The Banking and Strategy Initiative

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Let’s see some Temasek muscle

India WSJ reports today that Temasek is planning to add to its investments in India and China. Temasek recently completed its bond issue of $1.5 billion (Bloomberg). As of 2007 itself, Temaseks holdings in India included a 5% stake in Airtel and amounted to over 4% of its global portfolio at over $3 billion. It would have risen further in Dollar terms today with SGD having appreciated to 1.394 SGD to USD from 1.71 levels then.

They began in India (2004) with a 9% stake pick up in ICICI Bank, then at its vaunted peak, and 7.7% in Matrix Labs. They also bought a 5% stake in Apollo Hospitals and 20% in Onesource.(see here) Obviously Temasek already holds a sizable interest in Singapore Airlines, SingTel and DBS Bank to name a few within Singapore.

Being a city-state, Singapore has the advantage of cool crisp governance translating into control and business growth through such primarily SME modes of direct ownership in large infrastructure businesses. Their superb performance is underlined by quick decision-making and strong financial health as shown by its response to its and its clients’ recent bond issues for Temasek, PSA and one more. Interestingly, no non Temasek company has been able to raise debt from Singapore in 2009

As WSJ reports:

In China, Temasek already owns a 6% stake in China Construction Bank Corp. and a 4% in Bank of China Ltd. It has tried to invest in China’s airline industry, but a deal for Temasek and its unit Singapore Airlines Ltd. to pay $923 million for a 24% stake in China Eastern Airlines Corp. Ltd. fell through last year when China Eastern shareholders rejected the offer in hopes of a higher bid from Air China that never materialized.

Singapore Airliners is eager to restart talks with China Eastern if Beijing were to support foreign investment in the carrier, one of the people said.

In India, Temasek owns stakes in Tata Teleservices, conglomerate Mahindra & Mahindra, ICICI Bank, Bharti Airtel and logistics company Gateway Ditriparks. Manish Kejriwal, Temasek’s senior managing director, investment, international & India, said Temasek believes opportunities in consumer-oriented businesses and infrastructure in India “will lead to emergence of champions that are excellent proxies for economic growth.”

Temasek’s holdings also include major stakes in a cross-section of Singapore blue-chip companies. It has raised those stakes by subscribing to rights issues in a number of those companies that have turned out to be profitable.

Temasek bled heavily earlier this year from its stakes in Merrill (above 10%)  and quickly withdrew. It is also making profits on its stakes in Citi however and is holding StanChart as well for short-term profit. Its profits from Citi ( over $3 billion) may somewhat compensate it for its losses at BofA Merrill and others.  Despite these losses, it is one of the few SWFs that has survived today and is growing larger.  Temasek still plans to add to its investment in ‘Western Banks’ as per their own discussions with the press.

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This entry was posted on October 25, 2009 by in Amitonomics, China, Emerging Markets, India, Indian Stocks, Private Equity and tagged , , .

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