Published July 30, 2009

Temasek mulls joint investments with public

Portfolio lost more than $40 billion over the year to end-March, Ho Ching reveals

By CONRAD TAN

	Email this article
	Print article
	Feedback

(SINGAPORE) Temasek Holdings may open its doors to co-investments from the general public within the next decade to broaden its stakeholder base, chief executive Ho Ching said yesterday.

'We continue to hold Chip in very high regard for his professionalism and his integrity, so all those funny rumours you hear about his management style and all that, you can disregard.' - Ms Ho, on the departure of Charles Goodyear

It is still unclear how such investments would be made, but Ms Ho said that Temasek would first test any plans for joint investments with 'sophisticated' investors during the next five to eight years.

'If this pilot is successful, we may then consider a co-investment platform for retail investors in perhaps eight to 10 years' time.'

Asked about the types of investment vehicle that might be used, she offered few details, saying that the plan was still at an early stage.

'We're principally looking for people, including retail investors, who are prepared to invest long term, so we're not thinking of a mutual fund or short-term vehicles like that,' she said.

'It may become clearer over the next six to 12 months,' she added.

She said that Temasek is 'fairly open' to exploring co-investments with different types of institutional investors, including banks, at the pilot stage. 'Beyond that, what we're trying to do is to work towards a framework which we can then eventually translate to the retail investors.'

But she stressed that 'we still have to do a lot of spade work before we satisfy ourselves that this is something that is doable and that is desirable to do'.

Speaking at a lunch hosted by the Institute of Policy Studies, Ms Ho also revealed that Temasek's investment portfolio suffered net losses of more than $40 billion, or over 21 per cent, for the year to end-March.

Its economic profit or wealth added - which Temasek uses to measure its returns after deducting its cost of capital - was negative for the second consecutive year, she said. Further details will be released in its annual report, which is expected to be published in the last week of August.

Ms Ho's remarks were the first official indication of Temasek's performance for its most recent financial year, during which it came under fierce criticism for sustaining heavy losses on some of its investments, including a stake it had bought in Merrill Lynch in late 2007.

Last December, the Finance Ministry - Temasek's sole shareholder - said its portfolio shrank 31 per cent, from $185 billion to $127 billion, between March 31 and Nov 30, 2008.

Asked about the shock departure last week of her would-be successor Charles 'Chip' Goodyear, Ms Ho said: 'I want to reaffirm that the decision was both mutual and amicable. We continue to hold Chip in very high regard for his professionalism and his integrity, so all those funny rumours you hear about his management style and all that, you can disregard.'

She also declined to say how long she would remain as Temasek's CEO, now that Mr Goodyear - who was supposed to take over from her on Oct 1 - has left. The firm's yearly CEO succession review, started in early 2005, will continue, and it will consider both internal and external candidates for the post, she said.

Temasek will also launch an updated charter later this year - seven years after the first Temasek Charter outlining its main aims was published in 2002, she said.

Despite the turbulent past year, Temasek remains 'very comfortable with Asia', to which it plans to maintain a portfolio exposure of 70 per cent or more, including its 30 per cent exposure to Singapore, she said. 'We can expect bumps along the way, but the longer term potential remains strong. By longer term, we mean 20, 30 years.'

Asked what she thought of the financial sector, given the battering that financial firms have suffered worldwide in recent months, she said it was possible that the industry would become less profitable due to stricter regulation.

But 'at this point, we are still fairly comfortable with financial services as one of the core sectors that reflect the economies that we are interested in', she added.