Temasek’s Geographic Allocation to China Shrinks, While Unlisted Portfolio Allocation Grows

Posted on 07/12/2022

Singapore’s Temasek Holdings released its 2022 annual review. Temasek’s net portfolio value increased to S$ 403 billion at March 31, 2022 and achieved a 1-year total shareholder return of 5.81% for the fiscal year versus 24.53% in FY 2021, and -2.28% in FY 2020. Temasek was active in the fiscal year ending March 31, 2022, making investments worth S$ 61 billion and divesting from S$ 37 billion compared to the 2021 similar period of investing S$ 49 billion and divesting S$ 39 billion.

Temasek’s portfolio exposure to China dropped to low levels unseen in quite some time at 22% versus 27% in FY 2021, 29% in FY 2020, and 26% in FY 2019. Part of this can be attributed to the valuation of these Chinese domiciled assets. This is at the same time, portfolio allocation to the U.S. and Singapore increased. The allocation to Singapore widened as Temasek was utilized to provide financial support to certain companies during the COVID-19 pandemic, while the sovereign investor continued to ramp up investments in the United States. Temasek still invests in China, but recent deals have been smaller in size, versus the past large investments in Chinese banks, Chinese insurers, and Chinese fintech companies. Instead, Temasek prefers biotech investments in China, as well as logistics companies.

Furthermore, the reorientation of Temasek supporting domestic companies impacted Singaporean investment dollars to China. In 2021, Temasek participated in Singapore Airlines’ S$6.2 billion mandatory convertible bond issue, which helped to strengthen its balance sheet and position it for the resumption of global travel. TEmasek also took part in Olam’s rights issue to fund the strategic acquisition of Olde Thompson, a U.S.-based manufacturer of spices and seasonings, and the accelerated transformation of Olam Food Ingredients. Temasek participated in Sembcorp Marine’s S$1.5 billion rights issue in 2021.

Private Equity
Temasek remains a prolific institutional investor in private companies, from startups to mature companies. Temasek also continues to invest in private equity funds and credit funds. Unlisted assets reached over 50% of Temasek’s portfolio at 52%. Early stage companies make up less than 10% of their unlisted portfolio.

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