Temasek Expands U.S. Footprint With a Wary Eye on Trade Tensions

(Bloomberg) -- Temasek Holdings Pte. is developing an American accent.

The Singaporean state investor, whose S$308 billion portfolio ($226 billion) includes stakes in companies such as Alibaba Group Holding Ltd., is still betting on the U.S., even as it grows more circumspect in deploying capital amid trade tensions and an increased likelihood of a global economic slowdown.

“We need to be more exposed given the nature of the U.S. market,” said John Vaske, Temasek’s joint head of North America, referring to economic conditions in the past few years. “Of all the fresh capital we freed up in the last two or three years, the U.S. has gotten a disproportionate share of it.”

Temasek has poured $95 billion globally into everything from startups to asset managers in the past five fiscal years. It made S$29 billion in new investments in the 12 months through March, up from S$16 billion a year earlier. Divestments totaled S$16 billion.

Vaske, who joined in January 2017 after almost three decades at Goldman Sachs Group Inc., said there isn’t a specific amount targeted for the region, but the U.S. accounted for the largest share of new investments in the latest fiscal year, including investments in DowDuPont Inc. and Boeing Co., according to Temasek’s annual review.

U.S. assets comprised 13 percent of the investment firm’s portfolio at the end of March, up from 10 percent two years earlier. The proportion trails Singaporean and Chinese investments, which make up 27 percent and 26 percent of the portfolio, respectively.

Temasek has three U.S. outposts with about 40 people. It opened a New York office in 2014, followed by San Francisco in 2017 and Washington this year. Already an investor in Airbnb Inc. and Alphabet Inc.’s Verily, Temasek said it has no specific mandate in terms of deal size or types of companies it considers.

“We will start to look at companies at a very early stage,” Vaske said. “We’re not constrained by size on the low end in terms of dollar amount and we’re not constrained necessarily on the upside.”

Chasing Deals

Temasek’s deepening interest in the U.S. comes as the world is flooded with capital, creating what Vaske said is “severe” competition for deals from family offices, sovereign entities and private equity firms. Temasek has embraced many of those competitors as partners in deals that they’re intent on chasing, he said.

The firm, which was formed from a spinoff of state-owned businesses in 1974, invests across six sector groups, with much of their investments guided by macro themes of changing demographics and shifts in consumer spending.

While the growth prospects in the U.S. are appealing, its escalating trade standoff with China does cause concern, Vaske said.

The firm doesn’t anticipate a full-blown trade war, but it’s “mindful of the fact that it could occur” and is approaching the possibility as another risk to manage, he said.

©2018 Bloomberg L.P.