Temasek Holdings will invest aggressively in sectors linked to India’s domestic growth. The company is eyeing infrastructure, telecom, financial services and consumer goods segments in the current financial year.
As of March 31, 2010, Temasek’s underlying exposure in South Asia, mainly India, was 7 per cent compared to 32 per cent in Singapore.
Since 2002, Teamsek has been an active investor in Asia. This year, nearly 80 per cent of the underlying portfolio exposure was in the region, including Singapore.
Teamsek India Head Manish Kejriwal told reporters here today that India remained one of the fastest growing economies and continued to be one of its key investment destinations. “The ongoing improvement in infrastructure, along with a young population, is creating the right platform for long-term sustainable growth.”
Kejriwal said while the fund remained sector-agnostic, it was looking at a lot of emerging opportunities in telecom. Temasek, he said, took a long-term view of its investment posture, regularly reviewing and rebalancing its forward stance. During the last financial year, it made a total of S$10 billion in new investments and S$6 billion in divestments.
Temasek recently made new investments, including S$241 million in the National Stock Exchange, which represented its first foray into the capital markets/exchange space in India. It also made its first major investment in the infrastructure space with a S$280 million investment in GMR Energy. Other investments include in Sobha Developers and Essar Energy.
In the year ended March, the portfolio value of the firm increased to S$186billion – an increase of S$56 billion in one year. Essentially, this brings Temasek back to its portfolio value of March 2008. It also generated a total return of over 42 per cent to the shareholders, last year. The total shareholder return of over 17 per cent compounded annually since its inception. Wealth added for the year was S$42 billion in excess of the risk-adjusted hurdle.
Eight years ago, Temasek embarked on a strategy to transform its portfolio to focus on Asia. In 2004, only one-sixth (16 per cent) of the portfolio was in emerging Asia, excluding Singapore and Japan. Portfolio exposure to the mature OECD economies was higher, at one-third.
Today, outside of Singapore and Japan, Temasek has an Asian exposure of almost half, or 46 per cent. In other words, the firm has moved from a mature and stable portfolio in 2004, to a portfolio stance today which is more balanced between growth and risks — half in growth markets in Asia and elsewhere, and the other half in Singapore and the more matured OECD economies.
Since the start of its Asia strategy in 2002, the new investments it made over the last eight years have given the company a return of over 23 per cent. Temasek ended the last three financial years with a net cash position, and continues to have a preference to stay relatively liquid.
While pointing out that the worst of the meltdown risks are gone, Kejriwal said the build-up of sovereign debts and widening fiscal or budget deficits in European countries, call for a cautious outlook on the future.
