Temasek: ‘Increasingly GPs are competing with us’

Others are aping the firm's strategy of holding minority position for a long time, said head of PE fund investments Benoit Valentin.

Temasek is facing growing competition in an area of the market that has long been its niche, according to its head of private equity fund investments.

Speaking on stage at IPEM, senior managing director Benoit Valentin said it’s a common misconception that Temasek is a competitor to private equity funds when in fact the reverse is increasingly true.

“Our bread and butter is to take long-term minority positions in private companies [on a] direct basis … Today everyone is running in the same lane. The public guys, [such as] BlackRock, because of fee compression and public market valuations, are seeking alpha with a long-term private equity fund,” he said.

Although 85 percent of the Singapore government-backed firm’s $230 billion private equity portfolio is made up of direct investments, its fund investment business plays an important role in providing co-investment opportunities.

“We are very happy to pay fee [and] carry to managers who do things we cannot do by ourselves, either because they do types of transactions we can’t – typically large control transactions – or in certain very niche sectors or geographies.”

In recent years, the firm has been shedding GP relationships in order to become the co-investment partner of choice for a select few: “We tend to be a smaller LP in the GP Rolodex, so we have to sweat twice as much,” Valentin said.

Valentin was speaking on a panel about direct investing alongside Katherine Chung of Canada Pension Plan Investment Board and Giovanni Orsi of PSP Investments.

Look out for our in-depth interview with Temasek’s Americas head John Vaske in the February edition of Private Equity International.