Temasek expands in the west

The Singaporean sovereign wealth fund is strengthening its presence in the West amid expectations of higher interest rates and slower growth in Asia.

Temasek Holdings, the Singapore government-owned investment company, is increasing its capabilities in the US and Europe, and is setting up offices in New York and London, according to its latest financial review. 

“While Asia and Latin America will continue to be focus areas for us, we do see increasing opportunities in North America and Europe. We are setting up offices in London and New York to support our investment activities in these markets,” Ho Ching, executive director and chief executive of Temasek, said in a statement. 

The push into Western markets is also driven by the expectation of slowing growth in Asia, which Rohit Sipahimalani, co-head of investments, believes will occur as interest rates rise. Sipahimalani recently told theFinancial Times that higher rates “will slow growth in many Asian markets in which Temasek is invested”.

In June, the firm had set up a UK-based unit to support its investments, holdings and operations in London, a Temasek spokesman confirmed to PERE’s sister publication Private Equity International earlier. 

North America and Europe now make up 12 percent of its portfolio, up from 8 percent two years ago, according to the firm.

However, Asia continues to make up the bulk of Temasek’s portfolio. At the end of the financial year, Asia formed 71 percent of its portfolio based on underlying assets. Excluding Singapore, Asia made up 41 percent of its portfolio. China makes up 23 percent. 

During the year, Temasek invested a total of S$20 billion (€12 billion; $15.6 billion) and divested S$13 billion globally. Net investments for the year amounted to S$7 billion, and it invested S$4 billion in the energy and resources sector in North America and Europe.

Investments included Repsol, a Spanish-listed oil company, US liquefied natural gas exporter Cheniere Energy, and Venari Resources, a US oil company focused on deep water exploration in the Gulf of Mexico.

Temasek has now increased its assets under management to S$215 billion, up 8.5 percent from the S$198 billion its portfolio was valued in March 2012.  The value of its assets is at a record high and has
more than tripled over the past decade.

According to its review, 12 percent of its assets are classified as life sciences, consumer and real estate, the same as last year. The real estate proportion within that has not been disclosed. 

In Singapore dollar terms, the firm’s total shareholder return for the year ending March 2013 was 8.86 percent and its three-year return was 4.94 percent compounded annually. Longer term 10-year and 20-year returns were 13 percent and 14 percent respectively.

Suppiah Dhanabalan, chairman at Temasek, commented on the firm’s financial review saying, “Last year, there were some signs of a recovery in the global economy. The severe disruptive risks from the global financial crisis subsided, but structural risks have not been completely resolved.”