GIC, Temasek & MAS 01 (May 08 - Aug 09)

[winston]

Volatile global equity, currency and credit markets have 'inevitably' affected investments of Singapore's reserves, she Parliament. Still, the reserves are invested in a diverse range of assets and with a long-term strategy, she said, reported Bloomberg news.

Temasek, the state-owned investment company with a US$130 billion portfolio, increased investments in Merrill Lynch and Barclays Plc as the credit market collapsed in the past year.

It's the biggest shareholder of London-based Standard Chartered Plc and Singapore's DBS Group Holdings Ltd., and owns stakes in India's ICICI Bank and lenders in Indonesia, South Korea and Pakistan.

The fund spent US$18 billion on stakes in UBS AG and Citigroup Inc. in the past year.

'Our investments are well diversified across a wide range of assets and currencies, which has helped to mitigate risks to the overall portfolio,' Mrs Lim said.

I see a huge concentration in Financial Stocks

[kennynah]

oh well...the system we are in....

(the rest of the comments, self-censored........)

[millionairemind]

Tot this is more appropriate here.

Once bitten, twice shy
Oct 16th 2008 | DUBAI
From The Economist print edition

Will private equity and sovereign wealth funds invest in banks?


VIEWED against Dubai’s ever-expanding horizon of cranes and skyscrapers, anything seems possible: even that Western banks might find capital from sources other than their governments. Yet at this week’s buoyantly named “Super Return” conference, the mood among private-equity and sovereign-wealth types was unusually demure. Stephen Schwarzman, the boss of Blackstone, a buy-out firm, spoke for many when he warned of trying to “catch a falling knife and severing the tendons in your right hand”.

Most governments hope that having guaranteed their banks’ survival they will encourage outside investors to come back in. After all, private-equity firms are sitting on about $450 billion of “dry powder”—funds raised but not yet spent. And sovereign-wealth funds have assets of $2 trillion to 3 trillion, much of which is sitting idly in American Treasury bonds. Meanwhile, the IMF thinks American and European banks need $675 billion of new capital.

But will the blanket invitations to invest be accepted? Private equity needs to save part of its cash for recapitalising the mega-buy-outs of the boom era: much of the equity is now “toast”, an industry veteran admits. But some firms do see bargains. David Rubenstein, a co-founder of Carlyle, a big buy-out firm, thinks the financial sector could present the “greatest opportunity” he has seen in 20 years.

The trouble is that buying into big banks alongside governments is not top of anyone’s to-do list. Some specialist investors, such as JC Flowers and TPG, have already been badly burned. And clients who can invest directly in big quoted banks may balk at buy-out firms charging them high fees to purchase minority stakes on their behalf. Instead, many firms may limit themselves to distressed assets and buying (with government help) midsized American banks that they can run.

Sovereign-wealth funds, meanwhile, have been conspicuously absent. So far only Qatar’s investment authority has been prepared to play the sugar daddy, with investments in Credit Suisse and also, reportedly, Barclays. The funds’ reluctance partly reflects a liquidity scare in the Gulf, which has led several governments to support their own banking systems. Dubai’s pessimists, a tiny but apocalyptic tribe, worry that some of Abu Dhabi’s oil wealth may have to be spent helping its brash neighbour refinance its debts.

But the biggest impediment for many sovereign-wealth funds is the trauma they have suffered since investing in Western banks early this year. Typically since then the banks’ share prices have at least halved, losing tens of billions of dollars for their sovereign investors and earning them the unhappy reputation of being “dumb money”. No longer will they be smooth-talked into investing at very short notice in distressed institutions. Although Western government backing reduces the financial risk of such stakes, it also raises their political profile, which is unappealing to the potential investors.

Is attracting such capital a lost cause? Some will be tempted in. After all, the terms on offer were enough to attract Warren Buffett, an investing legend, to buy a stake in Goldman Sachs. But, broadly speaking, the recapitalisation of big Western banks is likely to be a two-stage process, with governments doing the heavy lifting first, before others are prepared to pile in. That could take years. Miracles do not happen overnight, even in Dubai.

[Blackjack]

ANGRY GPT Property Group shareholders have called for the removal of its board after attempts to recapitalise with a $1.6 billion issue and placement to Singapore's state-owned GIC Real Estate.

One of GPT's major investors, Perennial Real Esate Investment, last night called on the GPT board to postpone the transactions for five trading days to allow the new information to be properly disseminated to the market.

Perennial, which has a 10 per cent interest in GPT, said it had major concerns with the transactions. "The transaction is heavily dilutive to existing shareholders and Perennial believes that it is not in the best interests of shareholders," Perennial said.

"Perennial believes a deferral will allow the market to properly consider alternatives to releasing the true underlying value inherent in the GPT group's assets."

Perennial said it had lost confidence in the GPT board and planned to requisition a meeting to remove the board.

Brokers suggested that some institutional investors were unlikely to take up their entitlement of about $1 billion worth of units.

One source said up to a third of the institutional entitlement would be taken up by hedge funds and general equities funds.

GPT has raised at least $1.3 billion in a 1 for 1 non-renounceable entitlement offer to all unitholders at a discount of 35-48 per cent to Monday's closing price.

The offer was fully underwritten by UBS, Deutsche Bank and Goldman Sachs JBWere.

GPT also made a placement to Singapore's state-owned GIC RE of $250 million of notes convertible into equities at $1.25 per unit.

The heavy discount enraged unitholders but GPT's outgoing chief executive Nic Lyons, who stepped down yesterday, said it was critical to ensure the issue was fully underwritten.

He said the purpose was to raise enough capital to take the "whole gearing issue off the table" because the issue had masked the underlying value of GPT.

"There is no way that GPT was worth a dollar -- which was what it had been trading at -- when the assets were worth $3.68," said Mr Lyons, who handed over to stand-in CEO Michael O'Brien yesterday.

He said GPT had not, and did not expect to, breach its loan covenants, and would not leave "securities holders in an uncertain position" next year with "banks using legal rights to have the loans repaid".

Mr Lyons said if all securities holders took up their rights, the only dilution would be created by the placement to GIC, "which in the scheme of things is relatively minor". But an institutional investor pointed out that the distribution this year would drop from 18c to 7.2c per security.

GIC will end up with between 12 and 18 per cent of GPT capital.

GIC RE president Seek Ngee Huat said: "We see this partnership with GPT as a good fit."

Some observers believe that the GPT share price will fall when it re-opens for trading today.

A major investor said: "My biggest concern is the lack of management credibility and the joint venture."

"It is a potential time bomb. The management have a lot of issues to resolve." GPT has written down the value of its $1.9 billion European joint venture with Babcock & Brown to zero.

This, its most controversial move, has been blamed for the fall in GPT's share price from $4.67 last December to $1.15, wiping out $7.8 billion in market value.

Mr Lyons said he personally took "full accountability" for events and accepted the board decision to replace him.

"If we look back now with 20-20 hindsight, you would definitely do things differently.

"But ... they were the right things to do" at the time.

http://www.theaustralian.news.com.au/story/0,25197,24543300-643,00.html

[millionairemind]

Asian sovereign wealth funds may turn toward home
By Saeed Azhar ReutersPublished: October 28, 2008

SINGAPORE: Asian sovereign wealth funds may become more active closer to home, shoring up markets as emerging economies turn to their deep pockets to steer around the damaging effects of the global market turmoil, analysts say.

Bets on Western banks like Citigroup and UBS - where the funds pumped in billions of dollars during the early phase of the credit crisis - have shown few signs of paying off. As a result, wealth funds in Singapore, China and South Korea may instead look to invest growing cash stockpiles in more defensive sectors like Asian utilities and infrastructure companies. At the same time, they could keep an eye on distressed property and financial assets in Western markets.

Asian state funds could also pump cash into local banks to support domestic financial systems, as their counterparts in Russia and the Middle East have done, as well as take part in private equity or debt deals to help companies refinance billions of dollars of debt.

"There has been another round of de-risking from assets like stocks in emerging markets over the last few days, but the SWFs are in for the longer haul," said Jan Randolph, who covers sovereign wealth funds at Global Insight. "I think they'll still be looking for opportunities now that everything is a lot cheaper."

Asian sovereign wealth funds, which Deutsche Bank estimates manage around $1 trillion, or 29 percent of the assets held by global funds, have become more influential in financial markets, but they began building cash stockpiles as the credit crisis worsened.


The fallout from the collapse of the U.S. subprime mortgage market is now hurting the ability of the corporate sector to raise capital, forcing companies to look for state help. According to Morgan Stanley, Asian sectors facing refinancing risks include banks, especially those dependent on markets for funding in South Korea, Australia, India and Hong Kong.

In the corporate bond sector alone, $17.2 billion worth of bonds mature next year, led by companies in South Korea, Thailand and Taiwan, according to Thomson Reuters data.

The Government of Singapore Investment Corp., or GIC, gave evidence of such deals when it agreed to buy $250 million in convertible debt of the Australian property trust GPT, raising its presence in a country that accounts for just 2 percent of its portfolio.

"The convertible bond space is offering unprecedented opportunities right now," said Kirby Daley, senior strategist at Newedge Group in Hong Kong. "If you have capital, you can take full advantage of that. The opportunities are far better than getting in on the equity side of a lot of these companies."

Several investment-grade sovereign and corporate bonds now give a yield of around 15 percent and present opportunities for long-term investors, said Liew Tzu Mi, head of GIC's global emerging markets team for fixed income, currencies and commodities. But Liew said at a seminar last week that it was hard for investors to buy now, as the cash market for many bonds had dried up.

GIC, which has over two-thirds of its investments in the United States and Britain, said recently that it had been increasing its emerging-market exposure in northern Asia and the Americas.

The sea of liquidity among wealth funds was illustrated by GIC when it disclosed that 7 percent of its portfolio was in cash - over $20 billion out of an estimated $300 billion.

Korea Investment Corp., which has received $30 billion from the South Korean government, said it expected to diversify in order to be defensive in a falling market. "In addition to such traditional assets as equities and bonds, a gradual increase in the proportion of alternative assets can diversify investment risks," it said in a recent report.

But the crisis has not totally derailed sovereign wealth funds' appetites for big deals in the West, as shown by an Abu Dhabi state-owned venture capital firm's move to invest $2.1 billion in a manufacturing joint venture with Advanced Micro Devices.

And despite China Investment Corp.'s initial losses on its investments and recent concerns among regulators about overseas investments, the Chinese state fund went ahead with plans to raise its stake in the private equity firm Blackstone. CIC still holds 90 percent of its roughly $200 billion of assets in cash.

[millionairemind]

Temasek to invest up to US$147m in Pakistan NIB Bank

KARACHI - Singapore sovereign wealth fund Temasek Holdings has agreed to a further investment of up to 12 billion rupees (US$147 million) in Pakistan's NIB Bank via a rights issue, NIB said.


Temasek, already NIB's largest shareholder with 63.15 per cent, will participate in the Pakistani bank's 12 billion rupee rights issue and subscribe for shares not taken up by minority holders.

The rights issue will be offered to all existing shareholders at a ratio of 42.198 shares at par value, which is 10 rupees per share, for every 100 shares held as of Nov 19.

NIB shares last traded at 8.45 rupees each, giving it a market value of close to US$300 million.

'The purpose of the rights issue is to bolster NIB's capital to meet the opportunities and challenges that the board expects will be presented over the next few years,' NIB said in a statement dated on Monday.

If Temasek takes up the entire rights issue, its stake in NIB will rise to about 75 per cent, according to Farhan Rizvi, analyst at JS Global Capital.

According to NIB, with the rights issue, its paid-up capital will increase to over 40 billion rupees, the highest of all Pakistani banks. -- REUTERS

[winston]

BUSINESS TIMES - The meltdown in Singapore's stock market in October erased over S$16.4 billion from sovereign wealth fund Temasek's [TEM.UL] assets.

Blue-chip Singapore firms such as Singapore Telecommunications , DBS Group and Singapore Airlines accounted for one third of Temasek's portfolio value of about S$185 billion as at March 31, 2008.

[millionairemind]

Invest for the long term?? Or should some1 come out and say Lets Move On??? Sigh...

Published November 7, 2008

Temasek's Aussie investment goes under
Childcare operator ABC Learning Centres goes into receivership
By SIOW LI SEN

(SINGAPORE) A Temasek Holdings investment Down Under has gone under - a victim not just of the credit crunch but also dubious management.

Not quite as easy as ABC: Reports are emerging that founder Eddy Groves, who was ousted in September, ran ABC's operations in such an 'opaque' way that potential rescuers find the business model hard to decipher

Childcare operator ABC Learning Centres said yesterday that it has gone into receivership and appointed voluntary administrators to help clear a mountain of debt.

Reports are emerging that founder Eddy Groves, who was ousted in September, ran ABC's operations in such an 'opaque' way that potential rescuers find the business model hard to decipher.

ABC has also been attacked over related-party transactions. Mr Groves' former brother-in-law had a A$170 million (S$174 million) maintenance and renovation contract for ABC's childcare centres, and the service company lists its principal place of business as Mr Groves' Brisbane apartment.

Reports yesterday said the directors of ABC - the largest childcare centre operator in Australia and second-largest in the US - has appointed Ferrier Hodgson Group voluntary administrator.

Temasek Holdings is ABC's second-largest shareholder. In May last year, the Singapore investment company spent A$401.5 million or A$7.30 a share on a 12 per cent stake. Then early this year - as the stock sank - Temasek increased its stake to 14.7 per cent. This has since been pared to 12.68 per cent, after ABC completed an A$82 million equity placement in June.

Temasek Holdings spokeswoman Myrna Thomas said yesterday: 'We note the serious development announced by ABC Learning Centres. We are monitoring the situation closely and will explore all options available to us.'

Lazard Asset Management is ABC's largest shareholder with 12.93 per cent, followed by Temasek, then Morgan Stanley.

ABC said the company's banking syndicate has appointed advisory firm McGrathNicol as receiver, AP reported.

ABC chairman David Ryan said the company's board and management are 'disappointed' to be in this position but that quality childcare will continue. The company has almost 1,200 childcare centres in Australia and New Zealand, and more than 1,000 in the US, as well as more than two dozen nurseries in Britain.

ABC's debt on June 30, 2007 was A$2.2 billion, up substantially from A$111 million at the end of fiscal 2004.

The company, which gets a large proportion of its revenue from Australian government childcare subsidies, has delayed filing annual results for its latest financial year.

The government is in talks with creditors about ABC's future and has set up a task force to consider contingency plans to protect families that use the childcare service.

Potential buyers have been put off by the company's opaque management, after going through its books.

The Australian Financial Review newspaper said on Wednesday that instead of developing its own centres, ABC paid a company called 123 Global, run by former ABC executive Don Jones, to buy land, build centres and run them until occupancy rates were up, before selling them at a multiple of earnings.

But ABC could claw back liquidated damages if occupancy rates fell short, booking these as profits. In 2006, Mr Jones was running 123 Careers, which outsourced ABC Learning Centre staff. He paid a fee to ABC for a 10-year contract, which ABC front-loaded with payments over three years.

ABC is also said to have bought a toy distributor for A$5 million, loaded it with contracts to supply ABC Learning Centres, and then sold it for A$46 million.

Trading in ABC's shares has been suspended since Aug 21 as the company worked to resolve its debts. The shares last traded at 54 Australian cents.

[iam802]

It will be interesting to hear what Temasek have to say on their investment process.

Example, after they have invested, and with the worsening credit crunch, surely Temasek will have more information at their disposal that it is hard to raise cash.

And in this case for ABC Learning, which is already in debt, the odds are against them.

[iam802]

$22m aid for ABC.... until end of year. ( << Approximately 1.5 months to go.)

http://www.smh.com.au/news/national/22m ... 18112.html

The Federal Government will provide up to $22 million to keep ABC Learning Centres open until the end of the year.

The rescue funding was announced by Deputy Prime Minister Julia Gillard as she revealed that a preliminary analysis had found 40 per cent of ABC's 1040 centres are not profitable.

The funding will be used to keep those centres open for the next two months but she said the Government would not step in to buy or operate the centres.

She said the Government's key concern was to provide stability and to reassure parents and employees that these centres would remain open for the time being.

"The $22 million represents the possible cost of supporting the continued operation of these centres for two months and will allow parents to have the certainty that child care will be provided as usual in that period and will also provide stability for employees of ABC Learning,'' she told reporters in Melbourne.

Ms Gillard said the Government would use the next two months to decide what to do next.

"Arrangements beyond the 31st of December this year will become clear and we will make announcements about those when possible,'' she said.

ABC Learning, the nation's biggest childcare operator, yesterday handed over management to administrators Ferrier Hodgson.

About 120,000 children attend the centres, which account for more than 20 per cent of the nation's long-day-care places and employ more than 16,000 staff.

The Government has been in discussions with ABC's receivers and administrators as well as its banks on arrangements to prevent disruption to parents and employees.

It has established a telephone hotline - 180 2003 - and will also use its child-care website mychild.gov.au to keep parents and staff informed. The receivers have also set up a hotline - 1800 222 543.

After the ABC Learning board put the company into administration, receivers McGrath Nicol were appointed by the banks to which ABC Learning owes more than $1 billion.