GIC invests more in tech firms but is mindful of valuations

File photo of the Bitcoin virtual currency. GIC has expanded its technology investments while steering clear of cryptocurrencies.
File photo of the Bitcoin virtual currency. GIC has expanded its technology investments while steering clear of cryptocurrencies. PHOTO: REUTERS

GIC has expanded its technology investments - while steering clear of cryptocurrencies - but it warns that valuations have gone up substantially and it pays to be cautious.

It invests directly and through external fund managers in technology start-ups and growth companies, while also providing seed capital via venture capital funds.

But Bitcoin and the like are not on the agenda.

Group chief investment officer Jeffrey Jaensubhakij said at a briefing yesterday: "Cryptocurrencies are not issued by any go-vernment and are not backed by any asset or issuer. There is no regulatory safeguard for investments in cryptocurrencies. We consider the surges and changes in prices of cryptocurrencies to be driven by speculation."

However, it sees blockchain as an important technology.

Last month, GIC participated in Ant Financial's US$14 billion (S$19.1 billion) Series C equity financing. The funds will be used to accelerate Alipay's globalisation plans.

In May, GIC led a US$260 million Series B financing by CStone, a biopharmaceutical firm. It is also an investor in DJI and Meituan-Dianping in China, DoorDash in the United States and Oxford Nanopore Britain, among others.

GIC noted that it participated in a funding round for Shanghai-based electric car maker NIO, formerly known as NextEV.

 

It said this was based on its belief that China is a key innovation centre for building consumer products that optimise hardware, software and a complex supply chain, allowing companies to deliver high-quality products at a lower cost.

GIC has no fixed allocation to any specific geographies and sub-sectors.

"We study industry trends to help filter areas for deeper research and potential opportunities, not to allocate capital," it said.

It noted that it has invested significantly in new technology to enhance its investment processes.

"We believe our approach to finding good companies, good technologies and good business models, and applying these to our investment and organisational strategies, will give us a competitive edge and leave us well placed to invest in this challenging environment."

Angela Tan

A version of this article appeared in the print edition of The Straits Times on July 13, 2018, with the headline 'GIC invests more in tech firms but is mindful of valuations'. Print Edition | Subscribe