SINGAPORE - State investor Temasek Holdings' one-year total shareholder return bounced back in the year ending March, with its portfolio value reaching a new high.
One-year return for shareholders came in at 24.53 per cent, a turnaround from last year's minus 2.28 per cent. This is its highest since 2010, when its one-year return by market value stood at 43 per cent.
Temasek's net portfolio was valued at a record $381 billion as at end-March, up from $306 billion a year ago, it said in its annual review on Tuesday (July 13).
Temasek's portfolio value was boosted by a rally in global markets and the public listing of some of its holdings.
It has also doubled over the decade, with some $276 billion invested and $212 billion divested over the period.
Total shareholder return over 10 years was 7 per cent, up from 5 per cent a year ago.
Temasek's investments benefit Singaporeans through its Net Investment Return Contribution (NIRC) to the annual Budget.
Under the NIRC framework, the Government can spend up to half of the long-term expected investment returns generated by Temasek, sovereign wealth fund GIC and the Monetary Authority of Singapore - the three entities tasked to invest Singapore's reserves.
Temasek's group net profit saw a significant increase to $56.5 billion from $8.8 billion in the previous fiscal year, due to a change in accounting standards two years ago.
China, at 27 per cent, and Singapore (24 per cent) remain the firm’s two largest countries of exposure. Temasek remains anchored in Asia, with the region accounting for 64 per cent of its underlying assets.
The Americas, however, accounted for the largest share of new investments - consistent with recent years - followed by Singapore and then China.
Temasek is increasingly shaping its portfolio in line with four trends: digitalisation, sustainable living, future of consumption and longer lifespans, it said, noting that it is investing in companies that are developing innovative solutions to address global challenges or growing needs.
Incoming chief executive Dilhan Pillay, who is CEO of the state investor’s commercial arm Temasek International, said in a statement how it can help firms thrive and tackle current global challenges.
“We will deploy financial capital to stimulate innovation and growth; develop human capital to uplift capabilities and enhance potential; enable natural capital and foster sustainable solutions; and seed social capital to transform lives for a more inclusive and resilient world,” said Mr Pillay.
He will take over as Temasek CEO on Oct 1 from Ms Ho Ching, who is retiring after heading the state investor for 17 years.
Financial services remained the largest sector in Temasek's portfolio at 24 per cent, with telecommunications, media and technology (TMT) accounting for another 21 per cent.
But the composition of firms in these sectors has changed significantly over the past decade, Temasek said. Its financial services portfolio has evolved from mainly banks to include fintech, insurance and payments, while its TMT investments now have a strong focus on the tech space with e-commerce, sharing economy and digital content investments.
Its portfolio companies include United States-based online entertainment platform Roblox and Singapore payments and card issuance start-up Nium.
Unlisted assets continued to make up the highest share of its portfolio in the latest fiscal year, at 45 per cent.
In the last fiscal year, Temasek invested a record $49 billion, including in Singapore's national carrier Singapore Airlines (SIA) and marine and offshore player Sembcorp Marine. It also divested a high of $39 billion.
Temasek International's investment group joint head and head of portfolio development Nagi Hamiyeh said that the record year of investments and divestments was remarkable given the Covid-19 pandemic lockdowns and impact on travel and face-to-face meetings.
"In a sense, we were quite fortunate, as we had built deep and trusted relationships which stood the test of the pandemic restrictions. That has enabled us to maintain a healthy pace of investment activities and engagement with our portfolio companies all round," he said.
Climate action and sustainable solutions are a key priority for Temasek, with its commitment to halving its 2010 carbon emissions by 2030 and its longer-term ambition of net zero carbon emissions by 2050.
"To do this, we are actively investing in climate-aligned opportunities, and enabling technological and nature-based solutions that are carbon negative. These efforts complement and supplement the decarbonisation efforts of our portfolio companies," said Ms Neo Gim Huay, Temasek International managing director for climate change strategy.
Temasek has formed a sustainability council to share knowledge and tools for carbon measurement, physical climate risk assessments and climate-related disclosures.
Among its investments in these areas include Israel-headquartered water-saving technology firm Rivulis and chemicals manufacturing platform Solugen.
The firm said it is cautiously optimistic on the global economic recovery in the short to medium term, with the recovery encouraged by accommodative fiscal and monetary policies.
But uncertainty remains, given the virulence of new Covid-19 variants and potential geopolitical reverberations as tensions mount between China and the US.
Addressing a question on Temasek’s direction under its new chief executive at a media briefing on Tuesday, Mr Hamiyeh pointed to Mr Pillay’s position as Temasek International’s CEO for the past few years and how he has been integral to the firm’s vision and its journey going forward.
Mr Hamiyeh said not much change is expected with the handover to Mr Pillay, noting that Temasek has come up with a strong bench of senior management over the past years and decisions are made collectively.
Succession planning is taken very seriously at the company, and it is already planning for the next generation, he added.
Correction note: An earlier version of this story said that Temasek's investments in its financial year ending March 31, 2021, included agri-food company Olam International. Its investment in the company was made after the financial year ended. We are sorry for the error.