[SINGAPORE] Temasek Holdings is shaking up its asset mix with a push into biotechnology and consumer companies that stand to benefit from aging populations and increasing disposable incomes.
Singapore's state-investment firm singled out life sciences and agriculture as well as consumer goods among the top three industries it allocated money to in the fiscal year ended March 31, helping its portfolio value reach a record. It added assets in US pharmaceutical firm Gilead Sciences Inc, Indian drugmaker Intas Pharmaceuticals Ltd, and health and beauty retailer A.S. Watson during that period.
Temasek is broadening its investments as those holdings will capitalize on the increasing medical needs of aging societies mainly in the developed world and a growing middle class bolstering consumption in emerging markets.
The share of life sciences and agriculture in the investment firm's portfolio tripled in two years to 3 per cent and the share of an asset class that includes consumer goods and real estate gained to 15 per cent from 11 per cent in the period.
"Temasek is quite astute in monitoring and exploiting broad secular trends," Patrick Schena, co-head of the Fletcher Network for Sovereign Wealth and Global Capital at Tufts University in Medford, Massachusetts, said in an e-mail. These include "demographics, such as aging, and socio-economic transformations, such as expanding middle-income populations."
Temasek's value of new investments was the highest in seven years at S$30 billion and it made record divestments of S$19 billion, the firm said in its annual report released on Tuesday.
That helped swell the value of its holdings 19 per cent to a record S$266 billion, while the total shareholder return, which includes dividends, increased to 19.2 per cent from 1.5 per cent in the previous fiscal year.
Temasek invested in Global Health, an Indian owner of the Medanta franchise of multispecialty care hospitals, it said. It also bought assets in Cofco International Ltd, which holds a controlling stake in Nidera and Noble Agri, both international agriculture supply chain managers.
"Like other sovereign wealth funds such as China Investment Corp., Temasek's appetite for agriculture deals seems to stem partly from concerns about long-term access to stable food supplies," said David Evans, an analyst at the London- based Institutional Investor's Sovereign Wealth Center.
The Kuwait and Qatari sovereign wealth funds also are increasing investments in biotechnology and life sciences, and agriculture, said Mr Schena at Tufts.
Temasek's new investments in life sciences tie in with the change in how the global population is composed. The number of people 60 years and older will more than double to 2 billion in 2050, according to the World Health Organisation. That will require more medical treatment as illnesses like arthritis, osteoporosis and mental and neurological disorders increase. The WHO estimates that the number of people with dementia will triple to 135 million by 2050.
While the Singapore state-investment firm expanded the share of life sciences, agriculture and consumer assets, its biggest portfolio components remained financial services as well as telecommunications, media and technology.
Temasek and its subsidiaries last year were very active investors in digital assets, across a variety of sectors, including e-commerce and less traditional forms of finance, said Tufts's Schena.
"Is it a trend away from 'traditional' assets like industrial, finance?" he said. "Perhaps. But perhaps too less a shift away from, and more motivated by opportunities defined by discrete secular movements."