Who is making the investment decisions for Singapore’s GIC and Temasek ?

5 Mar

Singaporeans might believe that their government makes the final decisions when it comes to GIC acquisitions. A look at the board of directors in the sovereign wealth fund website reveals a who’s who in the cabinet. Yet, there are indications that some of these investments decisions may have been strongly influenced by certain financial celebrities in Wall Street.

In a Vanity Fair (VF) interview with Larry Fink, the CEO of BlackRock, a firm that was given the job to rescue Wall Street after the financial meltdown, it was revealed that the firm (supposedly, the largest money-management firm in the world) had clients ‘from state and local governments to college endowments, from Fortune 500 companies to the sovereign-wealth funds of, among others, Abu Dhabi and Singapore (in bold, my emphasis)‘.

The relationship between BlackRock and Singapore government’s investments arms, GIC and Temasek, can be put together based on online and publicly available information.

For example, Temasek’s (initially touted to be GIC) acquisition of shares in Barclays Global Investors. Temasek has since sold its 2 percent stake and estimated to have lost 500 million pounds to 600 million pounds (S$1.2 billion to S$1.4 billion). This move was backed by BlackRock.

Then, there is GIC’s acquisition into UBS. A Financial Times article entitled, ‘Sovereign funds fuel BlackRock’s UBS deal‘ notes, ‘The BlackRock deal highlights the rapidly evolving strategies of the sovereign wealth funds, which initially sought to take advantage of the turmoil in global markets by investing directly in beleaguered financial institutions’. GIC has recently converted its UBS notes into ordinary shares, ‘suffering a paper loss of about $5 billion’.

The investment corporation also invested in Citigroup at the end of 2007/ early 2008 (according to these two Straits Times article, here and here). In the VF Article, it was mentioned that BlackRock had worked on the citigroup portfolio for two months and supposedly made 12 millions based on their contract with the Fed. Though there is no definite time frame to link the investment decision with BlackRock’s contract, it is possible that they might have occurred around the same time.

As for Temasek’s acquisition of Merill Lynch’s shares, the relationship  with BlackRock could not be more direct. Again according to the VF profile, Merill owned 49 percent of BlackRock (then in 2007). In 2008, the former announced that Temasek is its largest shareholder. Merill Lynch has since merged with Bank of America.

In January this year, GIC incurred another loss after its investments in a Manhattan apartment complex known as Peter Cooper Village and Stuyvesant Town ‘is running out of cash’. The real estate property was backed by Tishman Speyers and a subsidiary of BlackRock. According to this blogger, GIC lost ’10 times as much as the actual owners’.

In piecemeal, the losses of GIC and Temasek may appear to be a result of ignorant or bad governmental decisions. However, once you begin to put the puzzles together, it starts to look more sinister. Don’t take my word for it. According to the VF article,

‘… BlackRock’s enormous and growing influence and its sheer size—too big to fail, some say—has begun to raise questions. “It’s like the Blackwater of finance, almost a shadow government,” says one senior bank executive, referring to the mountain of government contracts awarded to the firm’.

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One Response to “Who is making the investment decisions for Singapore’s GIC and Temasek ?”

  1. Stuffer March 6, 2010 at 9:44 pm #

    Nice work on the link between Blackrock and GIC/Temasek.

    In the financial world, such clients are called “Stuffees” – a derogatory term for a client that is eager to do deals, has substantial capital to do such deals, can do big deals, not too capable to do their own deals, and not too clever to discriminate good deals from bad.

    Usually, they would not be “Stuffees” for long as most likely the people behind them would have been sacked in due course.

    So, now you know what big “Stuffee” clients they are to these “middle-men”. And how embarassing, shameful and humuliating it is to know that we have the two biggest in the world in Singapore.

    And they would continue to remain so…………….

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