Temasek’s portfolio rose to $177B in FY14, most active investment year since FY08

Singapore’s sovereign wealth fund Temasek saw its global portfolio value inch up 2.3 per cent to close the year ended March 31, 2014 at a record S$223 billion ($177 billion), as the firm marked the previous fiscal as its second most active year in terms of net investments.

Overall, during FY14, the fund house invested S$24 billion and divested S$10 billion, resulting in a net investment of S$14 billion. It had marked a record year in FY08 when it invested S$15 billion at the peak of the previous bull-run which ended in January 2008.

“This has been one of our most active years for new investments – the most active since the global financial crisis – driven by softer Asian markets of interest, as well as the continued recovery of the global economy," said Lim Boon Heng, chairman, Temasek.

The fund house’s total shareholder return (TSR) for the last one year dived to just 1.5 per cent. Even as it maintained its TSR record since inception (1974), its returns over 10 and 20 years have dipped last year. However, its five-year TSR rose last year.

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 Southeast Asia) remains steady at 41 per cent compared with the previous fiscal ended March 2013. In its home (and the single largest) market, its portfolio value increased slightly from 30 per cent to 31 per cent of the total during FY14.

The portfolio value of its investments in Australasia dipped from 13 per cent to 10 per cent while in North America and Europe, it rose from 12 per cent to 14 per cent. In the rest of the regions, it remained at the same level.

During FY14, Temasek opened offices in London and New York to cover Europe/Africa and the Americas, respectively.

Heng said that the US Fed tapering its loose monetary stance and China reining in its debt fuelled growth bode well for the longer term, though major central banks will most likely take some years to unwind the massive balance sheet expansions of the past five years.

What is notable is the exposure to private firms. Temasek’s portfolio value in unlisted assets rose from 27 per cent of the total in FY13 to 30 per cent during FY14. 

Even though its exposure to financial services dipped from S$31 billion to S$30 billion in FY14, it remains the fund’s top sectoral bet. The sovereign fund’s investment in life sciences, consumer and real estate increased from S$12 billion in FY13 to S$14 billion in FY14.

In FY14, portfolio holdings in financial services and telecom, media & technology (TMT) dipped to 53 per cent from 55 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.

In April, Astrea II was launched, which is a co-investment vehicle containing broadly diversified range of investments in 36 private equity funds, each managed by third-party fund managers. Temasek is the single-largest investor in Astrea II with a 38 per cent stake currently.

Temasek India

Temasek, one of the more active sovereign wealth funds in India with investments in some marquee names, had made fresh investment in just one firm in India during FY14 where it put in more money in existing portfolio firm Tata Sky. However, over the last few weeks it has struck two deals and is on course for a third.

It invested in Star Agriwarehousing and Collateral Management Limited, an agri-solutions company and followed it up by co-investing in e-commerce marketplace Snapdeal. The fund is also in advance stages of investment in Intas Pharmaceuticals.

Last fiscal it had two loss-making liquidity events in the country when it exited Firstsource Solutions and part exited Bharti Telecom, a holding firm for Bharti Airtel, with a haircut. More recently it has clocked a multi-bagger by exiting Medreich in a strategic M&A transaction.

(Edited by Joby Puthuparampil Johnson)

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