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The Fascinating Business Empire behind Temasek Holdings – Part 2

In this two part series, I’m taking a closer look into the investments that Temasek Holdings has. As a brief introduction, Temasek is one of the world’s largest sovereign wealth funds with assets of more than S$200 billion and investments in over six continents.

Temasek’s investments are classified under five different categories: 1) Financial services; 2) Telecommunication, media, and technology; 3) Transportation and industrials; 4) Life sciences, consumer, and real estate; and 5) Energy and resources. You can find out more about the first two segments here.

With that settled, let’s dig deeper into this investing giant.

Transportation and industrials

Shipping, airlines, defence, power generation – you name it, Temasek has it. In Singapore, the fund’s most notable investment in this space is Keppel Corporation (SGX: BN4), which by itself is a huge conglomerate with business interests in shipbuilding, rig-building, construction, and property development among others.

Sembcorp Industries (SGX: U96) is also partly owned by Temasek. While the company competes directly with Keppel Corp’s ship- and rig-building business, it is also a major utility player in Singapore.

As for shipping, Temasek is a majority holder of Neptune Orient Lines (SGX: N03). The main container shipping brand of the company, American President Lines (APL), is part of the G6 alliance which is one of the largest shipping alliances in the world.

As a sign of Temasek’s over-arching reach in Singapore’s transport sector, both SMRT (SGX: S53) and Singapore Airlines (SGX: C6L) are also part of the fund’s portfolio.

Lastly, within the defence space, we have ST Engineering (SGX: S63) – one of Asia’s largest defence and engineering company – which is 50% owned by the sovereign wealth fund.

Life sciences, consumer and real estate

The largest property developer in South East Asia, CapitaLand  (SGX: C31), is one of Temasek’s major investments in this segment. Together with Mapletree Investments, both companies are the sponsors of many REITs now listed in Singapore.

Some of Temasek’s other investments in this category includes Olam International (SGX: O32) and SATS Ltd (SGX: S58). Last month, Temasek indicated its desire to acquire shares of Olam at S$ 2.23 each. Meanwhile, SATS is one of the largest gateway services and food solutions provider in Asia.

Energy and resource

This segment is where Temasek has spent the least amounts of money with only 6% of its S$215 billion invested in related-companies. Most of the investments in this space are made in overseas companies, with the most notable ones being a 5% stake in The Mosaic Company (NYSE: MOS) and an investment into convertible preferred shares of Chesapeake Energy (NYSE: CHK). The former is one of the leading potash producers in the world (potash is one of the key things that goes into fertilisers) while the latter is currently considered the second largest natural gas producer in the USA.

Foolish Summary

Temasek Holdings was created in 1974. For a sovereign wealth fund of its scale, it has a remarkable performance record: Since 1974, the fund has delivered a compounded annual growth rate of 16%.

As its size grows, we might see a slowdown in its investment performance as the size of a fund is its own natural anchor. That said, Singaporeans might still be able to look forward to good results from Temasek Holdings in the future.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim owns Cheasapeake Energy.