Temasek Holdings plans to allocate around $1 billion a year investing in deep tech sectors. Here are some of the recent investments made.
AEM Holdings
AEM Holdings, just over a decade ago, was a floundering company but when Loke Wai San assumed control via the Novo Tellus fund, the company managed a dramatic turnaround, sending its share price up multifold.
While AEM’s key client is Intel, the company says it is actively wooing other major clients to come on board with meaningful contributions seen in the second half of this year.
For FY2021 ended December 2021, its revenue was up 9% to $565.5 million, which exceeds the company’s guidance. However, because of lower margins, earnings for the year was down 5.6% to $92.1 million over FY2020.
For the current FY2022, AEM expects to generate revenue ranging between $670 million and $720 million.
Last August, Temasek became AEM’s largest shareholder after investing just over $100 million for new shares priced at $3.8477 each.
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With the universe of tech stocks undergoing a jittery phase in the last few months, Temasek added to its stake with a few rounds of open market buying. The most recent round was on March 16, when another 467,600 shares were bought at $4.25 each, bringing Temasek’s stake to 11.07%.
Nanofilm Technologies
Nanofilm Technologies International specialises in advanced coating technologies. Its coating helps protect key components used in consumer electronics and other end-products, often giving them a more aesthetically pleasing look and feel too.
The company was founded from within the laboratories of Nanyang Technological University by then associate professor Shi Xu.
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Nanofilm was a hotly-anticipated IPO when it was offered at $2.59 per share back in October 2020. On the back of bullish analysts’ calls, the share price surged to as high as $6.67 in July 2021.
However, the market was rudely shaken when the company’s maiden earnings report for 1HYF2021 ended June 2021 dipped instead of growing rapidly as anticipated. The company explains that a combination of supply chain disruptions affecting customers’ demand and hefty start-up costs at a new plant in China, were key reasons dragging the earnings.
The company managed to resume earnings growth for the more recent 2HFY2021, bringing the whole of FY2021 earnings to $62.2 million, up 8%.
However, its share price remains far from its peak. Temasek was one of the cornerstone investors when Nanofilm’s IPO was launched.
On Sept 21, just over a month following the 1HFY2021 earnings surprise, Temasek bought nearly 6.59 million shares at around $4.12 from Shi, bringing its total interest to around 47.73 million shares, or 7.24%.
On the other hand, another cornerstone investor, Capital Group, chose to cut its stake. On Jan 17, the US fund manager sold 922,900 shares at $3.15, bringing its stake below 5% and thus is no longer a substantial shareholder.
In its 2HFY2021 earnings commentary, Nanofilm paints a positive outlook given how it has put the pieces in place to capture new growth. Meanwhile, Sydrogen, the hydrogen joint venture between Temasek and Nanofilm, is on track to recognise initial revenue in an automotive project in 2H2022.
H2Pro
With an eye on the extensive hydrogen industry value chain — seen by its proponents as a substitute for fossil fuel, Temasek has made another related investment recently besides its joint venture with Nanofilm.
In January this year, Temasek was among a group of investors to invest US$75 million ($101.9 million) in Israel-based H2Pro which is trying to reduce the cost of producing hydrogen. Temasek’s fellow investors include Horizon Ventures, backed by Hong Kong tycoon Li Ka-Shing, and Breakthrough Energy Ventures, which is backed by leading US business figures Bill Gates, Jeff Bezos and Michael Bloomberg as well as Yara Growth Ventures.
H2Pro is founded in 2019 by researchers from The Technion — Israel Institute of Technology, regarded as the top school in the Middle East — as well as entrepreneur Talmon Macro.
H2Pro’s key innovation is its electrochemical-thermally activated chemical (E-TAC) that can split water without the need for costly membranes, thereby reducing both the cost and space needed to house the processing equipment. The company aims to produce green hydrogen at just US$1 per kilogramme within the second half of the decade.
According to H2Pro, the world’s hydrogen market is already worth some US$130 billion a year and is seen to hit US$11 trillion come 2050 if production, storage and transportation are all taken into account.
Commonwealth Fusion Systems
On Dec 1, 2021, Commonwealth Fusion Systems (CFS), which was founded based on fusion research from the Massachusetts Institute of Technology, announced it has raised more than US$1.8 billion to help fund the construction of what it claims to be the world’s first commercially relevant net energy fusion machine.
The funding round, led by Tiger Global Management, will also help CFS take another big step forward and work on the first commercial fusion power plant in the early 2030s.
Temasek was already the lead investor in an earlier round of US$84 million funding back in May 2020. Co-investors include new names like Microsoft co-founder Bill Gates, Google and Marc Benioff of Salesforce.
SambaNova Systems
Back in April 2021, Temasek and GIC, which manages Singapore’s reserves, were part of a group of investors led by SoftBank Group putting in US$676 million into SambaNova Systems, which is building both hardware and software for artificial intelligence applications.
With this latest round, the California-based company founded by a group of professors from Stanford University is valued at US$5 billion.
SambaNova is trying a different approach to tap the AI market. It sells the computing capabilities as a service instead of selling merely the products. This means the clients can address computing problems using computing problems with SambaNova without the need to hire a big team of data scientists of their own. Existing customers include the US Energy Department’s Argonne National Laboratory and Lawrence Livermore National Laboratory.
PsiQuantum
In July 2021, Temasek was part of a group of investors including BlackRock and Microsoft to invest US$450 million in PsiQuantum, which aims to build what it claims to be the world’s first commercially viable quantum computer. With this latest Series D funding, PsiQuantum has raised a total of US$665 million to date.
Simply put, quantum computing is seen as a more powerful of computing and is meant to help process very intensive workloads such as parsing data on climate, healthcare and so on.
PsiQuantum, founded in 2016, claims to have a unique technology in which single photons (particles of light) are manipulated using photonic circuits which are patterned onto a silicon chip using standard semiconductor manufacturing processes. It is partnering with GlobalFoundries to make the kind of chips it needs.
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