Temasek sets up dedicated LNG investment unit
Temasek Holdings has set up an investment unit dedicated to liquefied natural gas (LNG) assets. The move comes as the Singaporean sovereign wealth fund seeks to increase its energy exposure – as also evidenced through recent PE investments – in recognition of Asia’s strategic interest in securing natural resources.
The new entity, Pavilion Energy, has S$1 billion ($806 million) in initial capital and will operate in North America, Europe, Asia, Africa and Australia. It will principally target LNG-related businesses, including trading, exploration, storage, processing and shipping. Seah Moon Ming, Temasek's managing director for special projects, has been appointed to lead the unit, with Hassan Marican, former president and CEO of Petronas, serving as chairman of the board.
This is not the first Temasek subsidiary to take the name Pavilion. In January 2012, the sovereign fund set up Pavilion Capital, a North Asia-focused platform that supports small- and medium-sized privately-owned businesses, mostly through backing smaller regional GPs.
Temasek's energy and resources exposure jumped from 3% to 6% for the year ended March 2012, as it committed S$3.38 billion to three US energy companies: shale energy specialist FTS International, alternative fuels transportation firm Clean Energy Fuels, and fertilizer producer The Mosaic Company.
It also injected S$300 million into US LNG exporter Cheniere Energy and was a cornerstone investor in the IPO of Kulun Energy, another LNG player. Both deals were completed in partnership with RRJ Capital, a private equity firm set up by Richard Ong, which is said to count Temasek as one of its most significant LPs.
In February, RRJ Capital and GSO Capital, The Blackstone Group's credit arm, bought the bulk of $372 million in shares issued by Cheniere Energy Partners, a Cheniere Energy-controlled limited partnership that controls America's first LNG export plant. RRJ and Temasek own approximately 13% of the parent company.
Cheniere expects global LNG imports to rise from 303 million tons per annum in 2015 to 511 million tons by 2030. Asia will account for 60% of this demand.
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