TEMASEK MAY SEEK OUTSIDE CAPITAL

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Temasek, the Singapore state investment company, is considering expanding its stakeholder base and for the first time seeking outside capital from institutions and the public for joint investment projects, its chief executive said on Wednesday.

Ho Ching said that Temasek had been approached by institutional investors for joint projects and the group had considered the proposal for the last three years, although a decision whether to proceed might take another six to 12 months as the investment agency continues to study the consequences of the move.

Outside participation in Temasek's investment strategy would be seen as an effort to promote greater disclosure and corporate governance in one of the world's biggest sovereign wealth funds.

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Ms Ho told Singapore's Institute of Policy Studies yesterday that Temasek would want only long-term investors if the proposal goes ahead. It would first seek ”sophisticated co-investors” and test the model over ”one market cycle during the next five to eight years” before deciding whether to invite retail investors ”in perhaps eight to 10 years' time”.

Ideas being considered would include attracting investors for single projects or creating a fund that would invest in many projects, said a Temasek official, who cautioned, however, that discussions had not been completed. Ms Ho said Temasek was ”working towards a framework” that could include both institutional and retail investors.

Ms Ho, who is the wife of the Singapore prime minister, unveiled the proposal as she acknowledged that Temasek lost more than S$40bn in the last fiscal year that ended in March due to global financial turmoil. The finance ministry, Temasek's sole shareholder, reported in February that Temasek had lost S$58bn in the eight months to November 30 last year, reducing the value of its portfolio to S$127bn.

Ms Ho did not indicate how long she planned to lead Temasek after her chosen successor, Charles ”Chip” Goodyear, the former chief of BHP Billiton, suddenly withdrew from the post last week due to differences over strategy. But she said succession planning to find either an external or internal candidate would continue. Ms Ho has been Temasek head since May 2002.

Mr Goodyear had been expected to acquire more assets in natural resources and reduce Temasek's exposure to financials, which make up 40 per cent of its portfolio. But Ms Ho said Temasek was ”still comfortable” with its bank investments, although it also saw opportunities in food and energy.

Financial services remain a good proxy for the growth of Asian economies, she said. Temasek has stakes in Chinese, Indian and Indonesian banks. Temasek early this year sold its stake in western financial groups, including Bank of America and Barclays, at a loss.