Singapore’s Temasek is evaluating a huge overhaul, carving the group into three focused investment arms - Domestic Temasek Portfolio Companies (TPCs), Global Direct, and Funds/Asset Management - to tighten accountability and lift returns.

Reported by Bloomberg, the plan isn’t confirmed, but the reporting is credible and specific enough to assess the implications. If executed well, this move formalises how Temasek already manages the book, but with clearer mandates under separate structures.

Why now: the return and structure reality

Temasek closed FY2025 (year ended 31 March 2025) with a record net portfolio value (NPV) of S$434 billion, up S$45 billion year-on-year. On a mark-to-market basis - ie, if unlisted assets were carried at market values - the NPV would be S$469 billion, a S$35 billion uplift. Yet long-horizon is a significant concern for the state-owned investor: the 10-year Total Shareholder Return (TSR) is 5%, while the 20-year TSR is 7%, which is unimpressive compared to market indices. These facts alone explain Temasek’s desire to create structures that distinguish between the role of different assets as well as imposing capital rotation discipline.

Crucially, Temasek already maps its portfolio into three segments by value: Singapore-based TPCs (41%), Global Direct Investments (36%), and Partnerships, Funds & AMCs (23%). Turning these into operating arms would make explicit what’s implicit: different objectives, different risk exposures, and different performance metrics. It also makes performance attribution straightforward for boards, stakeholders, and the public.

Structural overhaul comes at a time of leadership change. Gabriel Lim becomes CEO of Seviora (Temasek’s asset-management holding company) on 1 September 2025, giving the prospective Funds/AM arm an operational anchor to scale strategies like private credit, venture debt, and secondaries.

What the split would actually change

First, sharper mandates and KPIs. A dedicated TPC arm can concentrate on resilience, dividend flow, and Return on Invested Capital from national champions in aviation, telco, utilities, and industrials. A Global Direct arm can chase alpha in themes like AI infrastructure, electrification, and future consumption across its key markets in the US, EU and India under arm-specific hurdle rates. A Funds/AM arm can scale earnings including fees via platforms such as Fullerton (fixed income and Treasury, equities, alternatives), SeaTown (reality, private equity, private credit), Vertex (venture capital), and Aranda Principal Strategies (private credit), reducing reliance on balance-sheet returns. The FY2025 Review already points to rising focus on alternative assets and core-plus infrastructure - this structure would simply align incentives to that posture.

Second, cleaner, faster capital rotation. In FY2025 Temasek invested S$52 billion and divested S$42 billion, demonstrating a healthy rhythm of capital recycling. Housing distinct balance sheets under arm leaders should increase decision speed on trims, exits and capital deployment into higher-conviction assets, but without cross-subsidising unrelated priorities. Temasek is building a firewall between mandates to enhance execution.

Third, fee income gets real scale. Seviora is positioned to expand products and third-party AUM under new leadership, with Aranda (Temasek’s private-credit platform) as a natural spearhead. A stronger, more coherent Funds/AM platform helps smooth group earnings through recurring fees and carry, diversifying away from mark-to-market volatility at the holding company level.

Finally, ESG targets become more comparable. Temasek applies an internal carbon price of US$65 per tonne of CO2 equivalent, rising to US$100 by 2030, and has set aside S$100 million of concessional capital for climate action. Segmenting TPCs from Global Direct/Funds clarifies where hard-to-abate emissions sit – particularly aviation and shipping exposures – and here decarbonisation can move faster. As such, carbon trajectories and incentives can be set without muddle.

India becomes the growth piston—inside Global Direct

A formal Global Direct arm sharpens Temasek’s push into India, its favored market for expansion, without mixing it up with “Singapore Inc.” objectives. Public disclosures and credible reporting indicate a country exposure nearing US$50 billion - about 8% of Temasek’s portfolio - with a targeted US$3-4 billion of fresh commitments annually.

The strategy favours fewer, larger, family-aligned bets with better governance influence and clearer exit paths. Examples include a 10% stake in Haldiram’s for about US$1 billion and control-oriented healthcare platforming via Manipal, where Temasek increased its stake to ~59% in 2023’s landmark sector deal.

The upside is concentrated alpha; the risk is concentrated drawdowns if valuations overheat. A split structure helps manage both through explicit limits and a custom minimum-return target for each investment arm.

Balance sheet, ratings, and ring-fencing

Temasek has a generally conservative funding stance and has maintained top-tier credit quality with ample liquidity, which is key to its role as a long-term investor. A three-arm operating structure need not alter that story if capital policies remain tight and cash moves efficiently to where it’s needed.

We expect clear ring-fencing - for example, the Funds/AM arm can carry financing appropriate for GP platforms and credit strategies - while preserving the parent’s resilience and flexibility. In short: structural complexity should not come at the expense of the low-cost funding advantage.

The first opportunity is faster capital rotation. With mandates and hurdle rates separated, the Global Direct and Funds/AM arms can accelerate recycling and double down on winners. FY2025’s S$52 billion of investments and S$42 billion of divestments suggest the gears are already turning; formal arm structures could make the gearbox more responsive.

The second is more fee-like earnings. Building Seviora into a scaled platform under a new CEO, and expanding Aranda and adjacent strategies, can lift recurring revenue. That mix shift matters when public markets are choppy and unlisted marks are slow to catch up—fees and carry can cushion the TSR journey.

The third is policy vs alpha clarity. A dedicated domestic arm makes it transparent which assets are stewarded for national resilience and which are pressed for growth returns. That transparency should improve internal capital budgeting and external accountability, especially given the three-segment framing Temasek already discloses.

The risks

We have identified three areas of downside risk in the new approach:

Silos and duplication are the classic organisational risk that other state-owned investors have averted through Total Portfolio Management. Cross-theme opportunities - AI data centres, grid electrification, energy transition - often span domestic platforms and overseas holdings. Poor coordination could blunt edge. Strong central portfolio governance and co-investment committees are essential.

Partner and LP confusion is another. If external manager stakes and mandates consolidate under Seviora, scopes must be mapped cleanly to avoid allocation conflicts and maintain LP trust. Clear information walls and robust LPAC processes will be non-negotiable as third-party AUM scales.

Finally, over-concentration in India is a real possibility. The very speed that boosts returns can magnify drawdowns if deal pricing gets ahead of fundamentals. Country and sector caps, plus clear exit discipline, need to be clarified from the outset. Reuters

KPIs to watch

We will be watching for a formal announcement and org chart: who leads each arm, and how boards and committees are structured. Also we are anticipating Seviora’s scorecard: third-party AUM growth, product launches (credit, secondaries), and how much fee income contributes to the group.

On India, we will track annual deployment which is programmed at US$3-4 billion, progress on transactions like Haldiram’s and healthcare platform follow-ons, and the IPO pipeline for liquidity.

Finally, we will examine portfolio mix and TSR - whether Global Direct outperformance and Funds/AM fees begin nudging that 10-year TSR above 5%.

The three-arm model codifies Temasek’s operating reality, but will the opportunity for sharper incentives, quicker rotation, and a bigger fee engine. The test will be execution - credible ring-fencing, crisp governance, and KPIs that translate into better long-run TSR.