Singapore’s Temasek has launched an independently managed subsidiary to pursue equity and structured equity investments at home and further afield.

The subsidiary, 65 Equity Partners, will initially manage S$4.5 billion ($3.3 billion; €2.9 billion), of which S$2.9 billion is provided by its parent and the remainder by the Singaporean government, Temasek president and chief executive of the new business Tan Chong Lee told Private Equity International.

Tan Chong Lee Temasek 65 Equity Partners
Tan: We intend to raise third-party capital

Tan said: “1965 is the year of Singapore’s independence. This is meant to be a global platform, and we just wanted some linkage back to Singapore. Sixty-five happens to be the international dialling code for Singapore as well.”

65 Equity’s funds under management include a S$1 billion Local Enterprises Fund targeting minority stakes in large domestic businesses and a S$1.5 billion Anchor Fund that will co-invest in high-growth companies in new economy sectors across Southeast Asia that intend to hold a primary or secondary listing in Singapore, according to a statement.

The remaining S$2 billion comprises permanent balance sheet capital that will target minority positions in mid-market companies across Europe and the US, Tan said. 65 Equity will look to co-invest alongside local family offices and funds in these markets.

The platform will target deal sizes of between $100 million and $200 million in companies with market values of between approximately $1 billion and $5 billion.

“We see the global capital markets as quite bifurcated between the buyout funds [and venture capital],” Tan said. “What we see, therefore, that is missing is capital dedicated towards the mid-market segment globally. When you look at the local enterprises in Europe, the main sources of capital are actually family offices and local funds, but very rarely do you find… a pan-European mid-market fund.”

Temasek has also focused in recent years on building out its presence and exposure to North American private markets, Americas head John Vaske told PEI last year. In the four years to March 2019, the US was the recipient of the largest share of Temasek’s new investments: around $36 billion, or 15 percent of the total.

“We’re going to have an office either in New York or San Francisco,” Tan added, noting that many of its employees globally have transferred from Temasek. “By sometime next year we’ll have in excess of 40 headcount globally.”

The new firm will collect some of Temasek’s existing subsidiaries under the same umbrella and co-invest alongside them, Tan said. 65 Equity will become 100 percent shareholder of Heliconia, a Singaporean small and mid-cap investor with S$2.3 billion under management; 30 percent shareholder of Tower Capital Asia, a S$430 million domestic buyout firm led by a former Actis director; and 10 percent in Novo Tellus, a S$100 million Southeast Asia firm.

Like its fellow subsidiaries, 65 Equity also aims to raise third-party capital for its international strategies. “Everything is under consideration and definitely we are open,” Tan said. “But definitely the intention is to raise third-party capital down the road.”