Littlespecks.com
31 Jul 2008
By Seah Chiang Nee
Singaporeans are a bit more nervous about Temasek investment in Merrill Lynch, despite its success in levelling down its investment cost in the weakened institution - but at the same substantially increasing its stake.
It was done under a special provision Temasek had signed with ML in December against loses, a hitherto unknown factor, which appears to show Temasek's caution at least in this respect.
The shareholding will increase its shareholdings in ML from 5 to 9percent, but cancelling the Big "T's" paper loss of around US$2.5b at current price.
Is it a coup of the highest order? Or an uncecessary doubling of the risk? The answer will lie in whether Merrill Lynch will eventuallysurvive and prosper.
Blogger redbean explains it this way:
While we were all speculating on how much Temasek has lost in its bank forays, it is now reported that Merrill Lynch is compensating Temasek a sum of US$2.5b.
This is about the amount Temasek has lost on paper at this point in time. So due diligence and contigency measures were built into the purchase.
And if similar terms were included in the other purchases, then things are not that dire. And this must be expected from the professional managers at Temasek.
>>>> More
