Temasek sets up S$4.5b subsidiary to invest in large local firms with regional, global ambitions

• Temasek Holdings​ will have a wholly owned subsidiary, 65 Equity Partners, to be headquartered in Singapore
• The new company will manage a S$4.5 billion fund
• Its principal investments will be in large domestic enterprises, with an aim to help them grow abroad

SINGAPORE — State investment firm Temasek Holdings has set up a new S$4.5 billion subsidiary headquartered in Singapore to invest in large enterprises here that have “regional and global aspirations”, it announced on Tuesday (Oct 27).

Known as 65 Equity Partners, the new entity will be led by its chief executive officer Tan Chong Lee, who is also president of Temasek International, an investment arm.

The new entity is wholly owned by Temasek and was incorporated in January this year.

In a joint statement on Wednesday, Temasek and 65 Equity Partners said that the subsidiary will provide capital solutions to large Singapore firms and help them grow while pursuing their regional expansion and transformation strategies.

It will “principally invest in established companies with regional or global aspirations and market values of between around US$1 billion (S$1.35 billion) and US$5 billion”, aiming to strike deals of between US$100 million and US$200 million to give it minority shareholdings in portfolio companies, they said.

The funds will give Singapore companies extra firepower in various situations such as growth, mergers and acquisitions, shareholding reorganisations, balance sheet optimisations as well as privatisations and cornerstone investments.

“(65 Equity Partners) will invest across industries with strong structural tailwinds, such as consumer, industrial and business services, logistics, healthcare, and technology, underpinned by committed owners and management teams,” Temasek Holdings said.

The subsidiary will focus on equity and structured equity investments, starting with Singapore and building on its presence across Southeast Asia, Europe and the United States.

The new firm now manages a S$1.5 billion co-investment fund, the Anchor Fund@65, which was jointly established by Temasek Holdings and the Singapore Government and announced by Trade and Industry Minister Gan Kim Yong last month. It also manages another S$1 billion Local Enterprise Fund, backed by the Ministry of Trade and Industry, to help develop “regional champions”.

The subsidiary joins Temasek Holdings’ other sovereign wealth enterprises that also invest in Singapore companies, albeit with different investment strategies from 65 Equity Partners.

For example, wholly owned Heliconia Capital Management directly invests in growth-oriented companies in Singapore including small- and medium-sized businesses, and is managing assets valued at more than S$2 billion as of 2021.

Clifford Capital Holdings, another Temasek Holdings-backed enterprise, primarily invests in infrastructure and other real assets sectors, helping these Singapore-based companies expand overseas.

With 65 Equity Partners, the new subsidiary will complement Temasek Holdings' broader investment strategy as a generational investor that is committed to delivering sustainable returns over the long term, Temasek International's chairman Lee Theng Kiat said.

“While Temasek has full flexibility to invest across a spectrum of opportunities, we have created 65 Equity Partners as a dedicated platform to offer tailored capital solutions, particularly for high potential businesses seeking to expand internationally,” he added.

He also said that the subsidiary will have flexibility to invest in opportunities that are not within Temasek Holdings' “core focus areas”, such as take-private situations or family business restructurings.

Mr Tan, 65 Equity Partner’s CEO, said that the new firm will be able to leverage its strong local insights, broad networks in Asia and its international presence to generate “superior risk-adjusted returns”.

“We look forward to working hand-in-hand with businesses on their journey to realise their ambitions and growth potential,” he added.