Temasek sells entire stake in Australia’s Fortescue Metals for $880-million

Temasek Holdings, the sovereign wealth fund of Singapore has sold its entire 4.1 per cent stake in Australian billionaire Andrew Forrest run Fortescue Metals Group to a group of overseas institutions, for $880 million.

Temasek, the $134-billion wealth fund, surprised the market by disinvesting in Australia's third-largest iron ore miner although the price of ore has sharply risen after the end of the global recession last year.

Fortescue also has not been an investor favourite since its share price rose from A$2 in late 2008 to $7.27 yesterday, its highest in nearly three years.

Temasek offloaded 129 million shares, or 4.1 per cent of Fortescue through investment bank Morgan Stanley at $6.82 a share, a discount of about 5 per cent to 18 January afternoon closing price of $7.19.

Temasek was the fifth largest shareholder in Perth-based Fortescue, with the largest shareholder being the founder, chairman and CEO of the company Forrest holding 31 per cent, followed by Chinese group Hunan Valin with 16.26 per cent, US cornerstone investor Leucadia National with 7.97 per cent and Russia's Magnitogorsk Iron & Steel with 5.36 per cent.

In May 2009, Temasek revealed that between March and November 2008, its portfolio declined by $58 billion due to the global economic meltdown.

Nearly half of the $58-billion loss was due to the 10 largest listed Singapore companies in which Temasek has a stake, and also due to its holdings in Bank of America and Merrill Lynch.