Regions

Temasek is different from other sovereign wealth funds and pays tax - Chairman

By Nicel Jane Avellana | Dec 05, 2013 09:39 PM EST
A man is reflected in a Temasek Holdings logo at their offices in Singapore February 6, 2009.
(Photo : Reuters)

Temasek Holdings is not your usual sovereign wealth fund, according to Chairman Lim Boon Heng, who was one of the speakers of a conference in Singapore organized by asset management firm Amundi. According to Chairman Lim, Temasek is a unique entity that only has few things in common with other sovereign wealth funds. He said, "Defining Temasek is not easy: We have not found another entity that does exactly what we do."

Chairman Lim said one point of difference is that as a commercial investment firm, Temasek is the outright owner of its assets. Unlike other sovereign wealth funds, it is not a fund manager for the government. He also added that Temasek pays taxes like other companies.

Its strategy is also not the same as other sovereign wealth funds because it invests mostly in equities. Other funds look for opportunities in portfolios that are liquid and globally diversified. Lim acknowledges that investing in equities is riskier and more volatile but it is also accompanied with the expectation that it will pay off with higher returns in the long-term.

He added, "We have the full flexibility to take concentrated risks, whether in owning up to 100 per cent of a portfolio company, or in deploying most of our investments into a concentrated geography." According to a report in The Straits Times, most of Temaseks investments are found in Asia. It also has a 25% exposure in Organization for Economic Cooperation and Development member countries.

Chairman Lim also said it monitors the performance of its assets for the long term. He added that they are not pressured to sell if the outlook for the long term is positive. However, if an investment is not working the company wants it to, Lim said they take money off the table even if it means recording a loss.

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