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Temasek Cannot Divest Stakes in GLCs Overnight

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According to the press release, “We refer to Mak Yuen Teen’s letter “Cut the knot of government ownership of GLCs” (ST, 2 May 00), and thank him for his comments.

GLCs are products of history

2 As Mr Mak has rightly pointed out, the original purpose behind the government’s involvement in business was to accelerate Singapore’s economic development by initiating industrialisation in the early 1960s. At that time, the government moved into areas such as steel making, shiprepair and petrochemicals etc, industries where the private sector did not want to enter and assume all the risks. Temasek Holdings was formed in 1974 to hold and manage all such government investments.

3 In the 1980s, Temasek began a process to divest its investments in companies that could stand on their own and were no longer of national or strategic importance. Our stakes in many companies have been reduced significantly. Some were divested completely. Please see Table 1 for some examples.

4 While we agree that the times have changed and there are no compelling reasons for the Government to hold controlling stakes in the GLCs, we cannot divest our stakes in the GLCs overnight. We have to wait for the right time to get the right price. In the meantime, we will vote our shares where necessary to enhance the value of our investments. We will be abdicating from our role if we step aside and not support proposals which make commercial sense.

Appointment of Board of Directors

5 Contrary to popular belief, Temasek only appoints the number of directors to the listed GLC Boards proportional to its shareholding level. We believe that each Board should have a good mix of directors so that there is a right complement of expertise. Temasek therefore also nominates private sector directors to the GLC Boards.

6 The proportion of directors from the public sector on the Boards of our listed GLCs is actually very small. For an average board size of 9 directors, the average number of public sector directors is two.

GLCs do not receive special privileges

7 While GLCs may be perceived to have better credit risks than non-GLCs when it comes to raising loans, Temasek GLCs are expected to raise the funds they need on commercial terms. Financial institutions that deal with the Temasek GLCs will have to make their independent assessment with no reference to Temasek or Government.

8 Like any shareholder, Temasek expects its companies to be profitable and to give a good rate of return on investment. However, we will divest or liquidate a GLC if it continuously performs poorly, for example, Construction Technology (the company was sold at a loss in 1996) and Micropolis (the company was liquidated in 1997).

GLCs are commercial entities

9 We wish to reiterate that Temasek GLCs operate like any private sector company on a commercial basis. The performance of our GLCs should be judged by the strength of their boards and management, and not on who their shareholders are. We also do not want to see our GLCs compete unfairly with the smaller local firms, and hence have constantly encouraged our GLCs to seek new business opportunities overseas.

10 Finally, Mr Mak quoted that a recent conference in Beijing concluded that “the state is a lousy owner”. However, we would like to point out that every country is unique. What works in one country may not work in another, and vice versa. Our major GLCs have generally performed well and gained regional recognition for their business performance and management. Temasek will ensure that its GLCs will not become complacent, but maintain their competitive edge and become more innovative and entrepreneurial in their outlook.

11 We would like to assure Mr Mak that Temasek constantly reviews its shareholdings in its GLCs to see whether there should be further reduction.

Yours sincerely

WONG HENG TEW
SENIOR VICE PRESIDENT”

Source: Temasek Holdings Press Release

Calamos Investments to Acquire Timpani Capital Management

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Naperville, Illinois-based Calamos Investments signed a deal to acquire Milwaukee-based Timpani Capital Management LLC, which focuses on small and small-midcap growth investing. Founded in April 2008, Timpani Capital Management oversees around US$ 588 million in assets. The deal is expected to close in the second quarter of 2019.

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RDIF and Russia-Japan Investment Fund to Invest in Russian Subsidiary of SBI Holdings

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The Russian Direct Investment Fund (RDIF) and the Russia-Japan Investment Fund (launched by RDIF, the Japan Bank for International Cooperation and JBIC IG Partners) have reached an agreement with the Japanese corporation SBI Holdings to invest in SBI Bank LLC, SBI Holdings’ subsidiary in Russia. SBI Bank LLC will undergo a large-scale reorganization.

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Ocasio-Cortez and Maxine Waters to Oversee US Banking System via House

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The youngest woman ever to serve in U.S. Congress – starting at the age of 29 – already has an opponent in her sights. Freshman U.S. Representative Alexandria Ocasio-Cortez, often dubbed AOC on Twitter, was appointed to the House Financial Services Committee, where the democratic socialist will oversee Wall Street. This committee oversees the banks and financial institutions of the United States. With Republicans controlling the U.S. Senate and the White House, and the Democrats controlling the House, one can expect less game-changing bills being turned into laws in the banking sector.

While bartending and waiting tables at the Flats Fix taco bar in Union Square, Ocasio-Cortez upset the more centrist Representative Joe Crowley, Chairman of the House Democratic caucus. Encouraged by her success, other far left democrats are planning to challenge moderate democrats in the 2020 primaries. Ocasio-Cortez is also expected to further strengthen the influence of Chairwoman Maxine Waters of the House Financial Services Committee. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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