John Vaske has been given a clear set of instructions. As head of the Americas business at Temasek, an investment company owned by the Singapore government, Vaske is charged with letting the rest of the US market know that Temasek is here and it means business.

The S$313 billion ($232 billion; €208 billion) firm has been on the ground in the US for five years, opening a New York office in 2014, followed by San Francisco in 2017 and a small office in Washington, DC in 2018 to keep eyes and ears on policy change. Over the last four years, the US has been the recipient of the largest share of Temasek’s new investments: around $36 billion, or 15 percent of the total, at 31 March 2019.

John Vaske
Vaske: Our tagline is, ‘Do good, do right, do well’

Vaske joined in January 2017 from Goldman Sachs, where he was co-chairman of global mergers and acquisitions in the investment banking division. As well as leading Temasek’s Americas team, he is global head of agribusiness.

Raising the profile of Temasek – not known for speaking freely to the media – as a serious contender in the US market is why Vaske is sitting down with Private Equity International. We meet at the investor’s offices in the Seagram Building at 375 Park Avenue, New York, something of a trophy address, which it shares with the likes of Clayton, Dubilier & Rice, Strategic Value Partners and Centerbridge Partners.

Vaske is relaxed and jovial, joking about the previous day’s Bloomberg TV interview in which he said Temasek was excited about direct investment.

“That’s all we do,” he says, shaking his head. “I followed up with ‘early stage’, but I thought, ‘You sound like an idiot.’ It’s like saying, ‘I’m excited about breathing.’”

Temasek’s mandate, Vaske says, is simple: be a responsible steward of the shareholders’ capital. Founded in 1974 as a holding company for 35 companies owned by the Singapore government – including Singapore Airlines, telecommunications company Singtel and DBS Bank – for the first couple of decades Temasek was focused on growing those companies. In the early 2000s it expanded that mandate globally, opening its first overseas offices in Mumbai and Beijing in 2004. Today it has 11 offices overseas.

“If we felt like we had access to all the opportunities in the marketplace, we would probably have a little less capital invested in private equity”

The firm has always been quick to point out it is not a sovereign wealth fund. It does not receive any pre-determined injections of capital from the government, has full discretion over its investment decisions and has an external board. Its goal, Vaske says, is to be a “good partner”, both from a financial perspective and in terms of its broader impact on society.

“Our tagline is, ‘Do good, do right, do well,’” Vaske says. He highlights the firm’s investment focus on six “structural trends”, which guide investments towards a “better, smarter and more sustainable world”: longer lifespans; rising affluence; sustainable living; a more connected world; smarter systems; and the sharing economy.

“All of those things are consistent with where we find the greatest opportunity, meaning to have financial reward in terms of the returns we can generate, but also, frankly, the impact we can have on the underlying economies and underlying geographies in which we are investing.”

Temasek’s investments align with the UN Sustainable Development Goals, particularly focusing on environmental factors and combating climate change. This is in line with the organisation’s stated aim of going carbon neutral in 2020, tracking and reporting its consumption of water, paper, electricity and air miles, and halving the greenhouse gas emissions of its entire portfolio by 2030.

Temasek is almost exclusively an equity investor, barring a little less than two percent of the portfolio in structured credit, which, Vaske says, is “really preferred equity or convertible or things of that nature, just a little bit above the capital structure than equity”.

Within equity investing, there’s “no lane we can’t traffic in”. Temasek considers investments in everything from mature companies to early stage, direct private investments, public securities and private equity funds. Private markets accounts for 42 percent of the portfolio.

“We’re not constrained by size or duration, so we can write small cheques, we can play in multi-hundred-million dollar or multi-billion-dollar investments, and we can keep an investment going forever.

“Now, we underwrite to the same discipline as other aspects of private equity, which is we want to see at least visibility toward a path to monetisation, to know that our capital is not just locked up forever. But at the same time, when that underwriting period ends, whenever it may be, we’re just as likely to re-underwrite and stay invested.”

For Temasek to have $1 to invest it needs to be freed up by either a dividend received or a monetisation event. For planning purposes, it takes a two- to three-year outlook as to what the firm thinks cash inflows from those sources will be.

Vaske is reticent when it comes to discussing explicit returns objectives, saying only that the firm is “trying to generate positive wealth added”.

“We take a look at our cost of capital, that’s basically a capital asset pricing model, to determine what our cost of equity would be, and then we’re trying to get a positive spread on that,” he says, adding that cost of equity is calculated individually for each investment.

“It’s the same kinds of financial disciplines almost any corporate or other private form of investor might impose upon themselves.”

Temasek’s 10-year total shareholder return – a compounded and annualised measure, which includes dividends paid to its shareholders and excludes shareholder capital injections – stood at 9 percent in Singapore dollar terms at 31 March 2019.

Temasek’s 400 investment professionals are split in two – half in Singapore and half distributed through 10 regional offices. They are organised into markets teams, for example, the Americas team and industry teams, such as TMT or financial services. To make an investment, both the market head and the industry head must agree it’s worth pursuing and staffing, and they will jointly present it to the investment committee.

“The allocation comes out of both budgets; we double count it to make sure people feel ownership and accountability.”

Each investment professional sitting in an industry group looks at all forms of investing within that group. Herein lies Vaske’s “most significant management challenge”.

“I don’t know that the best trader at a hedge fund in public securities is also the best early-stage investor, so I’m going to make sure our teams are constantly talking and complementing their skill set based on what they see in the market as an investment opportunity. Because there’s execution things that go into it that I think we’re good at it, but I think we could be better, and we’re not always as nimble as we could be.”

Seeking an outsized impact

When it comes to what Temasek is trying to achieve through its investments, Vaske talks of Singapore’s desire to be “a relevant player” in the global economy. With a population of 5.6 million in a “fairly remote” part of the world, it’s not, as Vaske says, going to be through its contribution to the labour pool.

“How can we impact big parts of the economy? How can we help solve the problems of a growing population when the planet is not getting any bigger? How can we help farmers be more productive in a way that is consistent with trying to create a more sustainable environment? Where can we put our capital and where can we put our strategic thinking to work that’s going to have an outsized impact on larger parts of the economy and larger parts of the population?” he says.

Key US investments include Impossible Foods, DoorDash, ClassPass and Visa. In 2017, Temasek made its first, and so far only, buyout on its own outside of Singapore when it acquired Global Healthcare Exchange from Thoma Bravo. Vaske says the transaction was the “right signal to the market” that it’s open to such transactions. However, these are likely to be few and far between.

“I think going forward, you’ll selectively see us do that from time to time. But for the most part, we’re someone else’s partner in everything we do.”

This can mean equal partners with other owners, but more often than not means Temasek is in a clear minority position.

In late 2017, Temasek co-led a $110 million funding round for Farmers Business Network, a farmer-to-farmer digital network offering data insights, input procurement and crop marketing services. It has subsequently backed another funding round.

Stand out

FBN co-founder and chief executive Amol Deshpande, formerly a partner at Kleiner Perkins Caufield & Byers, says Temasek “stands out among the crowd” of not only FBN’s investors but “all the investors I’ve even spoken with since I’ve been raising money for FBN”.

“In agriculture, I would rank them as the number one, not just the most active but also the most well-networked and the smartest money in this entire sector,” Deshpande says. “Having them has created brand value for us, but they also utilise that network and connections for the benefit of the business.”

Deshpande adds that Temasek’s global perspective, and the fact it invests in companies right across the size spectrum, helps them bring a point of view that is “more than just chatter, it’s real value”. Temasek has a firm-wide investment committee populated with a mix of people from all the region and industry groups, as well as functional areas such as legal and HR. All investment committee meetings take place in Singapore, and most people attend in person. Although it is possible to “behave in an ad hoc way” as Vaske puts it – ie, make an investment without going through the whole investment committee process – those are “the exceptions not the rules, because all of a sudden the whole thing could break down”.

Temasek has around $10 billion invested through private equity funds globally, a large proportion of which is in the US. At any given point it has around 50 GP-relationships. It has invested with funds from the likes of IK Investment Partners, Hony Capital, Golden Gate Ventures and Clayton, Dubilier & Rice, according to PEI data.

“We’ve done that to extend our network of relationships, we did it as a way to establish ourselves here. Those are really interesting and important relationships to have as we try to be a participant in the market.”

However, Vaske is clear that Temasek’s primary mandate is to be a direct investor.

“If we felt like we had access to all the opportunities in the marketplace, we would probably have a little less capital invested in private equity. I think we’d have some because it’s an interesting group of people to generate good returns and get good ideas, but we’re doing it primarily to get co-investment opportunities alongside them.”

When it comes to getting a fund investment approved, there’s a similar matrix as for all other investments: in the Americas, for example, Vaske would have to sign off on it, as would the head of the private equity funds group.

One Singapore-based fund formation lawyer PEI spoke to says Temasek can be “incredibly slow to process its commitments”, although less so when it comes to big brand-name fundraises.

“They are generally perceived as a sophisticated investor. They are often willing to take risks and I have seen them anchor a number of first-time funds in Asia,” the lawyer says.

“They are seen as smart money and investors from outside Asia often take comfort from a Temasek investment into an Asian fund.”

A Hong Kong-based placement agent agrees Temasek is willing to consider funds that others wouldn’t look at.

“Temasek is one of the most forward-thinking LPs in Asia,” the placement agent says. “If you’re looking to raise a first-time fund over $1 billion, they’re the first port of call. They’ve done really innovative stuff, like backing impact strategies and their Astrea portfolio securitisation.”

Temasek has been moving its capital toward more sector-specific vehicles, as well as smaller funds of between $1 billion and $5 billion. Vaske says: “In some of these mega funds of $20 billion-plus, we’re like LP number 40, they’ve got 39 calls to make before they get to us for co-investment dollars, unless we can figure out some other way to differentiate ourselves by virtue of a value added on the strategic side.”

Joining the fray

On the one hand, Temasek pushing into the North American market is a no-brainer; after all, it’s still the largest private equity market by quite some distance. On the other, a large market means a lot of competitors, a pool that is only growing as other sovereign wealth funds and family offices increase their direct investment capabilities. How is Vaske looking to navigate that?

“Is it competition? Who else in the market can partner with every other person in the market?” he says. “I view it as just making sure that we have the right dialogue with everyone who’s a player.”

Although it’s true that if a family office acquires 100 percent of a business it’s likely to hold onto it for a long time unless the investment goes awry, those situations are still relatively rare. Even family offices are looking for diversification and like-minded partners.

“What they don’t want to do is be in misalignment with somebody who’s in a fund structure that has to exit,” Vaske says. “For me, it’s just making sure we understand the investment mandate protocol of those other capital providers and we position ourselves as being the call of first choice when they’re looking at something.”

Temasek has a lot to recommend it as a partner to private equity firms, he says.

“Private equity likes us because we’re big and can scale and we actually do a lot of our own original work. They find it to be a pain at times, but on the other times, they know we have a different point of view and it’s actually nice to be able to compare notes,” he says. “If you want somebody just to be totally passive money, don’t call us, because we’ll have a point of view.”

Vaske says a big part of the investment team’s daily routine, and how its performance is measured, is active engagement with portfolio companies. He describes the approach as seeking to be as helpful a resource to the company as it can without telling management how to run the business.

“If you want somebody just to be totally passive money, don’t call us, because we’ll have a point of view”

“We don’t think of ourselves as change agents,” he says. “You will see us heavily skewed toward situations where the addressable market is clear and obvious to everyone pursuing it, the company’s got good structural integrity and you’ve got the right management team driving it. We’re not going to buy something that’s got the first two but not the third.”

So, will the US continue to be the fastest-growing portion of Temasek’s portfolio? It’s likely, but there’s no set goal in mind. Temasek’s investment professionals are rewarded based on the success of the firm, regardless of geography or strategy, so while the opportunities are there, the US is likely to benefit.

“I think people would be comfortable if the US was a bigger percentage of the portfolio. When we’ve had a monetisation event or cash inflow, the US has been a disproportionate end market for redeployment of that, but that’s because every one of our industry heads thinks this is an interesting market opportunity,” Vaske says.

“Because of the themes we’ve identified and because we’re a relatively new player in this market, there has been no shortage of opportunities. But investment in the US will be opportunity driven. It won’t be like, ‘Hey, John and the rest of the team, by the end of 2020, the US has got to be this big’. We just don’t operate that way. I guess it’s the benefit of having a longer-term horizon.”

Carmela Mendoza and Alex Lynn contributed to this report



$90m – Series B funding round

Investment date: December 2018

Temasek joined a $90 million Series B funding round for New York-based indoor farming group Bowery Farming led by Google’s venture arm GV. Bowery sells leafy green products to customers including Whole Foods, Foragers and Sweetgreen in the New York area.

“As an ag team, we’ve done an exhaustive study on vertical farming and where the opportunities lie, and there were a few priorities that rose to the top. So, when Bowery was in the market trying to do a capital raise, we had an informed point of view about where we want to deploy our capital and who we want to align ourselves with,” Vaske says.

“That’s, so far, early days, working out well.”


$1.8bn – Enterprise value

Investment date: May 2017

Intelligent healthcare supply chains provider GHX is Temasek’s only buyout without a partner outside of Singapore. It acquired a majority stake in GHX in 2017 from Thoma Bravo, which retained a minority position. Temasek’s TMT team had been looking for a software-as-a-service investment such as this but had been beaten several times in auction processes.

“We went to Thoma Bravo pre-emptively and said, ‘Look, we want to own a business like this, we like this, we’ve studied it.’ The TMT team led it in close consultation with the healthcare team,” Vaske says.

“We’ve owned it for a couple of years, and it’s working well.”


$300m – Series E funding round in May 2019 after several funding rounds since 2017

Investment date: August 2017 onwards

Temasek first invested in California-based Impossible Foods – famous for making plant-based burger patties that sizzle, bleed and taste like beef – in 2017.
“Our ag team did a huge alternative protein study several years ago, and it turned out that we’ve invested in a number of companies, such as Impossible Foods,” Vaske says.


$170m – investment

Investment date: August 2017

Temasek invested in SoundCloud – which, at the time, was struggling – alongside The Raine Group, a “longstanding partner”. The fund would not normally take on a business with clear operational challenges, but it was willing to partner with a firm that had a clearly articulated plan for what the turnaround would look like.

“We bought it at a pretty attractive level, so that our risk was, we thought, pretty minimal versus the potential for the upside,” says Vaske. “But we wouldn’t have done that on our own without someone who had a real operating thesis and the right people to drive it.”