Tunisia ministry of industry, energy
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- Limitations of the system.
3.5. SICARs.81. Venture capital is a form of private equity capital. It is a structured technique that provides capital to high-growth emerging enterprises. Venture capital enables enterprises to obtain private equity capital that is granted without any collateral (or tangible and intangible guarantees) and is paid back in the medium term by the enterprise itself once it has started to generate profits. In theory, venture capital plays a crucial role in economic development, due to its contribution to all stages of business formation and development, starting with identification of and support for very high value-added market segments, right up to these enterprises’ maturity and possible initial public offering. SICARs in Tunisia.82. Law 1995-87 of 30 October 1995 institutionalized venture capital in Tunisia, and introduced a new type of Investment Company: the Société d’Investissement à Capital Risque – SICAR – (venture capital Investment Company). This law states that SICARs may acquire a portion of invested companies’ share capital on their own behalf (or on behalf of third parties) with a view to the eventual re-transfer of ownership of these shares. SICARS invest in enterprises that are launched by project sponsors, are based in regional development areas, or that promote new technology and innovative ideas. 83. SICARs step in to help finalize the project financing plan. With the sponsor and FOPRODI, SICARs provide between 35 to 40 percent of total investment. Significant legislative changes implemented very recently (2009 Finance Bill) no longer allow SICARs to demand that sponsors provide collateral outside the project,42 or to pre-determine returns on their equity investments (phasing out of warrants, or the practice known as “portage”43). In addition, the new Finance Bill requires SICARs to use 75 percent of their funds in regional development. Table 7. SICAR activity. 
Source: Maher (2008). 84. There are currently about 40 SICARS in operation in Tunisia, 27 of which are backed by financial institutions. Five are regional SICARS that are majority owned by the government and eight belong to groups. At the end of 2007, in 12 years of business, venture capitalists had helped to finance 1,300 enterprises with funds amounting to close to TND 600 million (USD 468 million), half of which had been disbursed in the previous four years. 63 percent of projects funded between 2005 and 2007 were new business start-ups. Average participation of SICARs was about TND 463,000 (USD 361 000) for an average cost per project of TND 3.2 million (USD 2.5 million, Maher 2008). Limitations of the system.85. The 2009 Finance Bill rightfully erased two major constraints on the development of SICARs (see above). Nonetheless, there are other significant difficulties that will take longer to address; Due to the limitations of BVMT and the alternative market (see before), prospects of stock market flotation are slim and are therefore holding back the development of these institutions; Lastly, it appears that many SICARs lack expertise in the appraisal, approval and monitoring of technology projects. This inhibits their involvement in this sector.
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