance from ANZ and Westpac.
Enterprises with annual turnover of between $2 million and $100 million will be able to sell stakes of 10 to 40 per cent to the fund in return for cash to unleash their potential.
They might use the money to buy new manufacturing equipment or expand into other markets.
The fund will invest in chunks of between $5 million and $15 million.
If a business is later sold, the fund’s share of the proceeds will be reinvested into another enterprise
While remaining a minority stakeholder, it will encourage growth as well as provide advice, mentoring and introductions.
MORE NEWS
PM refuses to dump Angus Taylor amid police probe
$87m pledged for drought relief in regional NSW
Hunt for ‘coward’ who knocked out teen
It is expected to appeal to business owners that want to turbocharge their futures but either can’t get a loan or don’t want more debt.
Run by an independent CEO and board, the fund will start with capital of $520 million — $100 million from the government and each of the Four Pillars plus $20 million from HSBC.
Mr Frydenberg said he was confident of doubling that total to more than $1 billion over time by bringing in other banks as well as the superannuation sector.
He told The Telegraph he expects Labor to support the bill to establish the fund.
“It will be hard for them not to. This is good for small business,” he told The Daily Telegraph last night.
Mr Frydenberg said his model had been based on the “patient capital” funds run by UK and Canadian governments.
The British version was started with the backing of major banks after the global financial crisis. It contains nearly $5 billion and has invested in more than 200 businesses over long terms.
The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has said additional stable funding was needed.
And in a speech to the Australian Chamber of Commerce and Industry annual dinner tonight Mr Frydenberg will say the Reserve Bank has noted a key factor holding the economy back is a lack of “entrepreneurial finance” and that recent surveys have found more than a third of small and medium-sized businesses are having difficulty getting finance.
ANZ initially refused to join the fund, but has relented. Westpac did not join a working group established last year that was led by NAB.
The goal is to have the fund open for business by July.
Labor’s treasury spokesman Jim Chalmers said it had “offered in-principle support”.
“We will examine the detail of the proposal and take it through our usual processes to determine our final position in the parliament,” Mr Chalmers said today.
“If the Government was serious about getting this right they would have allowed more than four days of consultation on the draft legislation.
“The Treasurer’s engagement with relevant stakeholders and businesses so far has been totally inadequate,” Mr Chalmers said.
Originally published as Josh Frydenberg reveals $520m for business growth fund