Temasek bets big on AI, to increase exposure to 15% of portfolio

Singapore's investor Temasek is boosting its AI-related exposure to 15% of its portfolio by 2031, up from 6%. CEO Dilhan Pillay said AI is integral to finding new opportunities, with capital deployment focused on five key AI areas.

Singapore's state-backed investor Temasek is betting big on artificial intelligence as it scopes opportunities in emerging technologies to deliver sustainable returns. The investment giant said that it plans to take the AI-related exposure to 15 per cent of the portfolio value by 2031 from 6 per cent at present.

"AI is integral to how we sense emerging opportunities, adapt our portfolio, and thrive as an institution," Temasek CEO Dilhan Pillay said during a media briefing.

AI Investment Strategy and Focus Areas

Temasek said it has benefited from the digitisation wave in the past and that it viewed the advancement of AI as a pivotal phase that will create new opportunities. The company has identified five focus areas to deploy capital in artificial intelligence.

"We will deploy capital in a disciplined manner across five focus areas of the AI value chain: energy and data centres, semiconductors, cloud services providers, foundation models, and AI applications & software infrastructure -- with some companies operating as vertically integrated mega-caps," Temasek said in a release.

Record Financial Performance Amid Headwinds

Temasek's AI bet comes at a point when its net portfolio value (NPV) hit a record high, rising for the second consecutive year to S$518 billion ($400 billion) last financial year. The one-year Total Shareholder Return (TSR) was 10.5 per cent, with the NPV increasing by S$49 billion or around USD 38 billion.

The surge in portfolio value was driven by a strong performance of Temasek's Singapore-based portfolio and gains from key divestments, the company said.

However, the Iran war that broke out towards the end of February chipped away around 2 per cent of the gains in the NPV in March, the company mentioned.

A stronger Singapore dollar also contributed to reduced domestic returns for shareholders by two percentage points. Excluding this impact, the company said the returns would have been 12.9 per cent on a constant currency basis. The TSR was 14.8 per cent in US dollar terms.

China Portfolio Performance

Temasek said it continues to be an active investor in China with underlying exposure up S$10 billion or USD 7.7 billion over the year despite some headwinds in the three-year period from 2021-2024 that led to the five-year TSR falling to 4.6 per cent from a 10-year TSR of 7.1 per cent.

The company said it mitigated the China impact with stronger execution and sharpening its portfolio focus, which led to robust returns in past two years. (ANI)

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