Temasek’s Asian exposure dips in FY12, unlisted portfolio up

Singapore’s sovereign wealth fund Temasek saw its global portfolio value inch up 2.6 per cent to close the year ended March 2012 at a record $153 billion, although it is a deceleration in growth compared to the previous fiscal, at a time when its exposure to Australasia and the economically troubled markets of North America and Europe gained at the cost of Asia.

Temasek, one of the two sovereign funds of the Singapore government, saw its exposure to Asia (outside of Singapore which covers China, India, Japan and the rest of South-east Asia) shrink to 42 per cent compared to 45 per cent in the previous fiscal ended March 2011. In its home (and the single largest) market, too, its portfolio value dipped from 32 per cent to 30 per cent during FY12 as the fund house spread its risks.

The portfolio value of its investments in Australasia rose from 12 per cent to 14 per cent while in North America and Europe, it rose from 8 per cent to 11 per cent. In the rest of the regions, it remained at the same level.

Temasek’s portfolio value in unlisted assets rose sharply from 22 per cent of the total in FY11 to 27 per cent last year.

In FY12, the fund house invested S$22 billion ($17 billion) and divested S$15 billion ($12 billion), resulting in a net investment of S$7 billion. Gross, as well as net investment in a year, happened to be the second highest ever, next only to FY08.

The sovereign fund also bets more on energy and resources, doubling its exposure in the sector on a low base to 6 per cent. Temasek, whose investments have traditionally been tilted towards financials and telecom, has been slowly rejigging it. In FY12, portfolio holdings in financial services, telecom, media and technology dipped to 55 per cent from 58 per cent a year ago. At the peak of market valuations in FY08, Temasek held 66 per cent of its investments in financials and TMT sectors. According to Temasek, financial services exposure shrunk from 36 per cent to 31 per cent last year, mostly due to market valuations, even as there had been some divestments during the year.

Ho Ching, executive director and CEO of Temasek Holdings, said, “Urbanisation and middle-income population growth continue to underpin the long-term transformation of Asia and other growth economies. Sectors such as energy, resources and consumer goods & services are proxies to the demographic drivers of growth while technology in the media, computing and biotech may provide new breakthrough opportunities.”

Temasek India

Temasek, one of the more active sovereign wealth funds in India with investments in some marquee names, recently struck a fresh deal in the country when it invested $135 million in Godrej Consumer Products Ltd. It is the single largest alternative investment deal in the Indian FMCG industry.

This was Temasek’s first big fresh investment in India since 2010, when it invested $200 million in GMR Energy besides striking a deal to buy 5 per cent stake held by the New York Stock Exchange in the National Stock Exchange. In 2011, it was busy picking up equity stakes in public-listed companies like Max India and Jain Irrigation through open-market transactions.

According to Rohit Sipahimalani, Temasek’s co-chief investment officer and India head, “India’s prospects are underpinned by its strong savings and investment rates, and a middle-income population that is fast growing and is relatively young. Sectors benefiting from this set of favourable demographics include financial services, consumer and healthcare. The increase in urbanisation will also drive investments in infrastructure. We remain optimistic on India’s long-term potential and will continue to invest in sectors which are proxies for the country’s growth.”

Temasek recently made a part-exit from one of its old investments in India by selling close to half of its stake in ICICI Bank for Rs 1,472 crore ($300 million) through open-market transactions. Its other investments in India include Bharti Airtel, Tata Sky and Bharti Infratel.

Last month, Temasek also hired Promeet Ghosh, the former M&A head of Bank of America Merrill Lynch (BoAML), as managing director in India. He is the first MD level hire in the country in recent months after the sovereign fund lost two top executives in India, including its former country head and another MD in 2011.

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