Temasek Holdings has partnered Asia-focused private equity firm MBK Partners to bid for the South Korean arm of British supermarket operator Tesco, two people familiar with the matter told Reuters.

MBK has already entered the race for Homeplus, which is valued at US$6 billion (S$8.4 billion). It is vying against Carlyle Group and a consortium comprising Affinity Equity Partners and KKR & Co.

Temasek's latest interest in a consumer-sector deal comes more than a year after it bought almost a quarter of health and beauty retailer A.S. Watson, which is backed by Hong Kong tycoon Li Ka Shing. The US$5.7 billion investment was its single-largest.

Temasek, which has 28 per cent of its US$197 billion portfolio in financial services, has been diversifying in recent years, moving into the consumer and life science sectors.

Consumer and real estate companies formed 15 per cent of Temasek's assets as of March 31, up from 11 per cent two years earlier.

A Temasek spokesman declined to comment on interest in Tesco, and a spokesman for MBK could not be reached. Those familiar with the matter declined to be identified as the information is confidential. They said Temasek's entry marks a rare instance where the fund is bidding against Singapore sovereign wealth fund GIC, which has partnered Carlyle.

REUTERS