SINGAPORE: From smartphone makers to food delivery start-ups, GIC is increasingly interested in exploring more investments in the technology sector – an area it described as “important since day one”.
Among the steps that it has taken in recent years to fire up its plans – the formation of a global Technology Investment Group (TIG) and initiatives to provide the ecosystem with more than just capital resources, said chief executive officer Lim Chow Kiat in a group interview earlier this week.
Mr Lim stressed that the Singapore sovereign wealth fund is “not new” to tech given how its San Francisco office was set up in 1987. That has paved the way for GIC’s exposure and involvement in various parts of the tech ecosystem over the years, he explained.
Still, the need to be up to speed with technological disruptions has given GIC more reason to build up its exposure.
“If there are new technologies or new business models coming up, we want to know about it as early as possible so that we don’t get surprised by new competitors or new ways of doing businesses… (that) affect our incumbent holdings.”
When asked how GIC’s investment weightage in tech has changed, Mr Lim said it has “gone up a little bit” over the years through exposure from “multiple portfolios and teams”.
This week, it said that it was investing in UK-based Oxford Nanopore Technologies (ONT), which has developed the world’s only portable, scalable, real-time DNA sequencer. Prior to that, it announced in December that it will be part of a consortium buying a 10 per cent stake in digital maps firm HERE and in October, ramped up investments in China’s Meituan-Dianping by being part of its US$4 billion financing round.
When asked if other sectors have seen a change in investments as a result, Mr Lim replied: “To the extent that these are better investments, we will need the capital to be re-deployed.”
He declined to reveal the sectors that have seen a re-allocation and would only list businesses that remain reliant on the middleman or lacking a digital strategy among those that are “more at risk”.
“Even though we are long-term investors, it doesn’t mean we are static,” he said in response to Channel NewsAsia’s question. “We have to be positioned for change.”
GIC’s chief executive officer Lim Chow Kiat. (Photo: GIC)
INVESTMENT STRATEGY
During the interview, Mr Lim, together with Mr Jeremy Kranz who heads the TIG, shed light on GIC’s investment approach.
The TIG, which is more than one year old according to Mr Lim, was born out of the need to give the sovereign wealth fund’s tech investment efforts “a bit of a push”. With offices in Silicon Valley, China and India, its formation has enabled “capital to be deployed more flexibly including to hold existing stakes post the companies’ initial product offerings (IPOs), increase business development efforts and to highlight tech disruption risks in companies or sectors to benefit the overall GIC portfolio”, a spokesperson added.
Mr Kranz, who is usually based in Silicon Valley, said the TIG casts a wide net from start-ups to big listed firms, and invests in myriad ways such as direct investment or serving as a limited partner in top-tier tech funds.
On how the team picks its investments in start-ups that are deemed to be of higher risk, Mr Kranz explained that GIC’s multi-decade-long presence in key markets, such as the US and China, gave it “a lot of goodwill” and networks “to figure out which are the start-ups that are coming into growth phase and reaching an inflection point”.
He pointed out that is when the Singapore sovereign wealth fund invests directly.
GIC also tries to engage start-ups right from the initial stages though it rarely makes direct investments then.
Mr Kranz cited US-based DoorDash as an example and mentioned that he attended the food delivery start-up’s very first pitch at an incubator many years back.
“A lot of institutions will tell founders: ‘Call us when the cheque size is really big’. We really don’t think that way.”
One of the world’s biggest global investors, GIC also keeps an eye on emerging patterns and how they develop across geographies. For instance, in the food delivery space, it has also ploughed money into China’s on-demand service platform Meituan Dianping.
When asked what it would do when one of its investments disrupts another, Mr Lim replied: “Depending on the situation, the logical thing for us to do is to reduce our exposure to the one that gets disrupted and hopefully, we do that with enough alertness and lead time.”
GIC’s emphasis on holding a well-diversified portfolio has also given it the “ability to move more quickly”.
However, there seems to be one area where the sovereign wealth fund is drawing the line for now – Bitcoin. “I don’t think we know enough of it,” said Mr Lim.
Lastly, GIC and its global investment team are banking on “strategic collaborations” to differentiate it from the other investors keen to put money into the tech space.
For instance, it has a “multi-dimensional” relationship with Chinese smartphone maker Xiaomi. Apart from investing in the Chinese smartphone maker, GIC is also involved in Shunwei Capital, a venture capital fund founded by Xiaomi’s CEO Lei Jun, and has also participated in the firm’s ecosystem programme.
GIC fund is also focusing on creating platforms to bring people together to exchange ideas, build relationships and strengthen the overall ecosystem.
For one, it hosted 17 Chinese entrepreneurs and fund managers at its San Francisco office in October 2016 in what it termed as a China Entrepreneurship Trip. These Chinese entrepreneurs were introduced to Silicon Valley’s top venture funds and companies over the course of three days.
More recently, GIC jointly hosted the Bridge Forum with the Economic Development Board. With a focus on real estate technology, it brought together 80 real estate executives from 45 companies across China, India, Indonesia, Japan, Korea, Australia and Singapore and the US.
Said Mr Lim said: “We (don’t) just invest in the company and wait for the returns … We help both our investees and industry partners to create new businesses and new ideas.”
