GIC, Temasek revamp how they deal with hedge funds

SINGAPORE’S two largest state-owned investors are making major changes to the way they work with hedge funds, in moves that could affect billions of dollars in allocations.

Sovereign wealth fund GIC is in the midst of a shakeup of its external managers department, replacing its veteran head and hiring additional staff, according to people familiar with the matter.

Temasek Holdings has been contacting a wider pool of hedge funds for potential investments, people familiar said.

The unconnected moves could have major implications for the money available to the world’s biggest hedge funds. GIC is a significant source of capital for the sector.

Temasek has traditionally made relatively few investments with such outside managers directly, preferring to deploy money via subsidiaries like Seviora Holdings and investees like Avanda Investment Management.

Betty Tay, GIC’s head of the external managers department, plans to retire from the role and eventually be replaced by Kwong Hong Huat, people familiar said.

Formerly head of the Asia total returns public equities team, Kwong became the deputy director of the external managers department last month in preparation for the move.

“Organisational and leadership changes are part of GIC’s business planning process to ensure we remain well-positioned for the future,” a GIC spokesperson said in an emailed statement confirming the moves.

Tay has spent more than two decades at the firm, having previously worked at Bankers Trust (Singapore) and DBS Group Holdings. 

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GIC doesn’t reveal how much it has under management, but consulting firm Global SWF estimates its assets were about US$936 billion as of March last year, around 1.5 per cent of which was placed with hedge funds.

The firm is hiring for at least four positions in its external managers department, from associate to vice president levels, according to job postings on LinkedIn. It’s unclear how the leadership change at GIC will affect its hedge fund allocation strategy.

Temasek meanwhile is likely to increase the amount of money it places externally with hedge funds. Executives from the firm, which had a net portfolio value of S$434 billion as of March, have been reaching out to global hedge funds, according to people familiar with the matter.

“In addition to equities, we have been investing into alternative assets that diversify our exposure and provide a stable range of returns, strengthening the resilience of our portfolio,” Temasek chief investment officer Rohit Sipahimalani said in an emailed response to Bloomberg.

These assets includes private credit and hybrid solutions, private equity funds, and other alternative or uncorrelated strategies such as multi-strategy and macro hedge funds, he added.

Temasek last year said it was an investor in about 10 hedge funds including Citadel, the firm founded by billionaire Ken Griffin. It expected to generate double-digit returns from them.

The state investor is set to place its hedge fund allocations under a new Temasek Partnership Solutions unit from April as part of an overhaul.

About 23 per cent of Temasek’s net total portfolio was managed by external partners and fund managers as of March. 

The shift comes amid a wide-ranging review of how Temasek invests and manages assets externally. That’s likely to be completed in the coming months and could potentially free up capital to invest elsewhere.

Over the years, the firm has created numerous spinoffs, subsidiaries and holding vehicles, several of which have overlapping mandates. These run the gamut from early-stage venture capital firm Vertex to private credit specialist SeaTown and investor Fullerton Fund Management. BLOOMBERG