Cross-border investment: Temasek pays the wages of Shin
In many ways Temasek, the investment arm of the Singapore government, looks very much like the US and European private equity powerhouses it competes with for Asian assets. Its business strategy, as defined on its website, is “to invest in companies with high regional or global potential and build them into successful enterprises.” It calls itself a “proactive, long-term shareholder”, which “drives performance and acts as a catalyst for wealth creation and delivery of value”. Spoken like a KKR or Carlyle. But there’s a big difference:
|Happier times: Shin Corporation executive chairman Boonklee Plangsiri, left, and Temasek's managing director of investments, S Iswaran, in Bangkok in January|
The political dimension that comes with Temasek managing the assets of its government, S$129 billion (US$82.7 billion) of them at last count. On one hand that can make it difficult to buy assets with a political sensitivity to them; on the other, when a problem arises with an investment, things gets very nasty and very loud. Temasek has discovered this unhappy downside with its investment in Shin Corporation, the Thai telecommunications company previously owned by the family of Thaksin Shinawatra, Thailand’s ousted prime minister.
Temasek’s purchase of a 49% stake in Shin back in January was a politically charged event in itself. Many in Thailand took great exception to a key Thai asset falling under Singaporean control, a gripe that was exacerbated when the Temasek consortium then took its holding to 96% through a mandatory offer for the outstanding shares. The deal appears to have broken the spirit of Thailand’s telecoms foreign direct investment legislation limiting foreign investment in an operator to 49%.