Singapore’s investment funds blaze e-commerce trail

Singapore’s two investment funds, GIC and Temasek, have emerged as the biggest state-backed investors in technology, telecoms and eCommerce in the past 12 months, ploughing a combined $3 billion into the sectors.

That dwarfs investment by their global peers, who have committed about $200 million, according to the Sovereign Wealth Center, which tracks sovereign wealth fund activity globally.

Singapore’s investment funds blaze e-commerce trail

Investments include GIC’s last month in Flipkart, India’s largest e-retailer, and Temasek’s purchase in May of a stake in China’s JD.com, an Amazon-like e-commerce site that competes head-to-head with Alibaba.

The development is a sign that Singapore, a growing Asian technology and e-commerce hub in its own right, is throwing its weight behind sectors that not only provide a proxy for middle-class growth in many countries but offer a way to distinguish their activities from other sovereign wealth funds.

“All [sovereign wealth] funds look at how they can leverage their competitive advantage and these areas are where I think GIC and Temasek believe they can do that,” said Victoria Barbary, director of the Sovereign Wealth Center.

It also comes as Asia is emerging as an important source of funding for tech start-ups. The region’s capital is increasingly being invested directly into young technology companies, instead of through western private equity or venture capital funds.

GIC and Temasek made 24 investments in technology, telecoms and e-commerce companies, worth a total of $3.1 billion, between August 2013 and July this year, according to data from the London-based centre.

By contrast all non-Singaporean sovereign funds made only five disclosed investments in those same sectors, with a reported value of $211 million. Of those only one was in e-commerce: Qatar Investment Authority invested an undisclosed amount in Vente PrivEe, a French website that sells designer label clothing.

Established in 1981, GIC is Singapore’s sovereign wealth fund, with more than $100 billion under management. It manages the city-state’s foreign exchange reserves and invests in equities, fixed income, property and private equity.

In June, GIC and Insight Venture Partners, a private equity firm, agreed to pay $752 million for iParadigms, a California-based education technology company whose main product is Turnitin, a cloud-based function that helps detect plagiarism in students’ work.

Temasek, founded in 1974, is Singapore’s state investment company, with about 70 per cent of its assets invested in equities. In its latest financial year to March 31, Temasek increased its exposure to telecommunications, media and technology to 24 per cent of its $223 billion portfolio, up 1 percentage point from the year before.

Both GIC and Temasek have invested in Cheetah Mobile, an Internet security company that listed in the US in May. Temasek also has a stake in China’s biggest eCommerce operator, Alibaba, which is planning a New York listing this autumn that is expected to raise about $20 billion.

Ms Barbary said such investments tended to be in companies that had moved beyond early-stage venture capital funding and were “in a growth phase”.

But Temasek has also sold down some such investments, including shares in online classified advertising company 58.com, according to a US regulatory filing last week.

Taking account of divestments worth $10 billion and total investments of $24 billion, Temasek made net investments of $14 billion in its financial year to March 31 — double its average net investment level of the past decade.

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