Insurer NTUC Income has appointed Temasek-owned Fullerton Fund Management Company to manage assets worth around $23 billion.
The partnership involves a Fullerton's holding company, FFMC Holdings, issuing new shares to Income. This will give the insurer a significant minority stake in FFMC, while Temasek remains Fullerton's majority stakeholder.
The firms said the proposed transaction is not a merger and both companies will remain independent entities.
The move could make Fullerton one of the largest locally-owned asset management firms here, with its assets under management rising to more than $40 billion, up from $17.3 billion as at Sept 30.
Income chief executive Ken Ng said the insurer previously managed its own investments but having a licensed management team means it will get to "professionalise and leverage capabilities" of both parties and create more value for policyholders.
"We believe this proposed partnership with Fullerton is in our best interest to leverage economies of scale and tap the... deep investment expertise of our combined investment capabilities to serve our policyholders better," he added.
The pooling of investment capabilities will create more opportunities to explore innovative investment products and solutions, Income and Fullerton said in a joint statement yesterday.
The move also involves Income fund management employees transferring to Fullerton.
The proposed transaction is subject to regulatory approvals and other customary closing conditions.
In February, Hong Kong-listed insurer AIA set up a Singapore-based dedicated investment company to manage its internal funds.
Market sources have noted that insurers that set up units to manage their own funds found it difficult to attract management talent.
That is why most insurers now prefer to appoint an asset management company to do the work or to set up a dedicated group to improve investment strategies and returns.
Tokyo-based Tokio Marine has Tokio Marine Asset Management to manage its insurance funds, while internal asset managers oversee Canadian insurer Manulife Singapore's funds.
Others have their own asset management entities that manage their funds as well as service external institutional and retail investors.
These include Great Eastern's Lion Global Investors, British insurer Prudential's Asian asset manager Eastspring Investments, British-based Aviva Investors, which looks after Aviva Singapore's participating and non-participating funds, and French insurer AXA's fund house, AXA Investment Managers.