Temasek expands co-investment platform

The S$185 billion ($134 billion) Temasek Holdings is considering a long-term plan to develop a co-investment platform for retail investors, on the back of a long history of co-investment with private equity funds and other institutional investors.

This long term plan, over eight to 10 years, will be tested by co-investment with sophisticated investors similar to Temasek in the coming five years.

Temasek has had co-investments with various investors for more than five years in a variety of sectors and regions.

They include participating in the restructuring of China Aviation Oil, with a minority co-investment stake alongside BP; a partnership with Reliance Energy for a 50 per cent stake in the $200 million Reliance India Power Fund; co-investing with Cargill in oil palm plantations in Indonesia and Papua New Guinea; co-investing with Istithmar PJSC of Dubai in Thailand’s healthcare sector; and co-investment with two US private equity firms Silver Lake Partners and KKR in the $2.7 billion carve-out of the semi-conductor products group of Agilent Technologies to form Avago Technologies.

In a speech to the Institute of Policy Studies in Singapore, chief executive of Temasek, Ho Ching, said the board was exploring the feasibility of creating one more group of stakeholders, and this could be done by inviting the public to co-invest with Temasek.

“We hope to start this by first piloting the relevant structures and rules of engagement with Temasek and other sophisticated co-investors. It is important to test this over at least one market cycle during the next five to eight years,” she said. “If this pilot is successful, we may then consider a co-investment platform for retail investors in perhaps eight to 10 years time.”

At the end of March 2008 the sovereign wealth fund had $134 billion in assets, which was a $28 billion loss for the year. It is expected that will drop by as much again this year, with the 350 investment staff expecting a negative bonus pool for the second year in a row.

Addressing the issue of Chip Goodyear no longer taking over as chief executive, she said it “is unfortunate that both the board and Chip recently came to the amicable and mutual conclusion, that it was best not to proceed with the CEO transition. This does not mean, however, that we should stop this discipline of succession review.”