Temasek sees portfolio hit new high, warns of global weakness

After bouncing back sharply from a retraction in 2020, the portfolio continued its ascent, reaching SGD 403bn (USD 297bn) for the 12 months ended March, up from SGD 381bn in 2021. The one-year shareholder return was 5.81%.

Investments amounted to SGD 61bn – surpassing the previous high of SGD 49bn set in 2021 – while divestments reached SGD 37bn, according to Temasek's annual review.

The group identified ongoing geopolitical uncertainties, rising inflation, surging commodity prices, and severe supply chain bottlenecks as major macro concerns. "Against the backdrop of an increasingly fractious geopolitical environment and a looming climate crisis, economies are now more vulnerable, with key developed markets potentially facing a risk of recession," it said in an accompanying statement.

Portfolio exposure to unlisted assets rose sharply from 45% to 52%, largely at the expense of smaller positions in listed equities and other liquid holdings. Temasek said its unlisted assets had grown fourfold in value over the past decade to SGD 210bn, while generating annual returns of more than 10%. Over 20 years, the IRR for unlisted assets is 16.2% versus 6.7% for listed assets.

The portfolio is underpinned by investments in unlisted Singapore companies like Mapletree and SP Group, which account for 36%. Positions in other private companies are responsible for 26%, including 10% in early-stage start-ups. A further 18% is in private equity and credit funds, such as vehicles managed by KKR, TPG Capital, and Sequoia Capital, and 20% is in asset management.

Temasek's asset management business includes Vertex Holdings, an umbrella entity for various venture capital operations, and Seviora Holdings, which is responsible for Azalea Investment Management, InnoVen Capital, Fullerton Fund Management, and Seatown Holdings International. All these entities are looking to ramp up their third-party fundraising efforts.

"We have significantly scaled our asset management business, which was initially conceived to catalyse Singapore's ecosystem, augmenting the capabilities we have within Temasek to navigate an increasingly complex world," Temasek said.

Singapore represents 27% of the overall portfolio, having overtaken China, which has a 22% share. It reflects a drop in the value of Temasek's China holdings in the wake of regulatory upheaval and significant market corrections in the past year, notably in the technology sector.

This phenomenon likely contributed to technology, media, and telecom (TMT) exposure falling from 21% to 18%. It is now the third-largest sector, after financial services (down from 24% to 23%) and transportation and industrials (up from 19% to 22%).

Investment activity in China remains focused on areas benefiting from new consumption patterns, sustainability, and innovation. Temasek highlighted VX Logistics, a dry warehouse and cold chain developer and operator, Shanghai Hydrogen Propulsion Technology, a hydrogen fuel cell developer, and Whale Technologies, a digital marketing technology specialist.

Consumer technology remains the prevalent theme in India, where the group re-upped in ride-hailing platform Ola and made new investments in the likes of omnichannel eyewear retailer Lenskart and education technology player upGrad.

Temasek has set a target of reducing net carbon emissions across the portfolio to half the 2010 levels by 2030. The goal is to reach net-zero carbon emissions by 2050. Sustainability is increasingly visible in group investment strategies. For example, Temasek recently committed SGD 5bn to launch GenZero, which will back companies that accelerate decarbonisation globally.

"Over the year, we accelerated our efforts to invest in climate-aligned opportunities, enable carbon-negative solutions and encourage decarbonisation efforts in businesses," said Steve Howard, Temasek's chief sustainability officer.

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• Topics
• Southeast Asia
• LPs
• Performance
• Singapore
• Temasek Holdings