Temasek Holdings' Planned Restructuring, and Potential Impact on Investment Performance and Returns

Parliamentary Question by Edward Chia Bing Hui:

To ask the Prime Minister and Minister for Finance (a) whether the Government is aware of the (i) mandates, (ii) workforce sizes and (iii) manpower cost benchmarks for each new entity after Temasek’s planned 2026 restructuring; (b) if so, what are they; (c) whether the Ministry conducted assessments on the appropriateness of workforce size and manpower costs vis-à-vis investment performance, risk management and organisational nimbleness; and (d) if so, what are the results.

Parliamentary Question by Mr Ng Shi Xuan:

To ask the Prime Minister and Minister for Finance (a) whether there are circumstances under which Temasek Holdings is expected to accept lower financial returns when pursuing strategic or developmental outcomes under the investment mandates given by the Government; and (b) if so, how are such expectations articulated and governed, given that the Government does not direct or influence individual investment decisions made by Temasek Holdings.

Parliamentary Question by Kenneth Tiong Boon Kiat:

To ask the Prime Minister and Minister for Finance (a) whether the Government will review Temasek’s risk-return framework to explicitly value strategic ecosystem building alongside commercial returns; (b) whether the Government has assessed the impact of Temasek’s recent deprioritisation of direct early-stage local investments on Singapore’s ability to nurture nascent high-potential industries; and (c) if so, whether alternative capital support mechanisms will be introduced to fill this gap.

Parliamentary Question by Mr Shawn Loh:

To ask the Prime Minister and Minister for Finance with the recent restructuring of Temasek Holdings (a) what are the specific mandates and returns targets or benchmarks for the new entities; and (b) whether the Ministry will consider publishing data on relative investment returns and investment costs regularly.

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Parliamentary Reply by Senior Minister of State for Finance, Mr Jeffrey Siow:

The Government's mandate for Temasek is that it should deliver good, sustainable long-term returns. The Government ensures that Temasek has a competent board to oversee its management but does not otherwise influence or direct Temasek's individual investment decisions.

With regard to Question No 14 on whether Temasek has any performance benchmarks, I had addressed this in the earlier reply; but in short, Temasek does not operate against a specific conventional reference portfolio as it is a direct investor, an investor that is bottom-up. Nonetheless, it does publish some indexes as reference, as I mentioned earlier, including the MSCI and the STI.

The Government expects Temasek to ensure that its overall portfolio of investments, including its Singapore-based Temasek Portfolio Companies (TPCs), achieves good commercial outcomes. Temasek actively and constructively engages its TPCs. From time to time, Temasek will work with the TPCs on strategic reviews and initiatives to strengthen their foundations for future growth. Temasek’s Singapore portfolio has been able to contribute steady returns to Temasek's overall portfolio and to Singapore’s economic growth over the long term.

Beyond exercising the appropriate oversight over its investments, there is no requirement for Temasek to pursue specific strategic or economic development strategies. Efforts to develop industry ecosystems or to enhance the financing for early-stage startups are led by the Government, rather than by Temasek. For example, Enterprise Singapore has a Startup SG Equity scheme, through which the Government co-invests with third-party investors in Singapore-based deep tech startups to catalyse the deep tech ecosystem.

And from time to time, Temasek may participate in the Government's initiatives, but it does so on commercial terms, strictly consistent with its mandate. For example, the Government has co-invested with Temasek in the Local Enterprises Fund, which aims to help large local enterprises transform and scale up; and the Anchor Fund which supports promising high-growth enterprises to raise capital through public listings in Singapore. Both funds are managed on a commercial basis by 65 Equity Partners, a Temasek-owned platform.

As Temasek expands its investment activities across new geographies and sectors, it may need to adjust its organisational structure to sharpen its focus and better achieve its objectives. And in this regard, Temasek has publicly explained the rationale for its latest restructuring. These are matters for the Temasek board to determine and the Government does not intervene in such decisions.

Ultimately, the Government holds the board of Temasek accountable for delivering good long-term returns on its overall portfolio and that is on the basis of net portfolio performance, after deducting all investment fees and expenses.