SOVEREIGN wealth fund Temasek Holdings, which has pumped billions of dollars into lenders such as Merrill Lynch, said it may invest more in Western banks if the opportunity arose.

The fund also said its assets rose 13 per cent in the year to March, despite a sharp drop in equity markets that started in the fourth quarter of last year.

Chairman S. Dhanabalan told Singapore entrepreneurs yesterday that the fund had taken a five- to seven-year view on its investment in Merrill Lynch and described the United States broker as an institution with good management and business.

'If there is an opportunity to invest, we will look at it,' he said in response to a Reuters question on whether it was prepared to put more money into Western lenders.

Sovereign funds from Asia and the Middle East have become more influential in financial markets after investing in Wall Street and European banks hit by losses from US mortgages.

'Growing with our blue-chip companies and our direct-investment activities, Temasek now owns a net portfolio of about $185 billion at market value as at end-March,' Mr Dhanabalan said.

The Singapore Government has injected a little under $30 billion in assets and cash into Temasek since it was set up in 1974, he said.

'Our total shareholder return measuring changes in shareholder funds, including dividends paid and excluding new capital, is a healthy 17 per cent compounded annually since inception,' he noted.

Mr Dhanabalan said Singapore and Asia account for nearly 75 per cent of Temasek's investments, down from the 78 per cent reported a year earlier.

He said Temasek aims to have about one third of its assets in Singapore in the long run, another third in emerging markets and the rest in developed markets.