Temasek’s NPV fell to SGD306 billion a first in four years

Singapore’s state investment company Temasek, marked by global uncertanities and challenging environment saw its net portfolio value fell for the first time in four years to SGD306 billion for the financial year ended March 2020.

Ranked among the world’s biggest active equity investor in both the public and private space, the company said its one-year Total Shareholder Return (TSR) was -2.28%. But returns were 5% over a 10-year period and 6% over 20 years, it added. TSR takes into account all dividends paid to Temasek’s shareholder, less any capital injections.

According to senior executives said the coronavirus pandemic had not significantly altered Temasek’s investment strategy in the long term.

Yeoh Keat Chuan, Senior Managing Director, Enterprise Development Group and Deputy Head, Singapore Projects said, “One way for us to shape our portfolio for the future is to seek innovative companies at the forefront of developing new, sometimes disruptive, solutions that create new opportunities.”

However, the Covid-19 pandemic has amplified and accelerated the structural trends that guide Temasek’s investment direction.

During the year, Temasek invested SGD32 billion; divested SGD26 billion; and ended the year with a resilient balance sheet.

“A promising 2019 was cut short by the arrival of the Covid-19 pandemic in the last quarter of our financial year ended March 31. The resilience of our portfolio cushioned its worst effects,” said Lim Boon Heng, Chairman of Temasek Holdings.

Temasek remains anchored in Asia, with exposure to the region of 66% as measured by underlying assets, most of which are in China and Singapore. But the United States again accounted for the largest share of its new investments in the latest year.

Investments in China included Kuaishou Technology, a short video social platform; Beijing-Shanghai High Speed Railway; and Ocumension Therapeutics, an ophthalmic pharmaceutical platform company.

Additionally, investments in Singapore growth companies included ShopBack, a rewards and discovery platform; and Growthwell Group, which makes plant-based meat alternatives. These create longer term growth opportunities that complement our exposure in major Singapore holdings and efforts by Heliconia Capital to enable small and medium enterprises to scale beyond Singapore.

In a statement, the company said they have continued to grow their portfolio in North America (17%), where they see opportunities in line with key structural trends.

The developed markets of North America and Europe (10%) now form over a quarter of our underlying portfolio exposure. Geographically, the US again accounted for the largest share of new investments during the year, followed by China and Singapore.

“With a resilient balance sheet, we have full flexibility to reshape and rebalance our portfolio, whenever opportunities or challenges arise. This allows us to invest for the longer term, take advantage of market dislocations, and work to reposition our portfolio for the future,” the company said.

Financial services remained the largest sector in the company’s portfolio. Temasek also increase exposure to the payments sector and other non-bank financial services companies.

“We added to our stakes in PayPal, Mastercard and Visa and invested in emerging companies such as Blend.,” according to Temasek.

Life sciences and healthcare investments included AIER Eye Hospital, CareBridge, an integrated healthcare system and  biopharma companies developing new drugs and therapeutic solutions such as Beam Therapeutics, Coherus BioSciences, Transcenta and Vir Biotechnology.

On the sustainability end, Temasek has committed to invest in negative emissions technologies and nature-based solutions.

The company also stated that one key target is to reduce net emissions attributable to their portfolio to about seven million tonnes of CO2e³ by 2030. This represents half the estimated carbon emissions attributable to their portfolio in 2010 and approximately a quarter of the estimated emissions in 2020.

“While we remain watchful on the impact of Covid-19, we are also committed to building a more sustainable planet for ourselves, and for future generations. We recognise the urgent need for businesses with innovative solutions to improve lives and increase social resilience,” said Dilhan Pillay, Chief Executive Officer, Temasek International.

This has led the Singapore statet-owned Temasek to accelerate their investments into low-emission and resourceefficient companies, including in the areas of energy, food, waste, water, mobility and urban development.