Analysts and bankers said yesterday that the plan of Temasek Holdings to raise capital from various retail investors for future co-investments could take several forms. However, regardless of the plan’s final shape, the investment firm in Singapore will probably have to further invite potential investors.
At this time, it’s certain that Temasek will raise publicly -acquired funds solely from small investors. Ho Ching, the chief executive of Temasek, said on Wednesday that they were still studying the feasibility of getting the public to co-invest with the firm.
If Temasek continues the plan, the firm will have it tested first on co-investors before it will allow the participation of retail investors – an eight-year pilot process, said Ms Ho.
As a result, the people interviewed by Business Times did so with the condition of anonymity.
A good suggestion was for the firm to establish an investment fund on private-equity and invite rich individuals or institutional investors to participate. If this would be successful, Temasek could possibly open the fund to retail investors by listing fund shares in a stock exchange.
This fund would be different form other firms in the portfolio of Temasek in a way that the firm would directly run it.
However, an uphill task could be faced by Temasek to convince outside investors to place money in a sister fund.
Head of group investment banking George Lee from OCBC Bank said that to sell the said fund, the firm would more likely to have further disclose the investment record.
“In order to convince investors, they would have to be very transparent with their historical record, itemising exactly what they bought and sold, and at what price, in order to substantiate the return they claim to have made. That means disclosing a lot more things than they have disclosed.”
A banker reasoned out that having a sister fund launched would surely produce interest conflicts. With a fresh investment opportunity at hand, the banker asked, “Who invests – Temasek or the new fund? Would there be a no-compete agreement?”
Another person raised an objection regarding the publicly listed fund. He said that this would be in conflict with the objective of Temasek to attract long-term investors.
He also mentioned the possibility that the firm could allow the residents in the area to place some part of their retirement savings in the Central Provident Fund (CPF) with Temasek.
This would accomplish the firm’s aims to add retail investors to the stakeholder base of Temasek, while keeping its focus on attracting long-term capital.
By offering the residents the option to invest part of their savings in CPF with Temasek, it could somewhat address the difficulty to earn high return savings.
He also added that placing the savings of CPF with Temasek can possibly offer a good return, which is based on the firm’s 18 percent average annual return since its establishment in 1974.
It is theoretically possible for the firm to list itself, however, due to the number of information, Temasek need to disclose for public listing.