What is Temasek Holdings?
Temasek Holdings is a sovereign wealth fund (SWF)— a public company — which manages an investment fund on behalf of the Singapore government. Using Federal Reserves, it focuses on investments located in Singapore, China and North America, as well as Europe and some emerging economies. Temasek Holdings holds a portfolio of approximately SGD$306 billion (US$226.6 billion) as of March 2020.
The investment fund currently has 11 offices around the world and manages a wide range of investments and financial services, including telecommunications, media and technology, transport and industrials, consumer and real estate, life sciences and agrifood, energy and resources.
Key points to remember
- Temasek Holdings is a state-owned company that manages an investment fund on behalf of the Singapore government.
- Funded by government reserves, it has a portfolio of nearly $306 billion and a total shareholder return of 15% since its inception in 1974.
- Temasek has a largely independent board of directors and one shareholder, the Singapore Ministry of Finance.
- The company’s Temasek Foundation has funded 23 philanthropic projects across Asia.
Understanding Temasek Holdings
Temasek Holdings was founded in 1974 under the Companies Act of Singapore, which incorporated the organization. The incorporation allowed the company to own and manage investments and assets that the Singapore government was previously responsible for. By relieving the government of the financial task of managing investments, the government’s finance ministry was able to have more time and capacity to focus on policy making and regulation, as it was supposed to.
The company was originally founded on a wallet of SGD$354 million from shares in Singapore government-owned companies, startups and businesses, including a bird park, hotel, shoemaker, steel mill and airline.
Although Temasek Holdings has the usual corporate structure, with two unique features that reflect its status as a fifth schedule company in Singapore:
- The approval of the President of Singapore is required to take certain actions, such as the appointment and removal of directors and key executives, including the CEO; the Board of Directors and the CEO are accountable to the President. The majority of directors and key executives of Temasek Holdings are appointed independent directors private sector. Temasek has a sole shareholder in the Singapore Ministry of Finance.
- The company’s financial statements are audited by the Auditor General of the Government of Singapore.
Although Singapore’s Minister of Finance is the company’s sole shareholder, the Singapore government is not directly involved in any investment or operational decisions at any level of the company. The government is a shareholder as defined by the board, which allows Temasek to operate as a fifth listed company.
Aaa
The rating that Moody’s Investors Service assigns to Temasek and the debt issued by its financing subsidiary Temasek Financial Ltd.
Although it took a hit in fiscal 2019, posting just a 1.49% shareholder return, the company has posted a total return of 15% since its inception in 1974.
Like any business, Temasek pays taxes to tax authorities and separately declares dividends to its shareholders.
Special Considerations
Temasek’s website emphasizes its “stake in the well-being of our wider community”, citing his Temasek Trust, founded in 2007, which funds the Temasek Foundation. This association is subdivided into six foundations which oversee 23 philanthropic endowments:
- International Temasek Foundation
- Treatments from the Temasek Foundation
- The Temasek Foundation connects
- The Temasek Foundation nurtures
- The Temasek Foundation innovates
- Temasek Ecosperity Foundation
Overall, Temasek Holdings claims to have reached 1,300,000 people in Asia and Singapore with its work and community programs.