SINGAPORE Trends and Developments Contributed by: Christy Lim, Susan Wong, Felix Lee and Clarence Kang, WongPartnership LLP
Enterprise Financing Scheme, M&A Loans – Extension and Enhancement While there tends to be a fair measure of focus on high-value M&A deals, the impact of the EFS on acquisition financing in the SME sec- tor should not be underestimated. The EFS – Mergers & Acquisitions scheme (the “EFS M&A Scheme” ), which was launched in Octo- ber 2019, is designed to encourage lenders to advance loans to eligible borrowers for domestic or international M&A activities through the 50% risk share by Enterprise Singapore subject to an overall borrower group limit of SGD50 million. In the case of enterprises operating in a challenged market (defined as countries with Standard & Poor ratings of BB+ and below, including non- rated countries) and young enterprises (defined as firms formed within the past five years with at least one employee and more than 50% equity owned by individuals), Enterprise Singapore’s risk share can increase to up to 70%. It was announced in Budget 2025 that not only will the EFS M&A Scheme be extended to 31 December 2030 to continue supporting growth of SMEs, the potential loans under the EFS M&A Scheme will also be extended to cover target asset acquisitions, in addition to equity acquisi- tions, from 1 April 2025 to 31 March 2030. With more financing options available, SMEs may be able to pursue a broader range of strate- gic growth opportunities and manage risks by acquiring assets without being overly exposed financially, enhancing their ability to compete in both domestic and international markets, a development likely to be well received by SMEs looking to enter into acquisitions this year and beyond. Vendor Financing Vendor financing, an alternative structure in which the seller of the target company agrees
are seeing a greater alignment of ESG taxono- mies with one another. ESG taxonomies are cri- teria that provide financial institutions with guid- ance on identifying and classifying activities as green or transitioning towards green. In 2024, the mapping of the Singapore-Asia Tax- onomy to the International Platform for Sustain- able Finance’s Common Ground Taxonomy was completed. The new Multi-Jurisdiction Common Ground Taxonomy (M-CGT) seeks to enhance the interoperability of the Singapore Taxonomy alongside the EU Taxonomy and People’s Bank of China’s Green Bond Endorsed Project Cata- logue. Furthermore, Version 4 of the ASEAN Taxonomy for Sustainable Finance is also in the works. Classifications for sectors such as agriculture and manufacturing are set to be refined, and the ASEAN Taxonomy will be further expanded to cover two more sectors – informa- tion and communication, as well as professional, scientific and technical activities. Historically, cross-border flows of green capital and financing have been stymied due to the lack of taxonomy alignment and varying ESG stand- ards across different markets. These develop- ments may now serve as a common reference point for green and transition activities, facili- tating collective investments and financings in the jurisdictions covered. Having clear and standardised references for green activities also reduces the risk of greenwashing which is, in turn, key to improving investor confidence. Consequently, we anticipate that this will likely have a positive impact on acquisition financ- ings, with purchasers potentially having greater access to cross-border green and sustainabili- ty-linked bonds and loans, albeit facing a more rigorous application of ESG standards in taking up such financing.
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