Temasek Review 2016 Selected Questions & Answers

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Selected Questions & Answers from the Temasek Review Media Conference 2016

The following is an edited transcript of questions and answers at the Temasek Review 2016 Media Conference.

It has been edited to remove extraneous material and duplicated questions, or questions that ask for answers that are essentially repeats of information in the presentation, as well as grammatical edits to aid readability.  Questions are not necessarily listed in the order in which they were asked, but have been grouped by subject.

Slides and charts have been added from the Temasek Review 2016 where they were included in the presentation, or where they contain material helpful to the reader in providing detail to supplement the answer.

Click here to read the transcript of the preceding presentation and accompanying slides.

1. Performance and Portfolio

  • TSR and Hurdle Rate:
    • Performance against hurdle rate
    • Hurdle rate and expected long term returns
  • Divestments
  • Portfolio Value by Sector
  • Portfolio by Sector
  • Portfolio by Geography - China
  • Chinese Banks

2. Outlook

  • Expected Returns
  • Valuations
  • Europe
  • Brexit
  • UK Real Estate
  • Portfolio by Liquidity - Private Investments
  • Private Equity
  • Transforming Economies and India
  • Japan
  • Financial Services
  • Disruptive Innovations and Financial Services
  • Fintech
  • Growth Opportunities: Innovation
  • Sustainable Investing

3. Institutional Issues

  • Reorganisation
  • CEO Succession
  • US and San Francisco Office
  • Europe Office:
    • Review London Office
    • New offices in Europe

4. Specific Issues

  • China – Foreign Investment in Internet Banks
  • Singapore Companies
  • Standard Chartered Bank:
    • Strategy
    • Push for merger with DBS
  • Airbnb
Questions on TSR and Hurdle Rate

QUESTION: Since 2008, 2008‑2009, in most of the years you have underperformed the hurdle rate; why have you continued to underperform the hurdle rate over the long term? 

ROHIT SIPAHIMALANI: Clearly with 60% of our portfolio in listed companies we're not immune to movements in markets. So you saw in our presentation that the most recent year our performance was impacted by the weakness in markets in China and Singapore but what was encouraging was that our portfolio was much more resilient than the fall in these markets. Actually more importantly, if you look at longer periods, whether it's 3 years, 5 years, 10 years, 20 years, if you look at our performance relative to the weighted average performance of the indices in the markets in which we operate, consistently we have beaten those.

So, you know, that we're actually quite proud about. However, as you mentioned, we target an absolute hurdle rate so we need to do even better in the slower environment to basically meet and beat that hurdle rate which is why over the last few years you've noticed we've been looking to shift our portfolio in favour of those sectors which should give us the higher returns and where there are tailwinds of secular growth. And I think we've been quite encouraged by the results that we've seen in the last five years since 2011, as Chin Yee showed in her presentation, and that's something that we could focus on and that we feel fairly confident will get us to beat our hurdle rates in the long term. 

QUESTION: So would your hurdle rate be more reflective of your expected view of long term return?

ROHIT SIPAHIMALANI: Our hurdle rate is calculated actually investment by investment to reflect risks associated with that investment under the capital asset pricing model. So when we look at any investment, if it's in a more risky country it would have a higher cost of capital and if it's in a safer jurisdiction it would have a lower cost of capital. So the blended number of around 8% that you see is an aggregated bottom‑up cost of capital of our all our investments together and that's why you see change year from year because the composition of our portfolio changes.

Question on Divestments

QUESTION: Can you give some details of why your divestments were at a record last year and how do you see this changing in terms of the environment? 

CHIA SONG HWEE: For divestments, we don't really have a target but what happened last year, we saw the market rallying very strongly and we felt that for certain sectors, the valuation is a bit high for our comfort and it surpassed our intrinsic value so we decided to divest. So it's quite situational. There's no plan per se how much we want to divest in the coming year. 

Question on Portfolio Value by Sector

QUESTION: Which sectors contributed to this decline in portfolio value during the year?

CHIA SONG HWEE: The question is relating to other than the financial sector, what other sector has been affected? I think if you look at our portfolio companies, say listed in Singapore, that will include the offshore marine space, obviously it is also affected by the global imbalances in the oil and gas sector. So I would say those were the two major segments where we saw most significant declines in market values.

ROHIT SIPAHIMALANI: I would also add it’s a function of the point in time, right. Because it’s the largest company in our portfolio, Singtel had a decline, as was reported also in one of the columns today, over the last year of about 9%, which is a big amount given the weightage of that in our portfolio. But that’s as of March 31. Since March 31, Singtel is up 9%. So some of this was just a part of the general decline in the markets has impacted most of our listed stocks, you know, at that point of time in March 31. 

Question on Portfolio by Sector

QUESTION: Is it correct to say that the sector “telecom media” overtook financial services for the first time in the Temasek's history?

ROHIT SIPAHIMALNAI: Just on that point, remember I told you 20 years ago in 1996, Singtel as a single company was 66% of our portfolio? So telecom has for a long time – there’s definitely been periods when telecom's been the largest portion of our portfolio. 

Question on Portfolio by Geography (China)

QUESTION: The share of China in your portfolio has fallen slightly compared to last year, so is this mainly due to the China market falling or is it partially due to divestment? 

CHIA SONG HWEE: The decline is mainly due to the mark‑to‑market effect which is the share price decline of the listed shares that we own. But maybe I’ll add a little bit of colour there. Just as Chin Yee has mentioned, the transformation or reshaping of our portfolio globally over the last five years – we're doing the same for China.

Back in March 2011, our portfolio was pretty much dominated by our investments in the banks, at that time was about over 70% of our portfolio value in banks. As of March 2016, banks only occupied about less than 40% of our portfolio. We have added many diversified sectors and companies over the last five years, so the non‑banks as well as technology now accounts for about 22% of the portfolio, and consumer and real estate accounts for 20% of portfolio in China. So that adds up to be about 80%.

So you can see the very dramatic shift in the mix that we have. Underpinning that change was our view about the economic transformation that is taking place in China as it moved from an investment‑led to a consumption‑led economy and just as Chin Yee has mentioned to you, we've done relatively well in the new sectors that we focus on in the last five years in terms of returns, where we are seeing the similar type of good performance of our investment in the past five years in China.

Question on Chinese Banks

QUESTION: I just want to go back to look at China. I mean you've pared down your investments in Chinese banks, but you still have significant exposure. Could you say a bit about the outlook for all the banking sector in China, the banks haven't recovered much since March?

PNG CHIN YEE: I guess as you've noted, we still maintain significant positions in Chinese banks. I think we have been very comfortable with those positions, as Mike has articulated, we are seeing there are challenges but in the long term, you know, we still think that China offers significant growth potential. Our exposure to Chinese banks are mainly to the leading banks in the sector, with very liquid and defensible balance sheets so I think that give us great comfort in terms of their ability to navigate these challenging times. 

Question on Expected Returns

QUESTION: Given the 20-year returns have been coming down, how does this affect Temasek's view of its long term expected returns? Is it expected to be higher than 6 or should we expect 6 to be the norm going forward?

CHIA SONG HWEE: As we explained earlier, the return of 10, 20 years and so on is very much depending on two points in times, right.

So in this very volatile world, sometimes we get into this period where our return will be either higher or lower than what we expect it to be. But more importantly is what I think Chin Yee and Rohit is trying to explain, that the world is changing, where we used to make returns we can't be sure that you continue to do that. So we have been actively reshaping our portfolio in the last five years, in the sectors that we talk about and the encouraging thing is so far the results seem positive and hopefully this trend will continue. A shift from 8% in March 2011 to 23% of portfolio [in March 2016] in the new segment is a big change. But obviously we with the portfolio size it will take a while for the full effect to be felt. So we will continue to make that transition and adapt our investments down accordingly.

DILHAN PILLAY: The other thing: we are seeding new businesses. Just as there were businesses that were seeded for us over 40 years ago or even 25 years ago, we are doing that now and those should hopefully over time, give us a much better return profile as they come into the mainstream of our investment portfolio.

MICHAEL BUCHANAN: Maybe if I can touch on what I think was the second part of that question - to the forward looking T‑GEM model predictions. Let me say a couple of things there. The model is very forward‑looking, building in, as I touched on before, the expectations we have for key economic variables like GDP, inflation, and interest rates and so on but it also takes account of the starting point for valuations today. But it's a very forward‑looking model so it doesn't take into account what our returns have been in the last 20 years or any other period. It's a very forward‑looking model based on our scenarios.

ROHIT SIPAHIMALANI: I just want to make an initial point on the starting point just to clarify. So let's say 20 years ago, right, the starting point for that was 1996, at that time Singtel was two thirds of our portfolio and at that time, post its listing, it was trading at 35 times earnings. It was clearly not sustainable compared to the more normalised 16 times today. So when you have that as a starting point it clearly does impact your overall returns. If you exclude that, and you obviously can't exclude it, if you exclude it the rest of the portfolio had returns over 9%. And as Chin Yee said, if you look at trough to trough our returns have been 11%. So it's very dependent on what your starting point is. I think from our perspective we're very focussed on the fact that we have a hurdle rate which reflects our cost of capital and we are very confident that we should, based on all the initiatives we're doing, in the long run will be able to generate returns above the threshold cost of capital.

Question on Valuations

QUESTION: Given what's been going on in the downturn in the markets, at which stage would you be more aggressive about making additional investments?

CHIA SONG HWEE: The investment environment is obviously quite challenging, given the uncertainty in the marketplace and volatility associated with that. I think one other element that we would like to emphasise, as Mike pointed out, despite all this volatility and downward pressure on share price, we still believe that certain markets the valuation is still on the high side, compared to the historical past, especially when we look at the growth environment as well as margin pressure, we are a bit concerned about valuation. So we will take a very cautious approach in terms of how we look at investments, opportunities and invest accordingly. As you can see last year, even though we have divested on a record high, but we have invested S$30 billion as well, so we have not pulled back in terms of investment. But we took the opportunity to divest given the market rally that we saw in the first part of the financial year. 

Question on Europe

QUESTION: If I can ask Mike just to elaborate on the macro outlook in Europe, specifically in the UK. Is a recession your baseline assumption and how would you characterise the potential spillover into broader Europe?

MICHAEL BUCHANAN: I would say, look, any time you have this type of political uncertainty, it's going to weigh on confidence, both business confidence and hence capex and consumer confidence. And look, we've already seen that in the run up to the referendum where you saw a decline in PMIs and other measures of confidence and so that is likely to continue and would weigh on growth. In terms of the spillovers and so on to Europe, again, I would put Brexit more in the context of it being one example of the Euroscepticism which is playing out in many different ways rather than to sort of think about it spilling over very directly elsewhere. And also, as with many events, there are opportunities for investors that arise from this as well as the more obvious issues, perhaps in the immediate aftermath which are more on the downside. 

Question on Brexit

QUESTION: Can you elaborate a bit again about your view post-Brexit how markets are at the moment, how you are viewing increased volatility?

MICHAEL BUCHANAN: On Brexit, as I touched on earlier, we would see Brexit as one example of Euroscepticism playing out and some of the other related issues rather than something that's going to kind of create new waves elsewhere. And the impact on our portfolio, as I highlighted earlier, has been fairly modest and we would, in any sort of situation, always look at a whole bunch of different scenarios and factor that into our investment process as we do our sort of long term intrinsic value tests. 

Question on UK Real Estate

QUESTION: I understand you have a small exposure to UK but what about the properties you invested in, I think recently, how is it impacted and do you see opportunities in the real estate market in the UK now?

DILHAN PILLAY: So we made three investments in commercial real estate in the UK. Two of them are completed projects. They're high quality buildings with high quality tenants and they're leased out for long term. So in a sense it's a very stable yielding investment. The sort of buildings that, you know, you may not be able to get from year to year and it's really opportunistic if you can get access to these buildings. The third is a development project for which we have good quality partners working with us and that we will have to see what the environment will look like when that building comes on stream. But I would say that every so‑called crisis presents an opportunity, doesn't it? So for our real estate team it's really to figure out based on value tests where the opportunities are for us to deploy capital if that makes sense for us.

Question on Portfolio by Liquidity – Private Investments

QUESTION: Do you see as a trend increasing investment into the private companies and will it be shown in balance in the future of the portfolio?

PNG CHIN YEE: About 39% of our assets are non‑listed and that has increased as we've mentioned due to the steady performance of these assets versus the mark‑to‑market movements of the listed portfolio.

ROHIT SIPAHIMALANI: It's not something we actively track because frankly when we're looking at making investments we're looking at it from a value lens. We're less focussed about whether the specific opportunity is public or private. You know, it so happens that the unlisted portfolio has gone up and that's partly because of the mark to market decline last year in the value of the listed investments. But generally speaking, we are very focussed on making the right investments which meet our value tests which we think will give long term returns and it doesn't matter whether that's public or private.

CHIA SONG HWEE: We do not have artificial targets for public or private investing. It very much depends on bottom‑up opportunities and where we see value. 

Question on Private Equity

QUESTION: On unlisted assets what's your view on private equity and do you think you would invest more in this space if markets continue to be volatile? Thanks.

DILHAN PILLAY: On the question of private equity, if you're good at manager selection, private equity gives you very good returns over and above even the public markets over a sustained period of time and the best funds have always outperformed, whether you're first quartile or second quartile. And we have, you know, we have a relatively modest private equity portfolio compared to say the largest sovereign wealth funds and pension funds and that's because the main part of our focus is really direct investing.

We have been quite selective about the private equity fund managers that we've invested with, with a view towards accessing opportunities with them in the sectors we're interested in and that has actually been quite good for us the last few years and we believe that going forward that will continue to be the case. Now, on the PE market, there is a significant amount of dry powder out there and therefore there is a lot of capital looking for investments. So we can expect that auctions will remain highly competitive, pricing to remain elevated and leverage levels also to remain high for so long as liquidity is available.

Obviously at those prices we will have to see whether our value tests are met and for those where our value tests are met and we can partner with PE funds into those investments we will of course do it and where those value tests are not met obviously we will look for other opportunities ourselves. 

Question on Transforming Economies and India

QUESTION: Last year you said you're very happy with the structural reforms in China, Mexico and India. How do you see the structure reforms in India shaping up because it's been two years since the Modi-led government has been in power, are you happy with the progress India's achieved on reforms in the last two years?

ROHIT SIPAHIMALANI: The last year was probably the most active year we've had for investments in India since the Global Financial Crisis. So obviously we are reasonably positive about the outlook out there and have been putting dollars to work accordingly.

China continues to be an important market for us and will continue investing there, particularly in sectors that benefit from the transformation of the economy and we've been doing that over the number of years. So I think we've got to continue doing that. I think the point when we said the most important markets, probably what we might have implied is, in the emerging space those markets we feel more constructive about because of the reform momentum we're seeing out there.

MICHAEL BUCHANAN: And that reform momentum is continuing but of course many commodity countries have been sort of forced to adjust to a world of lower commodity prices and that sort of plays out in a number of different ways in different economies and we obviously react to that in our investment stance. But, you know, you are still seeing structural reforms in Mexico and, of course, as Rohit mentioned, in India. India's very well placed for a lot of our investment themes in terms of the growing middle class, lots of opportunities there as Rohit mentioned.

Question on Japan

QUESTION: Have you done anything in Japan and has your view on the market changed?

MICHAEL BUCHANAN: On the question on Japan, I would emphasise that we are very much a bottom‑up investor.  So we don't pick a country and say let's go and find some companies in that particular country. Rather, each investment has to meet our value test on a case by case basis. Of course, in Japan, there are a lot of fantastic companies, particularly in the tech space, and I would also emphasise recently the improvements in corporate governance in Japan in terms of encouraging a focus on return on equity, on profitability and where appropriate, paying dividends or increasing dividend payments and buy‑backs. And so we would continue to look in Japan, as elsewhere, for those sorts of companies that meet our bottom‑up case by case basis tests.

DILHAN PILLAY: And in 2011 we formed a company called Pavilion Capital to focus on North Asia and one of the countries it's focussed on is Japan. It's actually done a co-investment with a PE fund in Japan. It's invested in some funds in Japan to look for co-investments there. So their focus is clearly also in Japan, quite apart from China and Korea. 

Question on Financial Services

QUESTION: Just looking at your portfolio, your focus on the financial space has come down and maybe technology has increased. Is it going forward you think that traditional banking services which you were aggressively mentioned earlier you have come down on that and what's your view on the banks per se?

PNG CHIN YEE: I think some of that really reflects the mark‑to‑market volatility in the portfolio last year. In the longer term, as we've said, in the presentation, we're looking towards subsectors where we see maybe stronger growth potential in the next few years. So for example, we're very focussed on building our insurance exposure, particularly in emerging markets in Asia where penetration is still very low and there is a very strong structural tailwind to that industry. Payment services, for example, gives very strong recurring cash flows and as you have cash moving away from physical cash to digital money, that area is just going to grow much stronger than the other sectors. So we're looking for new areas within financial services and financial technology as well. We've spent a lot of time in the last two years monitoring a new business model coming up and making some bets in those areas as well. So we're really looking for areas where we see greater relative stronger performance and stronger returns. 

Question on Disruptive Innovations and Financial Services

QUESTION: The exposure to traditional banks have decreased relative to other new investments so can you give a view on whether you feel that the traditional banks are well placed to face the challenges ahead and given some of your biggest investments are in traditional banks?

PNG CHIN YEE: I guess on the financial services portfolio, banks still are a large proportion of that portfolio and we hold it because we're comfortable that the banks are actually well positioned. I would say that I think the banking landscape will be very different five, 10 years out. There are a lot of innovations out there in the marketplace which banks need to harness as they evolve their own business models and their own transformation. So, for example, you know, how can banks harness artificial intelligence to provide customised solution for their customers? How can they cut cost through either using block chain automation? There are a lot of different ways that the banks need to think about to adopt new technology as they evolve and we're obviously engaging with all our portfolio banks to make sure that they understand the challenges and can seize the opportunities that are available for them. So we're very comfortable with our holdings in the banks today.

Question on Fintech

QUESTION: Do you have a view on the fintech sector? What trends are you seeing? Do you think it will eventually disrupt the banking in areas and have you looked at some of these companies which you find attractive in that sector? That's my first question.

PNG CHIN YEE: We've actually spent a lot of time looking at the fintech space, whether it's marketplace lenders, robo-advisors, etc., and I think we've actually made a few investments in this area. We've invested in Adyen which is a global payments company, we're in SoFi which is a student loan refinancer in the US but is actually targeting higher income level sort of customer base across mortgages and other lifestyle financial products. So we've actually made quite a few of these investments and I think what our learning is, is that it's actually very hard for a fintech company to scale profitably, mainly because the cost of acquiring customers is still very high and we find that actually more and more fintech companies are looking towards not just a straight to-consumer business model but also a business model where they work with banks to supply banks with technology for them to serve their customers more efficiently and more effectively. And so I think there is actually a lot of interesting things going on in the fintech space but I wouldn't say that at this point that the banks will be disrupted. I think the banks need to learn to harness this technology and transform their own business model. So we see actually a lot of banks starting to do a lot more in this space, either acquiring or partnering with fintechs or actually developing their own solutions to actually serve customers better. So I think it's too early to write off the banks at this point. 

Question on Growth Opportunities: Innovation

QUESTION: Second point is as Temasek invests in new sectors like life sciences, technology, what kind of support do these companies ask for beyond cash? Are you hiring more specialist teams to do with this?

DILHAN PILLAY: On the second question in technology and life sciences, we require our teams to have domain expertise and that means we hire people with domain expertise and those teams have to know what they're investing in. But we also rely on network advisers whom we have on board to supplement the team's domain expertise. So that actually hopefully gets us up the curve and fairly knowledgeable about what we're looking at. If there's something that we don't understand, we won't invest in it.

ROHIT SIPAHIMALNAI: I would also add that in terms of what basically we bring to the companies, a lot of them is our global footprint of our network. So when we're investing in the US, a big attraction for them is our presence in Asia, our networks in Asia and helping them navigate these markets as they look to expand. So that's apart from just domain knowledge, it's our networks that we bring to the table.

Question on Sustainable Investing

QUESTION: Can you elaborate a little bit on your goals for the sustainable investing? 

DILHAN PILLAY: So on the issue of sustainability, more broadly, we are very keen to ensure that the companies we invest in are not just good companies but they have sustainable business models. Sustainability is not just about environmental sustainability, it's also about financial sustainability, business sustainability, and organisational sustainability. We look at things like environmental, social, governance factors, when we evaluate investments; we look for companies which have got good governance structures in place, high integrity, and excellence in their business models and in the execution. So broadly speaking that's how we approach sustainability. Sustainability is not something new for us. It's something that we've been looking at for many years. We set up a Sustainability & Stewardship Group really to crystallise the actions that we were doing for a number of years. And that's important for us because to be a successful company it's not just about being good financially; it's about being good as a sustainable, long term organisation. 

Question on Reorganisation

QUESTION: My question is more about the recent reorganisation of your management team, I'm just wondering what that means for your focus going forward, will that have any impact on strategy and areas of focus?

DILHAN PILLAY: The reorganisation that takes place is actually something that we do from time to time. We're an ever evolving institution to face the new challenges and the great opportunities that we see in front of us over the years. This time around we're grouped under six groups. There has been an expansion of the senior management bench. Both people coming from within as well as bringing competencies from outside to supplement and augment what we have within Temasek and that's natural in the context of an evolving institution. The strategy doesn't change. You know, we just have to make sure that we bring in good talented people, promote good talented people from within and broaden our bench strength so that, you know, as we see the pathway to the future we're ready and prepared for it.

CHIA SONG HWEE: Maybe I'll complement that by saying that the grouping of the market team as well as the sector team together gives us a little bit more flexibility in our resource deployment and also to leverage both the local as well as sector knowledge better. As you can see, as the world evolves, it's very hard to manage with silos as the trend is more converging and like the sharing economy, what is a company really representing? Is it a consumer company? Is it a technology company or otherwise, right? So we need to have a more flexible way of leveraging our resources.

Question on CEO Succession

QUESTION: I'm sure you get asked this every year, when is Madam Ho Ching stepping down in terms of leadership succession plans? Do you have any new view on that?

DILHAN PILLAY: On your question, whenever I've been on the panel I get to answer the question. Ho Ching is still CEO of Temasek Holdings. As we have said over the years, the Board has an annual succession review and that is a discipline they've put in place. Back in October last year it was announced that Lee Theng Kiat was appointed CEO of Temasek International and in that role he takes on the role of overseeing our investments and our role as an investor, asset owner and shareholder of our companies. Ho Ching has taken on the role of being responsible for the overall performance of the company as well as the stewardship role and that includes dealing with our constitutional responsibilities. Between Ho Ching and Theng Kiat, they are both engaged in ensuring that we remain a forward‑looking institution and they will prepare ourselves for the future.

Question on US and San Francisco Office

QUESTION: Obviously the US investments led the S$30 billion in the business that you've done last year followed by China and then you're also opening the San Francisco office later this year. What type of sectors are you interested in in the US? Why do you think the US is an attractive place to invest? And what's your view on the valuation in the US?

DILHAN PILLAY: The US is a very deep market, both in the public markets as well as the private markets. It's also a very liquid market and there's a lot of liquidity out there looking for investments to put it in. So as much as it may appear to be an attractive market, we have to be careful about valuations and valuations are high. You've seen on the buyout side that increasingly high levels of leverage are being maintained in buyouts and this obviously, you know, would be an issue for us to think about if you're going to make some of these investments. I would say that we continue to look for deep value investments. We have focussed on four areas in New York where we have an office right now, primarily technology, life sciences, industrials and energy and resources where we have teams on the ground. That doesn't mean that the other areas we aren’t involved in won't see investments in there. In fact the teams of Singapore find the way into the US and make investments in those areas. I think that's where we will continue to put our money in. Now, you would have seen that we're going to open up in San Francisco, that's going to be some time hopefully in the middle of September. That office should focus more on technology, life sciences and, you know, over time I think we would see that the technology piece of the TMT portfolio should increase not just because of the US but also because of investments made in other parts of the world like China and India. But life sciences should increase overall with that office. 

Questions on European Office

QUESTION: Post-Brexit, will you review your London office since it's supposed to look at the European investments?

DILHAN PILLAY: I think, regardless of Brexit, London will always be a significant financial centre globally. It is also a repository of top talent and in fact, the composition of our team there is actually multicultural. And London is still in Europe; London will still be relevant in the context of Europe. If Brexit does continue the pathway of the vote, then London will not be in the EU but it is still in Europe. So I would say the London office still remains relevant for us. 

QUESTION: I wanted to ask in the wake of Brexit will you be opening any offices elsewhere in Europe? 

CHIA SONG HWEE: Not at this juncture but we will continue to look at whether or not it makes sense for us to establish more offices to cover Europe more comprehensively but we have no plan at this stage. 

Question on China - Foreign Investment in Internet Banks

QUESTION: There was a report last month that China's banking regulator was opposed to foreign investments in Internet banks in China. Can I ask, are you aware of that? I think it came up during WeBank funding round. Can I ask are you aware of that and how does that affect your China strategy?

CHIA SONG HWEE: Yes, we are aware of that, actually there's nothing new from that perspective. Obviously we hope that at an appropriate time the regulator will feel comfortable opening up to foreign investors like ourselves as it proved that bringing in foreign investors we can bring certain value add as well when they opened up their banking sector 15 years ago. They're probably not ready to do so but we hope that one day they can do so for us.

Question on Singapore Companies

QUESTION: I noticed the bulk of your divestments last year was in Singapore companies like STATS ChipPAC and NOL. Can I get your view on how globally competitive you think our Singapore companies are and how you see your role of these companies, continuing to see your role as a steward of these companies?

CHIA SONG HWEE: In both cases that you have mentioned, we believe that the merger with the company that acquired them put the company in a much better position to compete globally and because of that we have agreed to sell our stake along with it. We will always work with our portfolio companies to add value and create wealth for the shareholder, ourselves included. That never changes. That we will continue to do. It is not something that we can project out to say what company we are going to keep at or reduce but that's what we do on a routine basis.

NOTE: The divestment of NOL, while announced in December 2015, was not transacted until June 2016 and is therefore not counted as a divestment in the Financial Year ended 31 March 2016.

Questions on Standard Chartered

QUESTION: Maybe a few words about your big holding in Standard Chartered, whether you're sticking to that, whether you support the strategy?

PNG CHIN YEE: On Standard Chartered, Bill Winters took over as CEO last year. He's made a good start in steadying the ship, securing the foundation through the rights issue and he's also started repositioning the bank. He's been able to attract high quality individuals to strengthen the bench strength, and at the end of the day Standard Chartered is still in very attractive markets, it's got a very unique footprint across emerging markets. It also has very strong franchise underlying the business and I think that's really going to stand it in good stead as it navigates these challenging times.

QUESTION: If I could ask Chin Yee to elaborate on Standard Chartered and the strategy there. Are you or have you been pushing for a merger with DBS?

PNG CHIN YEE: No.

CHIA SONG HWEE: Maybe I just want to answer the question in another way. We don't push our portfolio companies to do certain things. It is up to the board and management to do decide what they want to do. Of course when it makes sense we will support it.

Question on Airbnb

QUESTION: On Airbnb which was just mentioned earlier as one of your investments, how much money did you invest?

ROHIT SIPAHIMALANI: On Airbnb I'm not sure that number has been disclosed and since we're under NDA with them I don't think we can disclose that. But you raise an interesting point, companies like Airbnb, Didi, these companies that we've invested in you can see these are benefitting from tailwinds of the sharing economy, so companies like these are likely to be resilient regardless of what happens in the external environment. Look at other investments we've done this year like Alvogen, which is a direct generics company or ICICI Prudential in India where insurance is heavily underpenetrated. I just wanted to make the point that even in this environment, while we are cautious we're seeing attractive opportunities in segments where we see long term sustained growth and those are the sort of opportunities we're looking at to build a resilient portfolio.

Investment Themes

Investment Themes

Our investment activities continue to be guided by four investment themes and the long term trends they represent.

VALUES

VALUES

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