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Capital Markets

Inside Temasek’s response to Covid

Singapore’s state-owned investment company entered the pandemic in good shape. Covid-19 brought new challenges in which it has emerged as a double-barreled weapon against uncertainty. The fund’s chief investment strategist explains what makes Singapore’s intriguing sovereign wealth vehicle tick.

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Temasek has always been one of the world’s most interesting sovereign wealth vehicles: in asset allocation, mandate and style it looks quite unlike most of the classic diversified sovereign funds.

But Covid-19 has made it more striking still, bringing into sharp relief its dual role as an unemotional long-term investor and as a steward with a duty of service to the nation.

There have been no clearer examples of this than Temasek’s role in the SIA (Singapore Airlines) capital raising, announced in March with a S$15 billion ($11 billion) target through a rights issue and a tranche of mandatory convertible bonds.

Temasek backstopped both, pledging not only to take up its own considerable entitlement as a 55% shareholder but also any shortfall.

In the event, Temasek’s underwriting of the deal persuaded the market to participate; the rights issue, though not the convertible, was fully subscribed.

So Temasek had achieved two things in one go: it had made an interesting long-term contrarian investment; and it had performed a national service in reviving confidence in a key Singaporean asset that was under enormous stress.

Goldman Sachs called it the “gold standard” of coronavirus-related rescue packages.

But


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