Investing for Generations

We continued to rebalance our portfolio with a measured and disciplined investment pace, and a focus on private, negotiated opportunities.

During the financial year ended 31 March 2017, we divested S$18 billion and invested S$16 billion.

We maintained our divestment pace as we continued to rebalance our portfolio based on our global outlook. Given geopolitical risks across the world and rich equity market valuations in key markets, we adopted a measured and disciplined investment pace, with a focus on private, negotiated opportunities. This resulted in a net divestment of S$2 billion, the first time since the financial year ended 31 March 2009 that we ended the year with a net divestment.

Since 2011, there has been steady growth, as a proportion of our portfolio, of identified new focus areas – technology, life sciences, agribusiness, non-bank financial services, consumer, and energy & resources. As at 31 March 2017, these areas constituted 24% of our portfolio, up from 8% in 31 March 2011. Our aggregate returns since 2011 from new investments in these areas have outperformed the overall portfolio.

Temasek plays an enabler role by investing across all stages of enterprise growth, from early stage companies to more mature ones. We seek out companies with disruptive business models and technologies. We also identify and nurture enterprises that are potential leaders in their industry, and have a focus on innovation to drive success and make a difference.

Identified new focus areas constituted 24% of our portfolio, up from 8% six years ago.

Our aggregate returns from new investments in new focus areas have outperformed the overall portfolio.

Investment Highlights

The major sectors in which we invested during the year were telecommunications, media & technology, transportation & industrials, and life sciences & agribusiness.

In telecommunications, media & technology, we continued to invest in companies with distinct competitive advantages. We invested in Ctrip, a Chinese online travel reservations platform; Amazon, a global online retailer and cloud computing company; Koubei, an Alibaba-affiliated local services guide platform for offline merchants in China; and Wish, a global, mobile-first e-commerce marketplace. We also invested an additional S$1.6 billion via new shares in Singtel, a telecommunications provider in Asia; this transaction involved the sale of part of our stake in Intouch Holdings, and our remaining shareholding in Bharti Airtel, to Singtel.

In transportation & industrials, we acquired all the minority shares, via a scheme of arrangement, in SMRT Corporation, a multi-modal land transport operator in Singapore – for a consideration of S$1.2 billion. Following completion of the acquisition, SMRT was delisted from the Singapore Exchange. We also invested in PPG Industries, a US-based manufacturer of paints and coatings.

Within life sciences & agribusiness, we committed US$800 million to Verily Life Sciences, a life sciences research and engineering organisation spun off from Google. We also continued to invest in a number of companies developing innovative and sustainable solutions. These include SuperBAC, a Brazilian microbial fertiliser company; VoloAgri Group, a US-based vegetable seeds producer; and Impossible Foods, a company developing plant-based meat and dairy products.

S$16b

Investments for the year

S$18b

Divestments for the year

Biologics: A World Free Of Disease?

The US again accounted for the largest share of our new investments during the year. Within the US, we also invested in Antero Resources, an independent energy exploration and production company; and Modern Meadow, a developer of lab-grown bio-fabricated leather.

Modern Meadow: Bringing Biology To Your Wardrobe

In addition, we continued to make investments in Asia. Singapore accounted for the largest share of these investments, driven by our increased stakes in Singtel and SMRT. In India, we invested in SBI Life, a life insurance company; and Crompton Greaves Consumer Electricals, a company manufacturing and marketing consumer electronics. We also increased our stake in HDFC Bank, a private sector bank with exposure to retail and corporate segments. In China, we invested in ZTO Express, a logistics provider addressing e-commerce deliveries. Our exposure to the construction materials sector was increased via Ssangyong Cement, a South Korea-based cement manufacturing company.

As and when opportunities arise, we look to reshape and rebalance our portfolio. In certain instances, we capitalised on rich market valuations to exit some of our holdings. We may re-enter when valuations are corrected.

Our key divestments during the year included our positions in Synchrony Financial, Bharti Airtel, LafargeHolcim and Evonik Industries, as well as part of our stake in Intouch Holdings.

We also exited some holdings via acquisitions by third parties, alongside the uptick in global M&A activity during the year. Examples of this are the divestments of our stakes in Neptune Orient Lines and B/E Aerospace.

While we have divested part of our holdings in Alibaba, Univar and China Construction Bank, we continue to retain significant exposures in these companies.

Post March 2017, we invested in WuXi NextCODE, a fully integrated contract genomics organisation with a presence in China, the US and Iceland, that is  developing an end-to-end platform for genomic data. We also signed a definitive agreement to acquire a majority stake in US-based Global Healthcare Exchange, which provides an electronic trading exchange and cloud-based supply chain software for healthcare providers and suppliers.

Seeding New Businesses

We seed new businesses that are expected to yield sustainable returns, including those with long gestation periods. An example is Mandai’s rejuvenation into an integrated wildlife and nature heritage precinct. We established Mandai Park Holdings to conceptualise and drive this initiative.

In late 2016, Mandai Park Holdings obtained the appropriate approvals to proceed with the rejuvenation. A ground-seeding ceremony was held in January 2017 to mark the start of construction. The Singapore Zoo, River Safari and Night Safari will be augmented with a new Bird Park, a Rainforest Park, indoor edutainment attractions and eco-lodges. The development will be completed in phases, with the Bird Park scheduled to open in 2020.

Temasek established Pavilion Energy in 2013 to address the region’s growing demand for clean and reliable energy, with a focus on the liquefied natural gas (LNG) supply chain. In October 2016, Pavilion Energy’s subsidiary Pavilion Gas was awarded one of two LNG import licences by the Singapore Government to supply one million tonnes of LNG a year, for up to three years.

Enabling Growth Capital

During the year, Heliconia Capital invested in five Singapore-based small & medium enterprises. It invested in the consumer, urbanisation, and technology sectors. Investments included One Championship, a live sports entertainment events company; HRnetGroup, a recruitment and human resource solutions provider in Asia; Sanli M&E Engineering, a specialist water engineering company; and Ascent Solutions, an Internet-of-Things solutions provider focused on cargo and supply chain tracking.

In February 2017, the Singapore Ministry of Finance announced a new S$600 million International Partnership Fund, to be managed by Heliconia Capital. The fund will co-invest with Singapore-based firms to help them scale up and internationalise, with a focus on Asian markets.

We seed new businesses that are expected to yield sustainable returns, including those with long gestation periods.

Transforming Existing Businesses

In June 2015, the merger of entities owned by Temasek and JTC Corporation formed an integrated platform for sustainable urban solutions.

Ascendas-Singbridge was created via this merger. In December 2016, Ascendas-Singbridge partnered NUS Enterprise to set up The Hangar, Singapore Science Park, which is Singapore’s first deep technology hub.

Ascendas-Singbridge also expanded its business space solutions offerings to include flexible work spaces. In March 2017, Ascendas-Singbridge partnered Spacemob, the Vertex Ventures-backed coworking space operator, to launch 14,000 square feet of coworking space in Singapore Science Park 1.

Surbana Jurong was the other entity created through the June 2015 merger. Enhancing its range of technological urban solutions, Surbana Jurong launched its “Smart City in a Box” platform in July 2016. The platform will help officials better track, monitor and manage cities, through a dashboard of integrated smart applications.

Temasek plays an enabler role by investing across all stages of enterprise growth.

Fostering Innovation

We established Red Dot Capital Partners, a US$150 million fund providing growth capital to Israel-based technology companies which plan to expand to Asia.

In addition, together with EDBI, we established Lightstone Singapore, a US$50 million fund seeking to commercialise the biomedical sciences intellectual property of Singapore research institutes.

Developing Co-Investment Platforms

In June 2016, our wholly owned subsidiary Azalea Asset Management launched Astrea III, Singapore’s first listed bonds backed by cash flows from a diversified portfolio of private equity funds.

Astrea III is part of our continuing efforts to develop co-investment platforms where diversified portfolios of assets are made available to a broader base of investors, including retail investors.