Temasek’s portfolio expands to $169b with greater focus on energy

Suppiah Dhanabalan, the group's chairman struck a more upbeat note than last year, still warning of structural risks but acknowledging the impact of massive and synchronized monetary easing on major economies.

While financial services account for nearly one third of the Singapore sovereign fund's assets, natural resources - particularly in North America and Europe - are becoming increasingly important with net investments of S$4 billion over the course of the year. Total net investments were S$7 billion.

Notable energy investments included the purchase of a 6% stake in Spain-based Repsol and commitments to Chinese gas transmission company Kunlun Energy and Cheniere Energy, which is building a liquefied natural gas (LNG) export terminal in the US. The latter two deals were completed in partnership with RRJ Capital, which is said to count Temasek as one of its most significant LPs.

Earlier this year, the fund set up a dedicated LNG investment unit, known as Pavilion Energy, and gave it S$1 billion in initial capital and a mandate to operate in North America, Europe, Asia, Africa and Australia.

Across its portfolio, Temasek invested S$20 billion and divested $13 billion for the year ended March, compared to S$22 billion and S$15 billion the previous year. Net profit slipped slightly to S$10.6 billion from S$10.7 billion, while one-year total shareholder return (TSR) came to 8.86%, up substantially from 1.5% and 4.6% in 2011-2012 and 2010-2011, respectively. On a 10-year basis TSR was 13% compared to 10% the previous year.

Temasek remains Asia-heavy, with the region accounting for 71% of its portfolio, of which 30% is in Singapore. Given the themes that have underpinned the fund's investment philosophy in the last decade - transforming economies, growing middle income populations, deepening comparative advantages and emerging champions - this allocation is unlikely to change dramatically.

Latin American exposure doubled from 1% in 2012 to 2% in 2013, while the North America and Europe allocation went from 11% to 12%. The fund recently announced that it would open an office in London to coordinate European activity.

Portfolio liquidity is unchanged, with 27% deployed in unlisted assets.

Temasek doesn't provide a detailed breakdown of its GP relationships, but it announced commitments to two small- and medium-sized enterprise (SME) growth funds - Dymon Asia and Credence - and has co-invested with them in a number of Singapore-based companies.

The fund also increased its investment in Vertex, a wholly-owned venture capital firm, and set up Heliconia Capital Management to provide growth capital to SMEs in Singapore.

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