The $434bn state-owned investment fund’s CEO, Dilhan Pillay, has unveiled a new strategy to deal with the global challenges that lie ahead
In August, Dilhan Pillay, chief executive officer of Temasek, Singapore’s state-owned investment fund, stood before a room of journalists and delivered an expansive, almost 10,000-word presentation – his first media event since ascending to the top job in 2021.
Pillay had an important message to give. In a speech entitled “Positioning our organisation for the new global environment”, he set out how Temasek is adapting to a world increasingly marked by geopolitical tension and economic fragmentation.
“This is quite a big thing for us to do, and that is why I am doing this,” Pillay said in a 90-minute presentation delivered from the Temasek office in Singapore.
He noted that the world had enjoyed three decades of relative stability, during which the state investor saw its assets under management grow from S$104bn (€69bn) at 31 March 2000, to S$434bn by 31 March 2025 – a more than 300% increase. Temasek is now one of the world’s largest institutional investors.
But the world has changed. Trade and geopolitical tensions now weigh heavily on the global economy. In addition, the rapid advance of artificial intelligence and other disruptive factors, such as the Singaporean authorities introducing new foreign investment regimes, have come together to create “macro headwinds” affecting countries, organisations and individuals alike.
The future is clouded with uncertainty, Pillay noted, with the two largest economies – the US and China – edging toward decoupling. Temasek recognised this shift as early as 2019, he added, anticipating that US-China competition would intensify and that the unpicking of economic interdependence would emerge as a defining issue.
“And so we definitely need to realign our organisational structure for this new environment and around the three portfolio engines that we have,” said Pillay, 62, a former corporate lawyer specialising in mergers and acquisitions who co-founded WongPartnership, a leading Singaporean law firm.
Three main segments
From April next year, Temasek’s business will be reorganised into three segments – Singapore-based Temasek portfolio companies (TPCs); global direct investments (GDIs); and partnerships, funds and asset management companies (PFAs). These units will be led by a new generation of leaders, tasked with taking the organisation into the next decade and beyond under T2030, the company’s 10-year business roadmap.
Currently, TPCs account for 41% of Temasek’s portfolio, followed by GDIs (35%) and PFAs (23%). By 2030, Pillay said the aim was to create a more balanced 40:40:20 spread across these three segments.
“We definitely need to realign our organisational structure for this new environment”
Temasek portfolio companies
The island city-state’s government established Temasek to help drive the country’s industrialisation and to take ownership – as TPCs – of several state-linked enterprises, including Singapore Airlines, DBS Bank, Keppel Corporation, PSA and ST Engineering.
“These companies are stalwarts of ours,” Pillay told the audience of Singapore-based journalists. “Some of them, like Singapore Airlines or DBS, we’ve held since our inception in 1974. They account for S$200bn of revenue. About S$145bn is consolidated with our balance sheet, which, by the way, would make us one of the biggest companies in Asia if we were a company. But as an investor, it’s a different way of looking at things.”
“One of the things we have to consider in this new reordering of the world is whether our exposure to Asia is sufficient,” he continued. “Should we expand beyond Asia? To Europe, the Middle East, the US? Some of our companies have already done so. For example, ST Engineering has acquired companies in the US and is performing well there.”
Under Temasek’s stewardship, each of these Singapore-based companies has built a global footprint and is now recognised as a champion in its sector.
Pillay illustrated this evolution with examples. “In the early 2000s, PSA had only a small number of ports, primarily in Singapore and China,” he explained. “In 2006, we bought a 20% stake in Hutchison Ports and subsequently built a global port network. Today, we are the largest independent port operator in the world.”
Temasek supported SATS, a Singapore-based aviation services provider, in acquiring global logistics group WFS (Worldwide Flight Services) for €1.3bn in 2023. “Today, revenue is largely from WFS,” Pillay said. “This means our portfolio mix has shifted - from being purely Asia-centric, roughly two-thirds of revenue now comes from the US and Europe.
“And that’s the future,” he added. “If growth exists in these areas and you can address the opportunities it presents, then you should take that step forward,” citing the example of global tech, defence and engineering group ST Engineering’s acquisitions of MRAS, a US aircraft parts maker from GE Aerospace, and TransCore, a global toll solution provider.
“For TPCs, we control these companies,” Pillay continued. “Historically, we’ve had a light-touch approach and did not place people on boards. Today, we are beginning to do so because we believe we have a role in contributing to business development, model evolution and transformation. These companies are held for an indefinite period, so we own the long tail, and the consequences will be seen beyond just one cycle.”
Global direct investments
Temasek targets global leaders and pursues “control” transactions selectively. “In the last 15 years, we’ve only done five,” Pillay explained. “We own a majority stake in Manipal Hospitals, India’s largest hospital chain, and co-control gategroup, the world’s largest aviation catering company.”
He also cited Element Materials Technology, which provides testing and inspection in aerospace, defence, and connected devices such as mobile phones – all growth areas. Temasek acquired the British company in 2022 for more than US$7bn.
Temasek is now the majority owner of the Israeli company Rivulis, the world’s second-largest drip irrigation provider. It first invested in Rivulis in 2020 and subsequently raised its stake to 85%.
Partnerships, funds and asset management companies
The third – and increasingly important – pillar of Temasek’s strategy is partnerships, funds and asset management companies (PFAs). Temasek is invested in more than a dozen asset management companies that collectively manage S$90bn. These businesses were created primarily to scale capital solutions for the market.
In Singapore, Temasek controls entities such as GenZero, an investment platform for energy transition and decarbonisation projects, which complements its joint venture with BlackRock, Decarbonisation Partners. Another, ABC Impact, raises third-party funds to support projects ranging from agriculture to social infrastructure that deliver positive societal outcomes.
Its main PFA business is Seviora, which manages four lines of business: Azalea, which securitises the entity’s LP interests in private equity funds; Fullerton Fund Management; Innoven, a venture debt provider; and SeaTown, an Asia-focused investment firm.
In July, Temasek spun off its in-house private credit platform, Aranda Principal Strategies, to sit alongside other separately managed companies Vertex and Clifford Capital.
“At the moment, we’re conducting a strategic review to see how we can create synergies between these entities,” Pillay said. “The goal is to identify overlaps and optimise value for us as shareholders.”
By sector, financial services account for 35% of Temasek’s Global Direct Investments portfolio (mostly in non-bank finance companies), with 21% held in telecom, media and technology. Three next asset groups – transportation and industrials; consumer and real estate; and healthcare, life sciences and agri-food – each make up 14%. Credit represents 2%, but is expected to grow to 5%.
‘Resilient, future-proof portfolio’
The central theme that runs through Temasek’s investment strategies is sustainability. In the fund’s Sustainability Report 2025, published in July, Pillay wrote: “At this critical crossroad, we must remain agile in meeting today’s demands while staying the course on addressing tomorrow’s needs to build a resilient, future-proof portfolio.”
Temasek said the portfolio value of “sustainability living trend-aligned investment” as of 31 March 2025 was S$46bn – comprising S$39bn of sustainability-focused investments and S$7bn in climate transition investment.
Commenting on the report at the time, Johan Sulaeman, director of the Sustainable and Green Finance Institute at the University of Singapore, told TV news station CNA: “[Temasek] has reduced its portfolio emission […] by quite a bit over the last 15 years. But there’s still more work to be done,” he said. “The remaining work is probably more difficult than what they have done so far. I think good progress so far, but it will be quite challenging over the next 15 years.”
At August’s media presentation, Pillay said as an owner of “long-tail” assets, Temasek cannot ignore the effects of climate change, but it is not easy to shift companies based on LNG power generation to purely renewables.
“We own an airline,” he said. “So, we know that that’s tricky because the only way to bring down carbon emissions for aviation is sustainable aviation fuel. But that, while it has a future, is many years away because the cost curve is very, very high.”
In its 2025 GSR Scoreboard, Global SWF, an industry body, named Temasek as one of this year’s “perfect scorers” for best practice on governance, sustainability and resilience (GSR). Temasek shares the top spot with eight other institutional investors, including La Caisse (formerly CDPQ) and the Ontario Teachers’ Pension Plan.
Ultimately, Pillay said, concluding his presentation, Temasek had its eyes firmly on the future – whatever that might look like.
“I think the most important thing for us to consider is the fact that we have to sense what the road is ahead – and potentially the road around the corner,” he told the assembled journalists.
“We have to adapt our organisation to cater to the changes that we are likely to see. So, therefore, being more agile, being more nimble [and giving] more empowerment to people is an important facet of that future.”
