Temasek Holdings, the Singapore government's investment arm, is looking forward to opportunities from a reforms push by the new government in India of Narendra Modi.
It is bullish on small companies in the health care and biotechnology space in India and will look for sectors that might get opened for foreign direct investment (FDI), a senior Temasek official said here.
Stephen Forshaw, its managing director, strategic and public affairs, told Business Standard, "We always had a very strong interest in India. We have two offices there and are fundamentally optimistic in the long term about India. All signs with the change of government, though it is still early days, are very positive about the reform agenda."
Forshaw expects these reforms to create new opportunities. "We will see how that shapes in the coming months. Some of the opportunities have been constrained by regulations preventing FDI. If those change, that will open new opportunities."
Temasek, now 40 years old, had assets of S$215 billion as of March 2013. It has about four per cent of its portfolio in Indian investments, in both listed and unlisted companies. "We have been buyer and seller of stakes in companies in India for quite some time," Forshaw said.
Adding: "We are excited about health care, life sciences, biotechnology and pharmaceuticals in India. There are opportunities in that space we are looking at, small-ticket investments. A number of companies are reasonably small. Getting in at early stages is interesting for us."
Forshaw, who also heads the fund's Australia and New Zealand operations, said Temasek does not rush in with a wish list to a government yet to be sworn in, but "any reforms that open the ease of access to FDI is welcome. We would like the opportunity to invest in sectors we have not got the opportunity to in the past."
FDI in multi-brand retail and insurance sectors are among the long-pending reform proposals the previous government couldn't quite push through. Temasek has significant interest in financial services and retail space in its portfolio. It is a major investor in these segments in China, where it recently took significant stakes in luxury retailer Watsons and brokerage firm Citic.
Forshaw said China accounted for a fifth of Temasek assets, its largest foreign exposure. Its investment in China Construction Bank alone accounts for eight per cent of the overall portfolio. "It is our second largest country after Singapore by assets. We intend to continue investing in China. We engage with all sectors - the big ones are financial services. Even as of last week, we invested in Citic, as their company was consolidating and preparing to list on the Hong Kong Stock Exchange," he said.
Apart from financials and health care, the sovereign fund has developed a keen interest over recent years in energy resources. "Resources and energy are something we are watching closely for the past couple of years. It was six per cent in our portfolio last year. In 2011, it was about one per cent. We expect to see big growth in energy. We are looking at the cleaner forms of energy, where the demand will be higher," said Forshaw.
Temasek is tracking the movement from coal towards gas-fired power plants, with the emergence of shale gas. But it is cautious on the renewable energy space. "We have done some small investments in the space. We are cautious. We tend not to particularly focus on businesses heavily dependent on a subsidy to be efficient. The space is dominated by subsidised businesses. Governments are subsidising so that people can explore new models," he noted.
