Temasek, one of the three entities that manages Singapore’s vast sovereign wealth reserves, has set its sights on sustainability — and on expanding its investments in the United States.
Temasek made headlines in late July, as Jane Atherton, head of North America for the Singaporean investment giant, told media organizations including Institutional Investor about its plans to invest $30 billion across asset classes in the United States.
“It’s an incredibly deep and broad capital market, which provides tremendous opportunity for us,” Atherton told II. “The U.S. has always had a culture of innovation, and you see the majority of the unicorns being raised and domiciled here. It is at this point in time, clearly the leader in AI. And the U.S. is also showing very strong business fundamentals.”
The United States is expected to be the largest recipient of Temasek’s investment dollars with $30 billion forecasted over the next five years. Temasek recently reported a net portfolio value of $288 billion. It is wholly owned by the Singapore Minister of Finance, but is not state-directed and operates independently.
Temasek tends to operate on the riskier end of the investment spectrum compared to GIC, one of the two other funds managing Singapore’s wealth. Temasek primarily makes direct investments using equity, although it can commit capital in other ways too.
The capital will be invested across four major themes: healthcare, AI, financial technology, and consumer-driven trends. According to Atherton, Temasek is a bottoms-up investor, which means that its pacing plan is a little bit flexible. While the fund is seeking vintage diversification, it’s willing to wait for the best opportunities.
“A lot of this will be driven by the opportunity set that presents itself,” Atherton said. “We’re a permanent capital vehicle investing off our own balance sheet... There isn’t necessarily a fixed timeline to say X amount per year over the next five years.”
A major portion of Temasek’s work focuses on sustainable investing: Managing director of ESG investment management, Kyung-Ah Park said that across the organization, teams include sustainability in their due diligence process. As of March 31, S$44 billion ($33.2 billion) of Temasek’s portfolio value comprised of sustainable living investments.
“Because of the way we were founded, stewardship and sustainability are in our DNA,” Park said. “We are a generational investor and so we invest with a future in mind.”
Since 2021, Temasek has partnered with LeapFrog Investments, Brookfield, and BlackRock on major climate and sustainability-related efforts.
Temasek set up a joint venture with BlackRock called Decarbonization Partners, which makes late-stage venture and early growth stage private equity investments in companies that accelerate efforts to achieve net zero by 2050.
“We deliberately said, let’s not make a one-time fund but a durable asset class,” Park said. Temasek and BlackRock committed $600 million across a series of funds and has tapped 30 institutional investors globally to contribute capital. Decarbonization Partners announced in April that it had raised $1.4 billion, surpassing their $1 billion fundraising goal.
Thematically, Decarbonization Partners is looking at next generation energy, mobility, and digital transformation, among other themes, as investment opportunities.
Investments so far include Group14, a company that improves the operations of lithium-ion batteries and Monolith, which produces low-carbon hydrogen.
“When we think about sustainable investments, certainly low carbon solutions and the E part of it is a big part of what we do. But we also think it’s important to think through the overall journey of where we are headed and we really want to be able to lean in and do good and do well,” Park said.
