Shaping Our Portfolio for a Sustainable Tomorrow

Temasek reports a record net portfolio value of S$308 billion, and a net cash position for the financial year that ended on 31 March 2018. Temasek’s one-year Total Shareholder Return (TSR) was 12.19%, with compounded annualised returns of 15% since inception in 1974 – 44 years ago. Dividend income from our portfolio was S$9 billion for the year.

Temasek Chairman, Lim Boon Heng, comments, “Our journey as a generational investor is one that we take with a deep sense of purpose and responsibility; we are committed to do well as an investor, determined to do right as an institution, and inspired to do good as a steward. Doing well provides us the capacity to fuel our new investments, creates opportunities to grow our portfolio for the future, and gives us the means to care for our communities. Doing right shapes our values and ethos in Temasek. We need to reskill and upskill our people to be future ready, and prepare them with the skills to contribute to the wider community beyond Temasek. Doing good drives our philanthropic investments in the broader community as well as underpins our responsibility to safeguard our past reserves, based on the twin pillars of sustainability and good governance.”

Executive Director and CEO, Temasek International, Lee Theng Kiat, says, “Our net portfolio value passed the S$300 billion mark for the first time. It is now almost three times the dotcom peak of just over S$100 billion at the turn of the millennium. We continue to reshape our portfolio in line with our views of key long term trends. This on-going active investment stance is focused on solutions for a better, smarter and more connected world over the medium to long term.”

Geographically, the US accounted for the largest share of new investments during the year. China and Europe were the next two largest investment destinations. Temasek’s resultant portfolio is 60% in mature and 40% in growth economies. Temasek invests into companies at different stages of their development, ranging from early stage and unlisted investments, to listed large assets. In aggregate since 2002,  unlisted assets have delivered better returns than its listed investments.

Looking ahead, Temasek recognises that technological advances, demographic shifts and changing consumption patterns are disrupting traditional business models or creating new opportunities. Temasek is approaching these opportunities through six key trends: Longer Lifespans, Rising Affluence, Sustainable Living, Smarter Systems, the Sharing Economy and a More Connected World, which will drive solutions and opportunities for a better, smarter and more connected world.

In 2017, Temasek invested in several innovative, early stage companies in agribusiness, healthcare and digital media. These early stage investments, including indirect investments through venture capital funds, now constitute just under 3% of the portfolio. These higher risk, and sometimes longer term, investments are one way for it to seed new solutions and capabilities, and deliver higher returns in aggregate over the longer term.

Sulian Tay, Managing Director, Investment, says, “Looking forward, we see the probability of increased downside risks in the near term. Our balance sheet and portfolio resilience give us the flexibility to ride out short term market volatility, while delivering sustainable returns over the long term.”

Alpin Mehta, Managing Director, Investment, adds, “We continue to maintain a disciplined approach. Given the market outlook, we may recalibrate and slow our investment pace over the next 9 to 18 months. On the other hand, we do see a robust pipeline of opportunities for this year. In particular, we will actively seek attractive opportunities in promising sectors and markets driven by transformational technologies, demographic shifts and changing consumption patterns.”

Temasek Chairman concludes, “To succeed as an investor is not an end in itself. Ultimately, that success must be translated into a better and more sustainable world for our people and communities.”

 

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