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Singapore's Temasek grows global portfolio to include retail, African resources

SINGAPORE--As it approaches its 40th year, Singapore investment giant Temasek is stretching its legs, moving away from its finance-based comfort zone into sectors like retail and African resources to ensure future growth, analysts say.

With worldwide holdings worth SG$215 billion (US$171 billion) as of end March 2013, Temasek is listed as one of the top 10 global players by the U.S.-based Sovereign Wealth Fund Institute.

Its wide spectrum of interests spans banking, telecoms, transport, life sciences and property, while more than 70 percent of its investments are in Asia.

But with the global economy still readjusting five years after a crippling financial crisis, the firm, established in June 1974, is re-evaluating its portfolio to find new growth areas and minimize its exposure in the event of another downturn.

Analysts say businesses that cater to the needs of the growing middle class in emerging markets, as well as energy and resources, are expected to comprise the main areas of interest for the fund.

“One of the key investment strategies that Temasek has been pursuing in recent years has been to diversify its portfolio to tap into the rapid growth in spending by the middle class in emerging markets,” said Rajiv Biswas, chief Asia Pacific economist at IHS Global Insight.

“The rise of Asia's consumer middle classes will be one of the key global megatrends driving change in the global economy over the next two decades,” he told AFP.

Kelly Teo, managing director at I.R. Resources, said Temasek's venture into resources in Africa “shows their willingness to look beyond the norm.”

Tapping Consumer Growth

Temasek in March bought almost 25 percent of A.S. Watson, the retail chain owned by Hong Kong's richest man Li Ka Shing, for HK$44 billion (US$5.67 billion).

Its flagship brand Watsons is a household name as Asia's largest health and beauty retailer, with over 4,000 personal care stores and 1,000 pharmacies in countries including China, Korea and the Ukraine.

A Temasek-led consortium in March offered SG$2.53 billion to buy out minority shareholders of Olam, which supplies products such as nuts, coffee, cocoa and sugar to food and beverage manufacturers.

Olam also sells its own brands of packaged foods in Africa, which its website describes as the fastest growing continent for consumer products over the next few decade.

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