Temasek Holdings

Temasek Holdings

Type	Sovereign Wealth Fund
Industry	Investment services
Founded	1975
Headquarters	Singapore
Key people	Suppiah Dhanabalan, Chairman Ho Ching, CEO
Revenue	$83.284 billion SGD (2008)
Net income	$22.474 billion SGD (2008)
Total assets	$185 billion SGD (2008)
Website	Temasek Holdings

Temasek Holdings is an investment company owned by the government of Singapore. With an international staff of 380 people, it manages a portfolio of about S$193 billion (US$157 billion) at end of March 2011,^[1] focused primarily in Asia. It is an active shareholder and investor in financial services, telecommunications & media, technology, transportation, industrials, lifesciences, consumer, real estate, energy & resources.

Temasek is one of a few global firms with the highest corporate credit ratings by both Standard & Poor's and Moody's, of AAA and Aaa respectively.^[2] It has also attained perfect scores quarterly on the "Transparency Index for Sovereign wealth funds", a measure of the openness of government-owned investment funds.^[3][4]

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

Temasek has claimed that it is not strictly a sovereign wealth fund, in the sense that it "has to sell assets to raise cash for new investments and doesn't require the government to give approvals". This claim, made by a Temasek spokesman in 2008, was subsequently disputed by the Singapore Ministry of Finance's governance and investment director, who asserted that a broad definition of the term "sovereign wealth fund" could include "all state-owned investment vehicles, regardless of their funding" ^[5]. He noted, however, that the claim had been made in the context of a 2008 agreement between the United States Treasury, the Abu Dhabi Investment Authority, and GIC regarding the transparency and non-politicization of investments by sovereign wealth funds, and that Temasek already meets disclosure guidelines and provides more details than required by the agreement ^[6].

Contents 1 History 2 Management 2.1 Board of Directors 3 Investments 4 Financial highlights 4.1 2004 4.2 2007 4.3 2008 4.4 2009 4.5 2010 5 Controversy 6 See also 7 References 8 External links

History

At independence, the Singapore government had ownership or joint ownership of a number of local companies, such as Malaysia-Singapore Airlines (later broken up into Malaysia Airlines and Singapore Airlines) and the Singapore Telephone Board (which would later become Singapore Telecommunications). As part of its push for local and foreign private investment in sectors such as manufacturing and shipbuilding, the government's Economic Development Board (EDB) took on minority stakes in a variety of local companies. The government also acquired or established several companies, such as Keppel Corporation (originally Sembawang shipyard, taken over from the British Royal Navy after it withdrew from the island), ST Engineering (originally a weapon manufacturer set up to supply the Singapore Armed Forces), and the shipping company Neptune Orient Lines.

Prior to the incorporation of Temasek Holdings, most of these stakes were held by the Ministry of Finance. Temasek was incorporated in 1974 by an Act of Parliament. The Ministry was set up as (and remains) Temasek's sole shareholder, and the Ministry's various stakes were transferred to it, forming an initial portfolio of just over US$100 million.

Several of the companies in Temasek's initial portfolio were subsequently publicly listed, although Temasek continues to retain a large (and in some case a majority) stake. As of 2011, it owns approximately 20 percent of Keppel Corporation, 54 percent of Singapore Telecommunications, 55 percent of Singapore Airlines, and 66 percent of Neptune Orient Lines (see Temasek Holdings' investments).

In Jan 2008, The Economist reported that Morgan Stanley had estimated the fund's assets at US$159.2 billion.^[7]

On 5 March 2008, Simon Israel, Temasek Holdings’s 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.^[8]

Management

In January 2002, Ho Ching joined Temasek as a Director; subsequently she was appointed Executive Director in May 2002, and Executive Director & CEO in January 2004. She is the wife of Prime Minister Lee Hsien Loong.

In March 2009, Charles "Chip" Goodyear was appointed a member of the Board of Directors and CEO-designate, but owing to differences on strategic issues, the Board and Goodyear mutually agreed in July 2009 not to proceed with his appointment and Ho Ching continued as CEO.^[9][10]

In August 2010, a senior panel of three presidents was appointed:

• Greg Curl, former Bank of America chief risk officer, oversees financial services sector and strategy for the Americas
• Simon Israel, executive director, assumes additional rank of president. He stepped down from his board and executive duties in July 2011^[11]
• Hsieh Fu Hua, former Singapore Exchange CEO, appointed executive director & president; he joined as a director in February 2010. He stepped down from the post of president in October 2011, after 13 months in the role.^[11]

Board of Directors

• Chairman of the Board: S Dhanabalan
• Deputy Chairman of the Board: Chairman and MD of Exxon Mobil Asia Pacific, Kwa Chong Seng
• Executive Director and CEO: Ho Ching
• Executive Director: Chairman of Asia Pacific Breweries, Simon Israel
• Executive Director: Former CEO of Singapore Exchange, Hsieh Fu Hua
• Director: Former Chairman of DBS Group Holdings, Koh Boon Hwee
• Director: Managing Director and Group CEO of ComfortDelGro, Kua Hong Pak
• Director: Managing Director of GK Goh Holdings Ltd, Goh Yew Lin
• Director: Permanent Secretary, Ministry of Finance, Teo Ming Kian
• Director: Chairman of SEB, SAAB AB, Electrolux, Deputy Chairman of Ericsson, Marcus Wallenberg

Investments

Main article: List of Temasek Holdings' investments

As of 2004, it owns stakes in many large foreign companies, including Standard Chartered, Bank of China, China Construction Bank, ICICI Bank, Global Crossing, as well as many of Singapore's largest companies, such as SingTel, DBS Bank, Singapore Airlines, PSA International, SMRT Corporation, Singapore Power, Neptune Orient Lines and Mediacorp. It also holds investments in public icons like the Singapore Zoo and Singapore Pools, the only legal betting company in Singapore. On 14 October 2004, it announced that it was closing the operational headquarters of ST Engineering and transferring the latter's assets to itself.

About half of its managed assets are external to Singapore and 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.

Financial highlights

Temasek's financial year ends in March and reports are usually made in July-August.

Temasek Holdings's total shareholder return is 17% compounded annually since inception in 1974.^[12]

2004

• To satisfy 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 12 October 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. Temasek Holdings has increased transparency over the years, opening its books in 2005. Standard & Poor's assigned Temasek Holdings a AAA credit rating for "the best companies". At the time of this report, the various Temasek holdings linked companies held one-third of Singapore's stock market capitalization between them..

2007

• Temasek reported a 29% drop in earnings to S$9.1 billion (US$6 billion) reflecting fewer transactions and a cautious outlook of the market for the year. Its portfolio stood at S$164 billion, breaching the US$100 billion mark for the first time and about 27% higher than 2006.^[13]

2008

• Temasek achieved record profits of S$18 billion (US$12 billion), double that of 2007. This was boosted by asset sales of S$17 billion in the past year. Temasek's portfolio grew to S$185 billion (US$134 billion), an increase of 13% from the previous year, including a rare S$10 billion injection by the Singapore government.^[14][15]

2009

• On 10 February, Temasek said its investment portfolio value fell by 31%, or about $39 billion, from March to November last year.^[16]

• On 28 May, amidst the Subprime mortgage crisis, Singapore's finance minister defended Temasek's performance in parliament, as the wealth fund has made S$56 billion (US$38.5 billion) in the current market cycle that began around March 2003. In this 6-year period, it achieved an annualised return of 15%, better than the MSCI global equity markets' 6% returns and 'respectably' compared to other reputable institutional investors.^[17][18]

2010

• On 8 July, Temasek reported a 42% full recovery of its portfolio to S$186bn (US$134bn), but net profit fell 26% to S$4.6 billion. S$10 billion new investments were made over the year, with the most recent in resources and energy sectors.

• As of 31 March 2010, total investments within Asia increased from 74% to 78%, OECD dipped from 22% to 20%. About 23% of investments by value are unlisted assets. It is likely to maintain its Asia focus in the near future.

• SingBridge International was established to develop integrated townships and large-scale projects in Asia.

• Seatown was established and seeded with S$4 billion as a pilot project to invest independently of Temasek, with ability to hedge positions. It may invite external institutions to co-invest in 3-5 years and the public in 8-10 years.

• It cited protectionism in developed countries, the European sovereign debt crisis and asset bubbles in developing economies among risks for a slower recovery.^[19][20][21]

Controversy

Temasek is fully owned by Singapore's Ministry of Finance, and these close links to the government have on several occasions caused protests in foreign countries.

• When ST Telmedia (STT Communications), a Temasek-linked company (TLC), took a significant stake in Indonesian Indosat, workers went on strike to protest working for Singapore.

• In 2003, when ST Telemedia (STT Communications) 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.

• 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 on the streets of Bangkok.^[22] 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 tried unsuccessfully to force Temasek to divest a large part of its investment in Shin Corp.^[23] As of 2011, Temasak still effectively controls the majority of share in Shin Corporation which changed its name to Intouch Corporation via its affiliates.^[24][25]

See also

• Sovereign wealth fund
• Government of Singapore Investment Corporation

References

External links

• Temasek Holdings Official website
• Singapore: Government-linked corporations face the future. Embassy of the United States, Singapore. March 2001