By Denise Kee and Yoolim Lee

Nov. 16 (Bloomberg) -- Temasek Holdings Pte, Singapore's state-owned investment company, plans to start an infrastructure fund backed by S$800 million ($513 million) of water and gas assets, according to four people familiar with the proposal.

Temasek hired New York-based Morgan Stanley to sell as much as $150 million of shares in the fund's initial public offering, planned for as early as the first quarter of next year, said the people, who declined to be identified before an official announcement. Temasek manages about $83 billion of assets for the Singapore government.

'Temasek is seeing that this is an increasingly hot sector,' said Matthew Spence, a Sydney-based infrastructure analyst with Merrill Lynch & Co. ``Pension funds and insurance companies love these kinds of assets because they provide stable revenue and stable yield.''

The company joins Goldman Sachs Group Inc. and Carlyle Group in tapping demand from investors for funds that bundle assets such as utilities, airports and toll roads. The funds have returned 124 percent since September 2002, compared with 96 percent for stocks and 25 percent for bonds, according to Macquarie Bank Ltd., the world's largest private manager of infrastructure.

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Posted by rjorr at November 16, 2006 3:41 PM