UPDATE 3-Singapore’s Temasek says BP stake talk "speculation"

* Portfolio value up 43 pct to record S$186 bln at end-March

* Ho Ching to stay as CEO, no search for replacement

* Temasek’s one-year growth lags MSCI, Templeton fund

* Net profit dips 26 pct to S$4.6 bln on lower

* Says to continue focus on Asia, sees long-term prospects
(Recasts; adds GIC)

By Kevin Lim and Raju Gopalakrishnan

SINGAPORE, July 8 (BestGrowthStock) – Singapore state investor
Temasek, whose energy and resources portfolio grew by $3.6
billion last year, on Thursday dismissed talk it had held
discussions with BP Plc (BP.L: ) for a strategic stake.

Temasek’s comment comes amid speculation the troubled
British oil major is approaching several sovereign wealth funds
for cash to ward off a takeover and help pay for the worst oil
spill in U.S. history. BP boss Tony Hayward met an Abu Dhabi
state investment fund on Wednesday. [ID:nLDE6660B7]

“It’s speculation,” Temasek Executive Director Simon Israel
told reporters on Thursday when asked if Temasek was indeed
talking to BP. Israel did not comment further.

Analysts say an investment in BP by Temasek is unlikely as
it has repeatedly said it will focus on Asian investments,
after losing billions investing in Western banks such as
Merrill Lynch and Barclays (BARC.L: ) in the financial crisis.

A more likely candidate could be the $250 billion-plus
Government of Singapore Investment Corp (GIC), Temasek’s sister
wealth fund, whose investments are more diversified
internationally. GIC, which already owns about 0.7 percent of
BP shares, has declined to comment on the subject.

Temasek released its 2010 annual report on Thursday, which
showed the value of its portfolio rose 43 percent to S$186
billion at end-March, and said it was not searching for a
successor to Chief Executive Ho Ching.


For a graphic on Temasek’s allocations at end-March, click


For allocations at end-March 2009, click


For graphic on Temasek’s returns and comparatives, click


FACTBOX on Temasek’s management and portfolio


The growth took the portfolio of the world’s eighth-largest
sovereign fund to a record high, but it lagged some benchmarks
and peers. Officials also said the value had fallen since March
in line with weak global markets, but declined to give a

“Last year’s performance was a ride on a recovery from a
very depressed base,” said Song Seng Wun, an economist at CIMB.

“This (financial) year will be more challenging given the
environment we are in now.”

Temasek’s focus on Asia, particularly at home in Singapore,
increased in the 2009/10 financial year, and it said that
strategy would be maintained for the forseeable future, given
volatility in other world markets.

“Choppy waters lie ahead, but Asia will maintain its
secular long-term growth,” Chairman S. Dhanabalan said in a
statement. “Our focus on Asia continues.”


Temasek said 78 percent of its portfolio was in Asia as of
end-March, up from 74 percent a year previously. Investments in
developed economies dropped to 20 percent from 22 percent.

“The Asian focus is right given that the pendulum has swung
very clearly towards Asia,” CIMB’s Song said. “It’s not wrong
to look at commodities but the further you go, the less
familiar you are with the area so there are going to be more

Temasek’s exposure to the energy and resources sector
increased to S$11.6 billion, or 6 percent of its portfolio, in
2009/10 from S$6.5 billion, or 5 percent, in the previous year.

On Ho, who has been CEO since January 2004, Executive
Director Simon Israel told reporters she was not leaving.

“Ho Ching is our CEO, she is continuing as our CEO,” he
said. “There is no, underline no, active, immediate search for
a CEO.”

Ho, 57, the wife of Singapore Prime Minister Lee Hsien
Loong and fifth on Forbes’ list of the most powerful women in
the world last year, had earlier planned to leave by October

But Ho’s designated successor, former BHP Billiton (BHP.AX: )
(BLT.L: ) CEO Charles Goodyear, left Temasek in July last year
citing differences in strategy. [ID:nSIN521289]

Speculation on Ho’s future resurfaced in May when Temasek
announced former Singapore Exchange (SGXL.SI: ) CEO Hsieh Fu Hua
would join as executive director and president to assist her in
areas such as talent development and succession planning.


By sector, Temasek increased its investments in the
financial sector to 37 percent of its portfolio from 33
percent. Exposure to telecommunications, media and tech sectors
dropped to 24 percent from 27 percent, while investments in
transport and industrials fell to 18 percent from 19 percent.

Temasek’s net profit for the financial year fell to S$4.6
billion from S$6.2 billion, which it said was due to lower
contributions from portfolio firms.

And the one-year growth of its portfolio lagged the MSCI
Asia ex-Japan index (.MIAPJ0000PUS: ), which rose 63 percent in
the 12 months to March in Singapore dollar terms, according to
Temasek. According to Reuters’ calculations, Templeton Emerging
Markets Fund returned 68 percent in the same period.

“We are not a fund,” Executive Director Israel said, adding
Temasek had returned an annualised 17 percent since its
inception in 1974. “We are a long-term investor. We do not
enter and exit markets the way a fund does.”

Temasek is wholly owned by Singapore’s Ministry of Finance,
but plans to eventually allow the public to invest in it.

As a test case, officials said subsidiary investment
vehicle SeaTown Holdings would look at co-investment from
financial institutions in three to five years.
(Editing by Muralikumar Anantharaman)

UPDATE 3-Singapore’s Temasek says BP stake talk "speculation"