Singapore's Temasek opens up as it eyes regional markets
Singapore's Temasek opens up as it eyes regional markets
Bernice Han, Agence France-Presse, Singapore
The Singapore government's cash-rich investment arm Temasek
Holdings is gradually shedding light on its extensive operations
as part of a makeover to boost its expansion strategy into Asia,
officials and analysts said.
A plan by the company to open its books to get a credit rating
is a vital step towards demystifying the company, which holds
substantial stakes in almost every sector of the economy spanning
ports, banks, airlines, telecoms, media, shipping and utilities.
"This will be part of a measured process of opening up and
demystifying Temasek," executive director Ho Ching said in a
recent policy speech that surprised many observers because it
contained details normally not shared with the public.
The move toward greater transparency is likely to be welcomed
by critics who have called for Temasek to be put under greater
public scrutiny.
Since its inception in 1974, the 30-year-old state investment
vehicle has revealed little publicly about its investments.
This changed steadily since Ho, the wife of Singapore's
leader-in-waiting Deputy Prime Minister Lee Hsien Loong, was
appointed executive director in 2002.
In her widely reported speech, Ho unveiled for the first time
a report card of Temasek's performance.
She said the company achieved a compounded annual return of
more than 16 percent on its investments and had a dividend yield
of seven percent annually over the past 10 years.
Ho revealed plans to borrow for the first time in the
financial markets, a move that would require Temasek to open its
books to an external ratings agency to get a credit rating.
Analysts said these calibrated moves would fit nicely with
Temasek's plans to expand into the region, where an image as a
secretive government firm could impede potential investments.
"I think the demystification is aimed at neutralizing the
criticisms fired before for being somewhat secretive with what is
essentially a public holding," said Chandru Rajam, regional
director for advisory services with the Economist Corporate
Network, a unit of the Economist group.
"From a pure financial market perspective, securing a credit
rating is a good thing.
"It's a way for them to say it's no big deal, we'll be happy
to subject ourselves to external analysis."
Most recently, Temasek has shifted its radar screen to
promising Asian economies including China, India, Thailand, South
Korea, Indonesia and Malaysia.
"Not only are foreign reserves at record highs from Pakistan
to China, from Thailand to Indonesia, inflation and interest
rates have come down sharply," said Ho.
"In such a scenario, we believe there is an opportunity to
invest in the services such as the banking and finance sector as
a leveraged proxy to ride on the broad recovery of the respected
economies.
"In short, we will work to transform our portfolio from a
proxy for the Singapore gross domestic product, into a balanced
gross national product portfolio leveraging on the growth and
promise of Singapore, ASEAN (Association of Southeast Asian
Nations), Asia and the world."
Analysts said it made commercial sense to seek growth outside
Singapore.
"Once you reach a certain critical mass, further growth
opportunity will have to come outside the boundary of the country
when the pie is not growing," said Greg Pau, analyst for
corporate and infrastructure rating at Standard and Poor's.
"It's logical unless you want to stay the same size as you are
when the room for growth is not there anymore."
Temasek has expanded its overseas investment portfolio
recently.
Last year it joined forces with Germany's Deutsche Bank in a
winning bid for a 51 percent stake in Indonesia's fifth largest
lender, Bank Danamon, valued at US$350 million.
In December it bought a 5.2 percent stake in India's largest
private lender, ICICI Bank, worth an estimated $200 million.
News reports last week said Temasek was in talks to acquire a
stake in Malaysia's Alliance Bank.