The risk of investing in private deals Singapore investors should know

In recent years, private investment deals have become more accessible—and more aggressively marketed—to Singapore’s mass affluent population. These deals, which range from overseas real estate to pre-IPO placements and commodity-linked products, often promise high returns with a veneer of exclusivity.

Typically offered through "invite-only" seminars, WhatsApp groups, or cold outreach from supposed wealth advisers, such investment opportunities bypass the more regulated terrain of listed stocks and unit trusts. The sales pitch is compelling: higher-than-market returns, diversification beyond traditional financial products, and a sense of elite access.

But many of these deals carry outsized risks that go underappreciated by retail investors, especially when the offerings sit outside the Monetary Authority of Singapore (MAS)'s licensing and supervisory frameworks.

Most private deals are legally structured to be offered only to accredited investors—those with over S$2 million in net personal assets or an annual income above S$300,000. However, many of these products are routinely marketed to non-accredited individuals. This marketing is often done with careful phrasing to avoid breaching regulations. Instead of “selling” the product, promoters might offer a "preview" of a pre-IPO fund or an “introduction” to a developer syndicate. The grey zone allows dubious players to operate while claiming technical compliance.

The target audience is usually middle-aged professionals, business owners, or retirees with investable savings and a desire to accelerate returns without increasing traditional market exposure. These are investors who may feel they’ve missed out on Singapore’s property boom or are skeptical of low-yield CPF and SSB instruments.

The private deal space is a catch-all for any non-publicly listed asset offering. Common products include:

• Overseas property flipping deals with promised rental guarantees
• Invoice factoring or private debt notes with monthly coupon payouts
• Art, wine, whiskey, or gold-backed schemes framed as inflation hedges
• Pre-IPO shares or convertible notes in companies allegedly close to listing
• Energy or ESG-themed investment packages in foreign jurisdictions

Each of these comes with its own risks, but most share a common trait: illiquidity, opacity, and lack of regulated oversight.

In Singapore, investments offered to the general public must be registered with MAS and accompanied by a full prospectus. However, exemptions exist for private placements made to accredited or institutional investors. That’s where most of these schemes fall.

This loophole leaves non-accredited investors vulnerable when:

• The deal is misrepresented as low-risk or insured
• Documentation is thin, missing, or difficult to understand
• The investment is held offshore or under a trust structure
• No local legal recourse exists in the event of fraud or failure

MAS has issued multiple investor alerts about unauthorized firms and misleading investment promotions. But enforcement usually comes after investors have lost their money.

Several high-profile failures in recent years have highlighted the systemic risk of this unregulated corner of the investment landscape.

1. Envy Asset Management
More than S$100 million was raised from investors in what was marketed as a nickel trading investment. The fund was found to be fabricated, and investors now face long and uncertain recovery proceedings.

2. Hin Leong Trading Fallout
Promoters packaged investment deals around oil inventories and trade finance lines—without fully disclosing counterparty risk or the fragility of the underlying business. Many investors were shocked to discover they had little or no security over the assets.

3. Overseas Property Scams
Deals in the UK, Australia, and Thailand frequently promise fixed returns from property developments. Many Singaporeans found their units were never completed, rented, or even started. Legal jurisdiction, foreign bankruptcy laws, and poor documentation leave investors with little recourse.

Each case reveals a pattern: poor transparency, unrealistic promises, and legal structures designed to deflect accountability.

If you’re approached with a private investment deal, pause and look for these warning signs:

• Unlicensed status: Always check if the individual or firm is listed on MAS’s Financial Institutions Directory or Investor Alert List.
• High guaranteed returns: Returns above 8–10% per annum with no volatility are not realistic for low-risk products.
• Referral rewards: If the pitch includes a referral bonus or downline commission, the product is likely prioritizing marketing over substance.
• Opaque structure: If you can’t easily find out where your money is going or who holds the underlying asset, walk away.
• Emotional appeal or time pressure: Statements like “last 3 slots left” or “exclusive to doctors and lawyers” are sales tactics, not financial analysis.

Investors often conflate polished presentation with credibility. But as MAS frequently reminds the public, even legitimate-looking deals may be unauthorised or unsuitable.

If you are an accredited investor and are considering a private deal, apply the same diligence you'd expect from a professional portfolio manager. This means:

1. Understanding structure: Who holds the funds? Who owns the assets? What jurisdiction governs the contract?
2. Reviewing third-party documents: Insist on independent valuation reports, trustee agreements, and audited financials.
3. Knowing exit options: Can you redeem early? At what terms? Is there a secondary market or buyback guarantee?
4. Requesting disclosures: What is the worst-case scenario? How much do promoters get paid?

And if you are not an accredited investor, ask: Why was I offered this deal at all?

The private investment ecosystem often gets rebranded as the “alternatives” asset class—suggesting sophistication, strategic diversification, and inflation hedging.

But in reality, many of the offerings are dressed-up versions of:

• Unregulated debt
• Illiquid property options
• Commodities without price transparency
• Startups without product-market fit

True alternatives like private equity, infrastructure funds, or real asset portfolios are typically accessed through regulated institutions and require long holding periods, expert due diligence, and diversification strategies.

MAS and the Commercial Affairs Department (CAD) have stepped up joint enforcement and issued stronger public warnings. MAS is also refining the rules around accredited investor status and encouraging self-verification platforms to prevent mis-selling. However, the regulator is careful not to eliminate investor choice. The challenge remains balancing protection with access, especially in a country that encourages individual responsibility for retirement adequacy.

There is no insurance scheme for private deal losses. CPF monies cannot be used. And redress via FIDReC or small claims courts typically does not apply. Once funds are wired overseas, legal and jurisdictional recovery becomes nearly impossible.

Private deals can offer exposure to non-traditional markets, but they should never replace core holdings or retirement-oriented instruments.

If you are building your investment plan around:

• CPF Life
• SRS contributions
• Blue-chip REITs or ETFs
• Insurance-linked savings plans

Then any private deal should be treated as speculative capital—what you can afford to lose in entirety.

Consider applying a simple core-satellite framework:

• 70–80% of your portfolio: stable, regulated, long-term assets
• 10–15%: tactical or growth bets in managed structures
• ≤5%: high-risk private placements or alternatives

This helps maintain both emotional and liquidity discipline—especially in down cycles.

Singapore’s regulatory framework is among the most robust in the region. But when investors step outside that framework, the responsibility shifts to them. You must read the fine print, know your legal recourse, and weigh risk through a planning lens—not just a return lens. Many private deals are not illegal. But that doesn’t make them safe. As a rule of thumb: If you don’t fully understand the product, the issuer, and the exit—don’t invest.

The appeal of private investment deals is understandable. In an era of low yields and volatile public markets, the promise of above-average returns, exclusivity, and diversification can be tempting—especially when presented by well-dressed intermediaries at hotel seminars or over LinkedIn messages. But high returns without transparency or regulation are rarely sustainable.

For Singaporeans navigating retirement planning, housing costs, or legacy goals, the real question is not just “Can I afford to invest?”—but “Can I afford to be wrong?” Unlike regulated instruments like CPF, Singapore Savings Bonds, or even unit trusts, private deals often come with no consumer safeguards, no exit clarity, and no restitution path. And when things go wrong, the burden falls squarely on the investor.

Resisting the allure of such deals is not about risk aversion. It’s about aligning your capital with purpose, access, and protection. In wealth-building, as in architecture, the unseen foundation matters more than the visible façade.

Take the time to evaluate whether a deal fits your financial life—not just your aspirations. Because in personal finance, the smartest move isn’t always the boldest—it’s the most repeatable, transparent, and sustainable.