The Coalition will announce on Tuesday a $100m equity fund for small business that will see the government become a passive shareholder in up to 50 businesses a year.
The fund, which is modelled on the UK’s Business Growth Fund, is aimed at pumping in “patient” equity into businesses that are identified as having significant growth potential.
Under the scheme, the government becomes a minority shareholder in the targeted company, but the business retains control.
The announcement will form part of a Coalition pledge to “create” 250,000 new small and family businesses over the next five years.
The prime minister, Scott Morrison, will announce the fund today.
Three banks – CBA, NAB and HSBC – are understood to be willing to match the government’s commitment, meaning it could kick off with as much as $400 million ready to invest.
Australian Prudential Regulation Authority regulations will need to be modified to allow the fund to operate in conjunction with financial institutions, but the government says discussions with the regulator about the scheme have been “positive”.
When the fund reaches a maturity of $1bn in between three and five years’ time, between 30 to 50 businesses a year with annual turnovers between $2m to $50m are expected to benefit.
The Business Growth Fund in the UK, on which this scheme is modelled, has invested around $2.7bn in a range of sectors across the economy since 2011.
Morrison said the fund would help small businesses become bigger businesses.
“This fund means more small and family businesses can take that next step to grow, to create more jobs and to invest in the opportunities they’ve got their eye on,” Morrison said ahead of today’s announcement.
“This is for those businesses like a local brewery or restaurant that wants to expand interstate or even overseas, or maybe a family owned construction company wanting to grow to so they can meet demand.”
