Temasek investments guided by digitisation, future of consumption: Execs

Country's demographics, steady policy and focus on infrastructure are among its strengths, say senior executives of Singapore-based investment firm

Singapore-based investment firm Temasek, which invested $2 billion in Manipal Health Enterprise in April, plans to strengthen its technology, consumer, and financial services portfolio in India by raising its stake in existing companies and investing in early-stage enterprises.

Senior Temasek executives Ravi Lambah, head - investment group and head India, Vishesh Shrivastav, managing director, investments (India), and Mohit Bhandari, managing director, investments (India), spoke to Dev Chatterjee and Sohini Das about their company’s investment plans.

Edited excerpts from the interview in Mumbai.

What is your outlook on the investment opportunity in India?

Lambah: We are long-term positive on India. We see that the opportunities in India are well aligned with our investment themes. With the highest GDP (gross domestic product) growth globally, combined with a conducive fiscal and monetary policy framework, we are looking to invest $9-10 billion over the next three years in India, subject to finding the right opportunities.

Which important sectors you are looking at for investments?

Lambah: We are guided by four identified structural trends, such as digitisation, future of consumption, sustainable living, and longer lifespans. We are looking to deepen our exposure in sectors like financial services, consumer and technology, and healthcare services. With sustainability at our core, we’re also excited about opportunities in energy transition and decarbonisation. 

Are you participating in the private credit market in India?

Shrivastav: Globally, we are doing quite a bit in private credit; especially, we see opportunities in developed markets. Companies that have raised (funds) at high valuations don’t want to dilute at lower valuations. This is a very good product for them, and we are seeing very good yields. But in India, we are not directly playing in that market but we do structured transactions etc. We can call these credit-like characteristics of equity. It’s more of a global phenomenon for us, than in India. 

Bhandari: Globally, banks have stepped back from certain spaces where they were lending – and that is creating an opportunity for private credit to step in. EvolutionX is a platform that focuses on venture growth debt to the new age economy. It’s a platform seeded by us and DBS (Bank).

Has Temasek invested more in equity than via credit?

Shrivastav: Our platform with DBS is doing only credit transactions, while we do only equity. We look for equity-like returns from whatever instrument is there. We have multiple arms, for example, InnoVen Capital, also 50 per cent owned by us, is a classic venture debt. Then there is SeaTown Holdings, which does classic credit in addition to equity. So, we have these different pools of capital that are global in nature but would do India as well.

How is your portfolio in India doing?

Shrivastav: Globally, our portfolio is roughly $287 bn and in India we have invested 6 per cent of our global portfolio. This is the largest salience of the market in Temasek’s overall portfolio. In close to a decade that we have been present; we have invested north of a billion dollars per annum. This year is already north of that. For the financial year, that ends March 31, then it was $1-1.5 billion and after that we closed Manipal (Health Enterprises), which was a big deal, and Atomberg Technologies. Both these deals happened after the financial year.

Over time our salience to Temasek has been increasing – about five years back we were 3 per cent of the portfolio, and now we are six per cent. Returns have been good, and exits have been easy to come by. The unique characteristics of India (are) the demographics, the consumption trends by the middle class, the aspirational youth, the steady policy framework, (the) focus on infrastructure, the production-linked incentive schemes, and the general pool of entrepreneurial and managerial talent.

What is the update on the PharmEasy rights issue plan?

Bhandari: PharmEasy transaction is currently on, so we don’t want to comment. We have around 13 per cent stake in PharmEasy. PharmEasy has a 72 per cent stake in Thyrocare. We continue to believe in the sector; regulations will be healthy for overall growth and provide clarity.

What are your plans for Manipal Health now?

Bhandari: Our investment in Manipal Health is in line with our broader theme: increasing life expectancy. We were investors in the (Manipal) Group, and we have a high degree of comfort. So, when the opportunity presented itself, we were able to more than double down our investment. There is no hurry for Manipal to go for an IPO. Some shareholders have been offered exit, and those who have stayed back can carry on.

Shrivastav: As long as our intrinsic value test holds true, we will not be in a hurry to exit.