Temasek's decision to expand its global footprint has paid off, with the Singapore sovereign investor reporting a 19% return to shareholders for the year to March 31.
The fund portfolio has risen S$43 billion to S$266 billion ($196 billion) in a year, driven by the managers’ ability to capitalise on shorter term liquidity-driven rallies in key markets.
The one year total return figure of 19.2% compares with a three-year average of 9.62% and 10-year and 20-year returns of 9% and 7% respectively.
Temasek chairman Lim Boon Heng said, in a report issued yesterday, "This was the most active year for us since the global financial crisis. We made S$30 billion of new investments and a record S$19 billion of divestments.”
Overall, domestic bias is still evident in Temasek's portfolio make-up, with Singapore remaining the largest country exposure at 28%. Within Asia, Lim says the portfolio has been steadily increasing exposure to China, which made up 27% at the end of March. Insurance, consumer and technology stocks have been the main beneficiaries of the expanded Chinese allocation.
The top three sectors for investments globally by Temasek during the year were consumer, financial services, life sciences and agriculture. Its financial sector investments included the insurance and investment companies NN Group and Prudential plc and electronic market maker Virtu Financial.
During the year, it pared down its stake in China Construction Bank and, after the IPO of Alibaba in September 2014, monetised around 10% of its long-held stake. It also exited Mosaic, Cloudary, Kunlun Energy and Medreich.
In the TMT sector, Temasek has invested in mobile services provider Virgin Mobile Latin America, prominent Chinese online taxi firm Didi Kuaidi and e-commerce platforms like Lazada in Southeast Asia and Snapdeal in India.
Last year, Temasek set up offices in London and New York to capitalise on investment opportunities in Europe and the US. Its real estate portfolio has been expanded with UK office and mixed-use developments such as MidCity Place in High Holborn and 22 Bishopsgate in The City of London.
At the Asian Investment Summit hosted in Hong Kong by AsianInvestor in May, the delegates heard how Temasek’s investment committee behaved no differently to any commercial investment entity, albeit that its portfolio operates a flexible and unconstrained approach. For all its freedom, though, its managers communicate in granular detail on the portfolio holdings and investment returns, especially over the long term.
In the latest report, the president of Temasek, Lee Theng Kiat said, “On balance, our investment and divestment activities reflect our view of the global economy in the longer term, as well as our flexibility to capitalise on shorter term liquidity-driven rallies, as we saw in the second half of last year.”
Temasek’s Enterprise Development Group (EDG) serves as a focal point to support new businesses. Dilhan Pillay Sandrasegara, head of the EDG said, “We aim to enable enterprises, from early stage investments to disruptive business models, that have the potential to be future champions.
“We expect technologies to enable new disruptive businesses. Hence, we increased our investment in Vertex Venture, which has widened its venture investment coverage to technology and healthcare investments in Asia, the US and Israel."
Commenting on the economic outlook, Mr Ravi Lambah, Senior Managing Director, Investment, noted, “We are cautiously optimistic for the next few years. The US economic recovery, while uneven at times, remains on track. In China, growth is taking place at a more sustainable rate.”