Singapore-headquartered global investment firm Temasek reported a net portfolio value (NPV) of $389 billion for the FY2024 ended March 31, up $7 billion from a year ago, or 1.83% higher y-o-y. However, this is below FY2022’s NPV of $403 billion.
After adjusting for mark-to-market (MTM) NPV, Temasek would have reported an NPV of $420 billion for FY2024, up $9 billion from last year’s MTM NPV. The increase, says Temasek, was attributed to its investment returns from the US and India and offset by the underperformance of China’s capital markets.
During the year, the group made a net profit of $5.4 billion, swinging back from its $7.3 billion loss in FY2023. Group net profit, excluding unrealised MTM gains or losses of sub-20% investments stood at $8.8 billion, 40.1% down – or $5.9 billion lower – on a y-o-y basis.
In 2024, Temasek’s share of unlisted assets stood at 52%, 1 percentage point lower y-o-y, although this still marked growth from its 20% in 2004. The remaining 48% of its portfolio is in listed assets.
With this increase in exposure, reporting unlisted assets at MTM value would be more in line with Temasek’s peers, says Temasek International’s head of financial services Connie Chan at a July 9 briefing.
Applying a similar methodology, MTM NPV for FY2023 and FY2022 would have been $411 billion and $438 billion respectively.
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Over the past decade, Temasek’s unlisted portfolio has posted an internal rate of return (IRR) of 9% per annum, delivering higher returns than its overall portfolio, with an IRR of 6%.
Temasek’s one-year total shareholder return (TSR) was 1.60%, higher than -5.07% in 2023. Meanwhile, Temasek says its 20-year and 10-year TSR “remained stable” at 7% and 6% respectively.
“Longer-term TSRs are dependent on the starting year and ending year. Our 20-year TSR this year excludes our post-SARS recovery of 2004, which explains the drop in our 20-year TSR from 9% last year to 7% this year,” says Temasek.
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Investments and divestments
During the year, Temasek invested $26 billion into sectors such as technology, financial services, sustainability, consumer, and healthcare. It says that these sectors are aligned with the four structural trends of digitisation, sustainable living, future of consumption, and longer lifespans.
Its notable investments include Indian for-profit private hospital network Manipal Hospitals, testing company Element Materials, and American brand management company Authentic Brands Group.
Not including Singapore, the US continued to be the leading destination for Temasek’s capital, followed by India and Europe. They have also stepped up investment activities in Japan.
For the financial year, Temasek recorded a net divestment of $7 billion, compared to a net investment of $4 billion a year ago.
It divested a total of $33 billion for the year, of which $10 billion was due to the redemption of capital by Singapore Airlines C6L (SIA) and Pavilion Energy for their mandatory convertible bonds and preferential shares respectively. Divestments from its Chinese assets were not a material part of the amount.
Temasek is also looking to align its portfolio to structural trends, digitisation, sustainable living, the future of consumption, and longer lifespans. These investments made up 13% of the group’s portfolio - or $242 billion - in 2016. In 2024, it now makes up 39% - or $289 billion - of its overall portfolio.
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Global outlook
The global economy has been more robust than expected, as recession risks in key developed markets have largely subsided. Even though inflation remains sticky in many markets, the group expects it to come down from its elevated levels. Geopolitical tensions, however, remain a concern.
Looking ahead, the US will continue to be the largest destination of its capital, thanks to artificial intelligence (AI) enablers and adopters. Businesses in the country also look set to benefit from the US’s industrial policy.
In other regions, Temasek sees “select opportunities” in Europe such as the green transition and in its global companies. Meanwhile, it looks to increase its focus on India and scale up its exposure in Southeast Asia and Japan.
At the same time, Temasek will keep its “cautious approach” to China and continue to monitor its government policies in 2024. In the same briefing, deputy CEO Chia Song Hwee says Temasek is looking at Chinese companies that focus on driving domestic consumption, adding that there are some “structural challenges” that need to be resolved.
The group also sees near-term opportunities in private credit and solutions for private equity firms seeking liquidity.
“The top-of-mind issues we have identified since 2021 — a challenging economic environment, geopolitical tensions, rising protectionism, the climate crisis, cyber risks, and the rise of Industry 4.0 — continue to prevail,” says the group. “Against this backdrop, we will remain disciplined in our investment approach guided by the four structural trends, especially in opportunities in green transition and AI.”
“In an era of unprecedented global challenges, the resilience of our portfolio remains our core strength,” says Dilhan Pillay, executive director and CEO of Temasek.
“We must continue to build for the future as we catalyse solutions that enable a more sustainable world, invest in growth sectors and business models, and encourage enterprises to transform and adapt through efforts in innovation,” he adds.
