20150414 GIC should also disclose ‘underwater’ CPF investments, not only ‘profitable’ ones

GIC invests surplus tax dollars and CPF monies but continues to have a huge issue with transparency. Parliament becomes a joke when even MPs do not know where our reserves are invested by GIC.

The half-past-six reporting by our 153rd Press Freedom ranking media is also a cause for concern, eg.

When GIC sold its entire stake in the Bank of America Merrill Lynch Financial Centre last year, the ST reported the transacted amount as “£582.5 million (S$1.2 billion)”. ST’s Cheryl Ong then stated GIC bought the property in 2007 for “£480 million”. But what matters most to citizens is whether the investment was profitable and ST has clearly misled its readers by not stating the 2007 exchange rate. (2007 – £1 = S$3.06)

The ST article gave the impression that it made a profit of £102.5 million (£582.5 million – £480 million) when in fact, after conversion to local currency, there was a capital loss of S$269 million.

After scrutinising a list of its investments, it appears that GIC, run by bureaucrats, manages our funds using a ‘tikam-tikam’ investment model. I will highlight a few ‘underwater’ investments in this post.

A lot of information on GIC is already available online, such as it portfolio of 281 listed securities in May 2013 which I posted here 2 months ago.

With reference to the list, 47 securities (No. 234 to 281) have individual market values of US$10 million and below. We know that GIC is a ‘big shot’ fund manager and it appears these investments have been decimated due to poor judgement, lack of due diligence and no exit plans. That many investments had been lost, many within just a few years, has already been confirmed by our soon-to-be MOM Minister Lim Swee Say.

On 25 March, I highlighted an investment (below) which is now worth peanuts. There are others.

Gravity Co Ltd (Korea)

(Figures in chart do not include holdings by MAS)

SEC filing June 2005
SEC filing Dec2005
SEC filing June 2007
SEC filing Jan 2008

But according to a SWF report dated March 2008, GIC owned 23.98% of Gravity (see below)! How much was invested in Gravity will only be known to GIC.

March 2008 SWF report

GIC appears to have exited Gravity but how much CPF was lost in this investment? How many wiped-out investments are there?

Intime Retail Group Co Ltd (China)

It’s not just the smaller investments that are bleeding but even bigger ones above US$100 million ie Intime Retail Group. .

If GIC is investing for the long term, why does GIC buy and sell within months/weeks? Was there any change in Intime’s fundamentals to justify such transactions?

Details of the above transactions here and here

GIC is clearly not investing for the long term as it has already realised million$ in losses by paring its stake from 10% to 7%.

ICSA (India) Ltd

GIC was reported to have purchased 2.2 million shares in April 2008 and increasing to 3.3 million shares in October. In August 2013, its shareholding was reduced to 3.02%. Based on an exchange rate of 30 rupees to S$1, GIC had invested an estimated S$30 million.

Information on GIC’s sale could not be found online. From the chart above, isn’t this another wiped-out investment? What do you think?

There’s a general misperception of GIC – CPF monies are invested in solid companies providing good returns. From the list of GIC’s listed portfolio, the too many ‘submarine’ investments confirm GIC is a run of the mill fund manager. But it is still possible GIC could have been as profitable as it claims ie made money in real estate or private equity. But how would anyone know when even our MPs are equally ignorant?

It is every CPF member’s right to demand transparency and accountability from the PAP. The government is not doing us a favour by disclosing only profitable investments while keeping mum on those underwater.

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