It has invested in resources firms and financial institutions, including ICICI
Temasek Holdings Pte, a Singapore state investment company, is seeking stakes in Indian power producers, including GMR Group, as they double capacity to meet demand in the world’s second-fastest growing economy.
“We are in advanced discussions with GMR,” Wong Kim Yin, managing director for energy investments at Temasek, told reporters at a power conference in Singapore today. “We are trying to get exposure in Indian markets.”
Temasek, manager of $123-billion assets, is betting utilities will ramp up generation in the coming years to overcome power shortages that India’s government says are constraining economic growth. The 17-member Bombay Stock Exchange Power Index has climbed 62 per cent in a year, still lagging the 70-per-cent gain in the main Sensitive Index.
“Temasek is probably entering the market at the right time, since the sector and the company have a lot to offer,” said Abhineet Anand, a Mumbai-based analyst with Antique Stock Broking Ltd. He recommends investors buy shares of GMR Infrastructure Ltd, a unit of GMR Group, with a one-year price target of Rs 82.
GMR Infrastructure fell 0.2 per cent to Rs 63 at 1.22 pm in Mumbai trading, compared with a 0.1-per-cent gain in the Sensitive Index. The stock has climbed 24 per cent in a year.
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A Subba Rao, chief financial officer of GMR Group, had denied on December 15 a newspaper report that the group was in talks with Temasek and ICICI Bank to raise funds to build power plants. He couldn’t be immediately reached for a comment today.
Sources of Funding
“Typically, we look more at investing in power companies than in power projects,” Wong said, in reply to a question on whether Temasek was investing in new generators in India.
The Singapore-based company has invested in resources companies and financial institutions including ICICI, India’s second-biggest lender.
Finance Minister Pranab Mukherjee had said last month inadequate supply of coal, gas and power is “worrying”, as it constrains economic growth. Prime Minister Manmohan Singh also called for a partnership between the government and companies to increase power generation.
“In places like India and China, sources of funding remain domestic,” Temasek’s Wong said at the conference. “It is unclear if funding will continue without government stimulus.”
Equity markets offer sources of funding and Singapore is relatively untapped by the power industry, he said.
Indian utilities plan to increase generation capacity to 3,13,572 megawatts by March 2017 from 1,56,092 megawatts as of December 31, to curb peak-hour shortages.
Growth in the $1.2-trillion economy may accelerate to as much as 8.75 per cent in the year ending March 2011, from an estimated 7.2 per cent in the previous financial year, Mukherjee had said on April 2.