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FAQs

FAQs

Why was Temasek established?

Temasek was incorporated under the Singapore Companies Act in 1974 to own and commercially manage investments and assets previously held by the Singapore Government. This allowed the Ministry of Finance to focus on its core role of policymaking and regulations, while Temasek would own and manage these investments on a commercial basis.

Where did Temasek’s original portfolio come from?

The initial portfolio of S$354 million comprised shares in companies, start-ups and joint ventures previously held by the Singapore Government. They included a bird park, a hotel, a shoe maker, a detergent producer, naval yards converted into a ship repair business, a start-up airline, and an iron and steel mill.

For further information on the list of companies in Temasek’s initial portfolio, please see Temasek Portfolio since Inception in the Temasek Review.
 

Is Temasek a statutory board or a government agency?

Temasek is a Singapore incorporated company, and operates under the provisions of the Singapore Companies Act. Temasek is neither a statutory board nor a government agency.

Like any other commercial companies, Temasek has its own Board of Directors and a professional management team. It pays taxes to tax authorities, and distributes dividends to its shareholder.

In addition, as a key institution in Singapore, Temasek is also designated a Fifth Schedule entity1 under the Singapore Constitution, with certain safeguards to protect its past reserves. For instance, any transaction which is likely to result in a draw on Temasek’s past reserves2 is also subject to the approval of the President. The right to appoint, terminate or renew board members is subject to the concurrence of the President of Singapore.

Other than specific safeguards to protect the integrity of Temasek board appointments and its past reserves, Temasek continues to operate independently on a commercial basis.

Footnotes:

1 Under the Singapore Constitution, the concurrence of the elected President of Singapore is required over certain governance matters concerning Fifth Schedule entities. These include the appointment and removal of board members and the CEO, and the drawdown of past reserves built up by the entity before the term of the current Government. Other Fifth Schedule entities include the Central Provident Fund Board, Government of Singapore Investment Corporation Pte Ltd, and the Monetary Authority of Singapore.

2 Reserves accumulated by Temasek before the term of the current Government form Temasek’s past reserves. Current reserves are primarily profits accumulated after a newly elected government is sworn into power. The swearing-in of the new Cabinet on 1 October 2015 after the Singapore Parliamentary General Election marked the start of a new term of government.

 

Is Temasek required to pay tax?

Temasek pays the required taxes to the tax authorities, and separately declares dividends to its shareholder, as a commercial investment holding company.

Does Temasek disclose its financial results? How can I find out more about Temasek?

As an exempt private company, Temasek is not required to disclose financial information.

However, since 2004, Temasek has published its annual Temasek Review, which serves as a public scoreboard of its business and performance.

The Temasek Review forms part of Temasek’s annual disclosure exercise, which also include an online version of the Temasek Review, international media engagement, and advertising.

Temasek has also established a presence on digital platforms Twitter, Facebook, Instagram, LinkedIn, and Youtube to reach out and further engage the public.

Through these channels, Temasek provides updates on its performance, activities, and topics of interest. We hope to build communities with whom we engage more directly, as we share Temasek’s story over time.

Temasek’s annual report exceeds the standards of disclosure under the Santiago Principles, a set of best practices adopted by sovereign investors in collaboration with the IMF and various governments, including Australia, Canada, Norway and the USA.

Please refer to www.temasekreview.com.sg for the latest Temasek Review and to https://www.ifswf.org/santiago-principles to read more about the Santiago Principles.
 

Is Temasek credit rated?

Temasek has an overall corporate credit rating of Aaa/AAA by Moody’s Investors Service (Moody’s) and S&P Global Ratings (S&P) respectively

Temasek’s Global Medium Term Note (MTN) and Euro-commercial Paper programmes are rated, as well as each Temasek Bond.

Temasek’s MTN Offering Circulars and Reports by international credit ratings agencies are published on the bond section on Temasek’s website.
 

Who is Temasek's shareholder?

Temasek's sole shareholder is the Singapore Minister for Finance1.

Footnotes:

1 Under the Singapore Minister for Finance (Incorporation) Act 1959, the Minister for Finance is a body corporate.

Does Temasek manage Central Provident Fund (CPF) savings or Singapore’s foreign reserves?

Temasek does not manage CPF savings (which are managed by the Board of the Central Provident Fund), Government surpluses, or Singapore’s Official Foreign Reserves (which are managed by the Monetary Authority of Singapore).

More information on the management of Singapore’s reserves is available by visiting the Singapore Ministry of Finance website, https://askmof.mof.gov.sg/MOF/apps/fcd_faqmain.aspx, which has an 'Ask MOF' section on the management of reserves.

Are Temasek and the Government of Singapore Investment Corp (GIC) the same organisation?

There are 3 key financial institutions in Singapore, which are linked to the Singapore Government.

The Monetary Authority of Singapore (MAS) was formed in 1971, and acts as the central bank of Singapore. It manages the foreign reserves of Singapore. It is a statutory board.

Temasek is an investment holding company incorporated in 1974 in the early years of Singapore‘s independence to own and manage its assets and investments on a commercial basis.

GIC or the Government of Singapore Investment Corporation is wholly owned by the Singapore Minister for Finance1 and manages Government reserves, including surpluses accumulated and built up since independence.

They are separate entities with distinct roles and mandates, and distinct management teams.

Temasek is an investment company with a global portfolio, and manages its investments in accordance with its Charter. Temasek owns the assets it manages, is credit rated and issues international bonds.

As an active investor, Temasek aims to deliver sustainable returns over the long term. As an engaged shareholder, Temasek promotes sound corporate governance in its portfolio companies.

You can obtain more information about GIC at www.gic.com.sg, and more information about the MAS at www.mas.gov.sg.

Footnotes:

Under the Singapore Minister for Finance (Incorporation) Act 1959, the Minister for Finance is a body corporate.

Is the Singapore Government or the President involved in Temasek’s business decisions?

The Singapore Government is not involved in Temasek’s investment, divestment, or any other business or operational decisions. Its role as shareholder in respect of Board appointments is subject to the concurrence of the President in order to protect the integrity of the Board of Temasek as a Fifth Schedule Company.

The President of Singapore is not involved in Temasek’s investment, divestment or any other business or corporate decisions, except in relation to his custodial role1 in the protection of Temasek’s past reserves.

Further information on the President’s involvement is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

Footnotes:

1 Under the Singapore Constitution, the concurrence of the elected President of Singapore is required over certain governance matters concerning Fifth Schedule entities. These include the appointment and removal of board members and the CEO, and the drawdown of past reserves built up by the entity before the term of the current Government. Other Fifth Schedule entities include the Central Provident Fund Board, Government of Singapore Investment Corporation Pte Ltd, and the Monetary Authority of Singapore.

How is the President involved in the protection of Temasek’s past reserves?

The President of the Republic of Singapore has an independent custodial role to safeguard Singapore’s critical assets and past reserves.

As a key institution under the Singapore Constitution, Temasek is required by the Singapore Constitution to seek the President’s approval before a draw occurs on Temasek’s past reserves.

Temasek’s Chairman and CEO also certify the Statement of Reserves and Statement of Past Reserves to the President at prescribed intervals.

Further information on the President’s involvement is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

Is an investment loss considered a draw on past reserves?

A draw on past reserves occurs when total reserves are less than past reserves.

So if total reserves equal or exceed past reserves, there is no draw.

We then have to look at what is meant by investment loss.

When we invest in a portfolio of shares, there are constant changes in market values. Such changes happen for instance to the value of our shares during the global financial crisis, where we saw our portfolio value fall 30%, only to rebound 43% one year later. Such falls in the market value of shares are not a draw.

When investing to maximise long term returns, we may have realised gains or losses on disposal of shares. We may realise losses in our investments, either because the investment has gone bad, or we decided to exit in order to redeploy our funds to more attractive opportunities.

We may exit at a high or a low, depending on our views of the potential returns compared to putting the same dollar to work elsewhere.

Our Board has a responsibility to ensure that every disposal of investment is transacted at fair market value.

A realised loss would not constitute a draw on past reserves, so long as the disposal is done at fair market value (i.e., based on a price agreed between a willing buyer and a willing seller on an arm’s length basis).

The final test is whether total reserves are less than past reserves, after taking the divestment loss into consideration.

Further information is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

Is a fall in the share price of Temasek’s investments considered a draw on past reserves?

When we invest in a portfolio of shares, there are constant changes in market values. Such changes happen for instance to the value of our shares during the global financial crisis, where we saw our portfolio value fall 30%, only to rebound 43% one year later. Such falls in the market value of shares are not a draw.

We will also test if total reserves are less than past reserves, after taking the fall in market value into consideration. A draw on past reserves happens when total reserves are less than past reserves. There is no draw if total reserves equal or exceed past reserves.

Let’s take an example. Assume Temasek owns five shares worth $10 today. But one year later, the same five shares are worth $8. These share price changes (mark to market declines) on existing investments do not constitute a draw on Temasek's past reserves. 

Further information is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

How is the President involved with the Board of Temasek?

To safeguard the integrity of those involved in managing Temasek’s reserves, the President’s concurrence is required for the appointment, renewal or removal of Board members and the appointment or removal of the CEO by the Board.

Further to its normal fiduciary duties to the Company, the Board and CEO are accountable to the President to ensure that every disposal of investment is transacted at fair market value.

Over time, Temasek has assembled a Board and management team made up of people from broad backgrounds, across various industries, in both public and private sectors, from Singapore and overseas. The majority of Temasek’s Board of Directors are independent.

Further information on the President’s involvement is covered comprehensively in the Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

What are the companies in Temasek’s portfolio? How many are listed and what is the market capitalisation of these companies?

A list of some of Temasek’s portfolio companies as at 31 March 2022 is provided in the Temasek Review.

For further information on Temasek’s portfolio companies, please see Temasek Major Investments in the Temasek Review.

How does Temasek work with its portfolio companies?

Temasek manages its portfolio as an active investor increasing, decreasing, or holding our investments to enhance our risk-adjusted returns for the long term.

Temasek promotes sound corporate governance in its portfolio companies. This includes supporting the formation of high calibre, experienced and diverse boards to guide and complement management leadership.

Companies in Temasek’s portfolio are guided and managed by their respective boards and management. Temasek does not direct their business decisions or operations.

Temasek advocates that boards be independent of management in order to provide effective oversight and supervision of management. This includes having mostly non-executive members on boards with the independence and experience to oversee management. Similarly, Temasek advocates that the Chairman and CEO roles be held by separate persons, independent of each other.

Temasek is prepared to exercise its shareholder rights to protect its commercial interests.

Does Temasek request representation on the boards of companies in which it invests?

In general, Temasek is not represented on the boards of its portfolio companies.

Temasek promotes sound corporate governance in its portfolio companies by supporting high calibre, experienced and diverse boards to complement management leadership. By leveraging its wide network of contacts, Temasek can suggest qualified individuals for consideration by the respective boards.

Temasek employees on boards would be appointed in their personal capacity, and are expected to meet their fiduciary responsibilities as directors of companies.

How does Temasek fund its investments?

Temasek investments are financed using dividends and other cash distributions it receives from its portfolio companies and other investments, divestment proceeds from sale of its investments, and borrowings and debt financing sources such as the Temasek Bonds and Euro-commercial Paper Programme.

Further information on Temasek’s Ins & Outs is available here.

What is Temasek's divestment schedule?

Temasek does not have a divestment schedule.

Temasek is an active investor and rebalances its portfolio from time to time. Decisions to invest, divest or hold its investment positions are based on Temasek’s intrinsic value test.

How else does Temasek engage the community?

We support philanthropic programmes that focus on building people, building communities, building capabilities and rebuilding lives. Temasek has established 24 endowments since its inception, for community, philanthropic and public good causes, as part of our support for the wider communities in Singapore, Asia and beyond. Since 2004, we have been setting aside part of our  net returns above our risk-adjusted cost of capital for community contributions.

In 2007, Temasek established Temasek Trust to provide financial oversight and governance of Temasek’s endowment gifts. The Trust oversees the financial management and sustainable disbursements of Temasek’s endowment gifts to the six Foundations, based on prudent sustainability and sound governance.

In 2016, we regrouped our then 17 endowments under a structure of six Temasek Foundation, which are guided by their respective strategic thrusts and mandates to drive their community programmes.

In 2017, we added the Stewardship Asia Centre Endowment to reinforce our commitment to promote sound stewardship and good governance across Asia. Stewardship Asia Centre is currently the beneficiary of this new endowment. To date, our Foundations have touched about 2 million lives across Singapore and Asia.

You can read more about Temasek’s community engagement here and more about Temasek Trust at www.temasektrust.org.sg.

Will the application of the Net Investment Returns (NIR) framework to Temasek’s expected returns result in any impact on Temasek?

The NIR framework provides rules for determining how much the Government can spend on its Budget, based on the expected long term real rate of returns of the investment entities in the framework.

The inclusion of Temasek’s expected long term returns in the NIR framework does not affect, change or impact:

  • Temasek’s dividend policy;
  • Temasek’s strategies and operations as a long term investor; and
  • Temasek’s special responsibility under the Singapore Constitution to protect Temasek’s past reserves.

The NIR framework does not determine the amount of dividends that Temasek distributes to our shareholder.

The Government has a variety of sources of liquidity and cash flows that enable the Government to manage its liquidity needs independent of the strategies of Temasek, MAS and GIC.

Temasek will continue to declare dividends annually based on the profit we earn, in accordance with our Board-approved dividend policy. The dividend policy balances the sustainable distribution of profits as dividends to our shareholder, with the retention of profits for re-investment and future returns. The policy also takes into account the constitutional requirement to independently protect Temasek’s past reserves.

For further information, please see the 'Ask MOF' section of the Singapore Ministry of Finance website: https://www.ifaq.gov.sg.
 

Will the application of the Net Investment Returns (NIR) framework to Temasek’s expected returns require Temasek to pay more cash to the Singapore Government?

The NIR framework does not require Temasek to pay more dividends or cash to the Singapore Government.

The NIR framework provides rules for determining how much the Government can spend on its Budget, based on the expected long term real rate of returns of the investment entities in the framework.

The inclusion of Temasek’s expected long term returns in the NIR framework does not affect, change or impact:

  • Temasek’s dividend policy;
  • Temasek’s strategies and operations as a long term investor; and
  • Temasek’s special responsibility under the Singapore Constitution to protect Temasek’s past reserves.

The NIR framework does not determine the amount of dividends that Temasek distributes to our shareholder.

The Government has a variety of sources of liquidity and cash flows that enable the Government to manage its liquidity needs independent of the strategies of Temasek, MAS and GIC.

Temasek will continue to declare dividends annually based on the profit we earn, in accordance with our Board-approved dividend policy. The dividend policy balances the sustainable distribution of profits as dividends to our shareholder, with the retention of profits for re-investment and future returns. The policy also takes into account the constitutional requirement to independently protect Temasek’s past reserves.

For further information, please see the 'Ask MOF' section of the Singapore Ministry of Finance website: https://www.ifaq.gov.sg.
 

Will the application of the Net Investment Returns (NIR) framework to Temasek’s expected returns result in any changes in Temasek’s investment strategy?

Including Temasek’s expected returns in the NIR framework does not change Temasek’s investment strategy as a long term investor, and has no impact on Temasek’s ability to buy, sell or hold assets.

The NIR framework provides rules for determining how much the Government can spend on its Budget, based on the expected long term real rate of returns of the investment entities in the framework.

The inclusion of Temasek’s long term returns in the NIR framework does not affect, change or impact:

  • Temasek’s dividend policy;
  • Temasek’s strategies and operations as a long term investor; and
  • Temasek’s special responsibility under the Singapore Constitution to protect Temasek’s past reserves.

Any changes to Temasek’s strategies or portfolio composition will affect our expected long term returns.

Temasek’s investment strategy is the responsibility of Temasek’s Board and management. Investment and divestment decisions will continue to be based on our intrinsic value tests.

Temasek will continue to focus on delivering sustainable returns over the long term.

The Singapore Government is not involved in the investment, divestment or other business decisions of Temasek.

For further information, please see the 'Ask MOF' section of the Singapore Ministry of Finance website: https://www.ifaq.gov.sg.
 

Does Temasek pay dividends to its shareholder?

Temasek declares dividends annually in accordance with our dividend policy.

Our Board sets our dividend policy, balancing the sustainable distribution of profits as dividends to our shareholder with the retention of profits for reinvestment to generate future returns. The policy also takes into account our constitutional responsibility to protect Temasek’s past reserves. Our Board recommends the dividend payout for our shareholder’s acceptance at the annual general meeting.

Does the shareholder inject capital into Temasek?

Yes, our shareholder does make investments in Temasek shares. These investments are made at the discretion of Temasek's shareholder as part of the shareholder's own decision as to its overall asset allocation.

Do the financials in the Temasek Review and Offering Circular reflect Temasek’s performance as an investment company?

The Credit Quality section of our Temasek Review and Business of Temasek section of our Medium Term Note programme Offering Circulars include key credit parameters based on the financials of Temasek as an investment company1. Our Credit Profile provides a quantitative snapshot of our credit quality and the strength of Temasek’s financial position. Temasek’s overall performance as an investment company is also highlighted in our Temasek Review and Offering Circulars, through measures such as total shareholder returns over various time periods.

Footnotes: 

Based on the financial information of Temasek as an investment company, namely, Temasek Holdings (Private) Limited (THPL) and its Investment Holding Companies (IHCs) rather than the consolidated group of THPL and its subsidiaries. IHCs are defined as THPL’s direct and indirect wholly-owned subsidiaries, whose boards of directors or equivalent governing bodies comprise employees or nominees of THPL, THPL’s wholly-owned subsidiary Temasek Pte. Ltd. (TPL) and/or TPL’s wholly-owned subsidiaries. The principal activities of THPL and its IHCs are that of investment holding, financing and/or the provision of investment advisory and consultancy services.

Does Temasek guarantee its portfolio companies’ debts?

As a policy, Temasek does not issue any financial guarantees for the obligations of our portfolio companies.

Disclaimer

The information on this Frequently Asked Questions page is provided strictly for information only, and is not and does not constitute or form part of, and is not made in connection with, any offer, invitation or recommendation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of any entity.

The information below focuses on Temasek Bonds issued under Temasek’s two Medium Term Note programmes.

If you have further questions, please consult your own financial, investment, business, legal, tax or other professional advisers prior to investing.

Why does Temasek issue bonds?

We issue Temasek Bonds as public markers of our credit quality. They help instil long term financial discipline, increase our funding flexibility and expand our stakeholder base.

What were the proceeds of Temasek's bond issues used for?

The proceeds were used to fund the ordinary course of business of Temasek and our investment holding companies.

Why did Temasek establish a new Medium Term Note Programme under Temasek Financial (IV) in 2018?

The new programme adds to our funding flexibility and gives us the optionality to invite Singapore retail investors to participate in future bond offerings.
 
We issued the T2023-S$ Temasek Bond and T2026-S$ Temasek Bond, in 2018 and 2021 respectively, to retail investors in Singapore. These public bond offers broadened our stakeholder base and provided Singapore retail investors an opportunity to invest in a Temasek Bond.

The T2023-S$ Temasek Bond and T2026-S$ Temasek Bond were assigned the highest ratings of Aaa/AAA by Moody’s and S&P respectively. 

How many bonds has Temasek issued?

Since 2005, Temasek has issued 27 Temasek Bonds under our two Medium Term Note programmes in Singapore dollars, US dollars, Euro and British pound sterling, with debt maturity up to 2071.

As at 31 March 2022, the total amount of our 23 outstanding Temasek Bonds totalled S$20.3 (US$15.0) billion, with a weighted average maturity of over 19 years.

When will Temasek be issuing more bonds?

Temasek remains open and flexible to various financing options, including issuing subsequent bonds that are available to retail investors in the future, depending on objectives and market conditions.

Are Temasek Bonds rated? What is the rating?

To date, each Temasek Bond has been rated Aaa/AAA by Moody’s and S&P, the same as Temasek’s overall corporate rating.

Any credit ratings accorded to Temasek or Temasek Bonds are statements of opinion and are not a recommendation to buy, sell or hold the bond, and investors should decide whether the investment is appropriate. In particular, rating agencies have stated in their rating reports that credit ratings are NOT intended for use by retail investors, and retail investors should NOT consider the credit ratings in making any investment decision.

All investors should consult their financial, investment, business, legal, tax or other professional advisers prior to investing.

We have published our credit profile which covers our key credit parameters1 in terms of leverage, interest coverage, and debt service coverage, in our annual Temasek Review. Our credit ratios facilitate a quantitative assessment of our credit quality and demonstrate our fundamental strength as an investment company.

Based on the financial information of Temasek as an investment company, namely Temasek Holdings (Private) Limited (THPL) and its Investment Holding Companies (IHCs). IHCs are defined as THPL’s direct and indirect wholly owned subsidiaries, whose boards of directors or equivalent governing bodies comprise employees or nominees of THPL, wholly owned Temasek Pte. Ltd. (TPL), and/or TPL’s wholly owned subsidiaries. The principal activities of THPL and its IHCs are that of investment holding, financing, and/or the provision of investment advisory and consultancy services.

Does Temasek have any benchmarks or targets for gearing and other credit ratios?

Temasek has a conservative gearing stance. Our Board sets our overall debt limit, taking into account our shareholder funds, cash flow and credit profile.

Are Temasek Bonds guaranteed by Temasek and/or the Singapore Government? Does Temasek guarantee the interest payment and principal amount of Temasek Bonds purchased during the offer or in the secondary market?

No, Temasek Bonds are not guaranteed by the Singapore Government. The Singapore Government also does not guarantee any other debt obligations of Temasek.

Temasek Holdings (Private) Limited is the Guarantor, which fully guarantees all payments of interest due, and the full repayment of the principal amount at maturity whether the bond is purchased during the offer or in the secondary market. Do note that there is no certainty that the Guarantor will always remain solvent and able to fulfil its obligations under the guarantee.

Temasek does not guarantee the market price or market liquidity of Temasek Bonds during its tenor, which will be subject to many factors. 

Disclaimer

The information on this Frequently Asked Questions page and the Offering Circular and pricing supplement(s) referred to below are provided strictly for information only, and should be read as of their respective dates, unless otherwise specified or determined by the context. The information below is not and does not constitute or form part of, and is not made in connection with, any offer, invitation or recommendation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of any entity.

The information below focuses on Temasek Bonds issued by Temasek Financial (IV) Private Limited (the “Issuer”) under its Medium Term Note programme (the “Programme”) which are available to retail investors in Singapore.

If you have further questions, please consult your own financial, investment, business, legal, tax or other professional advisers prior to investing.

What is a bond?

When you invest in a bond, you are essentially lending money to a bond issuer.  

A plain vanilla bond is typically for a fixed period, called the tenor, and for a fixed interest rate, called the coupon. 

An issuer of a plain vanilla bond is basically promising you two things, in return for the money that you are lending to the issuer: 

First, it promises to repay you the principal amount when the bond “matures” at the end of its tenor.

Second, it promises to pay you interest at the stipulated annual, half yearly, or quarterly intervals.

Once the principal amount of a bond is repaid at maturity and the issuer redeems the bond, the bond no longer exists.

Depending on the objectives of an issuer and market interest, a bond issuer may issue bonds with more complex terms, such as variable interest rates. 

 

As a bond investor how should I evaluate Temasek?

Investors considering the Temasek Bonds should understand Temasek’s credit quality and ability to pay interest, as well as repay the principal amount. You should also understand all the risks involved.

You may find more information in the Programme Offering Circular, and you should also read the pricing supplement for that Temasek Bond.

What are the potential risks involved in bond investments?

Bondholders should assess various risks when investing in bonds generally and in Temasek Bonds, such as market, business, legal, regulatory, interest rate, default, liquidity and inflation risks.

These would apply to all Temasek Bonds.

For more details on the risks, please refer to Investing in Bonds.

You may also refer to the Programme Offering Circular for a discussion of certain risks in connection with an investment in Temasek Bonds, and you should also read the pricing supplement for that Temasek Bond before investing.

In a low interest rate environment, what is the risk for buyers of bonds?

If a bond is sold before its maturity, it will be sold at its market price, which may rise or fall depending on market conditions at the time, such as supply and demand, general market conditions and other factors. 

Interest rates and bond prices generally move in opposite directions. When market interest rates rise, prices of fixed-rate bonds tend to fall. This does not mean interest rates of bonds will change.

Hence, if you are unable to hold your bond to maturity, you may suffer a partial loss of your principal amount if you have to sell your bond when prices are down. 

How are Temasek Bonds’ interest rate determined?

To date, Temasek has been offering Temasek Bonds to retail, institutional, accredited and other specified investors. Temasek determines the bond interest rate via a book building process, based on the bids in this market-based price discovery exercise. 

The interest rate for the Temasek Bonds available to retail investors in Singapore have similarly been determined based on bids from institutional, accredited and other specified investors in a book building process.  

The same interest rate is offered to retail investors under the public offer. 

Why do Temasek Bond(s) pay a different interest rate when compared to other retail bonds?

The interest rate on a bond is a function of, among other things, the risk that an investor takes when investing in a bond.  

For a bond deemed to be of higher risk (usually because of the perceived or actual credit quality of the issuer), the interest rate is expected to be higher.  

The interest rate also depends on other factors such as the tenor and market conditions at the time of the bond issuance. 

The interest rate for the Temasek Bonds have been determined based on bids from institutional, accredited and other specified investors in a book building process for market price discovery. 

Are the interest payments or principal amount of Temasek Bond(s) affected by Temasek’s performance or the market price of its bonds in the secondary market?

The interest payments and principal amount of Temasek Bond(s) are independent of its price in the secondary market, and independent of Temasek’s performance. 

For example, for the T2023-S$ Temasek Bond issued in October 2018, the interest amount is fixed at a rate of 2.70% per year, payable every six months, while 100% of the principal amount, and the last interest payment, is due to be paid on the maturity date. 

Is there any recourse for retail investors if Temasek defaults on interest payments?

If Temasek defaults on interest payments, the trustee of the Temasek Bond(s) may give notice to the Issuer that the principal amount of the Temasek Bond(s) shall become immediately due and payable together with accrued interest (if any) in accordance with the terms and conditions of the Temasek Bond(s). 

You should understand the dynamics, risks and opportunities associated before investing in any product, including Temasek Bonds.  

How will I receive the interest payments?

A.     If you invest using cash:

CDP will credit interest payments on the respective Temasek Bond into the bank account linked to your CDP securities account. 

More information can be found on the CDP website

If you hold a Temasek Bond in a securities sub-account and/or investment account with a Depository Agent, you will have to rely on your Depository Agent to credit your account with the interest payments.

B. If you invest using your CPF Savings:

Interest payments, capital gains (if applicable) or the principal amount of the respective Temasek Bond will be credited to your CPF Investment Account.

For more information on the interest payment dates for the T2023-S$ Temasek Bond, please visit here.

For more information on the interest payment dates for the T2026-S$ Temasek Bond, please visit here.

Does an individual need to pay tax on the interest received on Temasek Bond(s)?

Interest derived by individuals tax resident in Singapore from Temasek Bond(s) is exempt from tax, except where such income is derived through a partnership in Singapore or is derived from the carrying on of a trade, business or profession in Singapore.

As we cannot advise you regarding your personal tax matters, you should not rely on this response as being tax advice and should consult your own tax advisers as to the Singapore or other tax consequences of the acquisition, ownership, or disposition of Temasek Bond(s), in particular the effect of any foreign, state, or local tax laws to which you may be subject.

Is it possible to transfer Temasek Bond(s)?

You may refer to the “Transfer of Securities” section on the CDP website for more information on the transfer of securities.

In addition, please refer to the selling and transfer restrictions set out in the Programme Offering Circular and the applicable pricing supplement for restrictions applicable to other jurisdictions.

What happens to the bond if a bondholder passes away?

You may refer to the “Transfer for Estate of the Deceased” section on the CDP website for more information.

Please also consult your own legal advisers.

How can I buy or sell Temasek Bond(s)?

Temasek Bond(s) can be bought or sold in the secondary market through your securities broker once it is listed and quoted on the Main Board of the SGX-ST.

If you intend to buy or sell Temasek Bond(s) in the secondary market before the maturity date, you will need to have a trading account with a securities broker that is linked to your individual CDP account.

For the purposes of trading, each board lot of Temasek Bond(s) will comprise S$1,000 in principal amount of the respective Temasek Bond(s).

Dealings in Temasek Bond(s) will be carried out in Singapore Dollars, and will in each case be effected for settlement through the CDP on a scripless basis.

Temasek Bond(s) may also be traded over-the-counter on the Debt Securities Clearing and Settlement System.

The market price of the Temasek Bond(s) may be above or below its issue price, depending on market conditions at the time, such as supply and demand, general market conditions and other factors

Can I sell Temasek Bond(s) back to Temasek?

No, you may only sell Temasek Bond(s) in the secondary market. Please see above question on how to buy or sell the Temasek Bond(s).

Will accrued interest be payable on Temasek Bond(s) if it’s traded?

If you trade Temasek Bond(s) in the over-the-counter market, accrued interest will be payable on the Temasek Bond. However, if you trade Temasek Bond(s) on the SGX-ST, accrued interest will not be payable.

Can I use my Central Provident Fund (CPF) Savings to buy Temasek Bond(s) in the secondary market? What charges are involved if I use my CPF Savings to buy Temasek Bond(s) in the secondary market?

CPF Savings refer to your investible CPF Ordinary Account savings. 

Each series of Temasek Bonds may or may not be included under the CPF Investment Scheme – Ordinary Account (“CPFIS-OA”). The applicable pricing supplement will state whether that series of Temasek Bonds are included under the CPFIS-OA and whether CPF Savings may be used to buy such Temasek Bonds.  

The following apply to Temasek Bonds which are included under the CPFIS-OA. 

Secondary Market Purchases after Completion of Offer

CPF members CAN use their CPF savings to purchase the Temasek Bond(s) in the secondary market. 

Conditions for using CPF Savings to invest in Temasek Bond(s)

To invest under CPFIS-OA, you need to be at least 18 years old, not be an undischarged bankrupt, have a valid CPF Investment Account with a CPFIS agent bank*, and have more than S$20,000 in your CPF Ordinary Account.  

*Applications using CPF Savings must be made through a CPF Investment Account with a CPFIS agent bank (DBS/POSB, OCBC, or UOB) with the applicant’s CPF statement. Please be aware that there will be fees associated with investments made through your CPF Investment Account. Do refer to the relevant bank’s fee schedule (DBS/POSB, OCBC, UOB) or consult the relevant bank which you hold your CPF Investment Account with for more information.

Can I use my Supplementary Retirement Scheme (SRS) funds to buy Temasek Bond(s) in the secondary market?

You should consult your stockbroker and the relevant bank which you hold your SRS account with if you wish to purchase Temasek Bond(s) in the secondary market after the listing of the respective Temasek Bond(s) on the SGX-ST using SRS funds.

Can I buy Temasek Bond(s) using a joint Central Depository (CDP) securities account in the secondary market?

You can use your joint CDP securities account, provided it is linked to a trading account, to buy Temasek Bond(s) in the secondary market.

You should consult your stockbroker and the relevant bank which you hold your joint CDP account with if you wish to purchase Temasek Bond(s) from the secondary market.

What do I need to do at maturity?

You do not need to take any action. Your principal amount and last interest payment will be automatically credited to your account as a single amount. 

If the price of the Temasek Bond(s) is above par at maturity, will I get a sum amounting to the higher price or just my principal?

The redemption amount at maturity will be 100% of the principal amount of the Temasek Bond, regardless of its prevailing market value. 

What is a corporate action? How do corporate actions affect your investment?

The information below is focused on investments in bonds. There are other factors which apply to investments in shares.

Corporate actions by a company can include a range of events, such as new issuances of shares or bonds, redemption of outstanding bonds, a buyback of shares or bonds or an acquisition or disposal of assets. If the company undertakes a corporate action, the market price of its shares or bond may be impacted.

Listed bonds are traded in the secondary market and market prices are affected by the financial fundamentals of the company (most notably the strength of a company’s balance sheet and its ability to meet its payment obligations), as well as wider market factors and sentiment.

The market price of the bonds can change based on the perceived financial strength, the interest rate environment, or investors’ expectations about the company and/or the wider market.

If you are an investor and you are considering whether to buy, sell or hold a company’s bonds, keeping up to date on its corporate actions and announcements, including the company’s periodic disclosure of its financial performance, is one way for you to understand the company’s financial and business health, and to ensure that you are aware of the latest developments affecting the company.

However, it is important that you consider these announcements as one data point, and that you make an effort to reach your own informed views about whether to buy, sell or hold securities, taking into account relevant information and your own personal circumstances, including risk tolerance.

Announcements made by the company do not constitute financial or investment advice. You should consult your own financial, investment, business, legal, tax or other professional advisers prior to investing.

How do I apply for a position at Temasek?

Please submit your details via the career portal under the respective application links. For further queries, please contact us at career@temasek.com.sg.

What happens after I submit my resume and how will I know if I am selected to participate in the interview process?

We will notify you if your qualifications and experience are relevant to the requirements of a currently available position. If you are selected to proceed in the process, you will be contacted directly by the Human Resources team.

What are your selection criteria when reviewing a candidate’s suitability?

We will broadly consider a candidate based on the following:

  • Competency
  • Relevant experience
  • Values
  • Leadership qualities (for experienced hires)

Selected Questions & Answers from the Temasek Review Media Conference 2022

12 July 2022, Singapore

The following is an edited transcript of questions and answers at the Temasek Review 2022 Media Conference.

Grammatical edits have been made to aid readability. For the same reason, questions are not necessarily listed in the order in which they were asked, but grouped thematically.

Slides and charts have been added from the Temasek Review 2022 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, and here to view all of the key financial metrics and diagrams in Temasek Review 2022.

Question on Net Portfolio Value

QUESTION: You doubled the net portfolio value in the last 10 years. So, is that one of the figures you run the company with or is it just net profit? In other words, could we expect that one of your targets would be to, again, double it over the next 10 years?

LIM MING PEY: I think many of you here will be familiar – the primary measure which we measure our portfolio against is our Total Shareholder Return, and our aim is always to achieve long term sustainable returns above our risk-adjusted cost of capital. I think you've heard from our 2030 strategy there are many things we're working towards in the decade ahead. So no, we would not be looking at portfolio size as just one target but rather it's really about working towards our structural trends, looking at the different opportunities from a bottom-up perspective and finding the best opportunities that can give us that resilient and forward looking portfolio that we want to construct.

ROHIT SIPAHIMALANI: Just to clarify your point, on this metric of risk-adjusted cost of capital, currently it's 7% for us. Over the last decade, as you pointed out, our returns have been just about 7%. So, we have met our risk-adjusted cost of capital. Going forward, while we don't have specific targets for portfolio value, the goal is to exceed our risk-adjusted cost of capital.

Question on Investments and Divestments

QUESTION: You mentioned that you will slow down your investment pace this financial year. How about divestments? I noticed that for the past two years your divestments have picked up. So what's your quick criteria when you come to the decision for divestment?

ROHIT SIPAHIMALANI: We will look at valuations and the intrinsic value of the companies that we hold. If we think if they're undervalued, clearly we will not look to divest them and we then have no compulsion to divest them. We also have a strong balance sheet and strong liquidity so there's no compulsion to divest at points where it doesn't make sense.

Having said that, if in the changing environment we think there are certain companies that have played out the investment thesis and are close to the intrinsic value, we will go ahead and divest. So, my sense is that as you look at this year you will probably see a decline in both investments and divestments for that reason. But we will continue to divest where we think an investment thesis has played out. 

Question on Investments and Divestments (2)

QUESTION: You touched upon divestments, and it was a characteristically active year for you with S$37 billion of divestments. But when you sell, what latitude do you have to remain in cash when you can see bad news coming from the stock markets ahead as has been the case throughout this year? To what extents are you expected to redeploy pretty quickly?

ROHIT SIPAHIMALANI: We don't really have any compelling need to invest if we don't see the right opportunities at the right value. Similarly, we've seen in the last two decades – you’ve had SARS, the GFC, the European debt crisis, China in 2016, COVID, and there have been many periods where we felt that the risk reward was not as compelling to be investing. We've been happy to sit on higher amounts of cash during those periods. But when we do see the right opportunities aligned with the long term trends, we will deploy.

LIM MING PEY: Again, that speaks to the value of our long term orientation as an investor looking for long term sustainable returns. We are not under any pressure to buy or sell in a particular year. It's back to the fundamental view of the intrinsic value and the trends of what we're looking at. 

Question on Investment – Unlisted Assets

QUESTION: We noted that unlisted assets now make up slightly more than half of Temasek's portfolio and this is partly due to the good returns despite the tough times. So, we are wondering whether this will be Temasek's strategy going forward and what is your outlook on this portion of the portfolio given all the risk factors?

RUSSELL THAM: Let me start by saying we invest in good opportunities regardless of whether it's listed or unlisted. As you can see from the performance, this sector has outperformed the listed sector. We value the [unlisted] portfolio on a book value less impairment perspective. If we were to mark to market, this unlisted portfolio value will rise another 10%. There are other benefits to it – if you look at the mix, there’s broadly three components there. One is mature assets that have been delivering a steady stream of dividends for us which is helpful. Two, we have a high quality diversified portfolio that is diversified geographically, sectorally, and by vintages, and you get a regular set of distributions. Finally, our early stage – that specific portfolio has done very well and it's around just under 10% of our unlisted portfolio and many of these have exited [early stage]. I think this portfolio is high quality, and generates reasonable liquidity for us too.

ROHIT SIPAHIMALANI: I would like to emphasise two things. One is that, you alluded to the point of risk. Actually, we don't see the unlisted portfolio as being higher risk. In some sense, it's lower risk because we can perform due diligence of these companies much better, we have access to much better information, we can have a role in governance of these companies. So, yes, there's illiquidity but we more than get compensated for that illiquidity premium based on the returns we've seen on this portfolio. But again, it's not a number or a target that we have – the percentage also varies depending on how the public markets do. So, last year when the public markets were very high and valuations were high, the share of the unlisted portfolio was lower, and this year, part of the reason it's gone up is also because of a decline in public market valuations.

LIM MING PEY: I just also want to add, I think what Russell said is right. We always approach investments from a bottom-up perspective. Which are the investments that we want to invest in, whether they are listed or unlisted. So, actually, in a way the percentage of unlisted assets becomes a resultant number. As we move towards the trends, there are many early stage opportunities because of the nature of those trends and so they manifest themselves in certain parts of this segment. So, it's really what comes out of our core focus on our opportunities.

MARTIN FICHTNER: I would just make a small comment that I think it's one of our strengths – the ability to be able to invest in both listed and unlisted assets. It is the best way that we can come up with to invest, against the trends that we see and build that resilient portfolio and from an investment team perspective, I think we get the benefit of taking insights on this side and deploying them over there or vice versa.

STEPHEN FORSHAW: There's a slide on the screen right now that gives a bit more colour to the unlisted portfolio, to give you an indication of how our unlisted portfolio is broken up.

Question on Investment – Unlisted Assets (2)

QUESTION: With most of your portfolio in unlisted assets now, I just wanted to understand a little bit on what the exit environment is like. The public markets are down now, so is there anything you have to do to adjust for your portfolio companies?

ROHIT SIPAHIMALANI: Maybe we can get that slide back up. 

You will see that some part of the portfolio – the largest chunk – is actually some of our Singapore companies that we've held for a long time, which we see as a steady source of dividends for us – so companies like PSA, Mapletree, Singapore, et cetera. There's another section here which is our investment in funds, third party funds. It's a very diversified portfolio and they have their own cycle of distributions and sales, which would be through either M&A or by listing in the public markets. And while in the near term there may be an issue in terms of public market listings – these are investments made over horizons of at least four or five years – we don't see an issue from that perspective.

So, again, it's not something that concerns us. We're not looking at immediate liquidity in the next 12 months or so from some of these companies. I feel fairly confident that if the companies do well, we will have good exit opportunities both in the private and public markets over the next few years.

Question on Investment – Unlisted Assets (3)

QUESTION: Your financial year ends March 31. We've since seen the markets go further down. Does that mean we see an acceleration into even more unlisted assets probably in the coming financial year, and possibly even more Singapore-based companies given the performance of the markets since March?

ROHIT SIPAHIMALANI: Our listed-unlisted proportion is really based on value and opportunity. In fact, arguably, I would say that today, the public markets have corrected much more and the private markets have yet to correct to the same extent. So, in some cases we may do more public market opportunities before we do private. But if we do see private market valuations correct, and we're beginning to see that, and we see the right opportunities, we'll invest in private markets. But we don't really have a goal of listed and unlisted.

LIM MING PEY: I think this is worth emphasising: we don't have a private asset allocation goal. From what you see from our private assets – at the risk of repeating, let's call the chart up again. 

Each segment of the unlisted asset portfolio serves different purposes and gives us different value. They're not in and of itself because they're private. So it's really looking at the dividends that they may give us, the co-investment opportunities, the insights that they give us, the early insights from the early stage companies that they give us. That's quite important, so we wanted to clarify as well.

ROHIT SIPAHIMALANI: And I would say the other part we're very happy about is the balance and resilience we have in our portfolio. You mentioned the fact that markets have come down since 31 March. But actually the only market that's had a positive return since 31 March is China, which is the one which had negative returns for us last year. So, this balance, you know, last year, the years before that, there was a period where the Singapore market didn't do very well because growth was getting more compensated for than value, and Singapore is more of a value market. But in the last fiscal year, Singapore was one of the better performing markets because it was more value-oriented. For us, when we look at resilience and long term portfolio construction, we want to make sure that firstly, we look at all scenarios and how the portfolio would perform, so we're not unnecessarily biased towards one scenario; but secondly, we look to have the balance to make sure the portfolio is resilient across environments.

Question on Investment – Portfolio by Geography

QUESTION: A technical point on geographical asset allocation and definition: when I look at a result saying 27% of the portfolio is in Singapore, I believe that means the legal domicile or the listing of the enterprise itself. If you were to look instead at the underlying geographical exposures of portfolio companies, would you end up with a different geographical mix than the one that you have?

ROHIT SIPAHIMALANI: Actually, just to clarify, what we've shown out here is the underlying geographical exposure. This is not by country of listing or incorporation. So, the reason we show it that way is so you get a sense of the actual exposure of our portfolio. 

Question on Investment – Portfolio by Sector (Telecommunications, Media & Technology)

QUESTION: I want to ask about Temasek's TMT sector. It's the largest drop in the sector for FY22. Did Temasek rebalance its investments in this sector or was it a mark to market loss? And also within your Development Engine, there are many investments in the technology sector. Will we see a tech-heavy portfolio from Temasek in the future?

MARTIN FICHTNER: I'm going to start with the second part because it highlights one of the reasons that we focus on trends.

Digitisation is something that is not just a technology element, it's something that touches the economy in general. And, therefore, investment around technology and technology-enabled business models shows up in many different parts of the portfolio. To pick an example out of fintech, it really depends where the company's core business and core focus is and our thesis for that company. So, we may have a company like Adyen, for example, which sits in the financial services portfolio – at its core it's a financial services business. But we also have an investment in a company called Duck Creek which provides back office enterprise software for insurance companies. That does sit in the TMT portfolio.

In terms of the sector allocation percentage, it has to do primarily with a valuation correction in the technology sector. It doesn't have to do with a rebalancing of the portfolio in any way, shape or form. It is a core sector for us.

LIM MING PEY: If I can also add on, moving forward, we're seeing a lot of convergence. So, we ourselves are looking at our four trends, how they are converging. So, something like digitisation that pervades all our trends, is it really just technology or not technology? So, we are encouraging our own teams to think cross-functionally and work towards those converging opportunities which we see a lot of value in.

RUSSELL THAM: Part of this also requires us to go very upstream early in technology investments. I think one of the key benefits of going that far upstream in the cycle, is that it allows us to gain a lot more insights than what it means to our portfolio down the road. Coming back to this, this certainly helps us construct a much more forward looking, much more resilient portfolio on an ongoing basis.

Question on Investment – Portfolio by Sector (Life Sciences & Agri-Food)

QUESTION: Can I ask about the agri-food sector? The pandemic and the war have proven the importance of food security. Have you changed your strategy towards investing into agri? Have you narrowed down the sector? And if you have changed the target, can you share with us?

RUSSELL THAM: Temasek has been a very active global investor in the agri-food tech space. We've invested in a lot of companies where technology is a key differentiator. Just to cite a couple of examples, we have invested in Rivulis, a micro-irrigation technology company, we've invested in an array of alternative proteins, we've invested in even seed genetics for vertical farming because we think urban farming will be more critical. We've invested in a broad array, as I mentioned earlier.

Coming back to a Singapore angle, recently we announced the Asia Sustainable Foods Platform, this is where the platform is designed to help food tech companies in three ways: in the R&D context, in the manufacturing area, and also in go to market. If we take all this in totality, Temasek is continuing to lean in because it is a key structural trend for us. At the same time, we believe many of these companies will enhance food resilience and food sustainability. So, our stance hasn't changed. We continue to invest in this sector.

LIM MING PEY: Actually not only has our stance not changed, we've been active in agri-food for some time because of the relevance in the sustainable living trend. Even in the investments that we've been making on alternative proteins, all these are with the stance of, how do we have better ways of producing food to feed the planet?

So while it was not maybe motivated by COVID per se, we start to see a lot of complementarity in food resilience, food security and how that's playing out in our original investment stance in agri-food as well.

Question on Investment – Crypto

QUESTION: I noticed you've made quite a few investments in the crypto industry over the past year, including in the popular exchange FTX. I was hoping you could explain what opportunities you see in this industry and how your outlook for the sector has been impacted by the recent crash in crypto markets?

MARTIN FICHTNER: Blockchain as a technology is an important innovation and it's going to have a long gestation period. We believe it's going to touch a lot of different parts of business and the economy. That is the reason that we focus on it and that's the reason we set up a pod four years ago to begin understanding the technology and the opportunities around it.

Our focus is broadly on blockchain-enabled solutions, platforms, infrastructure and some of the applications, and exchange is an example of that. So FTX is an example of that. But by no means are we only limited to making investments in something like FTX. We are also, as part of our Development Engine, building some companies ourselves. We've set many of them up.

In terms of the current market environment, this is part of a cycle of innovation that goes on. Again, we take a long term view and a long term investment horizon. Cryptocurrencies in particular, which is what I think you're referring to, our exposure to crypto currencies is minimal and it's primarily through venture funds that invest in crypto-related projects and companies. As I said, we are focused on more broadly, the application of the technology and the companies and the opportunities that are going to emerge from that.

LIM MING PEY: Actually, if I may add, I think despite the recent attention on cryptocurrencies, it is important to understand that blockchain, decentralised technologies and Web3 actually entail a lot more different components and opportunities in the value chain. So, we are looking for those transformation opportunities that will really disrupt many different industries.

MARTIN FICHTNER: This continues to be a great example of how we think about building that resilient and forward looking portfolio. It's important to understand how a technology like this, how an innovation like this, is going to touch, yes, financial services and help innovate financial services over a long period of time, but other parts of the economy as well. We're seeing it touch consumer companies, we're seeing it touch media companies now, and it's going to go broader than that.

RUSSELL THAM: If I may add, I think as part of our investment engine strategy, this particular engine is called the Development Engine. This engine is designed to identify and build future-centric capabilities. So, blockchain is one of the four verticals we have selected to build up capabilities in it. The others are AI, Cybersecurity, Digital solutions, and Sustainability Solutions. You’ve got to look at this in totality. This will put us in a much better position to build a forward looking, resilient portfolio.

Question on Investment – Crypto (2)

QUESTION: A follow-up question on a crypto question: how have you seen valuations of firms that you've invested in such as FTX or Amber being impacted during this current downturn?

MARTIN FICHTNER: In terms of valuations of some of the crypto companies that we might have invested in, I won't comment on any of the companies specifically. It would not be appropriate for me to do so. What I can say, though, is that in general, we're seeing a cycle from a valuation perspective happening right now and valuations for higher growth companies that have profitability further out, have come down. Some of that is starting to trickle into private company valuations as well. What we focus on is this: are the businesses healthy and are they growing, and do we think the prospects are strong? There is no mark to market on a daily, quarterly, et cetera basis, and we feel strongly about the companies in our portfolio performing well over time and we'll see cycles in terms of multiples go up and down as the cycles occur. 

Question on Investment – Singapore-based Portfolio Companies

QUESTION: We've seen a fair bit of consolidation in the Singapore portfolio. Does Temasek see more scope for further M&A opportunities given the market downturn?

LIM MING PEY: It's important to remind ourselves of the governance principles that we operate under. So, we look to the boards and the managements of those companies to consider their own M&A plans or strategies. As a supportive shareholder, we will always listen out to those opportunities and then we make our own evaluation as a shareholder.

ROHIT SIPAHIMALANI: We do want these companies to scale up, be globally competitive, and therefore you've seen we've been investing in the Singapore companies in a post-COVID world to help them be more competitive and to manage the green transition. So we will continue to do that but the opportunities and the decisions of what actions to take really is up to the companies themselves.

Question on Investment – Element Materials Technology

QUESTION: This year we saw a rare instance of Temasek buying 100% of a company – Element Materials Technology. Can you explain the rationale behind that, and are we likely to see more of this happening?

ROHIT SIPAHIMALANI: So, you're right, it's not something we do very often. It's not, however, the only time we've done it. About three or four years ago, we bought GHX in the US. We have made occasional controlled transactions of that nature. This one was a company we knew very well, because we were already a minority investor in the company and had been for the last few years. So, when the majority shareholder was looking for an exit, it was in a space where we see long term secular trends around testing, inspection and certification. They also were leaders of sustainability within that area. It was an asset we felt we could own for the long run and add a lot of value to, and it was synergistic to our ecosystem.

So we will do this. I don't think they will be very frequent but when we know a company well, feel convicted about it and it's aligned with our long term trends and focus areas, I think we will look at such opportunities selectively. 

Question on Investment – Sembcorp Marine Ltd

QUESTION:  It was mentioned that Temasek continues to invest in some of the Singapore companies, one of them is Sembcorp Marine. Can you explain a little bit of the thinking behind the investment in Sembmarine, and what will Temasek do if the plan to merge Sembcorp Marine with Keppel Offshore & Marine doesn't go through?

RUSSELL THAM: We made a commercial decision to invest in Sembcorp's 2021 rights issue. The purpose then was to strengthen its balance sheet and its liquidity position. Within that, there was also the plan to enable Sembcorp Marine to proceed with its transformation journey and it was stated then that this includes a proposed merger with Keppel Offshore & Marine. That was designed to help them pivot into better opportunities within the clean renewable space.

So, on the second question, if it doesn't go through, we don't speculate on hypothetical scenarios. But we have noted that the Sembcorp Marine management has indicated their liquidity position, and it should be good to at least end of 2023 as a standalone entity. So, I think that's where it is right now.

ROHIT SIPAHIMALANI: I think the important thing is that I think both management teams – the boards of both companies – have clearly articulated benefits they see in the merger and we do believe that a combined entity in this competitive environment would be much more able to compete globally and more importantly, effectively manage a transition to the green economy in terms of the types of things they can do.

RUSSELL THAM: Temasek is supportive of the combination and we think it's a compelling proposition, especially since it enables them to make a transformative next step which I think will create shareholder value all round.

Question on Investment – Zilingo

QUESTION: Just a quick Zilingo question. The board-backed investigation by Kroll was concluded, but at the very least, Temasek was on the board for two years when the company had a lot of failings and failed to file its basic financial audits. I realise this is a problem that you've inherited rather than developed, so I apologise for asking you the question. But what are some of the lessons that Temasek has learned from this and what will you change in your approach to governance because of it?

ROHIT SIPAHIMALANI: I would say firstly, we believe in the highest principles of governance and expect that of all our companies, and we also rely on the boards to drive that governance. As a shareholder, we engage with the boards but we see the primary responsibility of managing that governance is with the boards of these companies. Clearly, the company went through a tough time during COVID and there were a lot of changes that happened. There were clearly some things that the board was not aware of and when there were complaints made, they investigated and actions have been taken subsequently.

Question on Macro Outlook

QUESTION: You mentioned a slowdown in investment pace this financial year amid the global economic outlook. Could you expand a little bit on that, please?

ROHIT SIPAHIMALANI: We're in a bear market right now in the US, Europe and we have been in China for a while. The decline in values in markets like the US has almost been entirely a function of rising rates, and we still haven't seen an earnings decline being priced in. We think that is inevitable as we go through this year. So, we see further downside in the markets from that context.

If you look at Europe, I would say the situation is even more acute because not only do you have high inflation, slowing growth and tightening policy, you have the initial problem of the Russia-Ukraine crisis which is creating an energy crisis in Europe, which could clearly aggravate the situation much more.

China's actually at the other end of the cycle, where it's early cycle and I would say the risk-reward ratio is more balanced right now given the starting point of valuations, and also the flexibility they have on the fiscal monetary front. But overall, I would say the profile, even in China, if you have a recession in the US, and Europe, China will get impacted by that too.

So, the economic outlook is not looking very good. We see further downside in the markets and I would say, historically when you’ve had a bear market like this, you only trough after the Fed has shown that it's stopped tightening and is moving towards the policy of easing. Given the Fed's current stance we don't see that happening quickly, so for that reason we think this could be a prolonged downturn extending through the end of the year, potentially into some time in 2023.

All these cause our cautious outlook. At the same time, we look for opportunities aligned with our long term trends. We want to continue building a sustainable and resilient portfolio for when we get out of this downturn, and we will continue to invest. But for the reasons I mentioned, we are more cautious than we would have been, say, a year ago. 

Question on China Outlook

QUESTION: My question regards China. The period under review included an era of some debate about the investability of China, chiefly as a question of the unpredictable nature of regulation which must have affected some of your holdings in the tech sector, and I do notice China as a proportion of the portfolio has dropped from 29% to 22% over the last couple of years. Is that reflecting weaker market performance in China or have you consciously chosen to step away a little from your previous allocation towards China?

ROHIT SIPAHIMALANI: We continue to see China as an important market for us. We've been there for almost 20 years, and we’ve seen many cycles. Over the last decade, I would say it’s been the best performing market for us, even including the last year. So, it continues to be an important market for us.

The movement you saw in the portfolio last year was, in fact, entirely due to market price movements. In fact, we were a net investor in China last year. We were also a net divestor the year before that because we saw that valuations were very, very high. But we have seen attractive opportunities even in this volatile environment and continue to invest in China right now.

RUSSELL THAM: So maybe I will just add onto that. Given that we been there for almost 20 years, we have seen through policy cycles, we have seen through economic cycles, we've seen through various phases of economic development and we remain invested there. We constantly reshape the portfolio accordingly.

MARTIN FICHTNER: Even if you look at specifics around the trends that we invest in, there are very compelling opportunities in China – the rise of software, the rise of automation, the rise of deep tech in China do provide us with attractive investment opportunities now and in years to come. This is very much aligned with the key trends and the key themes that we have, in this case, I picked examples around digitisation but it's true across everything that we do.

Question on China Outlook (2)

QUESTION: What has been the biggest change in your China investment strategy over the past year? A lot has changed in the country for investments. How do you see this shaping forward? As a global investor, where do you see opportunities for investments now?

ROHIT SIPAHIMALANI: In China, a lot of opportunities align with our trends around digitisation, longer lifespans, sustainable living and future of consumption, so that could hold true. The two areas where we have been more focused on in the last year or two – one is basically looking at policy and making sure that whatever we're doing is aligned with policy. And in that context, the platforms are a good example there. We think that most the regulatory headwinds are behind us there. But it's nothing new in China — around the world people are concerned about monopoly power of the big tech companies. They're concerned about data issues. It's just the pace of change that we saw in China was faster than what anyone expected. So, we obviously have to keep policy in mind in whatever we look at out there and make sure we're aligned with policy.

I think the second thing that has been exacerbated is the polarisation of tension between US and China aggravated by the Russia-Ukraine war. It's something that we've always looked at, but we have to focus on it even more to make sure the businesses we focused on are self-contained within the China economic sphere, both from a market perspective and access to technology perspective. There continue to be many opportunities of that kind. Sustainable living is an example where China is the largest EV market in the world, it's building the whole value chain within it, it has access to minerals that go into it, so that's a perfect example of something which is aligned with our trends, aligned with government policy and actually is not negatively impacted by things that I just talked about.

Similarly in the area of consumption, and the government wants to encourage consumption, there are areas out in the domestic brands coming up – we invest in a company like Genki Forest, et cetera. There will continue to be opportunities of that nature. There's lots of opportunities we see out there in China.

MARTIN FICHTNER: We can go to the other question in terms of where we're seeing opportunities globally. Again, in many ways, the simple answer would be, we would go back to the four trends because underpinning those four trends are specific areas with specific strategies that we have to pursue. The gestation period for investments don't change immediately and on a dime. In longer lifespans, there are elements around infectious diseases that have become more relevant now as we've lived through a pandemic. But things around ageing or things around digital health and population health are themes that are of a longer term nature and will continue playing out.

If you go through each of the key trends within each sector and how we're playing on those, we're sticking to what we're focused on – financial services, the continued digitisation and innovation of the financial services sector, market infrastructure, payments – continues to be an important trend and I can go through each one of those. We do recognise that the environment shifts and maybe some opportunities become more attractive right now than others, but the core focus stays the same.

ROHIT SIPAHIMALANI: The only additional thing I would say is that compared to the last two years the one area where we're seeing many more opportunities, because you're seeing maturing of these opportunities is around the sustainable living trend. While there are early technologies, there's much more activity happening, there's lots more capital development in those companies so that's one area where I would say at the margin, compared to two years ago, we're seeing many more opportunities today.

RUSSELL THAM: Specific to China, there's a lot more emphasis on foundational technologies, enterprise-level technologies, and I think that's also in the area where, from a policy standpoint within China, there has been a big focus in addition to putting a lot of policy focus on enabling China's economy to transition to a low carbon economy. Those will play out over the next 5, 10, 15 years.

Question on Japan Outlook

QUESTION: Have you invested anything new into Japan in the past year, and what's your outlook now that the yen is at its lowest in the past decade? What's your evaluation for the country’s economy?

LIM MING PEY: In terms of our outlook, we do see near term support for growth, especially with the gradual reopening domestically, but as we shared just now, there are headwinds building up in the external environment, so growth could slow down in the second half of the year.

You also mentioned the yen weakness. I think we do see weakness because of a divergence in the US and Japan policy positions, but the divergence and the weakness should slow down from this point onwards.

ROHIT SIPAHIMALANI: I would just like to add that I'm very pleased to say that we've actually committed a billion dollars to our subsidiary, Pavilion Capital, to seed the fund that's going to be specifically focused on Japan. That will be the main vehicle through which we expect to be investing in Japan over the next few years. We will be looking forward to that.

Question on Sustainability

QUESTION: Can you share more details about the decarbonisation plans that Temasek has for its portfolio companies? And also with regard to the wider environment on ESG investing, which has also not been so hot in the last few months – how do you think this would impact the decarbonisation plans for your portfolio companies?

RUSSELL THAM: To start off, from Temasek's perspective, sustainability is at the core of all that we do. It is a journey, so I think that's important to remember. First off, Temasek has been a very active advocate for better disclosure standards globally. We are encouraged to see that various global committees and task forces are being set up, so we will continue to push on that front.

At the firm level, there are a couple of initiatives, as my colleague has mentioned. We have priced carbon internally, we have raised the price as we head towards US$100. We have sustainability-linked incentives for the staff soon. We have put in place ESG frameworks that is part of our investment strategy.

Secondly, on the investment front, we have been fairly active in investing across an array of climate-aligned opportunities, ranging from hard-to-abate sectors, to built environment, to hydrogen-related green technologies. So, that is ongoing.

We have also been actively establishing platforms. Recently, if you followed the news, we set up GenZero. We’ve put S$5 billion aside there to help accelerate decarbonisation globally to the point of working actively with our portfolio companies, so yes, we are active in that regard. You’ve seen a couple of examples in the video earlier, in Tampines Central [related to SP’s district cooling].. We have also recently partnered with SIA to launch sustainable aviation fuel. Coming back to that, it is a journey, we're fully committed, we have a multifaceted strategy, it’s multiyear, multipronged and we're executing to it.

LIM MING PEY: I think the second part of the question when you talk about ESG investing, there are two different aspects to ESG investing. Like Russell said, when we invest, we already have an integrated ESG framework that is incorporated into the due diligence of all our investments. That's how we are doing ESG investing. In other areas like impact investing, we've set up a dedicated team internally that's looking at impact investing because we believe in the value of investing for impact and for sustainability. So, it's a journey. I think we continue to work on this and we hope to see more of this becoming mainstream in the years ahead.

ROHIT SIPAHIMALANI: You can see we're doing a lot and I think part of it is because we're so committed to this. We've stated our goals of producing the carbon footprint of our portfolio by 50% from 2010 levels by 2030, which is about a two thirds reduction from 2020. That's a very, very high bar and we know it's not going to be easy, but we think it's important, and therefore we are all very committed to it.

Question on Sustainability (2)

QUESTION: You have stepped up investments in sustainability. How will your investments in sustainable technologies and companies contribute to improving Temasek’s investment return? Additionally, since Russia’s invasion of Ukraine, there has been a global trend against decarbonisation. Does Temasek see these setbacks as temporary, or has the paradigm shifted since the war in Ukraine?

ROHIT SIPAHIMALANI: One of the things that the Russia-Ukraine crisis highlighted on the energy front is that energy transition can't happen overnight. It is an expensive thing. It will take time, and it will have to be a journey. People have realised the need to have transition fuels but it’s also, if anything, from a medium term perspective, even accelerated the need to move away from fossil fuels and move into more sustainable fuels.

You can see that at the forefront in Europe. Even though they have brought some coal plants back on stream and so on and so forth, they're talking about much more aggressive goals towards decarbonisation over the next decade or so. As you pointed out yourself, it's probably temporarily just to meet the requirements of energy for the world. You may have some going back to fossil fuels, et cetera, but I would only think it's accelerated the long term trend towards the transition.

RUSSELL THAM: I fully agree with Rohit. This energy transition is a long term journey and Temasek is a long term investor. We have been relatively active in investing in future green technologies. To cite a few examples from a primary energy sector perspective, we have invested in geothermal energy generation, and in things even further out like fusion energy. We have started investing in green hydrogen production technologies and the respective carrier technologies that will move hydrogen around. Temasek is actively deploying capital there knowing it is long term, but we are a long term investor. The structural trends align, and we remain committed. This is also part of our sustainability journey. 

Question on Sustainability (3)

QUESTION: Temasek has mentioned that it is not going to set hard targets on decarbonisation for your portfolio companies. Today, it laid out three strategies of how it intends to do sustainable investing. For its upcoming investments which include certain carbon-intensive sectors – is there a harder stance coming up?

RUSSELL THAM: We do not have a “harder” stance. I think we, as a long term investor thinking about how we construct a resilient, forward looking portfolio in the context of sustainability. We assess specific value chains, for example, we think the hard-to-abate sector is something we should participate in. We think alternative clean energy sources is an area of interest we would certainly pursue. If we think hydrogen is something we need to preposition our portfolio, we would do it. That's how we look at it. We don't have a “harder” stance. As I said earlier, sustainability is at the core of all we do. It is a journey. We have developed, a multifaceted, multipronged and multi-year strategy and we are executing to it in a fairly agile manner, so we take it as it comes. But commitment is resolute. 

ROHIT SIPAHIMALANI: To your point, clearly if you want to achieve those goals, in new investments, we do need to be of lower carbon intensity so we can lower the carbon intensity of our portfolio. You will see by and large the four trends we have, most of our investments out there are low carbon intensity.

Having said that, we also want to invest in some sectors or companies which may be carbon emitters today, but are working on a transition to be low-carbon emitters, which is why when you look at this chart, we've got this wavy line that says that our portfolio decarbonisation may not be linear. We may invest in a carbon emitter today which could see the emissions go up with the idea of reducing it further because we see it not only just being good for the world, but that's also where a lot of value can be created. If a company has been valued as a high-carbon emitter and we can work to transition that, it could be a lead to a significant re-rating of those companies. 

LIM MING PEY: Russell has spoken about the new climate-aligned opportunities that we are looking for – in many instances, specific carbon negative related platforms or companies, and innovations that we invest in. And Rohit touched on the last point of how we're working with some of our existing portfolio companies like SIA on their ongoing decarbonisation journey.

RUSSELL THAM: We also became a founding LP (limited partnership) partner in the Brookfield Global Transition Fund. This is very targeted towards brown infrastructure and brown energy assets that we believe could transition well into a green orientation. This all ties together because having a good sense of which emerging technologies could help portfolio companies decarbonise is also a critical element of the overall strategy. These are not thought through in isolation. It's all linked together.

Another example of this being part of a broader ecosystem thinking is GenZero. We have also a particular track that we call carbon ecosystem enablers. This is where we invest in measurement, reporting, and verification technologies. We invest in consultancy companies that can sell carbon credits such as South Pole. We made quite a bit of investments which all come together in a broader strategy framework.

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