SINGAPORE — Singapore’s sovereign wealth fund, Temasek Holdings, revealed a 5.2% decrease in net portfolio value to S$382 billion in the financial year 2023, down from the previous year’s S$403 billion.
A significant shift from last year’s net profit of S$10.6 billion, the firm reported a loss of S$7.3 billion.
According to the group, this was primarily due to changes in accounting standards, including mark-to-market (MTM) gains and losses. When adjusting for MTM, the group would have posted a profit of S$14.7 billion.
This marks the first instance of a reported loss since the new accounting standards were implemented in 2018, said Temasek’s chief financial officer, Png Chin Yee.
Temasek reported a one-year total shareholder return (TSR) of -5.07%. Since its inception in 1974, its TSR has held steady at 14%, unchanged from the previous year. The firm’s 20-year and 10-year TSRs for this financial year stood at 9% and 6% respectively.
Investment activities for FY2023 saw Temasek invest S$31 billion and divest S$27 billion, resulting in a net investment of S$4 billion. The investment pace was curtailed due to a cautious approach amidst global uncertainties and a slowdown in global deal activity as liquidity tightened.
As of March 31, Temasek’s portfolio was primarily anchored in Asia, accounting for 63% of its total. Singapore, China, and the Americas continued to be the largest markets by underlying exposure at 28%, 22%, and 21% respectively.
In a statement dated 11 July, the group announced it had continued to invest in opportunities aligned with long-term structural trends and pursued a rebalancing strategy to ensure a resilient and forward-looking portfolio.
Over the past decade, the group invested a total of S$326 billion and divested S$248 billion. As of the end of March, the group’s underlying exposure to developed economies, including Singapore, North America, Europe, and Australia & New Zealand, was 64%, up from 58% in 2013.
The group is set to open a new office in Paris as part of plans to expand its global footprint and capitalize on significant growth opportunities.
In terms of sectors, transportation and industrials comprised 23% of Temasek’s portfolio, up by one percentage point year-on-year. Financial services dropped to second place at 21%, down by two percentage points, with telecommunications, media, and technology rounding off the top three at 17%.
Since 2011, Temasek’s focus sectors have outperformed its overall portfolio by four percentage points, indicating successful strategic investment, according to Png.
Temasek’s unlisted assets also outperformed its listed ones with an internal rate of return (IRR) of 14.4% over a 20-year period, compared to an IRR of 8.0% for listed assets and 10.1% for overall assets.
However, the group’s decision to invest in crypto firm FTX led to a write-down of over US$275 million (~ S$369 million) in November 2022.
Despite this, Chief Investment Officer Rohit Sipahimalani stressed that the decision was part of their early-stage investing portfolio and risks were mitigated by limiting the investment to less than 6% of its overall portfolio.
Looking forward, Temasek aims to focus on three growth engines: investment, partnership, and development.
The firm’s strategy includes building enterprises for the future in areas such as sustainable energy solutions, quantum computing, deep tech, life sciences, data solutions, and cybersecurity.
Temasek’s CEO, Dilhan Pillay, highlighted the challenges posed by rising inflation, higher interest rates, geopolitical tensions, and energy transition costs, emphasizing the need for prudent strategic planning and capability building to achieve sustainable value over the long term.
