Temasek's portfolio rebounds to record high

The Singapore government-controlled investment fund put S$49 billion to work during the period and recouped S$39 billion, both record highs. The one-year shareholder return was 24.53%, compared to -2.28% in 2020. Temasek has only surpassed this level three times in its history: in the mid-2000s boom and during the rebounds following the tech bubble bursting and the global financial crisis.

“It was an active year, despite pandemic lockdowns and travel restrictions. We invested to stimulate innovation and growth as we repositioned our portfolio for a changing world. We invested during market dislocations based on our value tests. We invested similarly into our portfolio companies, and maintained our disciplined sale of investments,” the group noted in its annual review.

“Over the year as markets rebounded, several of our unlisted investments went public to gird themselves for their next phase of development.”

There was little change in terms of broad geographies and sectors. Singapore and China account for more than half the portfolio, although China exposure fell from 29% to 27% as the Americas and Europe, Middle East and Africa allocations ticked up slightly. Financial services and technology, media and telecom (TMT) are still mainstays, on 24% and 21%, respectively, while life sciences and agri-food continued its recent climb, rising from 8% to 10%.

The multi-year trend of increasing exposure to unlisted assets was broken, with portfolio share falling to 45% from 48%. This likely reflects the recent IPO glut; Temasek’s exposure to listed equities in which it holds minority positions grew during the 12-month period.

Behind the general picture of stability, the investment fund tweaked its views on global secular trends. Previously, Temasek’s long-term strategy has been anchored in transforming economies, growing middle-income populations, deepening comparative advantages, and emerging champions. Its lodestars are now digitization, sustainable living, the future of consumption, and longer lifespans.

Temasek pointed to significant changes – made over several years – in its holdings. In financial services, the focal points are now financial technology, insurance, and payments. TMT, software, internet services, e-commerce, the sharing economy, cloud computing, and digital content have become emerging themes.

Highlighted investments within Asia include software-as-a-service (SaaS) provider Black Lake Technologies, healthy beverage brand Genki Forest, and drug developer Clover Biopharmaceuticals in China, microfinance specialist Bandhan Bank and energy efficiency-focused Schneider Electric in India, and e-commerce platforms Sea and Tokopedia – now known as GoTo, following a merger with Gojek – in Southeast Asia.

Temasek also flagged its increasing interest in Japan. It accesses the market through Pavilion Capital and last year established the PavCap Japan Fund to concentrate on mid-cap opportunities in the country, via direct investments and commitments to third-party funds.

Separately, in the past 12 months, Temasek has created a holding company for its four asset management units: PE-focused Azalea Investment Management, venture debt business InnoVen Capital, investment manager Fullerton Fund Management, and hedge fund specialist Seatown Holdings International. The goal is to provide more support in areas such as third-party fundraising.

Meanwhile, 2021 will also see the retirement of CEO Ho Ching, who has led the investment fund since 2004. Her replacement is Dilhan Pillay Sandrasegara, currently an executive director and CEO of Temasek International. Sandrasegara joined Temasek in 2010 and has held various leadership roles.

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• Topics
• Southeast Asia
• LPs
• Performance
• Financials
• Technology
• Asia
• Singapore
• Temasek Holdings
• TMT