Singapore-headquartered investment company Temasek, which published its annual Temasek Review, reported a record net portfolio value of S$275 billion1, and closing the year in a net cash position on 31 March 2017.
Temasek’s one-year Total Shareholder Return (TSR) was 13%. Longer term 10-year and 20-year TSRs were 4% and 6% respectively. TSR compounded annually since our inception in 1974 was 15%.
Dividend income from our portfolio was S$7 billion for the year ended 31 March 2017. This was about 19 times our interest expense for the year.
Temasek Chairman Lim Boon Heng commented: “While the global recovery is gaining momentum, there are still uncertainties, both in the medium as well as longer term. We have maintained an investment stance that is disciplined but nimble, and built a balance sheet that enables us to capitalise on opportunities and withstand shocks.”
“We have continued to rebalance our holdings towards longer term macro opportunities such as the transforming economies, as well as emerging new trends such as the digital enablers for new businesses. The strength of our balance sheet also enables us to undertake large projects which may have longer gestation periods, such as the Mandai rejuvenation.”
Executive Director and CEO, Temasek International Lee Theng Kiat, said: “As an active investor, we continue to reshape our portfolio during the year while adopting a measured and disciplined investment pace. We put a focus on private and negotiated opportunities, in view of our global outlook and rich equity market valuations in key markets.”
“We invested S$16 billion and divested S$18 billion of our portfolio last year, resulting in a net divestment position for the first time since the March 2009 year. Our active investment stance saw S$206 billion invested over the last ten years along with S$151 billion of divestments. This contributed to a S$111 billion rise in our net portfolio value over the last decade, notwithstanding the significant impact of the Global Financial Crisis in 2008/09.”
“We continue to focus on new longer term opportunities such as technology, life sciences, agribusiness, non-bank financial services, consumer, and energy & resources. Over the last 6 years, our investments in these new focus areas have risen from 8% of our portfolio to 24% last year, delivering better returns than our average return from our portfolio as a whole,” added Lee.
Temasek’s new investments are funded primarily by divestment proceeds, dividends from our portfolio companies, and distribution from funds. They are guided by our four investment themes and the long term trends they represent:
• Transforming Economies
• Growing Middle Income Populations
• Deepening Comparative Advantages
• Emerging Champions
Today, the new comparative advantages and emerging champions include disruptive technologies and sustainable solutions. The transforming economies in and outside Asia, as well as the growing middle income populations continue to remain relevant long term themes.