More focus on private deals and future-proof investments for Temasek Holdings last year

Temasek Holdings logo is seen at their office in Singapore. Temasek's portfolio value hits new record of $275 billion in the year ended Mar 31, 2017. PHOTO: REUTERS
Temasek Holdings logo is seen at their office in Singapore. Temasek's portfolio value hits new record of $275 billion in the year ended Mar 31, 2017. PHOTO: REUTERS

SINGAPORE - Temasek Holdings focused more on "private and negotiated" investment opportunities in the past year rather than publicly listed assets, as equity market valuations have generally been quite high, the firm said on Tuesday (July 11).

However, this is a popular strategy among institutional investors and so the competition for such investments is intense, the firm's directors said at a briefing on the launch of the annual Temasek Review.

"We see a lot of competition now, whether it's in the United States, China, India or Europe," said Mr Dilhan Pillay, the joint head of Temasek's investment and enterprise development groups, joint head of Singapore and head of the Americas.

"And it comes from new sources of capital - it's not just growth equity firms, private equity firms, sovereign wealth funds or pension funds. Now we're seeing family offices coming into this space that we've traditionally played in."

This intense competition for yield has significantly increased the amount of investments being poured into private equity funds and direct investments into privately held companies, which in turn is making it more of a challenge to seek out attractive opportunities, he added.

Mr Rohit Sipahimalani, the joint head of portfolio strategy and risk and joint head of India, added that in such an environment, Temasek has to demonstrate the value it can bring to companies that it wants to invest in.

"We find that, particularly for companies in the US and Europe, our networks in Asia and our strong presence on the ground in key markets where we have a history of well over a decade, that's the value that they see," he said.

 

"If you look at the investments that we've done in the last year in the US and Europe, we almost never win in an auction - we're very bad at auctions - a lot of these have been privately negotiated deals. In all these cases the big value-add they see from us is one, as a patient, longer-term investor that doesn't have a fund life so what we can offer is different from traditional private equity firms. And the benefits we can bring them through our networks in Asia."

Even in this competitive environment, Mr Pillay noted that the fundamentals of Temasek's investing principles still hold.

"We just have to make sure that we source the deals that we feel can give us long-term, sustainable returns and so far we've been quite happy with the deals we've managed to source," he said.

"The record that we've shown since 2011 in the area of technology bears it out. As long as we continue to be firmly focused on the areas that we want to invest in, keep our feet on the ground and have good sourcing capabilities, we think we'll do all right."

Temasek has indeed been focusing more on technology and other sectors that would benefit from long-term trends, such as life sciences, agribusiness, non-bank financial services, consumer and energy and resources.

Last year, such investments included stakes in Ctrip, a Chinese online travel reservations platform, e-commerce giant Amazon, Koubei, an Alibaba-affiliated platform for Chinese merchants and e-commerce marketplace Wish.

Temasek also committed funds in the past year to Verily Life Sciences, a research and engineering outfit spun off from Google, SuperBAC, a Brazilian microbial fertiliser company, VoloAgri Group, a US-based vegetable seeds producer and Impossible Foods, a company developing plant-based meat and dairy products.