• S$24 billion in new investments and S$10 billion divestments in most active year for new investments since 2007                             
• Opened offices in London and New York to cover Europe/Africa and the Americas respectively
• 16 Temasek endowments and charities touched over 170,000 lives in our communities over the past 10 years

Singapore, Tuesday 8 July 2014 – At the release of its annual Temasek Review today, Temasek reported a net portfolio value of S$223 billion, closing the year with a net cash position on 31 March 2014.

“… one of our most active years for new investments…”

Temasek Chairman, Mr Lim Boon Heng, said, “As we mark our 40th year in 2014, we see a world increasingly transformed by ideas and innovation.

This year has been one of our most active years for new investments – the most active since the Global Financial Crisis – driven by softer Asian markets of interest, as well as the continued recovery of the global economy."

"In the course of the past year, the US tapered its loose monetary stance and China reined in its debt fuelled growth. This bodes well for the longer term, though major central banks will most likely take some years to unwind the massive balance sheet expansions of the past five years," noted Mr Lim.

Performance Overview

Temasek's one-year Total Shareholder Return, or TSR, was 1.50% in Singapore dollar terms, mainly due to weakness in our key markets in Asia.  

TSR is a compounded and annualised measure of returns that excludes capital injections from our shareholder and includes dividends paid to our shareholder.

Our 10-year TSR was 9%, reflecting steady growth in our portfolio, which was up S$133 billion from S$90 billion 10 years ago. Longer term 20-year TSR was 6%, coming from a portfolio high with the listing of SingTel in late 1993.  TSR since inception in 1974 was 16%, reflecting our growth with a transforming Singapore in our early years.

On a consolidated basis, group shareholder equity was S$187 billion, up S$122 billion from 10 years earlier. Group net profit held steady at S$11 billion, above our 10-year average group net profit of S$10 billion.

Active investor

Over the past ten years, we have invested almost S$180 billion and divested nearly S$110 billion. We finance our investments primarily using dividends from our portfolio companies and divestment proceeds.

Investments last year totalled S$24 billion, half of which were in Asia as lower asset prices offered attractive investment opportunities, and two fifths in Europe and North America. Our divestments amounted to S$10 billion, giving a net investment amount of S$14 billion –  double the average annual net investment level of about S$7 billion, over the past 10 years.

The top three sectors for investments during the year were financial services, life sciences and energy. Towards the end of the year, we stepped up our investment activities in the consumer sector.

Our investments in the financial services sector included an increase in our holdings in AIA, the largest independent pan-Asia insurer, to over 3.5%, as well as an increase in our stake in Industrial and Commercial Bank of China (ICBC) to 8.9% of its H-shares (equivalent to 2.2% of total ICBC outstanding shares).

Further afield, we took a 1.1% position in Lloyds Banking Group, the largest domestic UK bank by assets, with leading market shares in mortgages and deposits.

In the life sciences sector, we invested almost US$1 billion in Gilead Sciences, a major developer of treatments for cancer, HIV and other infectious diseases; and US$500 million in Thermo Fisher Scientific, a provider of laboratory equipment and consumables.

In the energy space, we invested £235 million in the BG Group, a UK-listed oil and gas company. Separately, about S$2 billion was invested in Pavilion Energy, which focuses on LNG sourcing, supply and solutions.

Consumer sector investments concluded since the financial year-end include a 24.95% purchase of A.S. Watson from Hutchison Whampoa for US$5.7 billion in April 2014. A voluntary cash offer for Olam increased our stake in the company to 58.5% in late May 2014.  Olam is an integrated supply chain manager and processor of agricultural products and food ingredients.

In April, we made a US$150 million commitment to Seven Energy in Nigeria, an oil and gas producer.

Divestments during the year included part of Temasek's stakes in Bharti Telecom and Seoul Semiconductor. We completely exited our investments in Tiger Airways, Cheniere Energy and Youku-Tudou.

The top three countries in our portfolio, based on the underlying assets, are Singapore, China and Australia at 31%, 25% and 10% respectively, as at 31 March 2014. Our underlying exposure to North America and Europe grew to over 14%, up from 12% the previous year.

Investments in third-party managed funds stood at less than 10% of our portfolio.

Mr Lee Theng Kiat, President of Temasek, said, “We have invested in opportunities that are driven by urbanisation and increasing life expectancies. Rapid advances in technology have transformed the global marketplace, as people and machines become ever more connected."

"As an owner investor for the long term, we are ready to support new ideas to address emerging needs and opportunities, like health care for an ageing population, personalised medicine, or e-commerce", he added.

Mr Lee further elaborated, “Half of our new investments last year were in Asia, as weakness in the growth markets gave us various opportunities to add to the positions we like.

Europe and North America accounted for about 40% of our new investments. In absolute dollars, investments into these two regions increased by 60% compared to the previous year.”

Forward looking institution

During the year, we continued to build the institution for the long term, including people and systems, organisation and platforms.

We set up the Enterprise Development Group early last year to focus on new business development and expansion projects.  These are expected to yield attractive returns, including those with long gestation periods. New initiatives already launched include Heliconia Capital to provide growth capital and support for Singapore-based SMEs, and a 40.5% stake in Clifford Capital for project financing linked to mid-cap projects.

In April 2014, Astrea II was launched.  This co-investment vehicle contains a broadly diversified range of investments in 36 private equity funds, each managed by third-party fund managers.  Temasek is the single largest investor in Astrea II with a 38% stake currently.

Well received by institutional co-investors, Astrea II is the latest of Temasek's continuing efforts to develop co-investment platforms where diversified portfolios of assets can be made available to a broader base of investors.  It is our longer term aspiration to offer such platforms to retail investors.

In March 2014, we opened an office in London to cover Europe and Africa, and in June 2014, another in New York to add to our coverage of the Americas. These new offices help us better access investment opportunities and further enhance our stakeholder engagement in these regions.

Trusted steward

We are a responsible long term investor, committed to sharing with the wider community on a sustainable basis.  Since 2003, we have had a policy of setting aside a share of positive annual returns above our risk-adjusted hurdle, for community endowments.

Since our founding in 1974, we have established 16 endowments, and co-funded other community initiatives, to build people, communities, and capabilities, and rebuild lives in Singapore and Asia. In the past 10 years, our endowments and charities have touched over 170,000 lives, through the dedication, and the hard and heart work of their respective boards and managements.