The following is a transcript of the presentation to the media by Temasek CEO, Mr Dilhan Pillay, on “Positioning Our Organisation for the New Global Environment”. The text should be read in conjunction with the slides shown in this transcript. Grammatical edits have been made to aid readability.

Dilhan Pillay Sandrasegara:

Thank you for coming.

This is quite a big thing for us to do, and that's why I'm doing this. This is my first media interview – I've been in the (CEO) role at Temasek Holdings for almost four years and Temasek International for more than six years.

So I'm very happy to speak to you and give you a sense of what we intend to do, but to do that, I think it's important for us to reflect on where we've come from to where we are, because that sets the stage for why we're doing what we're doing today.

I think the first thing I would say is that the world, of course, is changing. The world does change from time to time, but we've had a relative time of stability for over the last 30 years, especially since WTO has come about in 2002, with the international rules-based order fairly in place, as well as for trading across nations. And so our organisational structure has been fairly stable over the last 20 years, and it was an organisational structure that was put in place in 2002. And so the genesis of the organisational structure we have today goes back to that time.

But we know that everything has now come into a different space for many of us – whether it’s governments, whether it’s companies, multinational corporations, domestic companies, and even individuals and societies. And so we definitely need to realign our organisational structure for this new environment that we're in, and around the three portfolio engines that we have.

I think the most important thing for us to consider is the fact that we have to sense what the road is ahead, and potentially the road around the corner. We have to adapt our organisation to cater to the changes that we are likely to see, so therefore being more agile, being more nimble, more empowerment to people, is an important facet of that future.

But ultimately, the real goal is to make sure that we perform, and that we thrive, So Every Generation Prospers, which is our Purpose.

Last year, we celebrated our 50^th anniversary.

It was a good time for reflection for us, and you will know that we published a book “By Generations, For Generations”. It's really a tribute to the previous generations of Temasek staff and leaders who paved the way for us to be where we are today.

In 1974 when Temasek was founded, it was a very difficult time in the world as well. We had the Vietnam War, we had fissures within American society. If you think about it, the anti war demonstrations were still going on. You had the Watergate scandal evolving, some paralysis in government then, and then to President Nixon's resignation six weeks later.

In the Middle East, you had the OPEC fuel crisis that came about as a result of the Yom Kippur war in October 1973. And in the UK, you had miner strikes that brought down the Conservative government. So it was quite a difficult time.

And in Singapore, around the time we were founded, we had the highest rate of inflation in recent memory, 30% year on year, and that was the time that we were founded.

But our leaders were bold enough to decide to move ahead, and set up Temasek to be the entity that would take over the commercial businesses that the government had formed, for a new Singapore that had emerged into independence.

And so we find ourselves today, not in the same circumstances, but things which are rather similar. So therefore, the need for us to also adapt our organisation for that new future has become an imperative. And we’ve constantly evolved our organisation during these last 50 years, and typically, when there are crises. So as the old adage says “Never waste a crisis”. We are ensuring that we're not wasting what's happening today in the global environment. 

So let me just go through with you the journey that Temasek has been on, at least in the last 22 years.

The first starting point would be in April 2002, when Ho Ching joined Temasek as Executive Director. Her mandate was to prepare Temasek to become a global investor. If you look at this bar chart, 94% of our portfolio value was in our Singapore portfolio companies, 94%. Only 4% of our portfolio was in global investments, and 2% was in funds and other instruments that we had.

And so she set about for us to start our direct investments. These were proxies to a growing Asia in the beginning, because we believed that we had to step up in Asia first, especially post WTO, where we saw that emerging Asia would be a winner in the context of globalisation. And so we started to invest in banks and telecom companies. Why? Because they were proxy for urbanisation, middle income populations in these countries.

We also started to look at globalisation of our Temasek portfolio companies, as well as listing some of them.

So I'll give you an example. PSA, at the time in the early 2000s, had only a small number of ports, primarily Singapore and a port in China. In 2004, 2005, we bought into Hutchinson Ports, a 20% stake and subsequently built a global port network. And today, we’re the largest independent port operator in the world. 

We created asset management companies because we believed that there was an opportunity for us to bring products out to the broader market, and to help galvanise the asset management sector in Singapore.

We also decided to become more transparent and that entailed us doing two things: one is to publish our Temasek Annual Review. The first one happened in 2004, and in the same year, we decided to get ourselves a credit rating, Triple A, by both S&P as well as Moody's. And why did we do that? Because we believed that quite apart from the fact that our shareholder was a principal stakeholder for us, we should have other stakeholders who would be able to give a marker for how we would be doing, or could be the canary in the coal mine if we were not doing the right things.

There was also an interesting development at the end of 2004, where we merged ST Group into Temasek. So the Temasek today comprises portfolio companies that came from Temasek from its inception in 1974, but included companies that were built by the ST Group which came out of the Ministry of Defence from 1969 onwards. So to give you some examples, it would be Sembcorp, which came from the ST Group. So did Chartered Semiconductors, which we eventually disposed of in 2009.

And so ST Group was seen to be a little bit more entrepreneurial in actually establishing new companies and setting them up, and helping them to contribute to the ecosystem, whereas Temasek was very much a good steward of businesses that had been built by the Ministry of Finance and Economic Development Board.

Where did we end? Well what happened at the same time? So even though we were on a good trajectory, there will always be crises in any decade that you operate in. And the two biggest crises that actually impacted portfolio accretion in value was SARS in March 2003; as well as the Global Financial Crisis which started towards the end of 2007, had gotten into full swing by the third quarter of 2008, and was in full bloom by the time of the end of our financial year in March 2009.

Yet we did manage to achieve for the decade, a 10% TSR, and we went from S$77 billion of portfolio value to S$193 billion by 31st March 2011. But the big shift was that from 94% of TPCs to 56%, still the majority, and from 4% of global direct investments, that went up to 37%, a nine-time increase. So that was the first phase of the globalisation of Temasek’s portfolio, which was in line with stepping up in Asia first, and subsequently to other emerging markets before we decided to invest in developed markets. 

Then came the plan for T2020. So Temasek does its strategies based on 10-year roadmaps. So first was T2010, second was T2020. (T2020) was implemented from 1st April 2011 to end of 31st March 2021. What were our objectives? The first was to become truly a global investor, and that meant not just investing in Asia, not just investing in emerging markets, but that we should have a more balanced portfolio, between developed markets and emerging markets. That meant stepping out to the United States and to Europe.

I'll just give you one statistic. At the beginning of T2020, US accounted for only 6% of our exposure, Europe accounted for 5%, so collectively 11%. By the end of the decade, US was 20% and Europe was 12%, so that’s 32%. So that was a massive shift when we decided that we will invest more into the developed markets, because we saw innovation and growth happening there, especially in the United States. And they were also deep markets for us to invest in across the capital structure, as well as through both private and public investments.

But again, there were shocks that came about that impacted our portfolio returns. The first was the Europe debt crisis, pretty much after the GFC from 2010 to 2012. Remember, it only came to a proper landing when Mario Draghi, as president of the ECB, said, “whatever it takes."

The second was of course the China stock market sell-off in 2015, 2016. There was also an exchange rate issue that came about in the same time. The third was emerging US-China trade tensions, which started in 2017 and accelerated towards the end of the decade.

But the most important of all was the COVID-19 pandemic. And although it started in China in 2019, it was again, in full bloom in March of 2020. So, you know, I think it's interesting for all our crises to have happened in March, because it happens to be our year end. So, you know, when everything's going well, come 31st March, the number that we are measured by gets impacted by something. SARS was March 2003, the GFC in full bloom was March 2009, and COVID in March 2020. I remember that, because that's my first year as CEO of Temasek International. I thought in January, we were going through a pretty good portfolio return and by the end of the year, we were minus 2.3%. It's never good to spend your first year in negative. But we achieved still a 7% (10-year) TSR, which means a doubling of our portfolio, despite these four crises that happened.

And again, you can see that the TPCs went from being a majority of our portfolio, 56%, to 38%. And the global direct investors went from 37% to 42%. But what really grew was the funds, the partnerships we have with others, and the asset management enterprises that we had set up, most of them with the objective of getting third-party money.

So where we are today, as at end of FY2025, is that our portfolio value is at S$434 billion, but the shift, the portfolio weight between Global Investments, Singapore and the Partnership Funds and Asset Management Companies, has remained fairly constant. It’s 41% for the TPCs, 36% for the GDIs and 23% (for the PFAs). So this 40-40-20 that we are thinking about for the future, which I will elaborate in a short while, has been fairly constant for us for some time.

But at the same time, we have also evolved as an organisation. From one office at the beginning of 2004 with 199 employees, we then ended the decade with 10 offices. We first opened up in Mumbai, in Beijing, Shanghai, and Ho Chi Minh City in 2004 and 2005. We then opened up in Hanoi. We also had an office in Brazil and in Mexico City, and so we ended up with 10 offices across these geographies and we doubled to more than 418 employees. That was around time that I joined Temasek, I joined Temasek in September of 2010.

By the end of T2020, we had evolved into an organisation of 13 offices. We opened offices in New York City, in Washington D.C, and in San Francisco; and in Europe, London and Brussels. We did consolidate our offices in Vietnam into one: Hanoi. And so that was a big change that happened at that time. Today, we remain having 13 offices, we have actually evolved our Brazilian office into a joint venture, so that's one office less, but we opened up in Paris in 2024. And we have almost a thousand employees, we are at 959. So the organisation has grown very significantly in the last 20 years, from almost 200 employees to almost a thousand employees, so five times the number, as our portfolio has also grown.

This chart is quite illuminating as to how the portfolio has evolved over the last 23 years.

So in 2002 as I mentioned, 94% in TPCs, but if you look at 2011, where we have ended up, as I mentioned, we've gone to 56% there. We increased to 37%, nine times for the GDI, and 7% for the PFAs segment.

But if you then see that the red borders from 2018 to 2025, that's where you see the constancy. You’ll see that we pretty much have evolved into a steady state, where we're really 40% of TPC value, 40% of global investments and 20% of Partnerships, Funds and Asset Management Companies. So that's where we are, plus or minus 5% for each segment, which will depend on the volatility of the market and being able to rebalance between the three different portfolio engines as and when we see dynamic opportunities to do so. 

Now, what do we see ahead of us?

Well, when we do a plan, we have to think of top-of-mind issues.

You have to figure out what's out there globally that you have to think about.

Obviously, the first which affects our portfolio directly is returns. And returns are definitely affected by Macro Headwinds. What are the Macro Headwinds that we see today? Well, will inflation become sticky because of tariffs? Now, will it just be a one-time hit, and after that, not really become inflationary from then? Or will it continue to have an issue, if in fact, the cost of production does not come down as a result of the changes that we’re seeing in supply chains and the like?

So what would happen in terms of trade tensions? Will we see more decoupling? Would that affect supply chains? Would that affect where value is captured from value creation? You see the reordering of the international rules-based order, especially with respect to foreign affairs, with respect to defence, with respect to trade. How will that impact us in our portfolio companies, strategies, we have for capital allocation, and the ability to still deliver good returns for our shareholder?

The second, of course, is Geopolitics and Fragmentation. This is something we identified in 2019 when we came up with our T2030 strategy. At that time, people were thinking that, you know, bifurcation would not happen. We took the view that the US-China competition would become more serious and that the issue of decoupling should be considered by us.

As a result of COVID-19 and what happened to our governments, fiscal balances and societies, we saw rising populism, nationalism, and protectionism. You know, when a rising tide lifts all boats, these things don’t become such a big issue, but when you get constraints put upon you as a country, as a society, they become real. And so what would then happen? How does that affect multilateralism? Will it result in more transactionalism? That is something we'll have to think about in the context of the opportunities we see.

Foreign Investment Regimes have proliferated, and therefore, they constrain the ability of foreign investors to invest more widely, especially in some sensitive sectors. That's coming not just from the United States, but also in Europe and elsewhere, even we in Singapore have a foreign investment regime today. And for the impact there is on cross-border capital flows, not just the willingness of people to invest, but whether they can, in areas of choice. And it's really a function of this issue of nationalism and protectionism as well.

AI is the biggest thing out there. When we did the 2019 strategy, we agreed that technology advancement would impact business models and therefore, we had to think about the impact on the workforce. So just as people were thinking about Industry 4.0, we said, we had to think about Workforce 4.0. So we started to work with the unions that were involved with our portfolio companies to see how we could bring unions, government, Temasek, and Temasek companies, and the workers under one tent to figure out how to go ahead, make sure the workers were skilled, reskilled, upskilled, as businesses changed their business models, especially for Temasek Portfolio Companies that we control. And so that is going to be accelerated – has been accelerated, but will be accelerated even more by AI. Whether it’s agentic AI, which affects services, or whether it is embodied AI, which affects robotics and AI in the context of manufacturing and process engineering. So we know that there’s going to be productivity gains. The question is how we make sure that the productivity gains on one side do not result another side not being able to share in the improvements that we can see. So while there are investment opportunities for us in AI, where we invest in the disruptors, how do we ensure that our companies are not disrupted? How do we make sure that the workforce is not just disrupted, but given the ability to skill and reskill and upskill themselves? 

Finally, of course, the last two are:

• Business and Cyber Resilience because as business transforms and relies on digitalisation, especially on AI, cyber resilience becomes more imperative because your attack surface has just become bigger.
• But the most important of all, long term, despite what's going on in the political space, is Sustainability and Climate Change, because that's a given. And if you have long-tail assets like we do, especially the Temasek portfolio companies, you can't ignore the effects of climate change. It's not easy to shift a company that's based on LNG power generation to green, to purely renewables, but there needs to be a balance. We can't give up on LNG, but we have to make sure we continue to actually invest in renewable energy to fund a greener planet. We have an airline. So we know that that's tricky because the only way to bring down carbon emissions for aviation is sustainable aviation fuel. But that, while it has a future, it's many years away because the cost curve is very, very high. 

In the meantime, what can an airline do? It can make sure that it has the most fuel-efficient fleet possible, given its own balance sheet and things like that. Singapore Airlines went through a major fleet renewal, it’s still going through (that), where the current fleet is about 35-40% more fuel-efficient than the previous fleet. And in fact, their freighters are about 50% more fuel-efficient. So this is important for us because in the long run, when the world begins to understand the true impact of climate change, then will there be a cost imposed on businesses with regards to the emissions? And that's really in the form of carbon taxes and other fiscal measures. 

But how are we going to build a resilient and forward-looking portfolio? That is the first pillar of our T2030 strategy.

We need to make sure that we have a very resilient component that provides a base load of value, allows us to have some form of buffer against the shocks that we know will come about. So 60% of our portfolio as a directional issue will be in resilient companies. And that includes our core companies, our TPCs, and some of the companies we have around the world as well. It includes compounders from our direct investments, the ones that we hold for the longer term. It includes the partnership funds and asset management because they will provide stabilised returns, especially in the private markets. It includes private credit, which while small in our portfolio today, just over 2%, will grow to about 5% over time. And it will include Core Plus infrastructure, where it gives both a running yield and a long-term measured return in the low double digits, but very stable for us to have a resilient component in our portfolio.

Then there's a dynamic component, which we hope to be about 40% of our portfolio value over the long run. That's the way in which we invest almost more than 90% of our capital, in the regular course of our business. It's where we invest around the world, in growth equity, a little bit in early stage, a very inconsequential amount in control transactions. We do this in co-investments, I'll come to that in a little bit, in a short while. We do public markets and other liquid strategies to ensure that we still maintain a certain level of liquidity in our portfolio so as to maintain our triple A rating. But we're also very focused on innovation and so we have the Innovation team, as well as the Emerging Technologies team, which tries to invest in more promising businesses and solutions which are coming up, which actually will give us a view of not just the road ahead, but the road around the corner, not just in terms of what could be valuable, but what could also have a long-term impact on the portfolio that we already own.

So, as I mentioned, and those of you who were around for our Temasek Review in July, you will know that our portfolio has evolved into three engines. The Global Direct Investments, the Temasek Singapore Companies and the Partnerships, Funds and Asset Management Companies. As I said to you, we will try to have this balance between the (percentage) weights of 40, 40 and 20. 

But these three portfolio engines are very different, in these six characteristics. First, the nature of investments. In the Global Direct Investments piece of it, we are generally a minority investor. We rarely take control positions. And the reason for that is simply this – if we want to take a control position, you have to be prepared to own the morning after of the whole company, not just the investment. And that means you have to have a multitude of skill sets to be able to do it. There's only so much you can do. The private equity funds do this as part of their bread and butter, but they have a support infrastructure of operating partners and other advisors who can help them do that. So if you think about that, minority investing means that we are very reliant on the fact that the partners we have in these companies can achieve the same objectives that we have. So the nature is quite different. The governance model is quite different.

For the TPCs, we control these companies. Historically, we've had a light touch approach to these companies. We have not tended to put people on the Boards in the past. Today we're beginning to do so, because we believe that we have a role to play to contribute to their business development, to their business model evolution, to transformation. But these are companies that we will hold for an indefinite period of time and so we definitely own the long tail. And the consequences will be seen beyond just one cycle.

For the Partnerships, Funds and Asset Management (segment), these are where we invest with others in the funds, this is where there’s diversification in the funds and across the different funds we have. For the asset management companies, it's about also being able to have products which the market will be willing to take on.

The duration of the investments are different. So in the Global Direct Investments, typically it’s either a three-year, five-year, seven-year duration. If it’s a compounder it can go for beyond that. In general we learn which ones are compounders, which ones are not. The Temasek Portfolio Companies, there’s no limitation on duration. The Partnerships, Funds and Asset Management Companies, typically the life of a fund is 10 years. So if you have a programme to invest across multiple vintages, this is very much a Long-Term portfolio that you have over time.

The opportunities and challenges are different. Opportunities you have in direct investments tend to be very global, tend to be, I would say, much more adaptable in terms of the way we would invest. The challenges are really macro, you know, sometimes it is a question of how much leverage is taken on if you are involved in a buy out. The challenges for the Singapore companies, are the questions of (are you) still being resilient, being able to adapt to a changing world? Just think about AI as I mentioned. On the one hand, we invest in disruption, the other hand we have to protect against being disrupted, and in fact, thrive in an era of disruption.

Performance metrics are different as well. Why is that the case? Well, if it is just a direct investment, there’s only one performance metric, which is the financial return. Because we're short-term owners of these businesses, or shorter-term owners, I would say. With the portfolio companies it is not just the financial metrics, operating metrics are critical. The way the company is building itself up, not just in terms of the business model, but even talent, becomes an issue for us to consider. We have to make sure that there are good labour relations, because everybody should prosper when the company prospers. So there are different things that we hold ourselves accountable for when it comes to our TPCs.

And capabilities are different. In the Global Direct Investments it is purely investment people who are needed there, supported by, yes, enablers we have in the whole firm, people in portfolio strategy and so on, but generally the thing that gets you your returns is the ability for our investment teams to source the right deal, to execute well and to actually follow up and give value as well. But for the TPCs, we will need a whole different set of operating capabilities which I will elucidate further in this presentation.

The success drivers are different. Again, for the funds, purely returns, but if you are in the asset management companies, AUM growth is the determination of success. In the global direct investments it is also about getting financial returns, but forging close relationships with them that could be applied to our portfolio companies, for example, or could give us newer opportunities with them in other areas. And for the PFAs group, one of the things that we require out of our Private Equity Funds group is that they are able to generate co-investment opportunities for the global direct investment team. And that's an important value driver. So the success factors, and the success drivers are different for each of the three groups and therefore the skill sets will be very different as well.

So what about Global Direct Investments? What are the success factors, et cetera that we need to think about?

First of all, it's the nature of the investments we make. So growth equity is our main focus. Growth equity helps companies actually grow, we can invest across the capital structure, whether it is straight equity, whether it's convertible equity, whether it is in private credit as well. But growth equity has that connotation. It is capital to help a company advance in its business model across the capital structure.

Then we have co-investments through the multi-sector private equity funds, which I mentioned was a key KPI for the Private Equity Funds team to bring to the Global Direct Investments. And for this, it's not just our knowledge of the private equity funds, but knowledge of which teams in there are the best performing ones for us to invest with.

Then we have sector and market funds. So in China, we have had, historically, funds that we would invest in and invest with in opportunities. These are market funds, but sector funds will be, for example, industrials, people who are good in that particular sector. And we do have opportunities to co-invest with them when we are in the funds itself.

Public markets is a critical part now of the skill set that we need, simply because to maintain triple A rating, we have to have a majority of our portfolio as much as we can in public markets. Of course, part of that is our Singapore companies, but the rest of it will be in global direct investments. So we have been upping our capabilities in this area in the last 18 months, and we have already begun to see the benefits of that. We’ve had uplift in the performance of our public markets out of the global direct investments.

We're still invested in early stage, because we believe in innovation and innovation as a driver of future growth. But in the current global environment, you have to be very, very selective in where you invest in early stage. In a low interest environment, where the cost of capital is lower, more capital flows to the early stage. In an environment like this one where there would more instruments for people to invest in, the amount of capital does not flow in the same way as it did before.

The best firms and the biggest firms get an inordinate amount of capital that comes into them. Other firms may have more difficulty in raising the same amount they were able to raise in the past.

Finally the last part is Control Transactions. We rarely do this. In the last 15 years, we've only done five. We own a majority stake in Manipal Hospitals, the largest hospital chain in India. We co-control a company called Gategroup, the largest aviation catering company in the world. If you think about SATS, this company is roughly about four times the size of SATS Food Solutions. We have a company called GHX, which has a marketplace in the US for hospitals to buy services and products from companies like medtech healthcare companies, and it has leading market share in the US.

We have a company called Element Materials, which does testing inspection, especially within aerospace and defence, with connected devices like our mobile phones, all of which are growth areas. We have a company called Rivulis which is the number two drip irrigation company in the world.

So very, very targeted, very, very specific. And so unless it's a global leader, there's no reason for us to have control transactions. Like I said, you have to really own the morning after when you have these companies. 

So this is a snapshot of the Global Direct Investments by their geographic spread, sector, and liquidity.

Now for those of you who attend our media conference on our results every year, you would realise that we actually present the spread across geographies for the whole portfolio which includes Singapore. But if you take out Singapore, then of course, the largest still happens in the United States at 33% of the global investments, followed by China at 21%, and Europe at 19%, with India at 15%.

Now this is very different from ACWI. 65% of ACWI is the US. The next highest, which I think is 8 or 9%, is the EU. And then the rest is very small. China, I think it's 3%. So by looking at this, you can say we're underweight in the US and overweight China and Europe, India, for example.

So if you are measured against ACWI, 65% of flows go towards trying to get the beta of ACWI, well then we should be more in the US, but that's not the way to build a long-term portfolio. Although, of course, we do see the US market as still being one to invest in, but if we are building a portfolio for 15, 20 years, you can't take into account just a short-term mix. You have to have a balanced portfolio because you will never know when a crisis could come about like we saw in the 2000s.

Likewise in terms of sectors, 35% is Financial Services, not just banks by the way, in fact we've been focusing more on the non-bank finance companies in the last 15 years. 21% is in TMT, but most of it is in technology, very little is in telecom, or media. Then of course in Transportation & Industrials, because if you look at global supply chains, that's natural, at 14%. We have Consumer & Real Estate also at 14%. And then there’s Healthcare, Life Sciences and Agri food at 14% as well. Most of that is healthcare and life sciences, less so Agri food. And the rest is 2% including credit.

Liquidity, 52% is publicly listed. That means we're significantly subject to volatility in the public markets. So while we strive to build a quality portfolio based on fundamentals, we're still subject to market sentiments. Whatever market headwinds out there, it finds its way into the equity markets as it does into the bond markets. And so we're very much subject to how global equity flows. We look at the markets and not just the fundamentals of the companies that we've invested in. So to be a long-term investor, you have to be prepared to go through cycles where you see peaks and troughs in the volatility of the markets.

So what are the success drivers for us? The first is our ability to source good deals.

Now that comes from the fact that we maintain good networks and relationships across the world, but it also includes the talent that we have and when we look at domain expertise, that's critical, which is the second factor.

We have 290 investment professionals in Temasek across seven sectors and five markets that we invest in. So we do have that domain capability to not just source, but evaluate critically the investments that we go into. It's important for us to make sure we have a seat at the table; at the very least, that we're in the room to know what's being discussed and therefore being able to control or influence outcomes comes from that presence in governance. And that's quite critical for us.

We have to ensure that there's continuous active portfolio management and that includes in point 6, the active shareholder engagement. The shareholder engagement is different from active portfolio management, because shareholder engagement includes us engaging the companies to see what we can do to bring value to them.

Portfolio management is to make sure we monitor the performance of the company and the management teams in particular. So the deep sector or market expertise as I mentioned comes with domain, but (it’s) more than just domain. It is understanding the market, what we would require to be successful in the longer run. Where would capital flows come from and so on, because I give you an example, you can invest in very good company, very good management, the valuation can be fair, not just based on today, but based on the future. But the question sometimes is you’ve got to know is what the exit for the investment that you're going to go into is.

Because if the exit’s not clear, then the time frame that you've set yourself for that monetisation of the investment may not actually happen. And you know that today, more companies are staying private for longer, which means that when we go into investment today, you're actually underwriting more cycles than you thought you were doing at the inception of the of the investment. So having an eye on the exit is so critical for us in this sense. So having this deep sector and market expertise, understanding what would drive the successful outcome of investment is so important to us.

And finally, where required we can bring operational value add to these companies where we do have the expertise.

Our TPCs.

Today I have you, the Singapore media. These companies are all familiar to you. You may not know this, but we have about 26 first tier companies.

Below them, some companies have other TPCs – Starhub comes under ST Telemedia on the last line, so does STT GDC, the number one data centre operator in Asia excluding China.

These companies are stalwarts of ours. Some of them we've held since inception in 1974, like Singapore Airlines or DBS. Together they account for S$200 billion of revenue, about S$145B odd is consolidated with our balance sheet, which by the way if we were a company, it would make us one of the biggest companies in Asia. But as an investor, it's a different way of looking at things.

And so if you look at these companies, you take for example DBS, it has won tons of accolades for the way it's been able to operate being a globally competitive business. But we have global champions as well like PSA, as I mentioned, number one international port operator in the world. SATS, number one in air cargo services after they bought WFS three years ago.

Seatrium still remains as one of the largest rig builders and builders of semi-submersible (platforms). Now moving to renewable energy as well, offshore renewable energy.

But we also have SIA, which we all know remains up there with all the leading airlines in the world. So the portfolio that we have, while it’s rooted in Singapore, so many of them are either global companies or they're globally competitive. 

The next page, however, gives us a better picture.

When we look at these companies, remember I spoke S$145 billion of consolidated revenue and S$200 billion of total revenue. 54% of that portfolio, underlying exposure by assets, is in Singapore. 15% is APAC, 14% is China, 7% is Europe, Middle East and Africa with the US only being 6%. So what does this tell you? Well, 83% of the underlying exposure of our TPCs are in Singapore or Asia. So, very much focused on emerging Asia.

So one of the things we have to think about, in this new reordering of the world, is that exposure to Asia sufficient? Should we have more exposure beyond? To Europe, to Middle East, to the United States? In fact, some of our companies have done that, like ST Engineering, it’s actually gone out and bought companies in the US and is doing well there.

So we have to figure out for each of our portfolio companies what is that future, where does it lay for them? Because stepping out to Asia post 2002 was the right call for most of them.

Sector wise, 38% is in TMT. You might ask why so much. We own 54% of Singtel, through ST Telemedia we have over 30% of Starhub. We have STT GDC which does data centres which is linked to the sector.

For financial institutions, it is 22%, but it's almost all reposited in one company which is DBS.

For transportation and industrials it is 21% – Singapore Airlines, Singapore Power, Sembcorp, Keppel, PSA. And for 17% real estate, that’s really reposited in our two companies, CapitaLand and Mapletree.

And then 3% is Life Sciences and Agrifood, which is not significant compared to the rest.

Liquidity, 60% of them are listed. So when the markets do well, these companies do well, our portfolio value does well. When the markets are challenged and capital flows go out of the market because of rebalancing, nothing to do with the fundamentals of company, share prices get affected, our portfolio value gets impacted.

So some people may ask, well, how come you can't perform like the private equity funds, et cetera and so on. Well 40% of our portfolio is in TPCs. We're not selling these TPCs. We're trying to make them better.

We take the full effect of what the market decides with respect to the TPCs’ value. We're not there buying and selling their shares to create market value. We're very dependent on the other shareholders to determine whether they continue to support the company or not, and much of it is not about fundamentals. Much of it depends on market sentiments and the need for liquidity as well.

So this is what affects our portfolio value. It's not about whether we invest in good companies or the companies are not so good. When we see a drawdown in value that we saw during the GFC, we went from S$185 billion to S$130 billion.

And the next year, we bounce back to S$186 billion. That is a resilient portfolio, that when the market comes back, we can go back to where we were before and go beyond.

So a drawdown to us does not reflect a poor quality of portfolio. There are other factors that come into play when we look at that.

What are the success drivers for Temasek portfolio companies?

The first, of course is Business Strategy and Transformation. Now transformation is a journey that knows no end. Okay, if you say you’re done with your transformation, that's it done, that's done and dusted, I can now go on business as usual, that’s not happening. Technology is making sure that's not happening, so continuous transformation is important for these companies. Continuous strategy orientation is very important to them.

Capital structure optimisation is important. Having the right equity and debt ratio for growth is important. If you have to, you have to issue equity. If you're doing an inorganic transaction, like an M&A deal, you can't just borrow to grow.

Leverage has restrictions. You will have a cap as to how much you can borrow. Does that constrain your ability to grow? It's better for you to consider both sides of the capital structure, both debt and equity.

Operational Performance is so critical, because that shows whether you're getting the right return for the money you're investing in your business. So ROIC becomes critical, so Return On Invested Capital, and ultimately, does it translate to good ROE? Because that will also drive share prices.

Sustainability Framework is important, because you own these companies for the long term. They themselves have to know what that means for them in 10 years’ time. So ultimately we know that a sustainability journey is a journey. It's a multi-year journey. It's not like a switch you are able to switch on and switch off.

But the steps you take today will bring you closer to your goal in the future.

What’s very important is High Calibre and Diverse Boards. That means not just Singapore directors, or Singapore-based directors, but also overseas directors.

The high calibre boards are so critical for us, because of the geopolitical constraints we have, because of the fact we have to navigate through difficult times. That is important piece of getting success.

And if you have a high calibre, diverse board – diverse not in terms of gender, diverse in terms of capabilities, competencies – you will be able to get a strong Management team with a strong Bench Strength, and that delivers performance over a long run. And of course we focus on Compensation framework because there must be pay for performance.

Finally, Investor Communications is so important. If you have good investor communications, Investor Day, your quarterly reporting and so on, people understand not just the results but the quality behind the numbers and also where you're headed. That is very important for our companies to undertake, and more and more of our companies now have embraced this idea of constant communication with investors.

How do we partner our companies in their journeys?

So for SATs, we supported them in buying WFS to have the number one air cargo services company. It was a diversified play. Before that, they did do cargo, but not at the same level. They were (involved in) ground handling, aviation services and food solutions.

Today, the revenue is largely in WFS, but that means that your portfolio mix has changed – from being purely Asia centric, the majority of revenues, 2/3 or 60% or thereabouts comes from the US and Europe.

And that's the future, because if you see growth in those areas that you can, in fact, address the opportunities that come from that growth, then you should take that step forward. The same thing with ST Engineering buying MRAS from GE and TransCore, which has helped them continue to be a leader in those areas.

Sembcorp, Keppel and Seatrium. We did a massive exercise there. As a result of that, Sembcorp has become a pan-Asia renewables developer, hoping to achieve 25 gigawatts of renewable energy by 2028.

Keppel has transformed itself to be an asset-lite global asset manager and operator, and Seatrium now operates independently, and we'll talk a little bit about it. Singapore Power has now disposed of non-core assets to focus on the grid in Singapore, to continue to deliver reliable energy supply for Singaporean homes and for businesses, to maintain the highest standards possible so that Singapore remains a competitive economy.

And Singtel has cleverly recycled its capital to provide a stable dividend growth for its shareholders. But it has also got its Singtel28 strategy, which focuses on the key segments of consumer and enterprise.

As you know, they are also diversifying into data centres and also beefing up NCS. So I think they are the right trajectory to create more value. But I'm not making a pitch for that stock, so please take that into consideration.

What can we do to add value to our companies? Well, one thing that we are doing is to make sure that our companies are as pure play as possible. Conglomerates are out of fashion and have been for some time, but we have to make sure they're all competitive.

So this is what we did with Sembcorp and Keppel.

So in May to July of 2020 in the midst of COVID, we decided, together with the board of Sembcorp Industries, we decided that we would separate Sembcorp Marine and let Sembcorp become a pure-play utilities player – at that time, LNG, so we were looking forward to diversifying to renewable energy. Sembcorp Industries’ market cap then was S$2.7 billion. It includes Sembcorp Marine at the time. Today it is S$10.9 billion.

Keppel on the far right hand side had a market cap of S$9.3 billion. It had a Vision 2030 which its management came up with, to become an asset-lite operator of infrastructure assets. We agreed that would be the case.

Today, its market cap is S$15.2 billion.

How did they both do it? Well Sembcorp industries hived off Sembcorp Marine. We became the majority shareholder. We then engaged with Keppel to see how we could merge the two companies together.

It happened after 30 years of trying. So today, you have a combination of Sembcorp industries where the market cap is S$10.9 billion, you have S$15.2 billion in Keppel and you have a new creation of a S$7.9 billion market cap company in Seatrium.

So all together, the market cap of these companies was S$12 billion at the beginning of 2020. Today the market cap is S$34 billion. So an uplift of S$23 billion when you include the dividends that the companies have given out, less the rights issues that we took on for Sembcorp to put it in a position for the merger.

I'm not saying we can replicate this with other companies at Temasek. There are still companies, of course, which are competing with each other.
But if we put our minds to it, together with the management teams and the boards of those companies, we can create value for shareholders. As long as we have a clear view of what their future should be, we believe that we can do what it takes to help our companies achieve the objectives that benefit shareholders and benefit ecosystems that they are in for future value.

Funds, Partnerships and Asset Management Companies. Today they’re 23% (of our portfolio) or thereabouts. 69% (of this segment) is in funds, 31% is in the AMCs that we control.

For the funds, there are four things we want to do. First of all, get good returns and that means being good at (fund) manager selection.

The median (performance) is I think, about 12% for private equity funds. We're outstripping them, as we have been doing it for last 10 years.

Co-investing. So we co-invest with these private equity funds, we ensure that there is a good source of co-investment opportunities for our global direct investment teams to get better returns. So just some examples here, Neoen is one of the leading renewable infrastructure companies based in France, but the assets are in Europe, in Australia and in Latin America. We put about S$850 million into that investment.

Atlantica is a company that provides energy sources to critical infrastructure, and so we partnered with Energy Capital Partners into that opportunity.

We looked to enhance the economics beyond the returns we get as an investor in the funds by doing additional things with them. Sometimes it's setting up new platforms. Sometimes it's a question of helping them to seek new strategies where we provide a larger part of the capital and get a return for that.

And so there are some examples that we’ve given. Also of the strategic collaboration that we have there.

The Asset Management Companies we have, we have more than a dozen. We're doing a strategic review right now to see how we can synergise between them.

The hope is that we can make sure that where we have overlaps, we figure out how to synergise between the entities which have those overlaps to get better value for us as a shareholder.

So these are some of the asset management companies that we have.

Under Seviora, there are four – Azalea, which securitises our LP interest in private equity funds; Fullerton Fund Management Company; Innoven is a venture debt provider; and Seatown does private credit and other things

And you have a bunch of others on the right hand side. Aranda is our private credit spin out from Temasek. Decarb Partners, our joint venture with BlackRock. Evolution X is a venture debt provider with DBS, but it goes into more mature business models.

65 Equity Partners is structured equity, Vertex is venture capital.

We have S$90 billion of AUM for these companies.

So how will we evolve our organisation structure?

In the beginning we only had one company, Temasek Holdings, and that's what they did – direct investments, portfolio management, et cetera.

For T2020, we set up Temasek international in 2011. Employees at Temasek Holdings were transferred to Temasek international. There's only one employee in Temasek Holdings since 2011. That's the CEO. Everybody else is in TI. It's lonely at the top, literally.

But the more important thing is over those 14 years, we developed so many other capabilities to support our portfolio strategies, our investment strategies, and that's really what we've been investing in – capabilities for the world that was changing, and the world that will continue to change.

And so this is what you want to know.

What are we going to do about the future? Well, it's a period of change. And so in that period of change, we too need to change. So Temasek International will continue to be there, but it will have all our group and corporate functions which go across as a horizontal to the operating entities.

And so we decided that the three portfolio engines should be housed as separate entities. There are good reasons for that. The Global Investments, the Temasek Singapore which is the TPCs and the Singapore market activities, and Temasek Partnership Solutions, which is PFA.

So TH, Temasek Holdings. As you know, it's not just a company that was incorporated under the Companies Act. It’s also a Fifth Schedule entity under the Constitution. So we have responsibilities, not just to our shareholder, but also to the President for protection of the reserves which are attributable to Temasek.

The Board of Temasek Holdings and the CEO are responsible for the entire portfolio, all the entities.

Because that's required of us under the Fifth Schedule.

So as I mentioned, Temasek International will continue to have all the skill sets we need to support the portfolio activities and the portfolio strategies that we will continue to undertake under the three entities.

And there are some changes in leadership which I will go through with you in a short while.

But I want to talk about this. This is critical for us. While we're an investment company, our most important asset is our people and we spend a lot of time on training of people in the context of talent development and talent management, preparing them for leadership roles.

Ensuring that they get a broad exposure within the company, across different functions, so they get rotated beyond their comfort zone and including across geographies.

We look at both internal progression as well as external hires as the way of building our bench. Since we announced our T2030 strategy after the board approval in 2019, 56% of the Managing Directors today were put in those positions post that time, so there was a massive shift in renewal of our bench strength. 1/3 were internal promotes, 1/4 was lateral hires.

We'll continue to stretch them and to make sure that they're given roles in order for them to be able to get up to their full potential, especially for those who are able to take on broader leadership roles within Temasek.

I myself have gone through something like 7 roles at Temasek. Song Hwee, our deputy CEO, has gone through almost the same, maybe even more. So we were all put through the rigour, in order to prepare for the roles we have today.

We have to continue to make sure that our people, especially those who aspire to have leadership roles, are given the opportunities to take on the experiences that they need to have, to have those leadership roles in long run.

So we go on the basis of a collective leadership at Temasek.

At the apex is myself and Song Hwee. Song Hwee is currently the Deputy CEO. We both joined Temasek at around the same time. Myself in 2010, him at the end of 2011.

You all actually look too young. But some of you would have dealt with him, when he was CEO of Chartered Semiconductor for most of the 2000s.

He joined us as co-head of Portfolio Management when I was head of Portfolio Management.

We have our institutional leaders who helm important functions in Temasek, in Singapore.

And we also have a group of regional leaders – US, Europe, Southeast Asia, India, China.

Now this is not all. We have 91 managing directors at Temasek but these are people who hold some of our key institutional roles as well as regional roles.

The first change is that in October, Song Hwee becomes Co-CEO of Temasek International. I will remain as CEO, but he'll be Co-CEO and join me in repositioning the company for its new journey.

From April next year, Png Chin Yee, our CFO will become President of Temasek Singapore, in addition to her role as CFO. And Nagi Hamiyeh will be President of Temasek Global Investments in addition to his role as Head of EMEA. He will continue to be based in Paris.

There is no President or CEO for Temasek Partnership Solutions. And the reason for that is because it's a new entity and because we're figuring out what the strategy is going to be, we're setting up an operating committee, which will comprise myself, Song Hwee, Rohit Sipahimalani our CIO, Ravi Lambah, the Head of Strategic Initiatives, Benoit Valentin and Alpin Mehta, who run our private equity fund portfolios, to come up with the strategy that we want to do, not just for TPS, but also for Seviora, together with Gabriel Lim who is the CEO of Seviora. So we'll have that operating committee run this entity for the next year or so, before we put forward a strategy to the Board and with that, the selection of a person who will be President of TPS, so that could happen next year or the year after.

I conclude by saying that to position ourselves for the future, there are three things that we have to do. One is to sense what's going on ahead of us, what's going on around us, be able to navigate it, especially as we put our portfolio strategies in place.

Be adaptable as an organisation. To address the surrounding environment, but also to address the needs of our three engines, actively shape the portfolios. So therefore being agile, being empowering is quite critical.

Perform. Have clear performance indicators for all the three groups, so that we can achieve the overall risk/reward that we need for our shareholder returns. Be mindful that each one has different performance indicators, and aside from financial returns, some of the others may require us to do more than just that.

And so if we do this correctly, we'll ensure that we will thrive and that will be So Every Generation Prospers.

Thank you.

One more thing I forgot to say, is that on 1st April (2026) I take over as Chairman of Temasek International and Song Hwee will be the Deputy Chairman. Lee Theng Kiat will retire as Chairman of Temasek International. And for all the subsidiaries – for TI, for TSG and for TPS, I’ll be Chairman, Song Hwee will be Deputy Chairman.

But for TGI as he'll be the CEO, I'll be the Chairman.

Thank you.