Good guise, but still…

By Paul Mackintosh - 29/07/13

What’s in a name? The sovereign wealth fund (SWF) Formerly Known as the Government of Singapore Investment Corporation Pte. Ltd. (a.k.a. GIC) has just formally changed theirs to GIC Pte. Ltd. Henceforth, the fund will be legally known as GIC. 

“The name change formalises the widely-used brand name of ‘GIC’ in the global investment community and markets that GIC operates in,” reads the GIC official statement, which continues: 
“The operations of the company remain unchanged, and the name change does not affect the identity of the company or its rights or obligations.”
GIC currently ranks eighth on the Sovereign Wealth Fund Institute global SWF rankings (which for now, still list the old name), with US$247.5 billion of assets under management, two places ahead of fellow Singapore SWF Temasek Holdings, which has $173.3 billion. Significantly, though, the SWF Institute gives GIC only a ranking of 6 on the Linaburg-Maduell Transparency Index, comparable with Middle Eastern entities and behind the 7 enjoyed by the China Investment Corp. or the 10 borne by Norway’s Government Pension Fund Global – or by Temasek. The natural conclusion is that it’s been easier to take the Government of Singapore out of the name of GIC than out of the fund itself. 
As GIC’s own materials state, “GIC is a private company wholly owned by the Government of Singapore. We do not own the assets we manage and are paid a fee as the fund manager looking after Singapore’s foreign reserves assigned to our care.” That said, GIC also states that, “The Government … neither directs nor interferes in the company's investment decisions. It holds the board accountable for the overall portfolio performance.” And GIC is a founding signatory to, and leading formulator of, the Santiago Principles of SWF governance which dictate that: “The SWF’s investment decisions should aim to maximize risk-adjusted financial returns in a manner consistent with its investment policy, and based on economic and financial grounds.” And GIC has clear macro-level obligations to its ultimate owner. 
GIC’s materials also state, however, that, “We do not go into specifics of our investment activities because we want to maintain our competitive edge and moreover, we are assessed on total portfolio basis, not on individual investments.” Its summary, with commentary, of the Santiago Principles insists that, “We do not invest other than for economic and financial considerations.” Nonetheless, those principles do allow for non-economic considerations to dictate SWF decisions, albeit, “if investment decisions are subject to other than economic and financial considerations, these should be clearly set out in the investment policy and be publicly disclosed.” 
I accept that the name change decision may have been a smart move, accepting reality and going with a widely used and less unwieldy monicker. It also mirrors Kohlberg Kravis Roberts’s metamorphosis into KKR and Texas Pacific Group into TPG, following best global private equity naming practice, as well as The Development Bank of Singapore’s recreation as DBS. But if this move is intended to reassure target markets that Singapore Inc. is no longer front and centre in GIC, I doubt that they will be so easily convinced.