Temasek May Buy Stakes in Minsheng, Medco to Expand

Temasek May Buy Stakes in Minsheng, Medco to Expand

Bloomberg/Jakarta/Singapore

Temasek Holdings Pte, a S$53 billion government fund, may buy stakes in China's first private bank and Indonesia's biggest listed oil company as it steps up investments abroad.

Temasek may offer about S$110 million for a 4.7 percent stake in China Minsheng Banking Corp., people familiar with the plan said. Separately, the fund said it was selected as the top bidder for 38 percent of PT Medco Energi Internasional, worth S$245 million at yesterday's closing share price.

Chief Executive Ho Ching, wife of Prime Minister Lee Hsien Loong, is increasing investment abroad to boost returns from an average of 3 percent a year over the past decade. Stakes in Medco and Minsheng Bank would allow Temasek, which has about half its assets in Singapore, to benefit from China's expanding economy and rising energy demand, said economist Timothy Condon.

"It's a bet on China," said Condon, head of Asian financial markets research at ING Groep NV in Singapore. "With China on the boil, it makes sense to be exposed to commodities. China's overriding concern is securing stable supplies of raw materials."

In the past two years, Temasek has invested S$3.3 billion in 35 companies at home and abroad, including a 53 percent stake in Indonesia's Bank Danamon Indonesia and 28 percent stake in Bank Internasional Indonesia.

Temasek, set up in 1974 to promote local industries, plans to increase the proportion of its overseas investments to about two- thirds in the next decade from about half, the company said last week in its first public annual report.

A Temasek unit is bidding to buy the Medco stake from Thailand's PTT Exploration & Production Pcl and other investors.

The Singapore investment company may also offer to buy the stake in Beijing-based China Minsheng Banking Corp. held by state- owned China National Coal Group Corp., the people said. The sale would occur before Minsheng, China's first private lender, seeks about $1 billion in an overseas share sale early next year, they said.

Medco shares have risen on the expectation higher crude oil prices will boost profit. The stock gained 60 percent in the past three months, more than a 16 percent increase in the benchmark Jakarta Composite Index. Crude oil futures in New York have gained 66 percent this year.

"The Singapore company wants to benefit from the surge in oil prices," said Alvin Pattisahusiwa, who helps manage the equivalent of $1.09 billion in Indonesian assets for Fortis Investments in Jakarta.

He declined to say whether Fortis holds Medco shares.

Investments in Asian countries including Indonesia and China make up 17 percent of Temasek's assets worth S$90 billion.

"As Asia develops, powered by a confident China and a connected India, we believe there is scope for Temasek to reshape its portfolio as an active investor in leading or emerging companies in Asia," said Temasek Chairman S. Dhanabalan in the annual report.

Last month, India approved plans by a unit of Temasek to invest in power projects in the South Asian country along with Reliance Energy Ltd.

Temasek "is a very big investment company and diversifying into the international market is obviously a policy that makes sense," Mike Hanbury-Williams, who helps manage the equivalent of $210 billion at F&C Asset Management in London, said this week.

Everitt Investments Pte, owned by Temasek, is bidding to buy 44.9 percent of New Links Energy Resources, which owns 85.5 percent of Medco Energi, Everitt said in an announcement published in the Jakarta-based Koran Tempo newspaper.

Medco shares surged 23 percent after the announcement, the biggest one-day gain in more than two years.

"Medco has good prospects as it's the biggest Indonesian- based oil producer, with a 7 percent share of the country's oil output," said Agung Wisnu Wardhana, who helps manage Rp 3.8 trillion in Indonesian equities and bonds at Bank Indonesia's pension fund, including Medco bonds.

Temasek last month agreed to buy 9 percent of the shares offered by China Power International Development Ltd. in a $330 million IPO, according to share sale documents.

Temasek has stakes in Singapore Airlines Ltd., Telekom Malaysia Bhd. and DBS Group Holdings Ltd.