Temasek on Deal Hunt to Boost Returns for Singapore

01 Jul, 2024

Temasek on Deal Hunt to Boost Returns for Singapore

Temasek, a Singaporean state-owned investment firm, is pushing its prominent companies into international deals to enhance returns from its S$382bn (US$282bn) portfolio. Known for its influential role, Temasek has backed major mergers and acquisitions involving companies like Singtel, ST Engineering, Singapore Airlines, and Sembcorp Marine, according to sources familiar with the transactions.

This strategy aims to invigorate these companies, many of which are struggling with low growth or declining share prices, to become more global and improve growth prospects. Temasek, formed in 1974, manages shares and assets for the government, while GIC, Singapore’s sovereign wealth fund, invests outside the country.

Temasek’s encouragement of mergers and acquisitions comes amidst pressure to boost returns, particularly with a general election approaching. The focus on dealmaking follows a challenging year ending March 2023, where Temasek reported a 5.07 percent drop in shareholder returns, its worst performance since 2016.

Notable deals include Singtel leading a $1.75bn investment in ST Telemedia Global Data Centres and Singapore’s approval of a merger between Air India and Vistara, bolstering Singapore Airlines' presence in India. Additionally, Sembcorp Marine merged with Keppel Offshore & Marine, forming a leading energy operations company. Temasek also sold Pavilion Energy to Shell, valued at $3.63bn in March 2023