Euromoney, July 13 2021
Temasek’s unusual positioning among sovereign wealth vehicles allowed it to get full exposure to the equity upswing. The results also tell us interesting things about developed versus emerging markets, deal making in a travel-free pandemic and making the best of a crisis.
Temasek on Tuesday reported 24.5% growth in the year to March 31, bringing its portfolio to a record S$381 billion ($281.8 billion) net asset value, achieved by a remarkable level of activity during a global pandemic.
Temasek is unusual among sovereign wealth vehicles in that it is invested entirely either in listed equity or unlisted companies. This positioning, achievable partly because of the existence of GIC as a more classic sovereign fund in Singapore, allowed it to benefit from the bounce in stock markets that followed the beginning of the Covid crisis – just as it was hit by the market decline in the previous financial year.
But beneath that headline number, there was a lot going on below the surface.
One was the amount of churn in the portfolio. Temasek has always been an active investor, but this year set records for both purchases and sales, with S$49 billion of investments and S$39 billion of divestments.
Temasek has long invested with four long-term themes – transforming economies, growing middle-income populations, deepening comparative advantages and emerging champions. But these days it tends to focus on four other, related, structural trends: digitization, sustainable living, the future of consumption and longer lifespans.
These themes can be seen in where Temasek put its money in the period it reported on Tuesday. You see it in the investment in online entertainment platform Roblox, in the Singapore global digital payments startup Nium and in UK-based wealth management platform FNZ. It is clear in Eavor Technologies, a Canadian company developing tech to harvest geothermal energy, and in Rivulis, an Israeli company developing water-saving technology for farmers. There are dozens of examples.