Singapore's GIC and Temasek have long pioneered venture capital investing among sovereign wealth funds and they remain at the forefront as SWF allocations to cutting-edge technology accelerate, according to a new global survey.
Temasek, in particular, with S$308 billion ($228 billion) under management as of March-end, continues to lead the way by funding new technologies, health and life sciences in China, the US and Europe, the joint study by Icex-Invest in Spain and the IE Business School shows.
Temasek has been involved in many of the biggest sovereign VC investments in the last two years, including an $800 million commitment to Verily Life Sciences, a subsidiary of Alphabet, in 2017. Other investments completed in the healthcare sector – primarily in the US, China and Singapore –include WuXi NextCode, Orchard Therapeutics, Hangzhou Just Biotherapeutics and CardioDx.
During 2017 and 2018 (up to end-September this year) Temasek's investments were primarily concentrated in the technology sector. Deals included the funding of Improbable, a British artificial intelligence and cloud-based development tech company, which completed a financing round with participation from SoftBank and Temasek that valued the company at $1 billion. The company is now valued at $2 billion.
The pharmaceuticals sector captured significant new SWF capital too, with Temasek leading 13 deals, including its $3.7 billion follow-on commitment to Bayer to help fund its acquisition of Monsanto.
As figure 1 shows,Temasek dominated by the number and breadth of its deals, investing across software, communications and fintech. The survey sample for 2018 includes 143 transactions distributed across some 19 funds, with Temasek involved in 55 of them and a further 33 involving GIC.
Together the Singaporean SWF duo accounted for 58% of the total deal count.
FIGURE 1: MOST ACTIVE SOVEREIGN WEALTH FUNDS, 2017-2018
Temasek’s deal activity last year includes the largest fundraising globally by a private company – Ant Financial. The operator of China’s largest online payment platform raised about $14 billion from Temasek, GIC and Malaysian sovereign fund Khazanah, as well as from private equity firms Warburg Pincus, Silver Lake and General Atlantic.
Temasek extended its investment profile in China as well in 2018, joining Trustbridge Partners, SoftBank, the Vision Fund and Hony Capital in a $500 million Series B round of funding in WeWork China. Elsewhere in Asia, Temasek participated along with Google and China’s Meituan-Dianping in a $1.2 billion fundraising in Go-Jek, the Indonesian ride-hailing firm.
Go-Jek requires access to solid funding sources as it faces intense competition from Grab and Uber, which are backed by SoftBank.
Temasek's overall portfolio has shown consistent positive performance, with one major dip at the time of the global financial crisis in 2009. In 2018, the portfolio value of its listed and unlisted (by book value) holdings grew by 12%. Its unlisted assets have remained steady at around 40% of the portfolio in the last three years.
The geographic split of the portfolio is 27% domestic, with 41% in the rest of Asia and 32% in the rest of the world.
Last year saw record-high levels of VC investment by SWFs, with 84 deals in 77 different venture capital rounds as new players enter the field, according to the Icex report.
From just seven before 2014, 17 different sovereign wealth funds participated in VC deals in 2018, it said.
FIGURE 2: TOP 5 SECTORS FOR VC FUNDING