Temasek says assets up 13 pct, eyes Western banks

(Updates with Temasek comments, details)

By Kevin Lim and Saeed Azhar

SINGAPORE, Aug 21 (Reuters) - Singapore sovereign wealth fund Temasek Holdings said on Thursday its assets rose 13 percent in the year to March 2008 and it was prepared to invest more money in Western banks if the opportunity arose.

"Growing with our blue chip companies and our direct investment activities, Temasek now owns a net portfolio of about S$185 billion ($131 billion) at market value as at 31 March 2008," Chairman S Dhanabalan said in a speech to a group of Singapore entrepreneurs.

He added that the Singapore fund [TEM.UL], which already owns large stakes in lenders such as Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) and Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), would look at opportunities to buy more shares in Western banks.

Sovereign funds from Asia and the Middle East have pumped billions into Wall Street and European banks hit by losses from the U.S. mortage market, though banking stocks have slid this year amid writedowns on risky debt.

"Our total shareholder return measuring changes in shareholder funds, including dividends paid and excluding new capital, is a healthy 17 percent compounded annually since inception," Dhanabalan said.

Temasek said in its annual report for the financial year to March 2007 that its assets stood at S$164 billion. It will release its 2007/2008 annual report on Tuesday.

The Singapore government had injected a little under S$30 billion in assets and cash into Temasek since it was set up in 1974, Dhanabalan said.

Temasek, the smaller of Singapore's two wealth funds, has been seeking investments outside its core markets of Asia excluding Japan in search of higher returns and to diversify its portfolio.

In his address, Dhanabalan said Singapore and Asia account for nearly 75 percent of Temasek's investments, down from 78 percent reported a year earlier.

Dhanabalan said Temasek aims to have in the long run about one third of its assets in Singapore, another one third in emerging markets and the remainder in the developed markets.

It is recruiting staff for new offices in Mexico and Brazil that will be set up this year [ID:nSP85829].

Temasek is also looking at Africa and the Middle East, and has asked a small number of staff to spend part of their time looking at potential investments in the region, a source familiar with the firm said.

Dhanabalan, who has been chairman of Temasek since September 1996, is a former Cabinet minister who once helmed the city-state's trade & industry and national development ministries. (Editing by Neil Chatterjee)