Temasek Holdings Pte defended its $2.6 billion of divestments last week, saying the transactions created value for the Singapore sovereign investor and the assets weren’t sold to cover losses on past investments or fund future purchases.
The state-owned investment company last week sold its 70 percent stake in Singapore Food Industries Ltd., which operates food outlets in factories, hospitals and army camps, for S$334.5 million ($221 million). It also divested Singapore power generator PowerSeraya Ltd. for about S$3.6 billion.
“Temasek has minimal debt and a net cash position and does not need to borrow to invest,” Myrna Thomas, Temasek’s spokesperson, said in reply to a report in 'Today' newspaper. “It is not in need of cash to support margin calls for positions with mark-to-market losses, be they foreign bank stakes or shares in local Singapore banks or investments in non-financial companies.”
Singapore's Prime Minister Lee Hsien Loong last week also defended the performance of the city's two state-owned investment companies after a plunge in the value of their stakes in Citigroup Inc., Merrill Lynch & Co. and other global banks, saying they should be assessed on their overall portfolio returns instead of specific assets.
Government of Singapore Investment Corp., or GIC, and Temasek have invested more than $23 billion in Citigroup, UBS AG and other banks as financial-services companies seek funds after posting close to $1 trillion of writedowns and credit losses. Both Temasek and GIC each manage more than $100 billion of investments.
Temasek is the biggest stakeholder in Merrill Lynch after a $5.9 billion investment in the past year. It's also the biggest shareholder of banks including London-based Standard Chartered Plc and Singapore's DBS Group Holdings Ltd., and has holdings in Barclays Plc, India's ICICI Bank and other lenders in Indonesia, South Korea and Pakistan.
“Temasek regularly reviews its portfolio positions, and decisions to sell or hold its assets and companies are based on various considerations,” Thomas wrote. "Temasek does not divest to destroy value or to reduce competition."