Temasek, Singapore’s state-owned investment company, is at it again. After a series of transactions this week, selling-off some of its stakes in several mainland Chinese companies — a couple of banks and Cosco, the container shipping group — Temasek has done a deal to provide half the funding for a new, $2bn China-focused private-equity fund set up by Goldman Sachs’s China partner, Fang Fenglei, according to the Wall Street Journal on Wednesday.
There are many interesting aspects to the move, but the central message — that Temasek obviously thinks there is far more mileage in China investments – contradicts what analysts construed from Temasek’s stake sales this week, that the China market was running out of steam.
Fang, chairman of Goldman’s Chinese-securities JV, will set up the fund to be anchored by Temasek, which is providing $1bn, reports the Journal. The other $1bn will be funded by several smaller investors, a person familiar with the plan told the paper.
The new fund will be geared toward buying stakes in state-owned Chinese companies, added the WSJ. Temasek’s board approved the funding last month, which will be structured over a few years, the same person said.
The move is the latest sign of growing overseas activity at Temasek, which has been expanding the international part of its portfolio. As one of the world’s largest sovereign-wealth funds, Temasek’s total investment portfolio exceeds $100bn, and Singapore represented 38 per cent of its portfolio at the end of March, compared with 49 per cent in March 2005, the Journal said, citing the company’s website.
Backing Fang, “one of the best-known deal makers in China”, represents Temasek’s latest effort. He retains his title as chairman of Goldman Sachs Gao Hua but will take a smaller role in daily management.
However, while Fang’s new businesses won’t compete with Goldman’s securities joint venture for underwriting deals, which have been its focus, they could potentially clash with Goldman’s own private-equity ambitions, notes the Journal.