What Is Temasek Holdings?

Temasek Holdings is a sovereign wealth fund (SWF)—a state-owned company—that manages an investment fund on behalf of the Government of Singapore. Using federal reserves, it focuses on investments located in Singapore, China, and North America, as well as Europe and some emerging economies. Temasek Holdings has a portfolio of approximately SGD $313 billion (US $224.839 billion) as of its fiscal year-end 2019.

The investment fund currently has 11 offices globally and manages a wide range of investments and financial services including telecommunications, media and technology, transportation and industrials, consumer and real estate, life sciences and agribusiness, energy, and resources.

Key Takeaways

  • Temasek Holdings is a state-owned company that manages an investment fund on behalf of the Government of Singapore.
  • Financed by federal reserves, it has a portfolio of nearly $230 billion and has 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 19 philanthropic endeavors throughout Asia.

Understanding Temasek Holdings

Temasek Holdings was founded in 1974 under the Singapore Companies Act, which incorporated the organization. Incorporation allowed the company to own and manage investments and assets that the Singapore government had previously been responsible for. By relieving the government from the financial aspect task of managing investments, the government’s Ministry of Finance was able to have more time and abilities to focus on policymaking and regulation, as it was designed to do.

The company was originally built on a portfolio of SGD$354 million dollars from shares in companies, startups, and ventures that were held by the Singapore government, including a bird park, a hotel, a shoemaker, a steel mill and an airline.

Although Temasek Holdings has the usual corporate structure, with two unique features that reflect its status as a Fifth Schedule corporation in Singapore:

  • The approval of the President of Singapore is required to take certain actions, such as appointment and removal of directors and key managers, including the CEO; the Board and CEO are accountable to the President. The majority of Temasek Holdings' directors and key officers are independent directors appointed from the private sector. Temasek has one sole shareholder in the Singapore Minister for Finance.
  • The company's financial statements are audited by the Government of Singapore's Auditor-General.

Despite the fact that the Singapore Minister of Finance is the company’s sole shareholder, Singapore's government is not directly involved in any of the investment or operational decisions on any level of the company. The government is a shareholder as outlined by the Board of Directors, which allows Temasek to operate as a Fifth Scheduled Company.

Aaa

The rating that Moody's Investors Service assigns Temasek and the debt issued by its financing subsidiary Temasek Financial Ltd.

Though it took a hit in fiscal year 2019, posting only a 1.49% shareholder return, the company boasts a 15% total return since its inception in 1974.

Like any company, Temasek pays federal taxes to the 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 its Temasek Trust, founded in 2007, which funds the Temasek Foundation. This nonprofit is subdivided into six foundations that oversee 19 philanthropic endowments:

  • Temasek Foundation International
  • Temasek Foundation Cares
  • Temasek Foundation Connects
  • Temasek Foundation Nurtures
  • Temasek Foundation Innovates
  • Temasek Foundation Ecosperity

Overall, Temasek Holdings claims to have impacted 900,000 people throughout Asia and Singapore with its community work and programs.