FT : Temasek, GIC – Almost Leaping Tiger, Not So Hidden Dragon

Tuesday, December 11, 2007

The purchase by the Government of Singapore Investment Corp of a 9% stake in UBS represents the single largest overseas investment by a Singapore state entity.  It also reflects the south-east Asian city-state’s ambitions to take holdings in Asian and European financial groups.  The deal marks a departure for the highly secretive GIC, which normally takes on the role of an asset management fund by investing in equities and bonds.  It is also one of the world’s 10 biggest property investors.  The UBS stake is unusually large for GIC, which manages Singapore’s foreign exchange reserves, budget surpluses and some state pension funds.  GIC, which was established in 1981, has normally kept a low profile, unlike Temasek Holdings, the Singapore state investment company that has pursued an ambitious global strategy of buying stakes in foreign banks and telecoms.  However, GIC is far bigger than Temasek, which has assets of $114bn. GIC will only say that its assets exceed $100bn.  Analysts estimate its true size as much as $330bn based on its average annual return of 9.5% in US dollar terms over the past 25 years.  This would make it the world’s second largest sovereign wealth fund after the Abu Dhabi Investment Authority.  GIC’s board is headed by Lee Kuan Yew, independent Singapore’s first leader, and his son, Lee Hsien Loong, the prime minister.  The younger Lee’s wife, Ho Ching, is the head of Temasek.  GIC’s investment in UBS, one of the world’s largest private banks, will also strengthen the city-state’s ambitions to become the world’s leading wealth management centre after Switzerland.

Reference : http://www.ft.com/cms/s/0/87823f6c-a76f-11dc-a25a-0000779fd2ac.html

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