Temasek sees portfolio reach $158b for 2010-2011 fiscal year
Temasek Holdings, Singapore’s second-largest sovereign wealth fund, said that its portfolio was worth a record S$193 billion ($158 million) at the end of its last financial year in March, up from S$186 billion ($152 billion) in 2010. Net profit came to S$13 billion ($10.6 billion), up from S$5 billion ($4 billion).
While five- and ten-year compounded total share holder returns (TSR) were 7% and 9%, respectively, the one-year return was a "modest" 4.60%. The "wealth added" - the mechanism by which Temasek measures performance against risk taken and capital used - fell short of the risk-adjusted hurdle by S$8.8 billion.
Writing in the fund's 2011 review, titled "Building for Tomorrow," S. Dhanabalan, chairman of Temasek, noted that the swift rebound in Asia last year was counterbalanced by continued economic uncertainty in the US and Europe. He cited rising debt burdens, inflation risk and political unrest in the Middle East as the primary economic challenges.
Dhanabalan and Ho Ching, CEO of Temasek, highlighted the opportunities presented by middle income populations in the emerging markets of Asia and Latin America, and the key role played by urbanization.
Temasek has been shifting its portfolio weight towards Asia since 2002 and investments made after this point have delivered returns of 21% over the last nine years, compared to 11% for pre-2002 investments. Asia, including Singapore, accounts for more than three-quarters of the fund's portfolio, with Australia and New Zealand on 12% and North American and Europe on 8%. Africa, Central Asia, the Middle East and Latin America together account for 3%.
On a sector basis, financial services dominate with 36% of total holdings. Transport and industrials follow on 23% and then telecommunications, media and technology on 22%.
During the year, Temasek made S$13 billion ($10.6 billion) in investments and divested S$9 billion ($7.3 billion) of assets. Major Asia investments highlighted in the report include S$280 million ($229 million) in India's GMR Energy and over S$100 million ($81 million) in Hutchison Port Holdings Trust. Temasek divested stakes in Hana Financial Group and Fortescue Metals Group.
The fund subscribed to rights issues by China Construction Bank and Bank of China worth over S$3 billion ($2.4 billion), but the report does not reflect this week's $3.6 billion sell-down in the banks.
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