en.Wedoany.com Reported - Singapore state-owned investor Temasek announced on Wednesday that it plans to increase its exposure to artificial intelligence companies from the current 6% to 15% over the next five years, in order to seize opportunities in this rapidly developing sector.
Temasek holds stakes in AI companies Anthropic and OpenAI. Its net portfolio value for the last fiscal year reached S$518 billion (US$400 billion), setting a record for the second consecutive year. This represents a 10.5% increase in Singapore dollar terms and 14.8% in US dollar terms. Over the same period, the MSCI World Index rose by 17%, but Temasek's portfolio differs from public equity benchmarks in structure, mandate, and asset allocation.
Temasek CEO Dilhan Pillay stated at a briefing that the rapid development of AI represents a critical phase that will create significant new opportunities. He revealed that the company plans to deploy capital across five key areas: energy and data centers, semiconductors, cloud service providers, foundation models, and AI applications and software infrastructure. Additionally, Temasek will examine AI adoption from the perspective of all its holdings. Pillay noted that AI adoption has entered a critical stage, and the remaining 85% of the portfolio must focus on adopting AI to remain competitive, which is key to capturing value from the rest of the portfolio.
Temasek said its performance last year benefited from divestment gains and the performance of local companies. The company did not disclose specific details of its holdings in AI companies or the impact of these holdings on performance. Despite a sharp surge in valuations of AI-related companies, Temasek still had to contend with market volatility triggered by China's uneven economy and the Middle East conflict, factors that caused its portfolio value to decline by 2% in the final month of the fiscal year. Pillay described this as one of the most challenging environments he has had to navigate as an investor.
In terms of long-term performance, Temasek's annualized 10-year return is 7.1%, and its 20-year return is 6.8%. Its 5-year return stands at 4.6%, impacted by China's underperformance relative to global markets between 2021 and 2024. Chinese valuations have since rebounded, and Temasek's underlying exposure to China increased by S$10 billion over the year.
As part of efforts to hedge the AI-driven portion of its portfolio (which is high-growth but volatile), Temasek plans to increase exposure to more stable areas, such as private credit and what it calls "core-plus" infrastructure. Its goal is to raise private credit exposure from 2% to 5% by 2031, with a focus on senior secured debt. This plan is proceeding despite the industry entering a more cautious phase, where managers face challenges such as weak fundraising, increased redemption requests, and stricter scrutiny of loan quality. Meanwhile, Temasek plans to expand core-plus infrastructure exposure (involving areas like electrification, data centers, and energy transition) from 1% to 5% by 2031.
In the last fiscal year, Temasek invested S$51 billion and divested S$31 billion in assets, resulting in a net investment of S$20 billion. Investments included Anthropic, OpenAI, China's Luckin Coffee, and Europe's Zegna Group.
Temasek stated that 43% of its portfolio is invested in companies headquartered in Singapore, 38% in global direct investments, and 19% in partnerships, funds, and asset management companies. The 10-year internal rates of return for the three segments are broadly similar: 8.1% for Singapore portfolio companies, 7.6% for global direct investments, and 7.7% for partnerships, funds, and asset management companies.
