The GDI portfolio was established in 2002 under Temasek’s T2010 strategy, which expanded its investment mandate beyond its TPCs to include direct investments in emerging markets, especially in Asia. In the early years, Temasek invested in proxies to economies such as banks and telecommunications companies across China, India and Southeast Asia.
In its commemorative book, By Generations For Generations, published in 2024, Temasek reflected on this strategy, noting that Asia was “on the cusp of change” with China likely to become a triple-A economy by the 2030s and India “not far behind” as a double-A economy.
“Our portfolio benefitted significantly from China’s economic expansion through this decade,” said Lim Ming Pey, Temasek International’s chief of staff in the executive office, deputy chief corporate officer and joint head of corporate strategy in prepared remarks.
In the FY2025 Temasek Review, GDIs are defined as Temasek’s investments in “established or emerging market leaders that are aligned to the four structural trends of digitisation, sustainable living, future of consumption and longer lifespans”.
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Such investments included companies with “access to large domestic markets, resilient supply chains and strong pricing power”. Temasek also sought opportunities in core-plus infrastructure and the artificial intelligence (AI) value chain.
According to CFO Png Chin Yee, Temasek’s GDI performance this year was broad-based with particular contributions from financial services and technology sectors. Notable GDIs include established and emerging market leaders such as payment solutions platform Adyen, Chinese tech group Tencent, investment group BlackRock, Indian healthcare group Manipal Hospitals and Singapore-headquartered, NYSE-listed Sea. In March, Temasek was reported to have acquired a stake of close to 10% in Indian snack maker Haldiram’s for approximately US$1 billion ($1.28 billion).
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Temasek's portfolio segments at this year's Temasek Review. Photo: Temasek
A net investment year
In FY2025, Temasek made net investments of $10 billion, with $52 billion invested and $42 billion divested.
The firm made investments in AI infrastructure and digital infrastructure, while the divestments were “broad-based”, says Png in response to queries from The Edge Singapore.
She adds that Temasek divests for various reasons including when its investment thesis has played out and when it wants to recycle its capital into similar areas once it has realised its profits in a particular investment.
“For example, we partially divested our stake in [Italian luxury fashion brand] Moncler, but we reinvested it into other consumer luxury spaces. So [it’s a] portfolio rebalancing in that sense. We also received our capital back from SIA (Singapore Airlines) because of its MCBs (mandatory convertible bonds),” she shares.
In the luxury sector, CIO Rohit Sipahimalani sees near-term headwinds from a weaker Chinese economy and US-led tariffs. However, given that its clients are “clearly well concentrated” among the top layer of the population, Sipahimalani believes fundamental demand for luxury remains. “The question is that you’ve got to find the right pockets, the winners and the losers. So that’s our perspective,” he says.
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When asked if the group will be taking a closer look at Europe on the whole, given how many fund managers now say the Continent is getting more “investable”, Sipahimalani said that the group also looked at the continent’s financial services, as well as new energy and industrials sectors. In May 2024, Temasek partnered with global investment firm Brookfield to acquire French renewable energy company, Neoen, in a deal valued at EUR6.1 billion ($9.15 billion).
“We also invested in VFS, which is Switzerland headquartered, but actually [a] fairly global company. And that tends to happen in Europe, A lot of our businesses that we invest in may be headquartered in Europe, but they tend to be quite global as well,” Sipahimalani adds.
Going on the defensive
With global defence spending on the rise amid geopolitical tensions, questions were raised as to whether Temasek will be positioning itself in the sector. To this, Sipahimalani points out that Temasek has historically had exposure to the defence sector through its TPC, Singapore Technologies Engineering (ST Engineering). However, given that defence is becoming a source of national sovereignty, leading to rising expenditures, there are opportunities. Temasek has also begun investing in the public markets and it is an area it looks at, he adds.
That said, deputy CEO Chia Song Hwee is more cautious, noting that Temasek is “very mindful that [it has to] comply with rules and regulation laws”.
“Just like food security, cybersecurity, defence is becoming part and parcel of what nations do,” he adds. “Hopefully it’s more for deterrence than offensive, and I think this is part of what a nation needs.”
Longer-term plays
Even though quantum computing is “quite a distance away” and capabilities will need time to be built, it is “important” for Temasek to stay “plugged in”, says Chia. “It’s just like six, seven years ago, we decided that we needed to spend time on AI. Of course, we didn’t expect gen AI to take off this way, actually nobody did. So we need to be ahead,” he adds.
Png acknowledged that such investments in emerging tech will take a longer term to play out and that it means the group has to be “very patient”. Temasek’s investments in early tech also fall within the 5% of its early stage investments.
When it comes to identifying trends early on, Sipahimalani points out that Temasek does get ahead of the curve in certain investments such as nuclear energy, which along with safer production technologies, is seen as an increasingly attractive alternative to fossil fuel.
“We invest in investment houses, which basically services a lot of these nuclear energy plants. So again, just knowing what’s happening across in newer areas in nuclear is important when we have even our current investments,” he says.
“So as we said, the amount we invest will be very small, at least it gives us the insight as to what’s the path out there, and that educates us as we look to for the rest of our portfolio,” he adds.
Given the geopolitical environment, Png notes that Temasek wants to be a “trusted investor” in geographies it operates in. As such, when it comes to more sensitive areas, the group is “very careful” in handling such matters due to implications in terms of the companies’ business and profitability. “So I think we try to stay out of things that are in the crosshairs of geopolitics,” she says.
“A few years ago, looking at geopolitical trends, we decided that we got to be very conscious that in a world of rising nationalism, protectionism, and we will avoid taking investments which get stuck in that conflict,” says Sipahimalani.
“So for the last years, we’ve been very clear that we want to invest more in businesses which have access to large domestic markets, which are self sufficient in terms of technology and supply chain,” he adds. These include Temasek’s investments in India’s financial and healthcare services industries, as well as the software and fintech sector in the US and local consumer brands in China.
Thanks to that approach, Temasek determined that the first order impact on its portfolio following US president Donald Trump’s Liberation Day announcement was “negligible”.
Doubling down on due diligence
Despite Temasek’s efforts, not all of its bets have paid off, with high-profile setbacks such as FTX, Zilingo and eFishery raising questions about the group’s risk management and due diligence.
“As we’ve discussed in the past, when we look at early stage investments, we have to look at the portfolio as a whole, because no matter how much you try, you can be never 100% sure that there will be never any fraud,” says Sipahimalani.
Following the FTX debacle in 2022, Temasek enhanced its due diligence processes to mitigate the risk going forward. That included putting greater scrutiny on companies’ founders and their management teams as well as insisting on independent board directors “of some stature” and paying closer attention to the auditors.
However, it would be a “mistake” to ignore investing in early stage companies due to these “isolated” incidents, he says.
“Because the reason why we invest in early stage… we try and manage the risk by capping the exposure to 6%; it’s currently 5% of the portfolio, and even within that, half of it is in VC (venture capital) funds, which is very well diversified to hundreds of companies. The other half is direct investments,” he points out.
However, given the higher interest rate environment, the group’s bias has shifted to companies in later rounds of funding such as those conducting their Series C and D fundraising rounds.
That said, the group still believes that it needs to have a “certain amount of focus” in the very early stage destructive technologies. “Because that allows us to look around the corner as to what big changes are happening,” he says.
While the failures draw attention, Sipahimalani notes that there have been a “lot of winners” people don’t talk about as much, such as Adyen and Alibaba.
“Both of them were companies where our first cheque was $35 million. But because we were there early, we were in a position to gain access to large amounts in subsequent rounds, and both ended up generating billions of dollars for us. The same is true for the other names too,” he says.
“So yes, we recognise that every time there is a fraud, it hurts us. We try and see what we can do better out there. But early stage investing still remains important for us,” he adds. “We are looking at forward technologies. We have a dedicated team on emerging technologies which could invest in things like quantum computing, nuclear fusion, robotics etc. So we continue to do that but we calibrate the risk by the amount of dollars we put into such binary events.”
Yet with companies in new emerging areas where there is lesser regulatory oversight, Sipahimalani says the company will have to do its own due diligence and determine the attractiveness of the risk reward. At the same time, not wanting to take any risks meant that Temasek would have “missed out” on a huge opportunity.
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