Within this PFA segment, partnerships and funds with names like Brookfield, KKR and EQT constitute more than two-thirds of portfolio value, while asset management companies like Clifford Capital and Decarbonization Partners — a BlackRock joint venture — make up the remaining one-third.
Together, Temasek’s asset management companies manage over $90 billion in assets.
While the PFA segment is smaller than Temasek’s global direct investments (36%) and Singapore-based Temasek portfolio companies (41%), it provides exposure to private credit and hybrid solutions, private equity funds, as well as liquid alternatives and uncorrelated strategies that include hedge funds, closed block insurance and royalties. Singapore-based Temasek portfolio companies refer to Singapore-based companies in which Temasek typically holds a minimum shareholding interest of 20%.
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According to Temasek, its allocations to some of these areas “can also provide steady cash yields”.
Many firms in Temasek’s PFA segment are alternative investments, says Lim Ming Pey, joint head of corporate strategy at Temasek International. “Alternative assets provide diversification to our portfolio beyond traditional equities and are an important return driver for us in the years ahead.”
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A new addition to Temasek’s stable of asset management companies is Aranda Principal Strategies, a private credit platform that was recently spun out from Temasek’s in-house credit portfolio team, established in 2016.
Aranda manages a $10 billion portfolio comprising both direct investments and funds, “and we expect to grow this over time”, says Lim at a media briefing.
Private credit and hybrid solutions “fill the void for underserved borrowers”, Lim adds. These borrowers are “for various reasons, not covered by traditional credit providers such as banks”. “Borrowers also find private credit financing increasingly appealing as it can offer them a more flexible and tailored solution.”
Aranda was spun off from Temasek in order to allow it to scale and operate with more flexibility in certain markets, like the US, says Chia Song Hwee, deputy CEO of Temasek International.
In response to The Edge Singapore, Chia says Aranda has two main types of investments.
The first is via “sponsors” like KKR and TPG, “when they need financing for their portfolio companies, when they do [mergers and acquisitions] or when they acquire things”.
“We are relying on the underwriting capabilities of these [general partners], which we have partnered for a long time on our private equity investment side,” adds Chia. “So, we have pretty high conviction on their performance [and] how they do things. Providing credit on those assets — we feel rather comfortable.”
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Aranda’s second avenue is direct investments into “mid-market companies in the US or Europe”, says Chia. “But mid-market [companies] in the US or Europe would be large-cap [companies] in Singapore, so their size is pretty large.”
Cash flow is “definitely” the “key parameter” that Aranda looks at, he adds. “Generally speaking, they are profitable [and] cash-flow generating, but they have business needs that cannot be fulfilled otherwise.”
One difficulty lies with the banks. Due to the Basel III regulatory framework, banks have stepped away from “many of these lending opportunities” because they have to take a higher surcharge if they want to lend to these firms, says Chia.
Another difficulty lies with the companies themselves, he adds. “Some of these founders do not want to be diluted by raising equity, so it gives us a very nice window to get exposure to good businesses with good cash flow [and] very limited downside risks.”
Unlisted assets
Last year, The Edge Singapore noted in our coverage of Temasek’s FY2024 performance that the investor’s share of unlisted assets — at 52% — was vastly higher than the average of 28% for pension funds. The share of unlisted assets fell to 49% of Temasek’s portfolio in FY2025.
On a mark-to-market basis, Temasek’s net portfolio value as at March 31 would have been higher at $469 billion, reflecting a value uplift of $35 billion from the unlisted portfolio.
“In general, over long periods, private assets have given us superior returns because of the illiquidity premium that we can harvest,” says Rohit Sipahimalani, chief investment officer at Temasek International.
In response to The Edge Singapore, Sipahimalani says “it’s natural” for a “long-term investor” like Temasek to “have a greater proportion of private assets”. “We’re different from other pension funds because our mandate is different.”
To maximise returns, Temasek could invest more in the private markets, says Sipahimalani, but this would limit liquidity. In addition, credit ratings agencies require Temasek to invest at least 40% of its portfolio in listed assets, he adds. “We balance, but overall, the high proportion of private [market investments] is [a reflection of] our confidence that we will get higher returns out there.”
Weakening greenback
Asked about the weakening US dollar, Temasek International’s chief financial officer Png Chin Yee says underlying exposure to the Americas is “about 24%” of Temasek’s total portfolio. This is the second-largest geographical region presented in Temasek’s breakdown, after Singapore (27%) and before China (18%).
Png also points to “offsets” like the euro appreciating against the US dollar. “We do take into account currency fluctuations and look at other terms, because obviously we are measured in Singapore dollars. Where it makes sense for us, we might create liabilities to hedge the assets, and… we might also hedge the exposure.”
Reorganisation
In October 2020, Temasek formed Seviora Group as the holding company for several of its asset management companies. Today, the group comprises Azalea Asset Management, Fullerton Fund Management Company, InnoVen Capital, SeaTown Holdings and Seviora Capital.
Gabriel Lim, formerly Temasek’s joint head of corporate strategy, will lead Seviora Group as CEO from Sept 1. He has been appointed CEO (designate) since May 1.
Lim joined Temasek in October 2024. He has served in various ministries since joining the public service in 2000, and was formerly the permanent secretary of policy at the Ministry of Trade and Industry (MTI) and principal private secretary to former Prime Minister Lee Hsien Loong from 2011 to 2014.
As Temasek CEO Dilhan Pillay Sandrasegara nears retirement age, what are the succession plans for the current chief, who has led the investment firm since 2021?
Asked if Seviora’s Lim could be poised for the top job, Temasek’s Lim says “succession planning is an ongoing process”. “They don’t just look at it [when] somebody is retiring; actually, they look at it every single year. Every year, there is a structured exercise at the board where we look at our pipeline of candidates, both internal and external. But the actual point of when that happens, it depends on the company’s needs [and] it depends on the bench strength.”
Temasek’s Lim, who is also chief of staff in Temasek’s executive office and deputy chief corporate officer, adds: “Generally, we’re very, very supportive of talent mobility across our whole ecosystem. Just as our portfolio companies may take some people from us, maybe at other times, we may take some people from them, but I think it’s about what each board feels that the company needs, and if someone in the ecosystem can play that role, actually we are very supportive.”
Temasek’s executives later clarified that there is currently no timeline for succession planning involving Pillay’s role.
Infographics: Temasek
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