Singapore's GIC Has a Headache: a Spare $33 Billion

(Bloomberg) -- What to do with an extra S$45 billion ($33 billion)?

For Singapore's sovereign wealth fund GIC Pte, a recent infusion of funds from the government means the pressure is on to generate returns.

The extra money, which will be managed as part of GIC's total portfolio, comes as the fund warns about low returns in coming years. Expanding investments in public assets, where GIC already seeks to deploy the bulk of its capital, will be less of a challenge than doing so in private markets.

“It does mean that we have to work harder” on the private side, Jeffrey Jaensubhakij, GIC's group chief investment officer, said Tuesday ahead of the release of the fund's 2018/2019 annual report. “Maybe we have to squeeze our partners harder, to sort of say, ‘Will you let us put more in your funds, or co-invest at a larger amount'.”

Singapore's central bank said in May it will transfer the funds from its foreign reserves to GIC for longer-term investment. The amount represented an excess in reserves beyond what is deemed necessary to maintain confidence in the city-state's exchange rate policy, according to the Monetary Authority of Singapore.

GIC is the world's eighth-largest sovereign wealth fund, managing around $390 billion, according to research company Sovereign Wealth Fund Institute. The Singapore fund doesn't publicly disclose its assets under management, only saying it manages more than $100 billion.

The increased funds do at least spell more resources for GIC, which has some 600 investment professionals.

“It's more pressure because we have to generate more,” Chief Executive Officer Lim Chow Kiat said. “But with scale, we also enjoy quite a bit of advantages.”

To contact the reporters on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net;David Ramli in Singapore at dramli1@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Stephanie Phang

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