GIC sees more growth in fintech after downturns

SAN FRANCISCO – Singapore’s sovereign wealth fund GIC said it still sees more growth in the financial technology sector, even after a slowdown that has sent startup values ​​plunging as investors turn away from riskier plays.

Chris Emanuel, head of GIC’s technology investment group, said the fund is excited about innovation in financial product distribution that offers opportunities to scale across the globe. It also sees opportunities in enterprise software as digital transformation efforts “increase across sectors in both momentum and urgency,” he said.

“Tech companies continue to change the way businesses operate,” Emanuel said in an interview before GIC’s Bridge Forum in San Francisco. “There will be further innovations, for example with cloud migration, which we are still at the beginning of, especially internationally.”

The global technology industry has seen a rout that has led to layoffs in the tens of thousands, reduced fundraising activity and shaved billions off the valuations of once high-flying startups. Even GIC and sister firm Temasek were not spared despite their long-term investment approach.

GIC is an investor in Digital Currency Group, the parent of troubled cryptocurrency broker Genesis. Temasek wrote down US$275 million (S$364.6 million) in November following the collapse of crypto exchange FTX and Singapore’s Deputy Prime Minister Lawrence Wong said the FTX loss was disappointing for the country.

GIC participated in Stripe’s $6.5 billion Series I fundraising round in March, which valued the fintech firm at around $50 billion, a far cry from the $95 billion valuation it received in 2021. GIC led a $60 million funding round for start-up Kerosene in August.

The fund, which does not publish its assets under management, is estimated to manage about $690 billion as of April 2023, according to a report by consulting and research firm Global SWF. GIC’s technology investment group sits within the market group’s private equity asset class, which made up 17 percent of GIC’s portfolio as at 31 March 2022.

GIC started investing in technology since it was founded in 1981 and established an office in San Francisco five years later. The technology investment group has 20 members, 13 of which are in Silicon Valley, according to Emanuel. GIC is hosting the Bridge Forum in San Francisco this week where partners and technology firms across Asia, the Americas and Europe will participate.

GIC invests in all stages of financing technology companies from start-ups to publicly traded companies, Emanuel said. The firm is “closely watching the development of new technologies like AI” and working with entrepreneurs tackling big problems with technology, he added.

“Our team’s approach is to understand the fundamentals, rather than betting on the next big thing,” he said. “Even with the secular trend of technological disruption, we believe there are cycles, and for us the most important thing is to stay disciplined and be selective.” BLOOMBERG