Report: Temasek, Bank of China plan infrastructure fund(3)

Temasek Holdings, one of Singapore’s two sovereign wealth funds is in talks with BOC International, a fully-owned investment banking subsidiary of Bank of China, to launch an investment fund focused on infrastructure opportunities in China, according to Reuters.

The firms are in talks to raise between $1 billion and $2 billion to invest in Chinese infrastructure projects, sources told Reuters. The fund will look to tap into investment opportunities arising from the Chinese government’s RMB4 trillion ($585 billion; €420 billion) stimulus package plan announced in 2008, sources told Reuters.

While discussions are still at an early stage, the idea to launch a plan together has been agreed upon. The infrastructure fund will be managed by a joint venture to be set up by BOC International and Temasek.

An unnamed source told Reuters that BOC International picked Temasek as a partner since the bank preferred to work with an entity that understands Chinese business culture and politics.

“It is highly inappropriate for us to comment at this moment. As in the past, we will make an announcement in a timely manner when there are material developments,” a Temasek spokesperson told Infrastructure Investor, without commenting further.

BOC International did not respond to requests for comment by press time.

As of 31 March 2008, 6 percent of Temasek’s S$185 billion ($127 billion; €91 billion) portfolio was invested in the infrastructure, industrial and engineering sector; 10 percent in transportation and logistics; and 5 percent in energy and resources. The value of Temasek’s total portfolio has since declined 31 percent to S$127 billion as of 30 November 2008.

Separately, it was reported earlier today that BOC International is in talks with potential investors to raise an RMB-denominated private equity fund focused on China’s domestic media industry.