Temasek Holdings is on the lookout for "emerging champions" in the tech industry and has ramped up investments in the sector to tap on trends like the sharing economy.
Telecommunications, media and technology made up the bulk of its portfolio in the financial year ended March 31, overtaking the financial services sector.
The Singapore investment company said at its annual results briefing yesterday that it will open its second United States office in San Francisco in September to take advantage of tech-related investment opportunities in Silicon Valley. It already has an office in New York.
The telecommunications, media and technology sector made up 25 per cent of Temasek's $242 billion portfolio for the year ended March 31. Financial services comprised 23 per cent of the portfolio - down from 28 per cent the previous year.
This shift in composition partly reflected stock price volatility over the period, said Ms Png Chin Yee, head of financial services and senior managing director for China.
In the longer term, however, Temasek is also positioning its portfolio towards emerging trends with strong growth potential.
"The sharing economy and changing consumption patterns have given rise to new businesses that did not exist even a few years ago," said Mr Michael Buchanan, head of strategy. "(We) were investing in this space long before the buzzwords 'sharing economy' became popular."
Temasek was among 12 investors that participated in a US$1.5 billion (S$2 billion) fund-raising round by home rental service AirbnB last year. It was an early investor in Chinese e-commerce giant Alibaba.
The sharing economy and changing consumption patterns have given rise to new businesses that did not exist even a few years ago. (We) were investing in this space long before the buzzwords 'sharing economy' became popular.
MR MICHAEL BUCHANAN, Temasek's head of strategy.
During its financial year, Temasek also raised its investment in Didi Chuxing, a Chinese transportation network company, and Mei- tuan-Dianping, an online-to-offline local service platform in China.
Temasek also put money in smaller but fast-growing technology-enabled companies such as SoFi and C2FO in the US, Funding Circle in Britain, and BillDesk and Policy Bazaar in India.
These emerging sectors are a growing segment of Temasek's portfolio. For instance, the telecoms sector made up the bulk of Temasek's telecommunications, media and technology portfolio in 2011, but tech and media investments have grown rapidly since and now make up almost a quarter of the portfolio.
Similarly, banks made up almost all of Temasek's exposure to financial services in 2011. The company has since broadened its holdings to include more insurance, payments and financial technology firms, such as digital payment services provider PayPal.
These now make up one-eighth of its financial services portfolio, Ms Png said, adding: "We're very focused on building our insurance exposure, particularly in emerging markets in Asia, where penetration is still very low."
Other emerging sectors the company is looking at include big data analytics, robotics and artificial intelligence, Mr Buchanan said.