Sources of $5b funds to Temasek revealed

The Ministry of Finance (MOF) has revealed the sources of the $5 billion in fresh funds that it injected into Temasek Holdings during the Singapore investment company's latest financial year.

The additional capital came from proceeds of the Singapore Government Securities (SGS), proceeds from government land sales in Singapore and government budget surpluses, the ministry told The Straits Times on Wednesday in response to queries.

The SGS are bonds that the Government issues to develop the domestic debt market, and are traded in public markets.

Temasek disclosed on Tuesday that it had received a $5 billion capital injection from the MOF during its latest financial year ended March 31.

The MOF is Temasek's only shareholder.

This helped boost the investment company's net portfolio value to $223 billion as at March 31, up from $215 billion.

However, the funds injection did not improve Temasek's total shareholder return, which "better reflects the investment performance of Temasek", an MOF spokesman said yesterday.

Temasek's one-year total shareholder return for its latest year to March 31 was 1.5 per cent in Singapore dollar terms, down from 8.9 per cent the previous year.

The company attributed this mainly to weakness in its key investment markets in Asia when it released its financial results on Tuesday. Its total shareholder return includes dividends it pays to the MOF, but excludes any fresh capital it receives from the MOF.

The MOF also told The Straits Times that the $5 billion capital injection did not include proceeds from the Special Singapore Government Securities (SSGS), which are instruments that the Central Provident Fund (CPF) Board uses to invest Singaporeans' CPF savings. In other words, Temasek "manages its own assets, and does not manage any CPF monies", the spokesman reiterated.

In the past 10 years, the Government has injected capital into Temasek only a few times.

In Temasek's 2007-2008 financial year, the MOF pumped $10 billion into the company. In 2011, the Government put in a further undisclosed amount to fund the joint venture between Temasek and Malaysian state investment firm Khazanah Nasional.

"As shareholder in Temasek, the Government injects capital into the company taking into account the long-term, risk-adjusted returns that it can be expected to make," the MOF spokesman said.

fiochan@sph.com.sg

This article was first published on July 10, 2014.
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