For a secretive kind of outfit, Temasek is certainly generating a lot of publicity these days. Following the storm of media interest last week over news of the sudden departure of its chief executive-designate Chip Goodyear, the Singaporean state investment agency is again in the news.
This time, the Temasek newsmaker is none other than Ho Ching, the SWF’s low-profile chief executive, wife of Singapore’s prime minister and a renowned shunner of media interviews.
In a rare public appearance on Wednesday, Ho in a speech in Singapore acknowledged that the value of Temasek’s assets may have slumped by more than S$40bn ($27.7bn) in the year through March. The fund had predicted last year a 16 per cent probability that the value of its assets may drop by more than S$40bn in the year through March, she said.
Ho then announced that Temasek might allow public investment for the first time. The company would seek “sophisticated co-investors” and would not sell the “family jewels” for short-term gains, she added.
Are things that bad, or is Temasek – or rather, Ho – a visionary that is completely revolutionising the sovereign wealth fund model?
According to Ho, Temasek would consider creating one more group of stakeholders over the long term, and may invite the public to “co-invest” with the company. It may seek “sophisticated investors” in five to eight years and retail investors in the next eight to 10 years, a point that without elaboration, has fuelled questions about the definition of a “sophisticated” investor.
Another question is whether foreigners would be welcome to invest – a relevant point as Singapore is hardly full of what might be called “sophisticated” indigenous investors.
But the biggest question is: if an SWF opens up to outside investors, particularly to foreigners, what, then, does an SWF become? Another long-only investment fund?
The idea that this radical move would come from the famously discreet Singaporeans is also novel.
Ho said it would be important to test the idea “over at least one market cycle” in the next five to eight years. “If this pilot is successful, we may then consider a co-investment platform for retail investors in perhaps eight to 10 years’ time.”
Allowing the public to invest in Temasek would “increase the state-run fund’s transparency,” Francis Lun of Fulbright Securities in Hong Kong told Bloomberg. “It will increase pressure on their managers to avoid investment mistakes.”
Whatever the reasons for Temasek’s radical thinking, it’s worth remembering that, despite what Lex noted was a “grisly year” for the Singaporean state investment agency, it remains not only one of the oldest sovereign wealth funds but also one of the most successful, generating annual total returns of 18 per cent since its 1974 inception (although more recent performance, say over the past decade to 2008, shrinks returns to 9 per cent a year).
As of November 30 2008, Temasek’s assets were valued at S$127bn, down from S$185bn at the end of March last year, according to Singaporean government figures. That is still a big whack of money and Temasek is up there in the ranks of the world’s biggest SWFs.
As for Temasek’s future leadership. Needless to say the ever discreet Ho merely pronounced it “unfortunate” that Goodyear didn’t take the top job, and confirmed that the succession review continues for her replacement:
“I just want to reaffirm that the decision was both mutual and amicable,” Ho said. ” We continue to hold Chip in very high regard for his professionalism and his integrity.”
Related links:
Ho Ching speech, Building a sustainable institution - TemasekHoldings
Numbers man’s brief brush with Temasek – FT
Temasek/Chip Goodyear – Lex
At Temasek, a foreign CEO-to-be won’t – WSJ
Temasek and transparency II - WSJ