Singapore: Singapore’s state investment firm Temasek Holdings (Private) Ltd has said it plans to work closely with companies in which it owns stakes as overseas holdings increase, in the first change to its charter in seven years.
“Temasek will focus on sustainable returns by engaging with the boards and management of our portfolio companies,” chairman S. Dhanabalan said at a briefing in Singapore on Tuesday. Temasek is looking for a successor to chief executive officer Ho Ching after Charles Chip Goodyear’s appointment was scrapped over differences in investment strategy. Assets of Temasek slumped by more than S$40 billion (Rs1.35 trillion) last fiscal year.
The review reflects the fund’s transformation from a passive holder of stakes in government-controlled companies to an investor with more than two-thirds of its assets outside the country. It holds 68% of PT Bank Danamon Indonesia Tbk and 6% of China Construction Bank Corp.
Changing focus: S. Dhanabalan, chairman of Temasek Holdings. Munshi Ahmed / Bloomberg
It sounds like shareholder activism, which is one thing they haven’t explored, said Melvyn Teo, associate professor of finance at Singapore Management University, who holds a PhD in economics from Harvard University. But this can be done in a friendly way, and more likely to be actions taken at the board level to unlock value.
Temasek’s assets for the year ended 31 March fell from S$185 billion a year earlier, Ho Ching, the wife of Singapore Prime Minister Lee Hsien Loong, said last month.
Two-thirds of Temasek’s portfolio is now outside of Singapore, compared with a predominantly Singapore portfolio in 2002, Dhanabalan said. Temasek said it will continue to review its charter to ensure it remains relevant to its investments.
The state-owned fund, set up in 1974 to foster development of Singapore’s banks, airlines and ports, now holds stakes in financial services, real estate, telecommunications, energy and transportation companies in at least four continents. It is the biggest shareholder in five of Singapore’s 10 biggest publicly traded companies by market value including Singapore Telecommunications Ltd, Southeast Asia’s biggest phone company, and DBS Group Holdings Ltd, the region’s largest bank by assets.
“We have refined our charter to more clearly articulate our focus as a value-oriented investor, and also as a shareholder focused on achieving sustainable returns by engaging with the boards and management of our portfolio companies,” said Dhanabalan. “In addition, we have made explicit our commitment to contribute part of our returns to encourage the growth and development of our wider community.” The charter also defines Temasek as an active investor.
“Temasek will continue to create and deliver sustainable, long-term value for our stakeholders, including the ministry of finance,” the fund said.
“In the medium term, we believe this can be achieved with a clear focus on Asia, including Singapore, while we add exposures to new geographies like Latin America,” Temasek said in a statement delivered before the briefing.
Temasek increased its financial service holdings to 40% of its portfolio with stakes in Standard Chartered Plc., ICICI Bank Ltd and lenders in Indonesia, South Korea and Pakistan. Temasek holds 13.8% in Bank of China Ltd.
Temasek will still invest in Western financial institution if the opportunities come and look attractive, Ho said on Tuesday.
The financial crisis is still unfolding, Ho said. “I think as an investor, we have looked at it and the possible impact in terms of the scenarios going forward, and we have come to the conclusion that our focus in Asia still remains for us a valid area of investment,” said Ho.