Temasek Holdings

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Temasek Holdings
Type	Government-owned company
Founded	1975
Headquarters	Singapore
Key people	S Dhanabalan, Chairman Ho Ching, CEO
Industry	Investment services
Products	N/A
Revenue	▲ $79.8 billion SGD (2006)
Website	www.temasekholdings.com.sg

Temasek Holdings is an investment company owned by the government of Singapore. With a multinational staff of more than 300 people, it manages a portfolio of over S$160 billion, or more than US$110 billion, focused primarily in Asia. It is an active shareholder and investor in such sectors as banking & financial services, real estate, transportation & logistics, infrastructure, telecommunications & media, bioscience & healthcare, education, consumer & lifestyle, engineering & technology, as well as energy & resources. In 2008, The Economist reported that Morgan Stanley had estimated the fund's assets at US$159.2 billion^[1].

The company announced in 2008 that is it not a sovereign wealth fund, with its spokesman saying the company "has to sell assets to raise cash for new investments and doesn't require the government to give approvals"^[2]. Temasek was excluded from an agreement between Singapore and the United States requiring greater disclosure and transparency in transactions involving sovereign wealth funds, which included the Government of Singapore Investment Corporation (GIC), claiming it "already meets disclosure guidelines" and provides more details than sovereign wealth funds.

Contents 1 History 2 Investments 3 Earnings 3.1 2004 4 Investments 4.1 2005 4.2 2006 5 Controversy 6 References 7 External links

[edit] History

In the early 1960s, the Singapore government took stakes in a variety of local companies, in sectors such as manufacturing and shipbuilding. Prior to the incorporation of Temasek Holdings in 1974, these stakes were held by the Ministry of Finance (the Ministry remains Temasek's sole shareholder)

In addition to Temasek, the Government of Singapore has another investment arm, the Government Investment Corporation (GIC), which invests primarily the government's foreign reserves.

Ho Ching was appointed executive director of Temasek Holdings in 2002. She is the second wife of Lee Hsien Loong, who became Prime Minister of Singapore in 2004.

On 5 March 2008, Simon Claude Israel, Temasek Holdings’ executive director, appeared in the US House of Representatives before a joint sub-committee of the House Financial Services Committee in a hearing related to foreign government investments in the United States^[3].

[edit] Investments

As of 2004, it owns stakes in many of Singapore's largest companies, such as SingTel, DBS Bank, Singapore Airlines, PSA International, SMRT Corporation, Singapore Power and Neptune Orient Lines. It also holds investments in public icons like the Raffles Hotel and the Singapore Zoo. It also holds a stake in Singapore Pools, the only legal betting company in Singapore. On October 14, 2004, it announced that it was closing the operational headquarters of Singapore Technologies and transferring the latter's assets to itself.

About half of its managed assets are external to Singapore and this includes stakes in telecommunication companies such as Telekom Malaysia. It has also taken up stakes in foreign financial institutions such as PT Bank Danamon in Indonesia and NIB Bank in Pakistan. Temasek-linked companies (TLCs) also hold an extensive global portfolio, such as SingTel's ownership of Australian telco Optus, and Singapore Airlines' 49% stake in Virgin Atlantic.

Although 75% of Temasek's holdings is in Singapore, it has set a target of eventually reducing this to only one-third. Another one-third will be in developed markets and the final third is planned for investment in developing economies.

Now Temasek Holdings is set to enter the NBFC market in India and is aiming SME and direct to consumer credits. Temasek has already started an office in Mumbai by floating its wholly owned subsidiary named First India Credit Ltd.

Source: Temasek Holdings

[edit] Earnings

[edit] 2004

• To satisfy the legal requirements in issuing bonds to raise money from the public, Temasek reported its accounts to the public for the first time in its 30-year history on October 12, 2004. Net profit was S$7.4 billion (US$4.4 billion) on revenues of S$56.5 billion for the financial year closing on March 2004. Its 2003 profit was S$241 million on revenues of S$49.65 billion in the previous financial year, while its 2002 profit was S$4.92 billion on revenues of S$42.56 billion.
• The 2004 report states that Temasek manages S$90 billion in assets. This represents an average total shareholder return of 18% year-on-year since 1974. This single year return was quite controversial as the average return over its 30-year history is only around 3%^{[citation needed]}, far below the industry average. Government Linked Companies lack transparency, for example Temasek had never opened its books until 2005. Standard & Poor's assigning Temasek Holdings a AAA credit rating for "the best companies". At the time of this report, the various Temasek holdings held one-third of Singapore's stock market capitalization between them.

[edit] Investments

[edit] 2005

• Temasek, through its 100% owned subsidiary Vertical Theme, bought a 14.73% stake in MPlant (Malaysia Plantation) which in turns owns Malaysia's smallest bank Alliance Bank. The deal was worth Ringgit 463.59million.
• Temasek bought a 25% stake in one of Pakistan's smallest banks, NDLC-Ific Bank.
• Temasek bought a 2.6% stake in Russian TeleSystems for US$300 000 000 (S$491 million) thus expanding its investments to Eastern Europe.
• Temasek Holdings bought a stake in Mahindra & Mahindra - India's biggest maker of sport utility vehicles and tractors. Temasek made the purchase through its wholly owned unit Aranda Investments (Mauritius) Ltd. It bought 5.5 million shares in the market representing a 4.7 percent stake. Temasek declined to give any financial details, but based on 30 March's closing price, it would have cost some US$62 million. The move comes after Mahindra & Mahindra and Ford Motor ended their partnership in India by selling their cross-holdings.
• Vietnam's Pacific Airlines will sell a 30% stake to Temasek Holdings Pte. in the second half of 2005. A Ministry of Finance official said Pacific Airlines is now valued at $167 million, and Temasek will invest $50 million to acquire the 30% stake. With the cash injection from Temasek, Pacific Airlines, which has accumulated debts of VND215 billion ($14 million) after more than 10 years in operation, will be able to pay off its debts and prepare for new developments, he said.
• Temasek Holdings will invest US$1.4 billion at the initial public offering (IPO) price during the China Construction Bank's planned international IPO, a bank spokesman announced Monday. China Construction Bank (CCB) and Asia Financial Holdings Pte. Ltd. (AFH), a wholly owned subsidiary of Temasek, signed a definitive agreement in connection with the strategic investment in CCB on July 1 for a 5.1% stake, the spokesman revealed
• Temasek Holdings Ltd announced on 8 July 2005 that it had almost tripled its stake in Pakistan's NDLC-IFIC Bank (NIB.KA), or NIB, as it expands into South Asia's fastest-growing economy from 25% to 72.6% for US$57 million. NIB is Temasek's sole investment in Pakistan, whose economy grew by 8.35% in the last fiscal year ending June 30; the fastest growth rate in 20 years. In a statement, Temasek said it is grateful to NIB shareholders for giving it the "opportunity to take a majority stake in the bank, and for their confidence in allowing us to work with the board and management to fulfill our common vision of building NIB into a leading bank in Pakistan." Temasek is hopeful about the growth prospects of Pakistan, particularly the financial sector and believes that NIB is well positioned to capitalize on this growth, it said. It was first revealed in January that Temasek had bought a 25% stake in NIB, a small commercial bank, through Bugis Investments, a wholly owned subsidiary of Asia Financial Holdings, or AFH. On June 30, AFH was allotted fresh shares by NIB's board of directors, raising Bugis' ownership of NIB from 25% to 72.6%, Temasek said. AFH is a wholly owned unit of Temasek Holdings. NDLC-IFIC Bank, itself the product of a merger between two financial institutions in 2003, also bought the local banking unit of French bank Credit Agricole (4507.FR) that same year.
• Temasek Holdings has joined a group of private equity groups in investing $70 million in Russian tyre production group Amtel Holland Holdings, an Amtel statement said. In March, Temasek bought a 2.6 percent stake worth about $372 million in Russia's top mobile phone firm Mobile TeleSystems. Temasek joined Alfa Bank Holdings in the latest round of fund raising by Amtel. Other investors in the group include Templeton Asset Management and Citicorp International Finance Corp. "Amtel is Temasek's first direct private investment in Russia, so it was important that we partnered with a company with an ethical and strong management team that was backed by other well-respected investors," said Manish Kejriwal, managing director for strategic development at Temasek. (8/7/05)
• July 15, 2005 - Temasek Holdings eyeing a stake in Taiwan's Chang Hwa Commercial Bank (2801.TW), a source familiar with the situation said Friday. Chang Hwa, the island's sixth largest lender by assets, is offering 1.4 billion new shares, equivalent to a 22% stake, worth at least NT$25.17 billion based on the bank's lowest offering price of NT$17.98 a share. The source is involved in the transaction, and confirmed that Temasek is competing against a few Taiwanese financial holding firms for the Chang Hwa shares on offer. Chang Hwa has said it expects to close the deal by next Friday.
• On 20 July 2005, Temasek Holdings has invested S$11 million in Mumbai-based Shringar Cinemas. Temasek says its wholly owned units, Aranda Investments (Mauritius) and Dunearn Investments (Mauritius), paid 62.5 rupees per share for the 14.9% stake. The shares were bought from India Value Fund which is managed by GW Capital. Shringar Cinemas operates multiplexes in India. Shares of Shringar traded at 74 rupees Wednesday morning on the Mumbai stock exchange. Earlier this month, Temasek announced that it's teaming up with London-based Sabre Capital to raise up to US$5 billion to invest in India. The money is to be pumped into equities and fixed-income markets of India's booming economy.
• Thursday 21 July 2005, Temasek Holdings will try to hire Chinatrust Financial Holding Co. (2891.TW) President Eric Chen if it acquires a 22% stake in Chang Hwa Commercial Bank Ltd. (2801.TW), the Commercial Times reports, citing unnamed sources. The paper also cites Chen, a former banker at Citigroup Inc. (C), as saying he would consider an offer to become president of Chang Hwa if Singapore's state-owned investment company bid for the stake is successful. Temasek Holdings is competing against several Taiwanese financial holding firms, including Mega Financial Holding Co. (2886.TW) and Taishin Financial Holding Co. (2887.TW), for the stake backed by 1.4 billion new shares. Chang Hwa, Taiwan's sixth largest lender by assets, said it expects to close the deal Friday
• On July 22, 2005, Chang Hwa accepted Taishin Financial's offer of NT$26.12 per share for the 1.4 billion shares being sold by Chang Hwa, Taiwan's sixth-largest lender by assets. Taishin's bid was valued at NT$36.6 billion. However, Temasek, Singapore's state-owned investment company, submitted another proposal for the 22% stake before Chang Hwa's board meeting on Friday, 29 July 2005.
• On August 3, 2005, Temasek cut its stake in SMRT to 54.8% from 62.1% - Singapore's state-owned investment company, Temasek Holdings Pte Ltd, said Wednesday it has reduced its stake in commuter rail and bus operator SMRT Corp. (S53.SG) to 54.8% from 62.1% after it placed out 110 million ordinary shares for sale late Tuesday. The shares were placed at S$1.11 per share and sold to institutional investors, it said in a statement. SMRT shares ended Tuesday's session at S$1.16. Temasek said the placement was aimed at improving the liquidity of SMRT stock and widening the stock's investor base, benefiting all SMRT investors. The share placement raised approximately S$122 million.
• On August 8, 2005, Temasek Holdings loses its bid to buy a stake in Bank of China to Royal Bank of Scotland. RBS, Europe's second-biggest lender, a 5% holding in Bank of China, though it will control the 10% holding on behalf of its co-investors. The deal is estimated that $3.1bn (£1.7bn)
• On August 11, 2005, it was rumoured that Temasek was in talks with Bank of China to buy a stake in it. BOC plans to bring in four foreign investors to take a combined stake of nearly 25%, worth $6 billion, Caijing magazine reportsin its latest edition. Royal Bank of Scotland Group PLC (RBS.LN) and Singapore's Temasek Holdings will each take a 9.9% stake in Bank of China, the report said, without citing any sources. UBS AG (UBS) and the Asian Development Bank will together hold a 5% stake
• On August 10, 2005, Temasek Holdings raised a total of S$580 million from placing out a 7.5% stake in property developer CapitaLand. Temasek revealed that it had placed out 200 million ordinary shares in CapitaLand at $2.90 each. That brings its shareholding in the property developer down to 44.5%, from 52%. Temasek remains the single largest shareholder in the company.
• On August 11, 2005, Chinese property firm Hopson Development Holdings Ltd. said it was selling a 16.7 percent stake in the company to Singapore state investment agency Temasek [TEM.UL] and a fund, Tiger Global, for HK$977.93 million ($125.4 million). The two strategic investors -- Aranda, a unit of Temasek, and Tiger Global, managed by Tiger Global Management -- will each own 8.33 percent of the company's enlarged issued share capital, after an issue of new shares, Hopson said in a statement.
• On August 24, 2005, there was rumour that Temasek Holdings may double its investment in China Construction Bank to $2.4 billion as part of a plan to expand overseas and cut shareholdings in Singapore's slower-growing economy, people familiar with the proposal said. Singapore's state-owned investment company offered to buy $1.4 billion of stock in China's third-largest bank before an initial public offering in October, said the people, who declined to be identified. Beijing-based Construction Bank last month said Temasek would invest $1 billion in the IPO itself. China Construction Bank accounts for 12 percent of total loans in China and has 14,500 branches.
• On August 25, 2005, Temasek Holdings is reported to be in the final stages of a deal to buy a 10% stake in Bank of China. According to the UK's Financial Times, the Singapore investment company will pay US$3.1 billion for the stake. The paper however adds that no deal has yet been reached. Temasek is said to be demanding warranties against a sudden deterioration in the finances of the state lender.
• On August 31, 2005, Temasek Holdings, the Singapore government's investment arm, will invest 3.1 billion US dollars in the Bank of China for a 10 percent stake, a BOC spokesman was quoted as saying by state media. Temasek will earmark another 500 million dollars at the initial public offering price during the BOC's planned international IPO. The deal will mark Temasek's second venture into China's banks after last month confirming it would purchase one billion dollars' worth of shares in China Construction Bank (CCB) during its public sale. Temasek will invest in BOC through the Asia Financial Holdings (AFH), a subsidiary of Temasek.

AFH will help the bank improve corporate governance and deepen banking reformsIt will become one of the BOC's strategic investors alongside Royal Bank of Scotland (RBoS) ahead of next year's overseas listing by the Chinese lender, analysts have said. RBoS announced August 18 it would lead a consortium to buy a 10 percent stake in BOC for 3.1 billion dollars alongside US investment bank Merrill Lynch and Hong Kong-based business tycoon Li Ka-Shing.

• On Wednesday August 31, 2005, Singapore Technologies Engineering Ltd. (S63.SG), a defense and engineering group part owned by the Singapore government, Tuesday said its unit ST Electronics will buy a U.S. company called iDirect Inc. in a deal worth US$165 million. iDirect, which was founded in Virginia in 1994, is a manufacturer of two-way Internet protocol-based broadband satellite networking solutions. Its customer base includes over 100 companies in the telecommunications services, oil and gas, construction and marine industries, as well as government agencies. "The acquisition of iDirect extends ST Electronics' presence in the U.S. and propels us to be a leading global satcom (satellite communications) solutions provider," said ST Electronics' President Seah Moon Ming.
• On September 3, 2005,Temasek Holdings Pte, Singapore's state-owned investment company, bought 12.4 per cent of Habib Corp, a Malaysian jewellery maker that acquired tugboats and barges from a Singapore shipping company. The 9.2 million Habib shares were acquired by Fullerton Fund Management Company Ltd for the discretionary fund account of Temasek Fullerton Alpha Pte, owned by Temasek, according to a stock exchange filing yesterday. It didn't say how much it paid for the shares or who it bought them from. Scomi Group Bhd, a Malaysian oil and gas services company, in February agreed to buy 30 per cent of Habib, giving it access to US$342 million of tugboats and barges.
• September 8 2005Investment company Temasek Holdings is reported to be planning the sale of its first global bond issue. Marketing of the US-dollar denominated debt issue for investors in Asia, Europe and the US is said to be planned for next Monday and Tuesday. Pricing is expected to be decided after the road show. According to Reuters, analysts expect Temasek to sell between US$500 million and US$1 billion of debt. Deutsche Bank and JPMorgan Chase are said to be lead managing the international bond offering. When contacted by Channel NewsAsia, Temasek would not comment on details, except to say that it's exploring various financing options to enhance its capital efficiency and increase its financial flexibility. Temasek has the top grade rating of AAA by Standard & Poor's and Aaa by Moody's Investors Service.
• On September 8 2005SpiceJet will get $20 million from MacRitchie Investments, Singapore (a wholly owned subsidiary of Temasek Holdings) and Istithmar, a UAE-based private equity firm.
• On 28 October 2005, Temasek Holdings said that it was open to increasing its stake in Malaysia's Southern Bank or selling off its current 7.6 percent shareholding, depending on opportunities. It may also just hold on to what it currently has for commercial benefits. Temasek says as long as it sees good returns from the transaction, it will support Southern Bank's move to buy Singapore's Asia General Holdings. But Temasek declined to comment on whether it would step in to buy the Singapore insurer if Southern Bank fails to get its shareholders' support for the deal. Spokesperson Eva Ho confirmed that Temasek owns a direct 4.36 percent stake of the Malaysian bank, while other units within the Temasek stable have a combined 3.22 percent. She would not reveal how much Temasek paid for the shares which were bought in the open market over a period of time. Southern Bank is currently fending off a takeover proposal by Commerce Asset Holdings which has been holding merger talks with a few major shareholders.
• On 31 October 2005, Singapore’s Temasek Holdings, Blackstone Capital Partners and the Carlyle Group have put in their bids to acquire a strategic stake in Air Sahara. According to industry sources, about eight bidders are interested in the airline, which has kept all “all options open”, including selling equity or strategic partnership, to fund its expansion plans. Ernst & Young is advising Air Sahara on the transaction. The sources said though October 31 was the last day for submitting bids by interested parties, it was likely that the deadline would be extended since prospective bidders had sought more information about the company. Liquor baron and owner of Kingfisher Airline Vijay Mallya has also evinced keen interest in picking up a stake in Air Sahara, while Jet Airways has said it was not, though earlier reports had suggested that it was holding negotiations on the matter. While some of the interested parties had put in their bids for the $100 million private placement, others were holding talks with Air Sahara for picking a higher stake. Air Sahara had last month announced that E&Y had estimated the company’s enterprise value between $750 million and $1 billion. The airline wants to offload 10% equity, which amounts to almost $100 million.

[edit] 2006

• On January 23, 2006, Temasek Holdings acquired 49% of shares in Shin Corporation from the Shinawatra and Damapong families. Aspen Holdings and Cedar Holdings were used as holding companies in the transaction.
• On March 28, 2006, Temasek Holdings bought an 11.55% stake in the London based Standard Chartered bank worth an estimated $4bn (£2.3bn) from the estate of billionaire Khoo Teck Puat [1]
• After the Global Offering (IPO) of the Bank of China (BOC) which listed on the Hong Kong Stock Exchange on June 1, 2006 (SEHK:3988), Temasek's ownership of the BOC through its subsidiary, Asia Financial Holdings Pte. Ltd., has been diluted to 4.765% (or 11,785,825,118 shares), after the over-allotment option was exercised in full.

[edit] Controversy

Temasek is an arm of the Singapore government and owned 100% by the Ministry of Finance, and these close links to the government have on several occasions caused protests in foreign countries.

When ST Telmedia, a TLC, took a significant stake in Indonesian Indosat, workers went on strike to protest working for Singapore. In 2003, when ST Telemedia acquired a two-third share of computer networking telco Global Crossing, the acquisition had to be approved by the U.S. government to ensure a foreign government did not control the extensive network. Moreover, it is said that Temasek has been trying to take control of major competitors in other countries for the sake of Singapore's economy.

Main article: Thaksin Shinawatra $1.88 billion deal controversy

Temasek's 2006 acquisition of Shin Corporation, owned by the family of then Thai prime minister Thaksin Shinawatra, was particularly controversial, with protestors burning effigies of Lee and Ho in the streets of Bangkok.^[5] The deal was a factor in exacerbating the Thai political crisis, which eventually led to the downfall of Thaksin and a review of the transaction's legality. The military junta that overthrew Thaksin later forced Temasek to divest the majority of its investment in Shin Corp.^[6]

Temasek is cited by journalist Eric Ellis as being central to the Singaporean support for the Burmese military dictatorship.^[7] However, Singapore's High Commissioner to Australia has issued a response denying these claims.^[8]

[edit] References

[edit] External links

• Temasek Holdings
• Singapore: Government-linked corporations face the future. Embassy of the United States, Singapore. March 2001
• GLCWatch Website providing information on Government Linked Corporations
• SWF Institute Profile on Temasek
• http://www.sovereigninvest.org The Sovereign Investment Council, a trade group for sovereign investors and financial firms that serve sovereign investment funds.