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Temasek (company)

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Temasek Holdings Pte Ltd
Company typeInvestment company / sovereign wealth fund
IndustryInvestment management
Founded1974; 50 years ago (1974)
HeadquartersSingapore
Key people
Lim Boon Heng[1]
(Chairman)
Ho Ching[1]
(Executive director & CEO)
RevenueDecrease S$97.0 billion (2017)[2]
Increase S$17.7 billion (2017)[2]
Total assetsIncrease S$275 billion (2017)[2]
OwnerGovernment of Singapore
Subsidiaries
Websitewww.temasek.com.sg

Temasek Holdings Private Limited (abbreviated as Temasek) is a state-owned holding company that can be characterized as a national wealth fund owned by the Government of Singapore. Incorporated in 1974, Temasek owns and manages a net portfolio of $275 billion[3] (as of 31 March 2017), with S$18 billion divested and S$16 billion invested during the year,[4] and 68% exposure to Asia – 29% Singapore and 39% Asia ex-Singapore.[3] It is an active shareholder and investor, and its investments are guided by four key themes – transforming economies, growing middle income populations, deepening comparative advantages and emerging champions. Its portfolio covers a broad spectrum of sectors including financial services, telecommunications, media and technology, transportation and industrials, life sciences and agribusiness, consumer and real estate, energy and resources, as well as multi-sector funds. Temasek has a multinational team of 630 people, in 10 global offices[5] including in Singapore, New York, and most recently, San Francisco.[6]

Temasek is commonly referred to as a sovereign wealth fund, particularly by the press and research outlets based outside Singapore.[7] However, it has frequently disputed this terminology, and prefers to be referred to as an investment company, because it invests mostly in equities, is the outright owner of many assets, and pays taxes like other commercial investment firms.[8] However, its sole shareholder (to which it distributes dividends) is Singapore's Ministry of Finance. A spokesman for the Ministry of Finance has noted that even though "there is still no universally accepted definition of sovereign wealth funds", Temasek is required to abide by international guidelines for sovereign wealth funds.[9] Beginning in 2015, capital gains from Temasek are included in Singapore's government budget, contributing approximately S$3 billion [10] to the 2015 budget.

Temasek has credit ratings of “AAA/Aaa” by Standard & Poor's[11] Global Ratings and Moody's Investors Service[12] respectively since their inaugural ratings in 2004. Temasek has also attained perfect quarterly scores[13] on the Linaburg-Maduell Transparency Index,[14] a measure of the openness of government-owned investment funds.

History

Incorporation

At the point of Singapore's independence in August 1965, the Government of Singapore had ownership or joint ownership of various local companies, such as Malaysia-Singapore Airlines (later split up into Malaysia Airlines and Singapore Airlines) and the Singapore Telephone Board (which became Singapore Telecommunications). As part of its push for local and foreign private investment in sectors such as manufacturing and shipbuilding, the government's Economic Development Board (EDB) also bought minority stakes in a variety of local companies.[15] During the first ten years after independence, the government acquired or established several companies,[16] such as the Keppel Corporation (originally Keppel Shipyard, taken over from the Royal Navy after the British military withdrawal from Singapore), ST Engineering (originally a weapon manufacturer set up to supply the Singapore Armed Forces), and the shipping company Neptune Orient Lines.

In 1974, Temasek was incorporated under the Singapore Companies Act[17] to hold and manage the assets previously held directly by the Singapore government. The goal was for Temasek to own and manage these investments on a commercial basis,[18] allowing the Ministry of Finance and the Ministry of Trade and Industry to focus on policymaking. Temasek's established mission was to contribute to Singapore's economic development, industrialisation, and financial diversification by nurturing effective and commercially driven strategic investments in and around Singapore.

Status

Temasek is a company incorporated in Singapore, and operates under the provisions of the Singapore Companies Act. It is neither a government agency nor a statutory board. Like any other commercial company, Temasek pays taxes that contributes to government revenue in the countries it operates in, distributes dividends to its shareholder and has its own board of directors and a professional management team. Its sole shareholder is Singapore's Ministry of Finance.

Temasek is designated a Fifth Schedule[19] entity under the Singapore Constitution, which imposes certain safeguards to protect the government's past reserves. For instance, the approval of the President of Singapore is required for any transaction which is likely to result in a draw-down of Temasek's cash reserves.[20] The president also has the right to appoint, terminate, or renew the members of Temasek's board of directors. In most other respects, however, Temasek operates as an independent commercial investment holding company.

In a 2009 speech,[21] Ho Ching, Temasek's Executive Director and CEO, said that the company had made an effort to instill discipline and professionalism, and to be tested and measured by providing public markers of performance. She noted that Temasek's bonds spreads and credit ratings have been regularly[22] and independently[23] monitored as public markers of Temasek's financial position and credit risks. Temasek had also openly[24] and accurately[25] disclosed its financial information through its annual report (although Ho said that, as a private company, it was not legally obliged to do so).

Initial holdings

Temasek's initial portfolio of S$354 million comprised shares in the following companies, start-ups and joint ventures previously held by the Singapore Government. The companies included a bird park, a hotel, a shoe maker, a detergent producer, naval yards converted into a ship repair business, a start-up airline, and an iron and steel mill.

Stake Buy

Temasek is about to buy 20% stake in UST Global, a digital technology services company.[26]

Controversy

Shin Corp

Temasek is fully owned by Singapore's Ministry of Finance, and these close links to the government have on several occasions caused protests in foreign countries.

Main article: Sale of Shin Corporation to Temasek Holdings

Temasek's 2006 acquisition of Shin Corporation, owned by the family of then Thai prime minister Thaksin Shinawatra, was particularly controversial, with protestors burning effigies of Lee and Ho on the streets of Bangkok.[27] The deal was a factor in exacerbating the Thai political crisis, which eventually led to the downfall of Thaksin and a review of the transaction's legality. The military junta that overthrew Thaksin, later tried unsuccessfully to force Temasek to divest a large part of its investment in Shin Corp.[28] As of 2015, Temasek's stake in Intouch Corporation (as Shin Corporation was renamed) had reduced to 42%.[29]

Fortune magazine described the investment in Shin Corp as a "spectacular misjudgment"[30]

Nepotism

In 2012, Singaporean blog TR Emeritus alleged that the appointment of Ho Ching, Singapore Prime Minister Lee Hsien Loong's wife, as CEO of Temasek Holdings was a case of cronyism and nepotism, which was subsequently deleted and for which they apologised.[30]

See also

References

  1. ^ a b "Management Team - About Temasek - Temasek". Retrieved 2 December 2016.
  2. ^ a b c "Temasek Review 2017". Retrieved 27 July 2017.[permanent dead link]
  3. ^ a b "Portfolio Highlights – Overview | Temasek Review 2017". www.temasekreview.com.sg. Retrieved 21 July 2017.
  4. ^ "Investing for Generations – Investor | Temasek Review 2017". www.temasekreview.com.sg. Retrieved 21 July 2017.
  5. ^ "Our Temasek Heartbeat – Institution | Temasek Review 2017". www.temasekreview.com.sg. Retrieved 21 July 2017.
  6. ^ "News Releases - Media Centre - Temasek". www.temasek.com.sg. Retrieved 21 July 2017.
  7. ^ "Company Overview of Temasek Holdings (Private) Limited". Bloomberg Business.
  8. ^ "Temasek is different from other sovereign wealth funds and pays tax - Chairman". Venture Capital Post.
  9. ^ "Guidelines for wealth funds apply to Temasek, says ministry". AsiaOne News.
  10. ^ Wille, Klaus (1 March 2015). "Temasek Faces New Normal With Singapore Eying Its Funds". Bloomberg Business.
  11. ^ Cheok, Jacquelyn. "Temasek Foundation Ecosperity opens first call for social innovation proposals". The Business Times. Retrieved 21 July 2017.
  12. ^ "Temasek Review 2017 - 404". www.temasekreview.com.sg. Retrieved 21 July 2017.[permanent dead link]
  13. ^ "Temasek to take majority stake in Global Healthcare Exchange - Reuters". Retrieved 21 July 2017.
  14. ^ "Sovereign Wealth Fund Institute". Wikipedia. 3 February 2017.
  15. ^ "About Singapore - Our History - The Sixties".
  16. ^ Government-owned corporation#Singapore
  17. ^ "Singapore Statues Online - 50 - Companies Act".
  18. ^ "Speeches by Ho Ching, Executive Director & CEO, at the Institute of Policy Studies".
  19. ^ "Modern Meadow Closes $40M Series B Round to Commercialize Biofabricated Leather - Modern Meadow". Modern Meadow. Retrieved 21 July 2017.
  20. ^ "Shareholders approve Temasek buyout of Singapore rail operator". Reuters. 29 September 2016. Retrieved 21 July 2017.
  21. ^ "Speeches - Media Centre - Temasek".
  22. ^ "Moody's affirms Temasek's Aaa rating".
  23. ^ "S&P CONFIRMS AAA RATING AS TEMASEK UPSIZES GLOBAL NOTES TO US$15 BILLION". 15 July 2013.
  24. ^ "Tougher challenges for Temasek ahead". 17 July 2012. Archived from the original on 2 November 2013. {{cite news}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  25. ^ "Temasek Holdings responds to NSP's claims". 23 August 2011.
  26. ^ "Temasek buys $250m in UST Global". 25 June 2018.
  27. ^ Thailand: Protesters burn images of Lee, wife. Bangkok Post, 18 March 2006.
  28. ^ Thailand Moves Against Foreign Firms, Asia Sentinel, 10 January 2007
  29. ^ "Temasek Review". Temasek. 4 July 2015. Retrieved 21 October 2015.
  30. ^ a b "Singapore's Lee Family and Nepotism - Asia Sentinel". 24 February 2012. Retrieved 2 December 2016.
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