Singapore sovereign wealth fund Temasek is significantly expanding its push into private markets, outlining plans to increase private credit to 5% of its portfolio by 2031 as it pursues higher-return investment opportunities.

According to its annual results, private credit currently accounts for 2% of Temasek’s portfolio. Future investments will focus on senior secured corporate lending, asset-backed financing and real estate credit, areas the firm believes offer attractive risk-adjusted returns.

Private credit is one of three areas Temasek identified as offering “compelling opportunities” over the coming years, alongside artificial intelligence and core-plus infrastructure.

The firm plans to more than double its AI exposure from 6% of portfolio value today to as much as 15% by 2031. It also aims to increase its allocation to core-plus infrastructure from 1% to 5% over the same period.

Supporting that strategy is the continued expansion of Aranda Principal Strategies, Temasek’s dedicated private credit platform. Formed in 2024 by consolidating more than a decade of private credit investing, Aranda launched with a  $7.7 billion (S$10 billion) portfolio that has since grown to more than $10 billion (S$13 billion) and now generates over $773 million (S$1 billion) in annual recurring income.

Temasek is also broadening its alternatives platform through Seviora Holdings. During the financial year, the firm integrated its wholly owned Pavilion Capital into Seviora to expand the group’s Asia-focused investment capabilities across private markets.

“As Temasek’s primary asset management platform, Seviora’s vision is to be a capital gateway between Asia and the rest of the world,” said Gabriel Lim, executive director and CEO of Seviora Holdings. “To realise this, we are scaling our capital base and broadening our ability to deliver long-term value to our clients across private equity, private credit, public markets, and tailored financing options.”

During the financial year, Temasek deployed approximately $39.8 billion (S$51 billion) in investments and divested about $24.2 billion (S$31 billion) in assets, resulting in net investments of roughly  $15.6 billion (S$20 billion). The firm did not disclose how much of that activity was tied to private credit.

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