TEMASEK Holdings is taking a significant stake in the holding company of health and beauty chain Watsons, as it seeks to boost its exposure to increasingly affluent Asian consumers.

The Singapore investment company will fork out US$5.7 billion (S$7.3 billion) for 24.95 per cent of A.S. Watson Group, which has 13 other retail brands in its portfolio, including supermarket chain ParknShop.

Asia's richest person Li Ka-shing, who is offloading the minority stake, will remain in control of A.S. Watson, via his Hong Kong-listed Hutchison Whampoa which owns the firm.

A.S. Watson is the largest international health and beauty retailer with over 10,500 stores operating 14 retail brands worldwide. Its flagship brand Watsons operates over 4,000 stores and more than 900 pharmacies, including in mainland China, Hong Kong, Taiwan and Singapore.

"The consumer retail sector is a good proxy to growing middle income populations and transforming economies," said Mr Chia Song Hwee, head of the investment group in Temasek, in a statement on Friday.

"This is very much part of our investment themes as we shape Temasek's portfolio for the long term. We continue to believe in the growth opportunities and long term prospects of Asia, particularly China, and a recovering Europe."

The deal is a dramatic turnaround after Mr Li announced early this month that he will list the 25 per cent A.S. Watson stake in Hong Kong and another exchange within this year. Earlier this week, reports emerged that the second location would be London and the stake will be sold for up to US$6 billion.

Now, Temasek has swooped in buy the shares meant to be listed and A.S. Watson will remain unlisted - for now.

A Hutchison Whampoa statement on Friday said it has agreed with Temasek to work together towards listing A.S. Watson "at a suitable time".