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January 21, 2005

Singapore's new wave of investments in India

Businessworld magazine recently published a country report on Singapore including the renewed interest among Singaporean funds like Temasek and GIC as well as Singaporean companies like Ascendas (best known for its IT park in Bangalore), Singtel and Singapore Ports.


The Government Investment Corporation (GIC) of Singapore - the one housed in Capital Towers - manages a figure that inspires awe in Singapore. "Upwards of $100 billion: that's the number associated with GIC," says the chief investment manager of a large US-based private equity fund operating from Singapore. Temasek, whose offices are in the Atrium, manages a portfolio of $90 billion.

GIC is secretive - no published account of its finances exists. Temasek, too, was opaque till a while ago, but this October, it published its finances for the first time, causing a sensation in the region. For the record, Temasek, which was created in
1974, has delivered a return of 16 per cent on an annualised basis over a 30-year-period. No such figure for GIC is available, but it too is said to deliver returns of 11-12 per cent on an annualised basis.

In China, GIC has changed its investment style. It invests directly into the companies. "There weren't many private equity funds in the region until recently and there aren't many with a long track record in these markets so we are more cautious," says Peng. It has put money into China International Capital Corporation, a private equity fund. In China, GIC has invested close to $500 million. It looks for a 20-25 per cent return in the US and Europe, and about 25-28 per cent in Asia.

India is now in GIC's sights because of its strong economic growth. GIC wants to invest both in domestic industries - consumer goods, financial services, infrastructure - as well as in knowledge-based industries like software services, business outsourcing, pharmaceuticals and light engineering. "Apart from direct investment, we also want to invest in India-focused funds that give us deal flow as well as deal intelligence. We would look at a minimum deal size of $20 million for every deal," says Kunnah Chinniah, executive vice-president, GIC Special Investments.

Temasek is poised to invest more than $15 billion in Asia and India should be a major recipient of this corpus.