Temasek launches new vehicle for co-investments in private equity funds

SINGAPORE, April 9 Wed Apr 9, 2014 4:32am EDT

SINGAPORE, April 9 (Reuters) - Singapore state investor Temasek is further opening up its private equity investments to outside investors, as the $170 billion investment firm broadens an investor base that may eventually include retail investors.

Temasek is launching Astrea II, a co-investment vehicle with broadly diversified holdings in 36 private equity funds, it said in a statement. It did not provide the size of the portfolio. Temasek owns 38 percent of Astrea II.

Like a private equity business, Temasek invests directly in companies and injects capital into separate vehicles run by former managers or by bankers, such as RRJ Capital, a firm run by former Goldman Sachs banker Richard Ong.

Temasek remains primarily a direct equity investor with about 10 percent of its portfolio in third-party managed funds.

"Astrea II is the latest of Temasek's continuing efforts to develop co-investment platforms where diversified portfolios of assets can be made available to a broader base of investors, including retail investors in the long term," Temasek said in a statement.

Opening up to outside investors is not new for Temasek, but bringing in retail investors will be a newer trend.

Yield-hungry investors globally are seeking co-investment opportunities from private equity firms, as these deals allow them to make higher profits through direct investment.

In 2006, Temasek had securitised its investments in 46 private equity funds through a special-purpose vehicle, Astrea, in London.

Astrea bought Temasek's interests in the funds, then sold some $810 million in equity and 15-year, floating-rate debt securities to sophisticated investors including financial institutions.

Temasek said it has six long-term institutional co-investors within the Astrea II portfolio including ARDIAN, formerly AXA Private Equity, a European investment firm.

Temasek CEO Ho Ching had proposed in 2009 that Temasek may allow outside investors such as institutions and eventually retail investors to invest in joint projects. ($1 = 1.2532 Singapore Dollars) (Reporting by Saeed Azhar; additional reporting by Stephen Aldred in HONG KONG; Editing by Chris Gallagher)

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