Despite disruptions caused by the COVID19 outbreak, Singapore state-owned investment company Temasek‘s portfolio value rose to a record S$403 billion ($297 billion) in the year ended March 31, 2022, its latest performance review showed.
Temasek’s portfolio value in unlisted assets has increased about four times to S$210 billion from S$53 billion a decade ago, according to the review. Over the last decade, the unlisted portfolio has generated returns of over 10% per annum.
The group’s net profit, however, dipped to S$11 billion in the March 2022 financial year from S$57 billion a year earlier.
Temasek managed to post a S$22-billion year-on-year growth in portfolio value, notwithstanding its exposure to pandemic-hit businesses and the uncertainty in global markets, as it invested and divested to capture opportunities aligned with long-term structural trends.
It invested S$61 billion and divested S$37 billion during the year, sending its total over the decade to S$315 billion of investments and S$234 billion of divestments.
Last year, the company reported a portfolio value of S$381 billion after posting a dip in the 2020 financial year.
“While the future remains unpredictable, we recognise that there are tremendous opportunities for us to work together to overcome global challenges,” said Temasek Holdings Chairman Lim Boon Heng.
Temasek has a 65% underlying exposure to developed economies as of March 31, up from 55% in 2011, with its portfolio still anchored in Asia (63%).
In terms of geographic exposure, Singapore now accounts for 27%, overtaking China, which was the biggest in the prior two years. China now accounts for 22% of Temasek’s exposure, compared with 27% last year, while the Americas account for 21%. Asia takes up 14% of the company’s exposure, followed by EMEA at 12% and ANZ at 4%.
By portfolio exposure, financial services (23%), transportation and industrials (22%) and telecommunications, media and technology (18%) are the three largest sectors.
In 2022, investments in consumer, media and technology, life sciences and agri food as well as non-bank financial services companies constituted 33% of the overall portfolio, a significant increase from their 5% share in 2011.
To construct a resilient portfolio, Temasek also deployed capital to reposition its major Singapore portfolio companies for growth in a post-COVID world.
“In the decade ahead, volatile as it may be, we will keep our focus on constructing a resilient and forward-looking portfolio,” said Temasek Holdings Executive Director and CEO Dilhan Pillay.
Despite the global uncertainties, Temasek said it will continue to generate risk-adjusted returns over the long term. It also expects a likelihood of a recession in developed markets over the next year.
“Despite slowing growth prospects and the uncertain outlook, we remain guided by our investment philosophy to generate risk-adjusted returns over the long term. We will prudently manage the risks and opportunities arising from macroeconomic and market events,” said Temasek Chief Investment Officer Rohit Sipahimalani.