Temasek has always been one of the world’s most interesting sovereign wealth vehicles: in asset allocation, mandate and style it looks quite unlike most of the classic diversified sovereign funds.
But Covid-19 has made it more striking still, bringing into sharp relief its dual role as an unemotional long-term investor and as a steward with a duty of service to the nation.
There have been no clearer examples of this than Temasek’s role in the SIA (Singapore Airlines) capital raising, announced in March with a S$15 billion ($11 billion) target through a rights issue and a tranche of mandatory convertible bonds.
Temasek backstopped both, pledging not only to take up its own considerable entitlement as a 55% shareholder but also any shortfall.
In the event, Temasek’s underwriting of the deal persuaded the market to participate; the rights issue, though not the convertible, was fully subscribed.
So Temasek had achieved two things in one go: it had made an interesting long-term contrarian investment; and it had performed a national service in reviving confidence in a key Singaporean asset that was under enormous stress.
Goldman Sachs called it the “gold standard” of coronavirus-related rescue packages.
But was it just a rescue package? That’s not quite the right way to look at it.
“Clearly, everything we do has to be looked at through the lens of commercial returns,” says Rohit Sipahimalani, chief investment strategist at Temasek, speaking to Euromoney after the launch of the annual Temasek Review and the confirmation of numbers previously announced in July, showing a 2.3% reverse in total shareholder return and a net portfolio value of S$306 billion.
Read the full article here
