Singaporean Entrepreneurs

Temasek Holdings recently raised its investment in Merrill Lynch when troubled ML announced plans to raise capital by way of share offerings. We were wondering why Singapore keeps buying into the troubled companies of the US when more doom and gloom is expected. Isn’t it bad enough that Temasek’s initial investment in December 2007 and March 2008 at US$48 a share has resulted in a 50% paper loss? (ML is now hovering in the mid US$20′s).

Well, it turns out that Temasek’s initial investment came with a price-reset clause which states that if Merrill sells new shares within one year at a price less than US$48, then Merrill will need to pay Temasek the difference in either cash or shares. Brilliant!

Backgrounder on Temasek Holdings
Singapore’s lack of natural resources makes it imperative for the government to invest in other countries in order to grow. While Singapore’s Ministry of Finance was the original portfolio holder, today, Temasek Holdings operates as an autonomous and professional investment house, guided by an independent board. Essentially, Temasek Holdings was set up to better manage the MOF’s accumulated portfolio of companies. The initial portfolio in 1974 was S$354 million. Today, the market value of Temasek’s portfolio has grown to S$164 billion as at 31 March 2007.

Some Trivia
There are actually several famous Temasek’s in Singapore. The ones listed below are all academic in nature although there are also clubs, sports groups, etc:
(1) Temasek Secondary School
(2) Temasek Polytechnic
(3) Temasek Junior College
(4) Temasek Laboratories at NUS