Temasek Charts New Course

Ashby Monk

According to P.R. Venkat and Costas Paris in this morning’s WSJ, Temasek does not consider itself to be a SWF:

“Despite the government being its sole shareholder, Temasek doesn’t consider itself to be a sovereign-wealth fund. Temasek officials insist its goals are primarily financial rather than to support Singapore government policy, although Singaporean companies make up a substantial portion of its portfolio.”

I’m intrigued by this development, since Temasek played an important role in the International Working Group of Sovereign Wealth Funds. If it’s not a SWF, what was it doing in the IWG? Is it going to pull out of the new Forum?

Clearly, Temasek is charting a new course, which has now resulted in the amendment of its Charter:

“We have refined our Charter to more clearly articulate our focus as a value-oriented investor, and also as a shareholder focused on achieving sustainable returns by engaging with the boards and management of our portfolio companies.”

I’d say Temasek is working hard to ensure its international legitimacy before a global expansion. The loss of Charles Goodyear as CEO—the American that was to pave the way for such an expansion—was a blow. It is probably also trying to bolster its domestic legitimacy after an awful year (the NYT reports the fund lost $27 billion during the financial crisis). So changing its Charter is probably a good move. It reinforces its commercial principles and distances itself from the government, which will likely provide international and domestic constituencies a bit more confidence in the SWF’s operations and motivations.

3 Responses to “Temasek Charts New Course”

  1. 1 rien huizer August 26, 2009 at 2:42 pm

    Is it a conglomerate or an investment company. The refernce to Berkshire would suggest that the former is a little closer to the truth, whatever the truth may be.

    Suggestion, whenever a gvt says X is not a SWF, thst’s it. Means the thing does not have to live by Santiago rules.

  2. 2 Tom Karol August 27, 2009 at 1:41 pm

    I seem to recall that the Alberta Heritage Savings Trust Fund also does not consider itself a SWF, but like Temasek, it also participates in the IWG.
    Sovereign investment funds – for a variety of reasons good and bad – have always been reluctant to agree that they exist or operate in the same manner as other sovereign investment funds.
    This could be critical.
    Each sovereign investment fund is unique in some way and each has the responsibility to act in its own best interests. It is not unlikely that each fund will individually decide how GAPP does or does not pertain to it, resulting in principles and practices that are anything but generally accepted.

  3. 3 Ashby Monk August 27, 2009 at 2:37 pm

    The IWG was crucial in the way it brought together these unique funds into a coherent group of financial actors. By doing so it created a community among sovereign investors. Anyway, any ideas on what we can expect from the new Forum?

    By the way, I personally see Temasek (and France’s FSI, Heritage Fund, etc.) as SWFs. Even where there is a domestic focus.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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