Singapore sovereign wealth fund Temasek Holdings' new charter marks a significant change from the original.
The new charter's backgrounder stresses the government is not involved in Temasek's business decisions while the old charter focused on their relationship.
The old 2002 charter began with the words:
Temasek Holdings was formed in 1974 as a focal point to hold and manage the Singapore government’s investments in companies for the long-term benefit of Singapore.
By nurturing successful and vibrant international businesses from its stable of companies, Temasek will help to broaden and deepen Singapore’s economic base.
Instead, the new charter begins:
Temasek Holdings is an investment company managed on commercial principles to create and deliver sustainable long-term value for our stakeholders.
Why the change?
Reuters explains:
Sovereign wealth funds have come under greater scrutiny from Western governments concerned that their investments may be politically motivated…
Temasek chairman S Dhanabalan candidly said, "We are operating more overseas, so we like people to have a better understanding of us," reports Reuters.
"Two-thirds of our underlying portfolio comprises assets outside Singapore, compared to predominantly Singapore assets in 2002," he said, according to a Temasek press release.
No SIA, DBS, SingTel sale as long as they are competitive
Wholly owned by the Singapore finance ministry, Temasek still has major stakes in Singapore bluechips such as Singapore Airlines, DBS Bank and SingTel.
Temasek will not sell them as long they are competitive, Mr Dhanabalan said in reply to a Reuters question. He said:
Our main focus is to build businesses which are internationally competitive. If these companies continue to be competitive, then there is no need to sell them. Unless we come to the conclusion that there is no more opportunity for them to grow, then that is a different question but I don’t think that is going to be something that we need to face in the immediate future.
Stressing Temasek makes its own decisions, the new charter's backgrounder says:
19. The Singapore Government, as shareholder, does not involve itself in the operations and business decisions of Temasek. Neither does the Government direct or influence the investment or divestment decisions of Temasek.
20. Temasek manages the assets it owns. It does so independently of, and plays no role in, the management of Singapore’s official foreign reserves and other Government reserves.
The 2002 charter's backgrounder, on the other hand, stressed the relationship between the government and Temasek.
It said the government needs to control companies such as utilities and airport and seaport operators that are critical to Singapore's security and economic well-being. They were described as Group A companies and Temasek undertook to ensure their financial discipline and sound management.
Group B companies, on the other hand, were those with the potential to expand overseas. The 2002 charter said:
Temasek is open to Group B companies partnering other companies or shareholders to regionalise or internationalise where it makes strategic or commercial sense. Temasek is prepared to dilute its stake through the issuance of new shares, or mergers or acquisitions in order to support the long-term success of these companies as regional or international players.
No more A companies, B companies
No such distinction is drawn between companies free to internationalize and those that have to be kept under government control in the new charter and its backgrounder.
Temasek CEO Ho Ching, the wife of Singapore Prime Minister Lee Hsien Loong, said:
The gencos (power-generating companies) are what we would classify under the previous Charter as Group A companies, but there are very few of these companies left in our stable. So, as of now, I would say most of them other than those in the defence sector would all be commercial and we are free to look at them as commercial.
President's role
In another departure from the past, the new charter's backgrounder calls attention to the President's role. His agreement is needed for the appointment and removal of Temasek board members and the CEO. And the chairman and the CEO must report to the President on Temasek's reserves every six months. "The President’s approval is needed for any transaction which may draw on the past reserves of Temasek."
The Wall Street Journal reports:
Chairman S Dhanabalan said that Temasek is open to divesting from Singapore companies if it feels that they can't provide acceptable levels of growth, though he added that there is no immediate need for this.
Ms Ho said Temasek still plans an initial public offering of port operator PSA International, Singapore Power and real estate company Mapletree Investments.
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