Temasek announces record net portfolio value of S$308 billion

Temasek Holding has reported its net portfolio value at a record S$308 billion and a net cash position for the financial year that ended on 31 March 2018.

In its annual Temasek Review published on Tuesday (10 July), the company stated that Temasek’s one-year Total Shareholder Return (TSR) was 12.19 percent, with compounded annualised returns of 15percent since inception in 1974 – 44 years ago.

“Dividend income from our portfolio was S$9 billion for the year,” it noted.

Temasek Chairman, Mr Lim Boon Heng, commented, “Our journey as a generational investor is one that we take with a deep sense of purpose and responsibility; we are committed todo well as an investor, determined to do right as an institution, and inspired to do good as a steward.”

Executive Director and CEO, Temasek International, Mr Lee Theng Kiat, said, “Our net portfolio value passed the S$300 billion mark for the first time. It is now almost three times the dotcom peak of just over S$100 billion at the turn of the millennium.”

“We continue to reshape our portfolio in line with our views of key long term trends. This on-going active investment stance is focused on solutions for a better, smarter and more connected world over the medium to long term,” he added.

The company noted that it has evolved since its inception – from investing mostly in Singapore, then to Asia, and more recently in Europe and the Americas as well. The latter two now form almost a quarter of our underlying portfolio exposure, behind Singapore (27 percent) and China (26 percent).

Temasek stated that since 2011, it has been increasing our focus in the technology, life sciences, agribusiness, non-bank financial services and consumer sectors. Underlying many of these sectors, are technology enablers.

“For instance, our interest in the non-banking finance sub-sectors has been in payments and other tech-enabled services. Other areas of investment activity included innovative businesses in life sciences and agribusiness,” it added.

It said that Temasek’s exposure to these focus sectors now constitutes about S$80 billion, or 26 percent of its total portfolio. This is up 9 times from S$9 billion, or an equivalent 5 percent share of a smaller portfolio in 2011.

“During the year, these focus sectors made up nearly half of its new investments, totaling approximately S$13 billion,” Temasek noted.

In 2017, Temasek invested in several innovative, early stage companies in agribusiness, healthcare and digital media. Synthetic biology is an emerging focus, especially for sustainable food production.

“Our investments in this space include Impossible Foods, which develops meat products from plants; and Perfect Day, which produces animal-free dairy ingredients,” it noted.

Within the life sciences sector, Temasek also invested in Tessa Therapeutics, a Singapore-based biotech company developing cell therapy for treatment of cancer; and Pear Therapeutics, a US-based digital therapeutics company that delivers reimbursable, regulated and prescription software to treat behavioural health and other diseases in the USA.

These early stage investments, including indirect investments through venture capital funds, now constitute just under 3 percent of its portfolio.

In 2015, Singapore and 192 other United Nations (UN) members signed up to deliver the UN Sustainable Development Goals (SDGs) by 2030. The company noted that these UN SDGs are in line with its ideals of an ABC World of Active economies, Beautiful societies and a Clean Earth.

Temasek held its fifth Ecosperity conference on 5 June 2018, the UN World Environment Day. Following the 2017 conference focus on Active economies, the 2018 theme moved to elements of a Beautiful society. Specific topics included food, education and healthcare for a growing global population.

It also separately partnered UNLEASH, a global innovation initiative, to gather some 1,000 young talents from around the world to co-create solutions to address the UN SDGs.

“We have gifted endowments for our communities based on the twin pillars of sustainability and good governance. These are funded by a share of our net positive returns above our risk-adjusted cost of capital,” the company said, adding that these 17 endowments are managed by six Temasek Foundations, whose programmes have touched over 800,000 lives across Singapore and Asia over the last decade.

In 2017, the company seeded its 18th endowment, to support the Stewardship Asia Centre, which enables the Centre, which was established in 2011, to plan and operate for the long term to promote sound stewardship and good governance across Asia.

Sulian Tay, Managing Director, Investment, said, “Looking forward, we see the probability of increased downside risks in the near term. Our balance sheet and portfolio resilience give us the flexibility to ride out short term market volatility, while delivering sustainable returns over the long term.”

Alpin Mehta, Managing Director, Investment, added, “We continue to maintain a disciplined approach. Given the market outlook, we may recalibrate and slow our investment pace over the next 9 to 18 months. On the other hand, we do see a robust pipeline of opportunities for this year. In particular, we will actively seek attractive opportunities in promising sectors and markets driven by transformational technologies, demographic shifts and changing consumption patterns.”

Temasek Chairman, Mr Lim Boon Heng, concluded, “To succeed as an investor is not an end in itself. Ultimately, that success must be translated into a better and more sustainable world for our people and communities.”