This is a straight forward investment and was divested some 4 years ago. It is included in this series of Temasek Tracking to demonstrate the dangers of investing in foreign assets where currency risk is very high in certain countries. It brings into sharp focus the need to review currency risk monitoring and mitigation techniques, if any, that Temasek employs since it started to diversify its portfolio into foreign markets when Ho Ching took the helm in 2002. This need is indeed serious given the strength of the Singapore dollar against almost all other world currencies since 2002.
Temasek invested US$100m in Burger King, Brasil, in Nov 2014. This was for 32,340,800 common stocks which was divested when the company IPO in Dec 2017 @ R$18.00
The investment in 2014 was US$100m @ 2.5690 = R$256.9m (@ 1.3183 = S$194.9m).
The divestment 32,340,800 shares @ R$18 returned cashflow of R$592,134,400 which represented an impressive ROI of 134% flat in Brazilian Real terms.
However, Real has depreciated by 213% so the proceeds of R$592,134,400 @ 4.13 works out to only S$143.4m. There was thus a realised loss of S$54.5m.
Temasek invested US$100m in Burger King, Brasil, in Nov 2014. This was for 32,340,800 common stocks which was divested when the company IPO in Dec 2017 @ R$18.00
The divestment 32,340,800 shares @ R$18 returned cashflow of R$592,134,400 which represented an impressive ROI of 134% flat in Brazilian Real terms.
However, Real has depreciated by 213% so the proceeds of R$592,134,400 @ 4.13 works out to only S$143.4m. There was thus a realised loss of S$54.5m.
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