Temasek’s portfolio value rises by S$42bn in 4 months

Temasek Holdings has seen the value of its portfolio rise to S$172 billion ($122 billion; €83 billion) from S$130 billion between 31 March and 31 July this year, it said at an annual review held at its Singapore office today. 

The Singaporean sovereign wealth fund is an active private equity investor through commitments to private equity funds and direct investments.

Responding to a question about how Temasek’s private equity investment activities will change, Ho Ching, its executive director and chief executive said: “Going forward, there will be changes depending on the kind of credit and leverage available”.

Temasek is believed to have committed $1 billion to the China-focused Hopu Fund, which closed on $2.5 billion in 2008. It has also invested in funds managed by Asian firms such as FountainVest and MBK Partners.

This July, Temasek was in talks with state-backed Bank of China to launch a fund that will raise between $1 billion and $2 billion for investments in Chinese infrastructure, according to Reuters. In the same month, it also said it was considering joint investments with “sophisticated co-investors” for the first time.

At the annual review, Ho attributed the increase in portfolio value over four months to the “markets’ recovery in general”. However, this is still lower than the value of the portfolio last March, which stood at S$185 billion.

Temasek noted a net profit of S$6 billion this fiscal year, down from S$18 billion in the previous fiscal year. The decline was due to lower contributions from its portfolio companies and its own investment activities, Ho said. 

The sovereign wealth fund also invested S$9 billion and made divestments of S$16 billion for the year ending 31 March. While it confirmed the divestment of its stake in UK bank Barclays, it is unclear if this was included in the figure.

“We certainly did not anticipate the speed or the depth of last year’s global financial crisis. Nor did we expect the crisis to originate from the US,” said Ho, who has come under fire for the portfolio’s over exposure to the financial services sector.

In 2007, Temasek invested $2 billion for shares in Barclays and $8.3 billion for a stake in Merrill Lynch. The stake in Merrill Lynch was converted to Bank of America shares following its acquisition of Merrill Lynch, giving Temasek a stake of roughly 3 percent in Bank of America, according to Singapore’s Straits Times. It had reportedly sold its entire stake in Bank of America by May, reportedly resulting in losses of between $2.3 billion and $4.6 billion.

Presently, while Temasek still allocates majority of its portfolio to the financial services sector, this has fallen to 33 percent from 40 percent last year. Telecommunications and media is second with 26 percent and transportation and logistics is third with 13 percent.

China, in which Temasek invests between 20 percent and 25 percent of its portfolio, will be the second largest investment destination after Singapore to which it allocates 43 percent.

Temasek is also mulling setting up more office in China, Ho added. It currently has in offices Singapore, Beijing, Shanghai, Hong Kong, Hanoi, Ho Chi Minh City, Mumbai, Chennai, Mexico City and Sao Paulo.