Volatile stock prices are driving Singapore’s Temasek to look at private assets, chief executive Pillay says

Temasek International Chief Executive Officer Dilhan Pillay says the S$313 billion (US$230 billion) investment firm will be more cautious when investing in the public markets this year as it increases bets on unlisted companies globally.

In his first interview since taking over the role in April, Pillay told Bloomberg Television that the past year had shown it was almost impossible to accurately predict geopolitical events. About 42 per cent of the Singapore government-backed investor’s assets were held in unlisted businesses as of March 31, up from 39 per cent a year earlier.

“This year of course we will think more carefully about how to invest in the public markets if the volatility in the public market continues,” Pillay said, adding that backing private companies often meant less instability. “If we invest in good private companies, the volatility is reduced.” He said volatility for unlisted companies wasn’t necessarily “public-market-pricing volatility or sentiment volatility,” rather more around business risks.

Temasek unveiled a modest 1.6 per cent gain in net portfolio value for the 12 months through March 31 on Tuesday amid a challenging environment that includes the stop-go trade war between China and the US as well as other potentially disruptive events like Brexit. Singapore’s sovereign wealth fund GIC last week said overhyped valuations in developed markets are also a concern. In US dollar terms, Temasek’s portfolio value fell by 1.7 per cent.

Divestments of S$28 billion as US equity markets hit record highs, and a solid performance from its collection of unlisted assets, were key to Temasek holding on to its portfolio gains.

Pillay also played down the idea Temasek was driving its investee companies to consolidate. In January, developer CapitaLand struck a S$6 billion deal to buy Temasek units Ascendas and Singbridge.