Temasek sees growth potential in Merrill Lynch
Posted: 26 December 2007 1143 hrs

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SINGAPORE : Investment company Temasek Holdings, which has taken a US$4.4 billion stake in troubled Merrill Lynch, said Wednesday it sees strong growth potential in the firm.

The US investment and brokerage firm, which has seen its finances ravaged by a persistent US housing slump, said on Monday Temasek had committed to a US$4.4 billion stake which it may raise by another US$600 million.

The US bank's new chief executive officer, John Thain, said the cash injections would help Merrill shore up its stressed balance sheet.

"Merrill is a leading global financial institution, with strong franchises in wealth management, global markets and investment banking. We believe it has an excellent platform with strong growth potential under John's leadership," said Manish Kejriwal, Temasek's senior managing director of investments.

"This capital raising will enable Merrill's management to focus on the execution of its business strategy and deliver shareholder value.

"Our participation in this capital raising exercise is a vote of confidence for the management team, and the underlying strengths of Merrill Lynch's franchise," Kejriwal said in a statement.

Merrill also announced that Davis Selected Advisors, a US investment firm, was purchasing a US$1.2 billion stake in the bank.

Merrill ousted its former CEO Stan O'Neal in late October after revealing nearly US$8 billion in writeoffs, mainly related to ailing mortgage investments.