Reuters: Singapore's GIC issues first performance report (23 Sep 2008)

Singapore's GIC issues first performance report

Sept 23 (Reuters) - The Government of Singapore Investment Corp (GIC) said on Tuesday it achieved an average annual real return of 4.5 percent in Singapore dollar terms over the last 20 years in its first-ever public report on its investments.

For a related story, click [ID:nSIN260248]

The following is a snapshot of GIC and sister fund Temasek Holdings [TEM.UL], which together manage assets in excess of $400 billion according to analysts.

Government of Singapore Investment Corp (GIC)

website: www.gic.com.sg

ASSETS: $100 billion to $330 billion (GIC says it manages well over $100 billion but most analysts estimate the figure is around $300 billion)

HISTORY: The government set up GIC in 1981 after it decided the bulk of the country's foreign exchange reserves should be invested in longer-term and higher-yielding assets.

About 44 percent of GIC's assets are invested in equities, 26 percent in bonds and 23 percent in alternative assets such as real estate and private equity. GIC held 7 percent cash at the end of March 2008.

In December 2007, GIC invested 11 billion Swiss francs in UBS convertible notes that, when exercised, will give it about 9 percent of the Swiss lender. In January, the fund invested $6.88 billion in Citigroup notes that are convertible to 4 percent of the U.S. bank.

MANAGEMENT: Lee Kuan Yew, former prime minister of Singapore, is chairman. His son Lee Hsien Loong, the current prime minister, is deputy chairman, while former Singapore minister Tony Tan is deputy chairman and executive director.

In April, Tan warned the world could be facing its worst recession in 30 years and that financial markets would be highly volatile.

TRANSPARENCY: GIC released its first annual report on Sept 23, which provided a breakdown of its portfolio by region and by asset class. It did not statel its fund size but said it managed an average return of 7.8 percent annually in U.S. dollar terms over the past 20 years.

In Singapore dollars, the fund returned an average nominal return of 5.8 percent per annum in the 20 years to March 2008.

Prime Minister Lee Hsien Loong said in May that GIC will not be as open as sister fund Temasek [TEM.UL] in providing details about its portfolio despite pressure from Western lawmakers on government funds.

Temasek Holdings

website: www.temasekholdings.com.sg

ASSETS: S$185 billion ($130.6 billion) as at March 2008, up from S$164 billion a year ago

HISTORY: Temasek was created in 1974 to hold and manage investments in state-owned companies such as Singapore Telecommunications (STEL.SI: Quote, Profile, Research, Stock Buzz), Singapore Airlines (SIAL.SI: Quote, Profile, Research, Stock Buzz) and DBS Group (DBSM.SI: Quote, Profile, Research, Stock Buzz) which were previously held by the Ministry of Finance.

The firm has in recent years diversified its holdings by cutting its stakes in Singapore companies and acquiring stakes in overseas firms.

Temasek's portfolio includes stakes in global banks such as Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz), Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz), Bank of China (601988.SS: Quote, Profile, Research, Stock Buzz) and India's ICICI Bank (ICBK.BO: Quote, Profile, Research, Stock Buzz).

MANAGEMENT: Temasek is headed by Ho Ching, the wife of Prime Minister Lee Hsien Loong.

TRANSPARENCY: Temasek issues an annual report that gives the size of its assets, its investment performance and its largest holdings. The fund is rated AAA by Standard & Poor's and Moody's.

RECENT ACTIVITY:

- Temasek said on Sept 5 that it would sell power generating firm Senoko Power to a consortium led by Japan's Marubeni Corp (8002.T: Quote, Profile, Research, Stock Buzz) for S$3.65 billion.

- Temasek reported a doubling in net profit to S$18.2 billion for the fiscal year ended March 2008 but warned of further contagion from the global credit crisis.

- Chairman S. Dhanabalan said on Aug. 21 the firm may make new investments in Western banks if the opportunity arose. [ID:nSIN27493]

- Temasek agreed in July to sink an additional $900 million into Merrill Lynch as part of the debt-laden U.S. investment bank's latest $8.5 billion fund-raising effort. Temasek has not indicated whether it will keep or sell Bank of America shares it will get following the latter's purchase of Merrill.

- Barclays said in June Temasek will invest up to 200 million pounds in the British bank's 4.5 billion pound cash call [ID:nL25637237]

- Temasek said on May 28 it is looking for investments in Latin America and will set up offices in Brazil and Mexico before the end of this year. On Aug 11, the firm said it hired Morgan Stanley investment banker Michael Dee to head its new international division [ID:nSP170576]

Sources: Reuters, Morgan Stanley, Standard Chartered Bank (Writing by Kevin Lim; Editing by Neil Chatterjee)