Bharti shines brightest in Temasek portfolio

VC Circle

Temasek’s total portfolio in the South Asia region has increased from 1% in 2004 to 7% as on March 2009.

Singapore’s Temasek Holdings’ presence in India is on an ascendant note. The largest sovereign wealth fund active in India, Temasek’s portfolio in the South Asian region (India and Pakistan) has increased from 1% of its total portfolio in 2004 to 7% as on March 2009. The total size of this portfolio stood at $6.4 billion.

Temasek is banking big on Asia with the region accounting for 74% of its portfolio for FY09. The recent results of the firm indicate an increasing exposure to emerging economies in Asia, Latin America and Russia.

Bharti Airtel: The rising star

Some of the major investments of Temasek in India are ICICI Bank, Bharti Airtel, Tata Teleservices, among others. The fund has infused more equity capital in two of its India portfolio firms this year – DTH player Tata Sky and non banking financial services company Fullerton India.

Some of the major portfolio companies of Temasek in India have also seen value erosion. Temasek’s 8% stake in ICICI Bank was worth Rs 3,705 crore in FY09 as compared to Rs 8,561 crore last year. Similarly, the 5% stake in Bharti Airtel is reportedly worth Rs 11,878 crore for FY09 as compared to Rs 15,681 crore a year ago.

But, total shareholder return (TSR), the compounded annual return over a specified period, on Bharti Airtel is highest among any major portfolio companies of the fund. Bharti is in talks with South Africa’s MTN for a $23 billion cash and share-swap deal which would create an emerging markets giant with over 200 million subscribers. Bharti Airtel’s TSR stood at 32% over a five-year period, compared to 4.2% of ICICI Bank.

Big on Asia

Temasek seems to banking big on Asia, which accounts for nearly three-fourth of its portfolio including Singapore. “As Asia progresses, it will continue to de-risk. We are comfortable in maintaining an overweight stance on Asia,” said Ho Ching, CEO and executive director, Temasek, in a release.

“Within Asia, India continues to be one of our key investment destinations. We believe that India is structurally resilient as an economy given its low exposure to exports, strong corporate balance sheets, low external debt and a resilient banking system,” said Temasek senior managing director Manish Kejriwal, who also heads its India activities.

Temasek is in now eyeing Indian infrastructure and consumption-driven businesses. Earlier this year, Temasek opened an office in Chennai besides its existing office in Mumbai.

The theme for the year seemed to be cashing out, as the firm made S$16 billion of divestments as compared to S$9 billion of investments globally, including rights issues worth S$3 billion. Some major divestments were Bank of America (which it got after the merger with Merrill Lynch where Temasek originally invested) and Barclays. The group net profits stood at S$6 billion, as compared to S$18 billion last year.

Temasek pie

The Singapore-based state investor’s exposure to OECD economies has fallen from 32% in 2004 to 22% in 2009. Its exposure to its home state Singapore has also fallen from 52% in 2004 to 31% in 2009. 

Other areas where portfolio has showed a significant rise in this period is North Asia (China, Taiwan and Korea), where it has gone up to 27% from 6% in 2004. The SWF started recouping from the losses made due to portfolio erosion during the downturn, according to its latest results. The Singapore-based state investor’s portfolio has risen to S$172 million by end of July as compared to S$130 million in March 2009.

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