Temasek Asset Growth Slows as Asia Holdings Damp Performance

Temasek Holdings Pte’s assets grew at a slower pace in the year to March as Asia holdings weighed on the performance even as Singapore’s state investment company boosted assets in Europe and the U.S. amid economic recoveries.

The value of Temasek’s holdings increased 3.7 percent, less than half the growth the previous year, to a record S$223 billion ($179 billion) compared with S$215 billion, the firm said in its annual report today. Total shareholder return for the period, which includes dividends, shrunk to 1.5 percent from 8.9 percent in its previous fiscal year.

Chief Executive Ho Ching has opened offices in London and New York to take advantage of a recovery in European and U.S. economies as China’s expansion moderates. North America and Europe accounted for about 40 percent of new investments as of March 31, while top investments were in financial services, life sciences and energy, according to a statement.

“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,” Chairman Lim Boon Heng said in the statement.

The firm’s total shareholder return averaged 16 percent since inception in 1974. The average return was 10.9 percent over a five-year period, it said.

The Standard & Poor’s 500 Index rallied 19 percent in the year ended March while the Stoxx Europe 600 Index climbed 14 percent, outpacing the 1.8 percent return for the MSCI Asia Pacific Index. The Singapore benchmark stock gauge lost 3.6 percent in the year.

Active Investor

Temasek made S$24 billion of new investments last year, up from S$20 billion a year earlier, it said.

The city-state’s investment firm boosted its stake in the U.S. health-care industry in the first quarter. It bought 5.3 million shares in Thermo Fisher Scientific Inc., a manufacturer of scientific instruments and chemicals, directly or through its units, and 1.6 million shares in BioMarin Pharmaceutical Inc., a developer of therapeutic enzyme products, according to a May 15 filing with the U.S. Securities and Exchange Commission.

It invested $1 billion in U.S. biopharmaceutical company Gilead Sciences Inc., Temasek said today.

Temasek’s liquefied natural gas unit Pavilion Energy Pte said in November it will pay $1.3 billion for a 20 percent stake in three gas blocks off the shore of Tanzania in east Africa.

‘Great Dance’

Divestments declined to S$10 billion from S$13 billion a year earlier as Temasek sold shares of Bharti Telecom Ltd. and Seoul Semiconductor Co., it said.

There’s “no great dance of joy with this latest set of results,” said Song Seng Wun, an economist at CIMB Research in Singapore. “It’s a case of steady as she goes as Temasek was able to offset small losses from their core holdings of Singapore and Chinese equities with divestment proceeds, dividends and distributions.”

Assets in Singapore rose to 31 percent from 30 percent of its holdings, it said. Investments in the rest of Asia were unchanged at 41 percent, while those in North America and Europe rose to 14 percent from 12 percent.

Financial Holdings

Financial services, which had accounted for 31 percent of Temasek’s assets in the year to March 2013, fell to 30 percent and remained the biggest industry for Temasek’s portfolio. Stakes in China Construction Bank Corp., Standard Chartered Plc and DBS Group Holdings Ltd. are Temasek’s biggest assets by value after the holding in Singapore Telecommunications Ltd., according to data compiled by Bloomberg.

Temasek raised stakes in Hong Kong-based insurance company AIA Group Ltd. to more than 3.5 percent and lifted its stake in the Hong Kong-traded H shares of Industrial & Commercial Bank of China Ltd. to 8.9 percent. It also took a 1.1 percent stake in Lloyds Banking Group Plc.

“Temasek increasingly thinks in global terms,” Sven Behrendt, managing director at Geneva-based GeoEconomica, which researches sovereign wealth funds, said before the results were released. “And that is more and more reflected in their investment style.”

Net income widened to S$10.9 billion from S$10.6 billion a year earlier, Temasek said.

Temasek’s holdings in so-called large blocks, or stakes of more than 20 percent in companies, dropped to 34 percent of its portfolio from 38 percent, according to today’s statement.

Evolving Investments

Temasek originally served as an owner of shares in former state-owned companies and began directly investing in foreign equities in 2002. It has 10 offices worldwide in addition to its headquarters, with the latest opening in New York last month.

Assets managed by state funds will increase by about $600 billion to $6.6 trillion this year, said Patrick Thomson, London-based global head of sovereigns at JPMorgan Asset Management Inc.

Temasek is the world’s 10th-biggest state investor, according to the website of the Institutional Investor’s Sovereign Wealth Center. The world’s biggest is Norway’s Government Pension Fund Global, with an estimated $869 billion of assets under management. Singapore’s other state investor, GIC Pte, ranks No. 5 globally with an estimated $315 billion of assets, according to the website.

“State investors will continue to be among the world’s most active investors over the coming years,” Thomson said.

Among companies with holdings in various industries, shares in Warren Buffett’s Berkshire Hathaway Inc. increased 20 percent in the year to March 31, while Hong Kong billionaire Li Ka-shing’s Hutchison Whampoa Ltd., with investments in ports, real estate, telecommunications and infrastructure, surged 27 percent.

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