Temasek Holdings Pte set up a wholly owned company run by Tow Heng Tan, its former chief investment officer, to invest in privately held firms in North Asian markets including China.
Pavilion Capital Pte will expand Temasek’s current holdings in closely held companies and will focus on small and medium enterprises in China, the Singapore state-owned firm said in an e-mailed statement today in response to queries.
“There are still vast opportunities in many asset classes,” said Song Seng Wun, an economist at CIMB Research Pte in Singapore. “This gives them the flexibility, since you’re talking about having direct stakes in new emerging growth enterprises.”
Temasek, which managed S$193 billion ($150 billion) as of March 2011, has transformed from a passive holder of stakes in government-controlled companies to an investor with more than two-thirds of its underlying assets abroad.
Pavilion would be Temasek’s second investment company in as many years. The firm, in February 2010, set up a wholly owned global investment company called Seatown Holdings Pte with committed capital of more than S$4 billion to invest in assets including stocks and bonds.
Seatown, which makes its investment decisions independently, will co-invest with institutional investors by 2015 and may add retail investors by 2020, Temasek said in 2010.
“Be it a Seatown or Pavilion, you can have slightly different mandates,” said CIMB’s Song. “It can be as big as they want it to be. They have more than enough money in their kitty.”
Temasek said in July the value of its assets climbed 3.8 percent to a record in the year ended March 2011 and profit more than doubled on increased contributions from its holdings. The company posted a total shareholder return of 4.6 percent and had an annualized compounded return of 17 percent since its inception in 1974, according to its annual report.
Temasek bought 3.77 billion shares of China Construction Bank Corp. on Nov. 11, increasing its stake in the second-largest Chinese lender by market capitalization to 9.42 percent from 7.86 percent. In July, its real estate unit, Mapletree Investments Pte, agreed to pay HK$18.8 billion ($2.4 billion) for Swire Pacific Ltd.’s Festival Walk shopping center, the biggest property transaction ever for the Hong Kong landlord.
‘Complement and Expand’
Pavilion will “complement and expand our coverage and capacity for North Asia, including China,” Temasek said in the statement.
Temasek also has a fund-management unit, Fullerton Fund Management Co., which invests in hedge funds and other assets such as equities and bonds.
Tow, who joined Temasek in 2002, became its chief investment officer in October 2007. He was head of Indochina and co-head of Singapore, according to Temasek’s website. He was managing director of Lum Chang Securities Pte and an investment banker with Schroders Plc in Singapore before he joined Temasek.
The Singapore investment company hired Tan Chong Lee as its chief investment officer-designate from Bank of America Corp., people familiar with the mater said in September. Tan was previously head of corporate and investment banking in Southeast Asia at Bank of America’s Merrill Lynch unit in Singapore. He became Temasek’s sole chief investment officer on Dec. 1.