The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Updates to add graphic.

By Una Galani

HONG KONG, July 9 (Reuters Breakingviews) - In the murky world of sovereign investors with global ambitions, the relatively high level of transparency at Singapore's Temasek has always been welcome. Its latest effort to share more information will eventually be appreciated too. For now, though, it's a bit lost in the remaining fog.

It has been 10 months since Dilhan Pillay, CEO since 2021, announced a roughly 40-40-20 split of Temasek's S$518 billion ($401.3 billion) portfolio into three divisions – Singapore-based companies, global investments, and its funds, partnerships and asset management companies. On Wednesday, he went one step further by disclosing a 10-year internal rate of return for each unit.

Ranging between 7.6% and 8.1%, the results just about beat Temasek's disclosed risk-adjusted cost of capital of 7.4% over the 10-year period, but the three are uncannily similar for units with distinct identities. Its stable stock of Singapore-based companies with $155 billion of aggregate revenue, including DBS DBSM.SI – the city-state's largest bank – and Singapore Airlines SIAL.SI, returned roughly the same amount as Temasek's global investments unit, which includes its growth bets, holdings in Anthropic, OpenAI and its co-investments with private equity managers.

At best, it shows Temasek's overhaul is a work in progress. Since 2020, it has successfully cajoled underperforming local companies to merge, restructure and strike deals. The latest example came in February when it supported the $5 billion sale of STT Telemedia Global Data Centres to KKR KKR.N and Singtel STEL.SI. Such activity would prop up Singapore returns.

Its global investments, meanwhile, ought to have a higher risk-return profile even if they don't have a fixed life like a traditional 10-year private equity fund. Perhaps its preference for startups and young companies means it holds on to stakes for longer, crimping even medium-term returns. And Temasek's overall 17% exposure to China, where capital markets have lagged global peers, may be holding the division back, too. That's a high allocation compared to benchmarks like MSCI's All Country World Index .MIWD00000PUS, where China is a rounding error and has less weight than Taiwan's 3.3%.

Temasek's U.S. exposure will continue to rise: Pillay's plan is to boost AI's share of the sovereign entity's global investments to 15% by 2031, up from 6%, and quintuple to 5% its share of infrastructure assets where it sees opportunities in electrification, data centres and the energy transition. His goal of boosting its share of private credit to 5%, up from 2%, is also likely to increase its share of American assets.

If that boosts the returns on its global investments and nudges up Temasek's overall 10-year total shareholder return above the current 7.1%, it would provide a validation, albeit belated, of its restructuring efforts.

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CONTEXT NEWS

Singapore state investor Temasek on July 8 reported a net portfolio value of S$518 billion ($401.3 billion) for the financial year to the end of March, the first year of fully transitioning its financial reporting to a mark-to-market basis. Temasek's 10-year total return rose by 2.1 percentage points to 7.1%.

The prior year Temasek reported a net portfolio value of S$434 billion. It said at the time that marking its unlisted portfolio to market would have brought the net portfolio value to S$469 billion.