Last week, Temasek released its 2025 Annual Review for its fiscal year ending 31 March 2025.
The investment firm’s portfolio hit new highs despite the ongoing global challenges.
This year’s review points to a stronger emphasis on its core portfolio companies, attention to growth areas, and a broad international presence.
Strong and resilient portfolio performance
Temasek reported a Net Portfolio Value (NPV) increase of S$45 billion compared to the previous year to S$434 billion.
This NPV is a record high for Temasek, four times its value 20 years ago.
This growth was largely driven by a robust performance of Singapore-based Temasek Portfolio Companies (TPCs) and Global Direct Investments.
Temasek also showed resilience in its portfolio through its 20- and 10-year total shareholder returns (TSR).
The firm’s 20-year TSR came up to 7% and a 10-year TSR of 5%.
Although the 10-year TSR saw a fall of one percentage point from the previous fiscal year, this decrease was due to the exclusion of Temasek’s particularly strong performance in March 2015.
This resilience is attributed to the investment firm’s active portfolio rebalancing to adapt to changing economic landscapes.
Moreover, Temasek reported a dividend income of S$10 billion.
Temasek portfolio companies driving value
TPCs provide stable and sustainable returns over a long period and cash in the form of dividend income.
As of 31 March 2025, TPCs delivered a consolidated revenue of over S$150 billion.
TPCs also make up the largest portion of Temasek’s portfolio at 41%.
This high revenue is contributed by the companies’ successful strategic initiatives.
Take for instance, Singtel’s (SGX: Z74) strong performance for Optus and NCS as part of Singtel’s five-year strategic reset.
Another example is Olam Group (SGX: VC2), which proposed the sale of a 64.6% stake in Olam Agri Holdings valued at S$5.28 billion as part of its reorganisation plan to deleverage and invest in future growth.
In addition, Temasek actively engages with TPCs by supporting their respective strategic developments such as innovation and business transformation.
Temasek also established an Investment Stewardship team to oversee such long-term value creation efforts.
Emerging growth areas shaping the future
Other than resilient components, Temasek invests in dynamic growth areas.
The first area is unique core-plus infrastructure.
This area has been a long-standing aspect of Temasek’s investment strategy and the firm has been on the lookout for rising opportunities.
These opportunities include investing in data centres amid the rise in the adoption of artificial intelligence (AI) applications.
Furthermore, infrastructure in the green energy space has also been on Temasek’s radar due to the surge in demand for electrification.
In 2024, Temasek partnered with Brookfield Asset Management (NYSE: BAM) to acquire a majority stake in Neoen.
This acquisition gives Temasek exposure to green infrastructure with Neoen being one of the largest exclusive renewable energy companies globally.
On the topic of AI, Temasek looks for opportunities vertically across the value chain.
For example, the firm directly invests in AI infrastructure firms like Nvidia (NASDAQ: NVDA) and early-stage applications such as Waymo.
For 31 March 2025, early-stage investments encompass about 5% of the investment powerhouse’s total portfolio value.
Additionally, Temasek is committed to building AI ventures both independently and through active engagement with its TPCs.
These ventures include Minden.ai which is a venture partnered with Temasek’s TPCs to increase consumer engagement.
Minden.ai enables personalised services for consumers and more effective loyalty programmes through its flagship product yuu Rewards Club.
Continued developments in sustainable and inclusive investments
Temasek is committed to sustainability principles across its investments.
In the financial year 2025, Temasek had about S$4 billion of investments in the sustainable living space.
Currently, S$39 billion are in sustainability-focused investments and S$7 billion in climate transition investments.
These investments included companies with scaling sustainable solutions such as Electra.
Electra is a US-based provider of low-carbon alternatives for iron production.
Temasek continued to foster partnerships like the Brookfield’s Catalytic Transition Fund which makes investments in decarbonisation solutions in emerging markets and developing economies.
The firm also backed a number of funds and companies that focus on sustainable investing.
One of these funds is the GEF South Asia Growth Fund III, which focuses on climate investment in India.
A cautious global outlook
As of 31 March 2025, Temasek has 13 offices in nine countries.
Singapore and the Americas take up the largest portion of Temasek’s investment portfolio at 27% and 24%, respectively.
This diversification shows a better allocation of resources towards attractive investment opportunities.
Moreover, spreading out the exposure to many different countries reduces concentration risk of the portfolio.
For the road ahead, Temasek expects pressures on the Singapore economy from geopolitical uncertainties.
The company has confidence in the nation’s monetary and fiscal policies to offset such challenges.
The firm plans to carry on engaging in their TPCs and developing strategic partnerships to drive innovation.
On the future of the United States, Temasek acknowledges the need to be cautious regarding Trump’s tariffs and the Fed’s response to inflation risks.
However, the firm remains confident with the US leading the charge in the global AI industry supported by its robust capital markets and a culture of innovation.
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Disclosure: Gabriel Lim does not own shares in any of the companies mentioned.
