Singapore's state investment company, Temasek, is actively pursuing new investment opportunities in artificial intelligence (AI) and core-plus infrastructure. This strategic shift was highlighted during the launch of its annual Temasek Review, where Deputy CEO Chia Song Hwee described AI as a "two-decade opportunity" capable of transforming various industries. Core-plus infrastructure, which includes digital infrastructure and energy transition assets, is expected to provide resilient, risk-adjusted returns and stable cash yields. These asset classes collectively represent 36% of Temasek's global direct investments.
Temasek is approaching AI investments at multiple levels. It is investing in leading companies that have achieved breakout scale, such as Nvidia, and those that support the broader AI ecosystem, like data centers. For smaller, early-stage AI startups, Temasek adopts a more cautious approach, partnering with venture capital funds and participating in later funding rounds once breakout opportunities are clearer. The firm caps its exposure to early-stage investments at 6% of its overall portfolio value for risk management. Additionally, Temasek is collaborating with other major players, including BlackRock, Microsoft, and MGX, through the AI Infrastructure Partnership to invest in new and expanded AI infrastructure.
Beyond AI, Temasek is also diversifying into alternative assets like private credit and hybrid solutions, aiming to address the needs of underserved borrowers not covered by traditional banks. To facilitate this, Temasek established Aranda Principal Strategies, which now manages a $10 billion portfolio of direct investments and funds. This platform is expected to grow further, indicating Temasek's belief that alternative assets will be a key return driver in the coming years. Temasek also invests in top-tier private equity funds like EQT, KKR, and TPG, alongside other alternative strategies such as hedge funds that offer resilient returns through uncorrelated strategies like closed-block insurance and music royalties. The Americas remain the largest destination for Temasek's capital, constituting 24% of its portfolio as of March 31.
