Temasek 'eyes US investments' to offset fall in portfolio value

Temasek Holdings is eyeing US deals and co-investments with private equity partners to offset its first annual decline in the value of its assets in seven years.
Temasek Holdings is eyeing US deals and co-investments with private equity partners to offset its first annual decline in the value of its assets in seven years.PHOTO: REUTERS

Singapore state investor Temasek is set to pounce on deals in the United States and look for co-investments with private equity partners to offset its first annual decline in the value of its assets in seven years, said bankers and people familiar with the strategy.

Temasek, one of Asia's most active state investors, has seen its nearly 16 per cent stake in London-based Standard Chartered drop 55 per cent in value over the past financial year while its Asian investments have been hit by China's economic slowdown.

The 10 per cent drop in sterling against the Singapore dollar that followed Britain's vote to leave the European Union has also depressed the value of the Standard Chartered stake.

Temasek said it will offer details of its performance when it reports results this week, as well as give some indication as to where it sees future investment opportunities.

The investor promoted former corporate lawyer Dilhan Pillay Sandrasegara as president of its international business and head of its Americas team on May 1, with a view to accelerate its investment in that region, especially in technology, consumer and healthcare, people familiar with Temasek's strategy told Reuters.

Since then, Mr Sandrasegara has been meeting companies in Silicon Valley, where he is spending a considerable part of his time every month, the people said.

"Dilhan is a very smart guy, I am sure he will hire some people and build a team," said a senior banker, who works closely with Temasek.

"They have a lot of dry powder that can be deployed."

Temasek does not disclose its net cash position.

Last month, Temasek formed an advisory group comprising executives from global companies such as PepsiCo and Honeywell International as part of its bid to seek US investments. Singaporean and Chinese firms make up over half of Temasek's S$266 billion portfolio.

Mr Enrico Soddu, head of data and research at the Sovereign Wealth Centre in London, expects the value of the portfolio to have fallen by between 5 per cent and 10 per cent from a year earlier, mainly hit by China.

This would be the first decline since 2009. The portfolio rose by nearly a fifth in the year ended March 2015.

Temasek has done a few big deals in the West in recent years.

It was stung by an investment in Bank of America-Merrill Lynch, in the run-up to the global financial crisis, that proved loss-making.

This year, it sold its US$1.6 billion (S$2.2 billion) stake in shipping firm Neptune Orient Lines and last month pared its stake in China Construction Bank.

It also invested in Alibaba and Korea's Homeplus.

Temasek's returns have fallen below its risk-adjusted hurdle in five of the last eight financial years.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 05, 2016, with the headline 'Temasek 'eyes US investments' to offset fall in portfolio value'. Print Edition | Subscribe