Temasek mulls co-investment platforms

The Singaporean sovereign wealth fund is considering joint investments with ‘sophisticated co-investors’ for the first time and may eventually do the same for retail investors.

Temasek Holdings, which currently has Singapore's finance ministry as its only stakeholder, is considering the expansion of its stakeholder base in a move that is likely to bring about greater transparency in the sovereign fund’s operations.

Temasek, which is an active investor in private equity funds and also makes direct investments, is exploring the feasibility of creating one more group of stakeholders, Ho Ching, executive director and chief executive, said.
“We can do this by inviting the public to co-invest with Temasek,” she said, adding that Temasek hopes to start by first piloting relevant structures and rules with other “sophisticated co-investors”. This will be tested over at least one market cycle during the next five to eight years.

If this pilot programme is successful, Temasek may then consider a co-investment platform with retail

If we are looking at a co-investment platform… we are not thinking in terms of a mutual fund or any short term vehicles like that.

Ho Ching

investors in perhaps eight to ten years’ time. “If we are looking at a co-investment platform, we are principally looking for people including retail investors who are prepared to invest long-term. We are not thinking in terms of a mutual fund or any other short term vehicles like that,” Ho, who was speaking at Singapore’s Institute of Policy Studies, said.

She said that Temasek has been trying to think this through for the last three years and its plans may become clearer over the next six to 12 months.

“A broad base of stakeholders will be part of our ecology for discipline and performance in the decades ahead,” Ho said.

In response to a question with regards to what kind of institutions would fall into the category of “sophisticated co-investors”, Ho said that at this point, the sovereign fund is fairly open about who would fit the bill. She added that in the past, institutions have approached Temasek from time to time to explore the possibility of co-investments.

“I think what we’re trying to do really is to work towards a framework which we can then eventually translate to the retail investors,” she said. It has not yet been determined how this will be done and Temasek still has to “understand for ourselves what are the consequences, including unintended consequences”, before embarking on this plan, she said.

Ho said that the value of Temasek’s portfolio declined by more than S$40 billion ($28 billion; €20 billion) in the fiscal year ending March 2009. As of 31 March 2008, the sovereign fund’s portfolio was worth S$185 billion.