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Singapore's Temasek records returns of 24.5%, highest in a decade

State investor reaps bumper net profit of $42bn in last fiscal year as markets rebound

Temasek's net portfolio value rose to SG$381 billion from SG$306 billion, a respite for the Singapore government-owned investor, whose one-year total shareholder return had tapered off in recent years. (Photo by Keiichiro Asahara)

SINGAPORE -- Singapore state investor Temasek's portfolio reversed a decline in returns for the year ended March 31 as rebounding markets lifted it from a COVID-19-induced slump.The company, which is among the world's most prolific institutional investors, on Tuesday reported an annual return of 24.5% for the period, a significant recovery from the minus 2.28% seen in the preceding year and its best performance in a decade.

Net portfolio value rose almost 25% to a record 381 billion Singapore dollars ($283 billion), up from SG$306 billion ($214 billion) in its previous report.

It was a respite for the Singapore government-owned investor, whose one-year total shareholder return had tapered off in recent years.

This all took a turn in the past year as the company logged a bumper group net profit of SG$57 billion ($42 billion) -- the highest in 10 years.

"It's a mix of multiple things that drove returns," Mukul Chawla, joint head for telecommunications, media and technology at Temasek International said at a virtual media conference on Tuesday.

Temasek International is the commercial arm of Temasek Holdings, created to undertake investments so that its parent can focus on stewarding Singapore's reserves.

"Because we have a March cycle, markets were down at the time (last year). They are in a better place now so the public portfolio has done well, but so have a number of our private companies," Chawla said. "A number of those (private companies) have benefited from public listings in some cases."

Temasek holds significant stakes in Singapore's key companies, such as Singapore Airlines, Singapore Telecommunications and DBS Group Holdings, and is involved with notable names within the global tech industry.

It previously placed bets on companies such as Southeast Asian unicorn and superapp provider Grab and Chinese e-commerce giants Alibaba Group and Tencent.

According to data platform Global SWF, last year Temasek was the top tech backer among state-owned investors, at $2.3 billion -- a reflection of its interest in the sector.

The company is poised to ride the growth of Southeast Asian startups as a number of them have made big moves over the past year to strengthen their dominance in the region.

Grab, for instance, has announced that it will go public in the U.S. via a SPAC deal under Silicon Valley-based Altimeter Capital for a whopping $39.6 billion valuation. Also known as a "blank check" company, a SPAC is a listed shell corporation set up with the intention of acquiring an unlisted target company. That target company can then list on public exchanges without having to go through the arduous vetting process tied to traditional initial public offerings.

Temasek, along with US. tech giant Google, also invested in Indonesia's e-commerce unicorn Tokopedia last year.

The startup and Gojek, Grab's superapp rival, which is also an Indonesian unicorn, announced in May plans to merge and go public subsequently, a move that will create one of Southeast Asia's biggest tech conglomerates, GoTo Group, that will cover everything from ride hailing and digital payments to online shopping.

"When you look at what happened during COVID last year -- all of us working from home. What does it mean? It means that digitization has been a very, very prevalent area," Nagi Hamiyeh, joint head of investment group at Temasek International said at the media conference on Tuesday.

"Payments has been a very, very prevalent area. E-commerce has been a very, very important area," he noted. "And this trend, we think is irreversible, and will get accelerated, and we feel fortunate that we have started emphasizing quite a bit of our efforts and capital, towards these trends over the last several years."

Temasek has, over the years, raised its bets on emerging industries in the consumer, media and technology, life sciences and agri-food, and nonbank financial services sectors.

This cluster took up just 5% of its portfolio in 2011, but now make up 37% in its latest report a decade later -- forming a larger proportion than its other focus areas like telecommunications, real estate and transportation.

Temasek said it remains anchored in Asia, based on its exposure to underlying assets. China, at 27%, and Singapore, at 24%, remain the company's two largest countries of exposure.

While Singapore's share did not change in the past year, China's exposure dropped from 29% in the previous report. Temasek's bets in Chinese tech companies have recently been met with greater scrutiny.

The investor has backed China financial technology giant Ant Group and and ride-hailing company Didi Global, both of which have come under Beijing's regulatory microscope recently.

On July 2, the Cyberspace Administration of China admonished Didi for breaching national security in its data management -- two days after shares in Didi started trading in New York following a $4.4 billion IPO.

Temasek, however, remains focused on prospects in the world's second-largest economy.

"The changing regulations, specifically as they apply to Didi or otherwise, I don't think are different or new in the sense that regulation or regulation change is part of our risk assessment for any investment," Chawla said.

"We remain bullish on the opportunities in China, and for these companies going forward."

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