Temasek Holdings is an investment company owned by the Singapore government, not a fund manager for the government.
So where does Temasek get their money to invest?
We look at the background to Temasek. We look back to the 1960s.
In the 1960s, in order to jumpstart the economy, the government embarked on an industrialization drive and also took on a proactive entrepreneurial role by taking stakes in a wide range of companies in the manufacturing, financial, trading, transportation, shipbuilding and services sector.
Many of these early companies were joint ventures with foreign investors which helped in the transfer of technology.
Some were of strategic and national importance.
For example, the Development Bank of Singapore was set up to provide development financing.
Singapore Airlines was formed in 1967 from the split of the Malaysia-Singapore Airlines.
The national shipping line, Neptune Orient Lines, was formed in 1968 to leverage on Singapore's strategic location while Sembawang Shipyard was established in the same year when the Singapore Government took over the shipyards left behind by the British forces after they withdrew from Singapore.
These companies became government linked companies (GLC).
The government's stakes in these companies were originally held directly by the Ministry of Finance. The Ministry of Finance established Temasek Holdings in 1974 to manage these assets.
When Temasek Holdings was incorporated in 1974 under the Singapore Companies Act, it held as its initial portfolio investments and assets made in the first decade of nation building.
The value of Temasek's initial portfolio was $354 million.
The objective of the transfer of these assets to a commercial company was to free 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.
So, 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.
Since 2004, Temasek has published its annual Temasek Review, which provides a summary of its group financial results based on audited financial statements, as well as data on Temasek’s portfolio, shareholder returns and its governance and investment frameworks.
An online version is available for reading.
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.
Reference:
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http://www.temasek.com.sg/
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