Temasek and BlackRock are raising billions for environmental startups

In early April, the world’s largest asset manager BlackRock (AUM $ 8.67 trillion) and Singapore’s Temasek Holdings announced they were joining forces again, creating new funds to invest in advanced environmental startups. on the way to commercialization in the market.

Decarbonization Partners, as the joint partnership is calling it, will create multiple funds with the initial injection of $ 600 million ($ 795 million) by the two companies, raising additional capital from outside investors to reach $ 1 billion. dollars for their first fund.

Ultimately, they aim to reach at least US $ 5 billion (S $ 6.63 billion) or more in assets under management in the coming years.

This is great news for all late stage businesses looking for significant funding to market their ideas, products or services, thus contributing to a net zero emissions economy.

A look at the impact this can have on Singapore

First, it strengthens Singapore’s position on the green investment map, with the state-owned company directly engaged in supporting the commercialization of advanced environmental projects.

Second, this is great news for all countries in Southeast Asia, as Temasek’s proximity and understanding of the region can open up avenues for regional businesses, which would normally be less accessible as Western investors prefer. maybe stick to what they’re comfortable with in Europe and America. .

temasek holdings
Image Credit: Munshi Ahmed via Bloomberg

Third, it may prove to be a worthwhile investment for Temasek – whose assets are part of Singapore’s vast national reserves – as annualized returns targeted for a decade or more can reach 20% per year. These are the bold goals set with BlackRock (in which Temasek is also one of the biggest investors).

Finally, Temasek, representing government interests and holding a stake in large local companies, has a vested interest in promoting environmentally friendly solutions, which could see their debut on Singaporean soil. This could impact both companies owned by Temasek and branches of Singaporean industry.

You can find a clue as to how this might play out in the way Dilhan Pillay, Temasek’s new CEO succeeding Ho Ching in October 2021, and BlackRock CEO Larry Fink, highlighted their interest in the development of solutions that would replace fossil fuels with hydrogen.

singapore airlines
Image Credit: Edgar Su via Reuters

This is of direct interest to Singapore Airlines (in which Temasek has a major interest), as it seeks to replace jet fuel in the long term.

At the same time, hydrogen shows potential as an alternative to oil in shipping, with Royal Dutch Shell and Singaporean SembCorp announcing 12-month trials for fuel cells mounted on a ro-ro ship, which are expected to begin next year.

As the city-state is one of the largest petrochemical hubs in the world, it is also uniquely positioned to be at the forefront of the transition from oil and gas to hydrogen, including its industrial base on the island. de Jurong is sure to reap the rewards.

Potential to help generate returns for Singapore

In other words, Temasek is committed to investing in companies whose solutions have direct applications to support Singapore’s major industries – air and shipping, as well as petrochemicals – which are the foundations of today’s business. local economy but which are doomed to be replaced. possibly by new solutions.

It is therefore of essential national interest that Singapore be at the forefront of this change, able to maintain its advantageous position built over the previous decades.

The city-state has already embarked on this protracted evolution on many fronts.

lng singapore expedition
Image Credit: Riviera Maritime Media

About ten years ago, it gave up petroleum in favor of cleaner natural gas for local electricity production. Today, it is using its position as the world’s leading bunkering port to deploy LNG shipping solutions for new generations of ships running on cleaner fuel.

In the future, this experience, and at least part of the infrastructure used for cryogenic LNG, can be used to adapt to applications using liquefied hydrogen – especially since the main source of gas today ‘ hui are still the traditional fossil fuels which Singapore is very knowledgeable and well equipped to handle.

Former Canadian ice hockey player Wayne Gretzky recommended skating where the puck went, not where it was. With that in mind, Temasek’s shares show great potential not only to generate substantial returns for the company, but for Singapore as a whole.

Featured Image Credit: Munshi Ahmed via Bloomberg / Citywire Selector

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