VENTURE CAPITAL INVESTMENT TRUSTS

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VENTURE CAPITAL INVESTMENT TRUSTS

  1. 1. VENTURE CAPITAL INVESTMENT TRUSTS Abdullah Kaya Capital Markets Board
  2. 2. Outline s A new map of the world by Jeffrey Sachs s Venture Capital/Private Equity and Government Policy Approaches s Regulations of Capital Markets Board (CMB) to Support Entrepreneurship x Venture Capital Investment Trusts x Funded Pensions x Secondary Stock Markets for Small Enterprises
  3. 3. A new map of the world...
  4. 4. Venture Capital/Private Equity and Government Policy Approaches s Incresing the supply of investment funds s Promoting VC/PE investments through tax incentives s Creating secondary stock markets s Funding pre-finance appraisal
  5. 5. Venture Capital Investment Trusts s Regulated by a Communique in 1998 s CMB permission required s Must be a joint stock company with an initial paid in capital of approximately $ 1 million. s Must endure a minimum of 10 years. s More than half of the shareholders must be Turkish citizens
  6. 6. VCITs continued... s One year for the VCIT to find the necessary office space, personnel and equipment, and form a draft portfolio s The shares of VCIT must be registered by the Board before they can be offered to the public. s 10% of issued capital within one year, 30% within the end of the third year and 49% at the end of the fifth year must be offered to the public.
  7. 7. VCITs can... s invest in shares and bonds issued by venture companies, s take part in management of these companies and offer consulting services for them. s Invest in other securities (government bonds, mutual fund shares, etc) up to 35% of their assets even in other VCITs provided that they have no management and capital relation.
  8. 8. VCITs can not... s collect funds specified under the Banking Law, s carry out commercial, industrial or agricultural activities s invest more than 10% of its assets into related companies unless specified by a provision under the principle contract, s keep investee companies more than 10 years
  9. 9. Advantages of VCITs s professional portfolio management s surveillance of CMB s diversification s improved economy s liquidity s tax incentives
  10. 10. VCITs: Vakif Risk and Is Risk s Vakıf Risk (1996) *TL 900 billion paid in capital *Invested in; -Teknoplazma -Inova Biotechnology -Ortadogu Yazılım (TR-Net) s Is Risk (2000) *TL 20 trillion paid in capital *Is Bank Group owns 87.5% of the company
  11. 11. Relevant Developments.. s Funded Pensions s Secondary stock markets for small enterprises
  12. 12. Funded Pensions s Sustainable long-term economic growth requires long-term sources of funding. s In Turkey, regulations are done, and funded pension system is hoped to operate in near future. s The regulations allow funded pensions to invest up to 5% of their assets in venture capital.
  13. 13. Secondary Stock Markets for Small Enterprises s The existence of a stock market which encourages IPOs is crucial for the development of venture capital. s The US venture capital industry is driven by the NASDAQ market. s CMB tries to create a Turkish equivalent of NASDAQ.

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