Temasek Holdings - Summary

May 12, 2013

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The government of Singapore established Temasek Holdings in 1974 to contribute to Singapore’s industrialization and economic diversification by nurturing the city-state’s government-linked companies (GLCs). Temasek looked to help its portfolio companies become regional champions through effective oversight and commercially-driven strategic investments around the Pacific Rim. Temasek is a private company with a single shareholder: the Singaporean government. Its board and executive management are accountable to the country’s president.

Temasek’s heritage has fundamentally shaped its investment strategy and style. The state-owned investor only invests in stock and almost three quarters of its portfolio is allocated to listed companies at home, where it holds large blocks of shares in GLCs, and abroad, where it invests in hopes for financial gain and the transfer of technological expertise. 

After a mistimed intervention in Western financial services companies in 2007–’08 that lost some $4 billion, Temasek returned to emerging markets, its traditional bailiwick. In 2013 it shifted its focus back to developed markets, establishing offices in London and New York that officially opened in 2014. In Europe and the U.S. Temasek invests mainly in sectors that can benefit Singapore’s economy, such as healthcare and technology, media and telecommunications. 

Since the financial crisis Temasek has made substantial investments in energy and nonenergy commodity-producing companies. These stakes have enabled the state-owned investor to diversify its portfolio away from financial services, which still comprise much of its holdings, and take advantage of secular economic trends like rising demand for energy, consumer goods and food in emerging markets as the middle class grows in those countries.

Temasek is primarily self-funded: It raises money for investments from the dividends of its portfolio companies and from selective divestments that yield financial rewards. Since 2005 it has also issued a range of bonds with maturities of up to 40 years to help finance its activities and deepen Singapore’s capital markets. 

Temasek has had direct access to Singapore’s foreign exchange reserves since 2004, on the condition that it report to the nation’s president on how it uses this money. The Ministry of Finance can also inject fresh capital into the company; in 2013, it injected 5 billion Singaporean dollars ($3.5 billion) in Temasek. 

Although Temasek considers itself a holding company, it is a member of the International Forum of Sovereign Wealth Funds and a signatory to the Santiago Principles, the Forum’s voluntary code of best practice, like its national peer, GIC. Considered a relatively transparent sovereign fund, it has published annual reports since 2004.

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