Temasek-backed subsidiary True Light Capital on Thursday announced that has closed its first flagship fund at $3.3 billion to invest in Greater China.
True Light Fund I received capital commitments from sovereign wealth funds, foundations, financial institutions, and family offices. True Light Capital is an independent and wholly-owned subsidiary of Temasek.
The firm’s latest fund close will see True Light invest alongside Temasek in areas with a nexus or major business relationship with Greater China. True Light Fund I invests across private and public equity, as well as indirectly through private equity and venture capital funds.
Some key sectors it looks at include life sciences, technology, consumer, industrials, and business services.
“True Light is positive about China’s long-term fundamentals and outlook, and we continue to see attractive investment opportunities aligned with the four long-term structural trends of digitisation, longer lifespans, sustainable living, and future of consumption,” said True Light Capital CEO Yeo Chee Kian.
“These trends are driving Chinese innovations in areas that we will focus on, including the digital transformation of industry value-chains, novel therapeutics and integrated biotech companies, decarbonisation technologies like new energy and battery solutions, and new consumption products and services,” he added.
The formation of True Light Capital comes at a time of heightened uncertainty around China, driven by various factors including Sino-US decoupling and weaker economic growth. This has led to a slowdown in dealmaking activity in China, particularly among Western investors who remain on the sidelines due to perceived risk.
Temasek, however, has expressed that it remains “excited about the China market”, and continues to see attractive opportunities in areas such as advanced manufacturing and energy transition. China makes up about 22% of its global S$382 billion ($281 billion) portfolio as of March 2023, according to Temasek’s website.
“While people tend to look at the weakness in the traditional sectors such as the traditional manufacturing or real estate, and then people tend to overlook these emerging sectors,” Temasek’s head of China Yibing Wu shared at the Milken Institute Asia Summit earlier this month.
The formation of True Light Capital also allows Temasek to further scale its capital via a partnership in order to remain committed to the Chinese market.
“As part of Temasek’s T2030 strategy, we have been growing our Partnership Engine to scale capital in areas where we believe we can generate stable and sustainable returns over the long term. We established True Light as one of our Assets Under Management businesses, to broaden our ecosystem and provide partners with the opportunity to invest in structural trends in China,” shared Chia Song Hwee, Deputy Chief Executive Officer of Temasek and Chairman of True Light Capital.
True Light Capital was established in 2021 and has close to 20 employees across its Singapore headquarters and Shanghai office.