Temasek: ‘North America and Europe are markets of increasing interest’

Ho Ching, Executive Director and CEO of Temasek, was presented with the 2014 Asia House Asian Business Leaders Award at a gala event at London’s Banqueting House on Monday 27 October.  Ahead of the ceremony, she spoke to Asia House about Temasek’s goals and aspirations.

To date, Singapore and China account for a sizeable share of Temasek’s investment portfolio. Which countries are you planning to increase investment in and where do you see opportunities?

We have slightly more than 70 per cent underlying exposure to Asia, with a majority of that, as you say, being to Singapore and China. It hasn’t always been this way. We started out in 1974 with almost all our underlying exposure to Singapore alone. We grew with our portfolio companies as Singapore transformed.

Since 2002, we have actively invested in the transformation of Asia. In more recent years after the GFC (Global Financial Crisis of 2008), we have stepped up our investments beyond Asia. Our Asia exposure outside Singapore grew almost six-fold in the decade following 2002, while exposure outside Asia more than doubled.

We continue to anchor ourselves in Asia, where we think we are well positioned to capture the long term growth benefits. North America and Europe are markets of increasing interest and exposure. Europe has good companies with solid fundamentals and we like the fact that these companies have global reach and global exposure. American companies continue to innovate and we see those as comparative advantages.

So tell me, why did Temasek decide to open offices in London and New York this year?  Which sectors does Temasek plan to invest in by setting up offices in these cities?

Our investments in Europe and the US have been growing in recent years. There are great global companies present in these regions and many are looking to tap the growth of markets in Asia, Africa and Latin America. We see opportunities to provide growth capital, and support their growth through partnerships. On the flipside, we also see Asian companies broadening their markets to include Europe and the US.

Our London office will be able to cover Europe and Africa, while our New York office will work closely with our offices in Mexico City and Sao Paolo to cover the Americas, North, Central and South. We look to them to provide a non-Asian lift for our portfolio for the longer term.

What are the themes that drive investment decisions at Temasek?

Our aim is to deliver sustainable returns over the long term. We have four investment themes, which have consistently guided our investments over the last decade. We see them as being as relevant today as we did a decade ago.

Our first theme, Transforming Economies, taps the potential of countries such as China, Brazil, Turkey, Mexico and India, as well as countries in South East Asia. The second theme of Growing Middle Income Populations looks at supporting the expansion of those on middle incomes and their needs.  Our investments in healthcare, education, consumer companies and real estate are good examples. Investments in microfinance help support the aspirations of better lives among the poor and expand their capacities to earn more.

For the third theme of Deepening Comparative Advantages, we seek out economies, businesses or companies that have distinctive, sometimes local, intellectual property or other competitive advantages, as they grow to serve regional or global markets. As for the fourth theme, Emerging Champions, we look to invest in companies that have a strong home base, or in companies at inflection points. These companies have the potential to be regional or global champions.

Singapore skyline. Photo by Tim Allen

Regarding the endowments and philanthropic entities that Temasek supports, could you share with me an example of an initiative and the rationale behind it?

Since our inception, we have established 16 endowments. They broadly aim to achieve four objectives: building people, building communities, building capabilities and rebuilding lives, both in Singapore and Asia.

These non-profit philanthropic organisations are focused on developing or delivering sustainable programmes that help local communities uplift themselves. The endowment approach helps beneficiary organisations fund programmes beyond the short term year-to-year needs and enables them to plan for longer-term impact.

In general, our approach has been to train the trainers, be they in education or healthcare, in voluntary organisations or local governments. This is to build up the capabilities and capacities for the longer term.

An example is, in March this year, we established the Temasek Emergency Preparedness Fund with an endowment of S$40 million. This supports a series of programmes to enable families in Singapore to be better prepared for emergencies.

We are fortunate that Singapore is a safe city. Still, unforeseen events can happen, and we hope the programme raises awareness that we have to be ready for the unexpected and prepared to respond.

The first programme that it rolled out was the KITS (Kids in Tough Situations) pilot programme. KITS aims to train counsellors to provide community-based therapy for children who have emotional and psychological difficulties arising from trauma. For example, school children affected by a tragedy involving one of their classmates.

Another programme saw the distribution of 1.2 million ‘Stay Prepared’ starter kits to households nationwide. Each kit contained three 3M™ N95 face masks, instructions on how to wear the masks and emergency contact numbers. These are to help households begin to take steps to protect themselves in the event of a pandemic such as MERS (Middle East Respiratory Syndrome) or other flu pandemics, or elevated haze caused by plantation burning in neighbouring countries.

By being prepared, there is less risk of hysteria or panic when a crisis develops. We had not anticipated, for instance, that Ebola would have developed into a serious health and safety threat when we first conceived of the Emergency Preparedness Endowment.

Likewise, we have been supporting programmes since 2004 to strengthen homes and low rise buildings around Asia, using simple methods developed through university research. This is a pre-emptive programme to reduce the risks and dangers of homes collapsing during earthquakes, giving the families a bit more time to get out of their homes.

naomi.canton@asiahouse.co.uk

The annual Asia House Asian Business Leaders Award recognises those individuals who embody the ‘Servant Leader’, that is who can demonstrate economic success and professional excellence accompanied by moral leadership and service to society. Ho Ching was selected to receive this year’s Award because of her impressive business credentials and her significant efforts to inspire a commitment in others to improving society. For more information about the 2014 Asia House Asian Business Leaders Award Dinner click here.