Temasek defends investment in Thailand’s Shin Corp


Yahoo! Singapore - Finance

Thursday March 8, 4:08 PM

Temasek defends investment in Thailand’s Shin Corp

State-linked
Singapore investment firm Temasek Holdings on Thursday defended a
controversial investment in Thailand which frayed bilateral ties and
helped trigger the army takeover in Bangkok.

Temasek said it will continue to monitor developments in Thailand
before making future decisions regarding its controlling stake in
telecom giant Shin Corp, formerly owned by ousted Thai premier Thaksin
Shinawatra.

In a letter to the Straits Times, managing director for corporate
affairs Myrna Thomas said Temasek makes investments like any other
company based on commercial considerations and after factoring in
potential risks.

“Our investment in Shin Corp in Thailand was no different. We had a
positive assessment of the outlook for Thailand and completed the
investment in accordance with market norms and best practices in
international mergers and acquisitions,” Thomas said.

“We continue to monitor the political situation and business
environment in Thailand and will take the appropriate decisions as an
investment firm.”

She noted that Temasek has maintained its “triple A” credit ratings from agencies Standard and Poor’s and Moody’s.

The letter was in response to a reader who had written to the
pro-government newspaper that Temasek’s Thai investment was a national
concern as Shin Corp has now lost 45 percent of its value since the
deal was concluded last year.

Singapore’s ties with Thailand were strained after the Thaksin
family sold a 49 percent stake in Shin Corp to Temasek in a tax-free
deal which angered the Thai public.

This built up into months of street protests which sparked the military coup that overthrew Thaksin in September.

Relations further deteriorated when Thaksin had a private meeting in
the city-state with Singapore Deputy Prime Minister S. Jayakumar in
January.

Thai coup leader General Sonthi Boonyaratglin has called for a
return to Thai ownership of Shin Satellite, Thailand’s only satellite
operator which is under Temasek’s control through Shin Corp, saying the
company could be used to spy on sensitive military conversations.

Thai coup leader General Sonthi Boonyaratglin has called for a
return to Thai ownership of Shin Satellite, Thailand’s only satellite
operator which is under Temasek’s control through Shin Corp, saying
this could be used to spy on sensitive military conversations.

On Wednesday, Thailand’s military-installed government took control
of the nation’s only private broadcaster — also in the Shin Corp
stable — after it failed to pay 2.8 billion dollars in fines and fees.

Meanwhile, the Singapore government said it grades Temasek based on
the performance of its portfolio of investments rather than on an
individual basis and accepts that some investments may fail.

Laurence Lien, director for governance and investment at the finance
ministry, said in a separate letter to the Straits Times on Thursday
that as of March 2006, Temasek has delivered a compounded annual total
return of 18 percent since its inception in 1974.

This translates to 28 percent annually over the past three years.

Despite the Shin Corp investment, Temasek “is again expected to do well” for the financial year ending March 2007, Lien said.

As of March 2006, Temasek managed a diversified global portfolio worth 129 billion dollars (85 billion US).

Its investments cover telecommunications and media, financial
services, property, transportation and logistics, energy and resources,
infrastructure, engineering and technology, pharmaceuticals and
bio-sciences.


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