SINGAPORE (Reuters) – Singapore state investor Temasek issued a revised charter on Tuesday that downplayed its links to government policy or strategic interests, as it eyes more overseas assets from banks to infrastructure.
Temasek, one of the world’s biggest wealth funds whose sole shareholder is the Singapore government, still has controlling stakes in half the city-state’s blue-chip firms such as Singapore Airlines (SIAL.SI), but it has increased its exposure elsewhere.
Sovereign wealth funds have come under greater scrutiny from Western governments concerned that their investments may be politically motivated, after high-profile acquisitions of stakes in large Western firms and banks by such funds.
CEO Ho Ching said Temasek will still consider taking stakes in Western financials, despite the firm’s estimated $4 billion-plus losses after it sold off its stakes in Bank of America (BAC.N) and Barclays (BARC.L) in the past year.
“If the opportunity comes, and it looks attractive, yes,” Ho said of investing in Western banks, adding that the fund was also interested in resources as an asset class and saw opportunities in Asian infrastructure.
She, however, ruled out investing in overseas land for agriculture, as firms linked to South Korea and Middle Eastern firms have done in recent years.
Ho was speaking at the launch of an updated charter that described the fund as an investment firm managed on commercial principles, dropping a reference to its role to improve the city-state’s economic base.
“Temasek felt the need to emphasise its independence, or perhaps it is preparing to spin itself off as a truly independent unit…Countries are resistant to investments by politically-linked entities,” said David Cohen, director of Asian economic forecasting at Action Economics in Singapore.
The charter was first written in 2002 to spell out its relationship with the government and provide a roadmap on what Temasek planned to do with its stakes in state-linked firms such as top bank DBS Group (DBSM.SI), Singapore Telecommunications (STEL.SI) and arms maker ST Engineering (STEG.SI).
Temasek now describes itself as an investment firm creating long-term value for its shareholder, the Ministry of Finance. It did not include the notes accompanying the 2002 charter stating that the government — through Temasek — needed to own and control firms deemed critical to the city-state’s security, economic well-being or public policy objectives.
“There are very few of these companies left in our stable,” said Ho, the wife of Singapore Prime Minister Lee Hsien Loong. “We are free to look at it completely commercially.”
She said initial public offerings of unlisted units, which include firms in strategic sectors such as port operator PSA [PSA.UL], grid operator Singapore Power, and television and radio broadcaster Mediacorp, were “still on the table”.
“There is a right time for them to be listed,” she said, adding that initial public offerings for asset manager Fullerton Fund Management and bank holding company Fullerton Financial Holdings are also long-term possibilities.
Ho also said Temasek could package its private equity investments in infrastructure into business trusts in the next 3-5 years to raise funds as well as to make such assets available to retail investors in Singapore.
The Singapore state investor already has a London-listed fund of funds called Astrea, which holds Temasek’s interest in 46 private equity funds. Astrea raised nearly $810 million in debt and equity during Temasek’s fiscal year ended March 2007.
The updated charter does continue to show Temasek’s links to the government. For example, the Singapore President’s approval is required for the appointment or removal of Temasek’s board members and CEO.
The fund is looking for a successor to Ho after designated successor Chip Goodyear, a former BHP Billiton (BHP.AX) CEO, unexpectedly resigned last month citing strategic differences.
Ho said last month that Temasek’s portfolio lost more than $27 billion or more than a fifth in its financial year to end-March. Temasek will release its annual report next month, giving the audited value of its portfolio and investment returns.
“I think the crisis is still unfolding,” she said, when asked what lessons she had learnt from the global financial downturn.
By Kevin Lim and Neil Chatterjee
(Editing by Muralikumar Anantharaman)