Temasek, the Singapore state agency, is to seek a lower profile in its investment policy in response to a growing backlash against sovereign wealth funds.
Its chairman said that Temasek would avoid investing in “iconic” companies overseas, and instead opt for taking minority stakes in future investments and seek local partners in making any acquisitions.
S. Dhanabalan told the state-affiliated Singapore Straits Times: “In every country, whether it is in Asia or Europe, there is an increasing tide of nationalism. We’ve got to take various factors into account, such as whether the company or the activity is iconic for that country, whether it will arouse all kinds of emotional sentiments.”
The new policy is unlikely to affect Temasek’s recent bank investments in Standard Chartered and India’s ICICI because both are less than 20 per cent.
The move, which marks a turnround in Temasek’s aggressive investment strategy, comes after the group encountered problems with its holdings in leading Indonesian and Thai telecoms groups.
The Indonesia competition panel this week ruled that Temasek’s investments in two local mobile operators breached anti-monopoly laws and ordered it to sell one of its holdings. Temasek said it would appeal against the decision.
Last year, Temasek’s purchase of Shin Corp, Thailand’s largest telecoms group, contributed to public protests against Thaksin Shinawatra, then prime minister and whose family controlled the company. Mr Shinawatra was later ousted in a military coup.
It is not just in Asia that such concerns are growing. In the European Union and the US, there has been a growing chorus of concern about sovereign wealth funds scooping up important assets. In Germany, Angela Merkel, the chancellor, is looking at plans for a new body to vet acquisitions of important companies.
Temasek has insisted that its investment decisions are based solely on “commercial” considerations. Simon Israel, Temasek’s number two executive, has said that the agency’s state ownership might cause a nationalist backlash in some places, but it is also a benefit because some foreign governments see it as a stable and long-term investor.
Critics have said Temasek has failed to take into account local political conditions when it has made investments, but Mr Dhanabalan rejected those claims.