<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published July 31, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Temasek co-investment plan creates a buzz
But transparency may be an issue; option of investing CPF monies raised
By CONRAD TAN
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(SINGAPORE) Temasek Holdings' plan to raise long-term capital from retail investors for co-investments in the future could take various forms, bankers and analysts said yesterday. But, irrespective of the final shape of these plans, the Singapore investment firm will likely have to open its books far more to potential investors than it has, so far, some said.
It is by no means certain at this stage that Temasek will seek to raise funds from the public, let alone small investors. Temasek chief executive Ho Ching stressed on Wednesday that it was still studying whether it is feasible to get the public to co-invest with the firm.
If Temasek decides to pursue the plan, it would first test it on 'sophisticated' co-investors before allowing retail investors to participate - a pilot process expected to take up to eight years, Ms Ho said.
As a result, most of the people that BT spoke to did so only on condition of anonymity.
One popular suggestion was for Temasek to launch a private-equity investment fund and invite other institutional investors or rich individuals to participate. If the fund proved successful, Temasek could then open it to retail investors - possibly, but not necessarily, by listing shares in the fund on a stock exchange.
The fund would differ from the other firms in Temasek's portfolio in that it would be run directly by Temasek.
But Temasek could face an uphill task in convincing outside investors to put money into a sister fund.
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</TD></TR></TBODY></TABLE>George Lee, OCBC Bank's head of group investment banking - the only person willing to be named for this article - said that Temasek would probably have to disclose much more about its investment record than it has done so far, to sell the fund.
'In order to convince investors, they would have to be very transparent with their historical record, itemising exactly what they bought and sold, and at what price, in order to substantiate the return they claim to have made.
'That means disclosing a lot more things than they have disclosed.'
Another banker pointed out that launching a sister fund would inevitably produce conflicts of interest. Faced with a new investment opportunity, 'who invests - Temasek or the new fund?' he said. 'Would there be a no-compete agreement?'
Yet another objected to the idea of a publicly listed fund, saying that a listing would be at odds with Temasek's objective of attracting long-term investors.
'It has to have some kind of structure that locks you in for the long term,' he said.
He also raised the intriguing possibility that Temasek could allow residents here to place part of their Central Provident Fund (CPF) retirement savings with Temasek, if they wanted.
That would achieve the twin aims of adding retail investors to Temasek's stakeholder base, while preserving its emphasis on attracting long-term capital.
Offering residents here the option of investing some of their CPF savings with Temasek could also partly address the difficulty of earning a high enough return on savings for old age, he added. 'CPF is paying interest of at least 2.5 per cent - how can they continue paying that when interbank rates are near zero?'
Placing some of the CPF money with Temasek 'could potentially give you a good return' based on Temasek's average annual return of 18 per cent since its inception in 1974, he added.
Another, theoretical, possibility is for Temasek to list itself, but given the amount of information it would have to disclose for a public listing, that seems improbable for now.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Temasek co-investment plan creates a buzz
But transparency may be an issue; option of investing CPF monies raised
By CONRAD TAN
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>(SINGAPORE) Temasek Holdings' plan to raise long-term capital from retail investors for co-investments in the future could take various forms, bankers and analysts said yesterday. But, irrespective of the final shape of these plans, the Singapore investment firm will likely have to open its books far more to potential investors than it has, so far, some said.
It is by no means certain at this stage that Temasek will seek to raise funds from the public, let alone small investors. Temasek chief executive Ho Ching stressed on Wednesday that it was still studying whether it is feasible to get the public to co-invest with the firm.
If Temasek decides to pursue the plan, it would first test it on 'sophisticated' co-investors before allowing retail investors to participate - a pilot process expected to take up to eight years, Ms Ho said.
As a result, most of the people that BT spoke to did so only on condition of anonymity.
One popular suggestion was for Temasek to launch a private-equity investment fund and invite other institutional investors or rich individuals to participate. If the fund proved successful, Temasek could then open it to retail investors - possibly, but not necessarily, by listing shares in the fund on a stock exchange.
The fund would differ from the other firms in Temasek's portfolio in that it would be run directly by Temasek.
But Temasek could face an uphill task in convincing outside investors to put money into a sister fund.
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'In order to convince investors, they would have to be very transparent with their historical record, itemising exactly what they bought and sold, and at what price, in order to substantiate the return they claim to have made.
'That means disclosing a lot more things than they have disclosed.'
Another banker pointed out that launching a sister fund would inevitably produce conflicts of interest. Faced with a new investment opportunity, 'who invests - Temasek or the new fund?' he said. 'Would there be a no-compete agreement?'
Yet another objected to the idea of a publicly listed fund, saying that a listing would be at odds with Temasek's objective of attracting long-term investors.
'It has to have some kind of structure that locks you in for the long term,' he said.
He also raised the intriguing possibility that Temasek could allow residents here to place part of their Central Provident Fund (CPF) retirement savings with Temasek, if they wanted.
That would achieve the twin aims of adding retail investors to Temasek's stakeholder base, while preserving its emphasis on attracting long-term capital.
Offering residents here the option of investing some of their CPF savings with Temasek could also partly address the difficulty of earning a high enough return on savings for old age, he added. 'CPF is paying interest of at least 2.5 per cent - how can they continue paying that when interbank rates are near zero?'
Placing some of the CPF money with Temasek 'could potentially give you a good return' based on Temasek's average annual return of 18 per cent since its inception in 1974, he added.
Another, theoretical, possibility is for Temasek to list itself, but given the amount of information it would have to disclose for a public listing, that seems improbable for now.
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