GIC and Temasek tighten grip on dealmaking crown

The Singapore funds have reinforced their standing as the world's most active sovereign wealth investors, underlining the benefits of strong global resources and partnerships.
GIC and Temasek tighten grip on dealmaking crown

Singapore’s two sovereign wealth investors frequently rank as the most active dealmakers globally, but they have strongly tightened their grip on that crown during the Covid-19 pandemic.

GIC and Temasek accounted for nearly two-thirds of the 165 transactions executed by sovereign wealth funds between July 2019 and September 2020 (see graph below), up from 53% of the 257 deals done the year before. Temasek was way out in front with 36.4%, and the Singapore institutions' closest rival was Mubadala with a 10.3% share.

These were among the findings of the latest annual sovereign wealth fund report launched yesterday by Madrid-based IE University's Center for the Governance of Change (CGC) and Icex, the Spanish government’s trade and investment body.

The figures are even starker for transactions in the first half of 2020. Over 50 of the 60 or so deals announced in that period were attributable to the two Singapore funds, the study found.

While pandemic-related restrictions have impeded state institutions from making direct investments, it added, those with well established capacity for deal generation, sourcing and execution – such as GIC and Temasek – were less affected.

Javier Capape, IECGC:  

Javier Capape, director of sovereign wealth research at CGC, said during the report's launch: “Singapore’s sovereign wealth funds are the most active on earth. They have extensive workforces doing active direct investments; teams specialised in asset classes and types.

“They are able to deploy capital very quickly and to reach many industries and many geographies with their presence through international offices, with partnerships with co-investors and by sourcing deals at a very impressive pace." 

GIC has 10 offices around the world including in locations like Sao Paulo and Seoul, while Temasek boasts 12, including three in China and three in the US.  


Covid will thus only accelerate the building of private deal investment capabilities generally, Capape told AsianInvestor. “This can be achieved via stronger internal teams, and better (and more diversified) investment partnerships.” Certainly asset owners' appetite for alliances in Asia seems to be growing.

Yet Capape pointed out another key factor in the Singapore funds’ high transaction volume: they tend to do more visible deals. 

"They partner a lot, engage in joint ventures and form part of bidding consortia – such types of investment typically achieve more publicity than domestic private deals made as solo investments," he said.

Moreover, both GIC and Temasek are active in venture capital deals. These are relatively easy to track because VC investment rounds are normally made by a group of investors – and startups want to get them publicised, said Capape.


Both funds' portfolios are well diversified across sectors and geographies, but they have increased their focus on certain areas in the past year or so, just like their peers elsewhere.

Temasek’s geographic investment focus in the 2019-2020 period was primarily the US, followed closely by China, the report said. The fund was also, again, among the most active investors in India, participating in half of the 10 transactions identified in the same time frame.

Temasek’s sector interest “was characteristically very diverse, but exhibited particular concentrations in biotechnology, internet, food and software”, said the study.

One transaction highlighted in particular was Temasek’s lead in a June 2020 round of $250 million in BioNTech, the German biotechnology company, aimed at funding accelerated vaccine development.

This reflected an increased interest in biotech and healthcare among SWFs that pre-dated Covid but has accelerated amid the pandemic.

“We see more sovereign wealth funds investing in biotech companies, viewing this as being of strategic importance,” said Capape. Countries want to get ahead of others in securing such expertise and capabilities, he added.

“Also noteworthy is Temasek’s pivot to agribusiness and innovative food products, such as Impossible Foods, that are encouraging ethical consumer food choices,” the report said.

Meanwhile, GIC was especially active in software, fintech and pharma, as well as expanding its holdings in various segments of property, including hotels, offices and warehouses.

The fund has been one of the most active industrial real estate investors in recent years, the report added. Its notable partnerships include a joint venture with Australia’s ESR to develop a logistics fund focused on strategic locations around Sydney, Melbourne and Brisbane.

The dominance of direct investments by the largest and most well-resourced sovereign funds reinforces a predominant point, concluded the report: direct investment is largely the domain of institutional investors that have developed private market capacity, can maintain a long-term horizon for at least a portion of their portfolio and have sufficient net assets to be able to bear liquidity risk.

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