India is in the sights of US$288 billion Singaporean state-owned investor Temasek which will pour US$10 billion into the world’s most populous country over the next three years, according to Ravi Lambah, its head of India.
With 6% of its portfolio in India, Temasek’s Indian assets total approximately US$17 billion, having backed startups like ride-hailing app Ola and online grocery delivery service Zomato.
Temasek’s planned allocation to India over the next three years would indicate a sustained pace of investment that is likely to surpass the rate of AUM growth and see India comprise 10% of Temasek’s assets by end-2026.
Lambah told The Mint, “It (pace of investment) was a billion dollars a year for many years, we doubled that in FY 23. And we will try to do it every year, if we can find our opportunity… The world is in a difficult place. There's high interest rates, high inflation in the US and in the Europe. We don't have that problem. Rates are not that high, inflation is not high too. We are the fastest growing economy, globally, last year and will be this year, as well."
Since April 2022, Temasek has invested nearly US$4 billion in a range of investments, notably in the healthcare sector. Investing in India's healthcare space since 2004, Temasek has been one of the sector’s early foreign investors. In April, Temasek increased stake in Manipal Healthcare Enterprises from 18% to 59% for US$2 billion, purchasing the shareholding from India’s quasi-SWF, the National Investment and Infrastructure Fund (NIIF). The deal built on its growing portfolio of healthcare assets in India. Last year, it invested INR6 billion in Medica Superspecialty Hospital, replacing a consortium led by Asian private equity investor Quadria and Europe-based co-investors DEG and Swedfund. The consortium held around 67%, but Temasek’s holding is more than that.
Temasek is also a longstanding backer of Chennai-based Dr Agarwal’s Healthcare, investing INR2.7 billion last year for a minority stake in the eye-care hospital chain. The investment is being used to forge strategic partnerships, acquisitions and new hospitals. The group is targeting doubling hospitals to 150 in by 2027 from 76 in 2022. Other investments in the Indian healthcare sector are focused on pharmaceuticals with Temasek backing pharmaceuticals-focused platform Integrace, e-pharmacy startup PharmEasy, Glenmark Pharmaceuticals, and physical fitness platform Curefit.
Investments in FY2023 include subscription-based food retailer Country Delight, online wellness retailer Healthkart, smart appliances maker Atomberg, and credit card platform OneCard, while it also raised its stakes in e-commerce provider Shiprocket and insurance companies HDFC Life and ICICI Prudential Life.
Temasek is leading a US$350 million Series D fundraising round for Ola Electric, with an investment of up to US$150 million. It invested US$10 million in a US$37 million funding round by edtech unicorn upGrad. Temasek is also in the process of investing in online pharmacy Pharmeasy, which has faced a collapse in valuation since 2021.
While some venture capital transactions are overseen by Temasek subsidiary Vertex, its Mapletree affiliate is pushing the investor’s strategy in Indian real estate. In February, a INR150 billion (US$1.8 billion) tech-focused Indian real estate platform was formed by Ivanhoé Cambridge – the real estate arm of Canadian pension fund CDPQ – and Mapletree. Mapletree also has four properties in India: Global Infocity Park in Chennai; Global Technology Park in Bengaluru; Mapletree Logistics Park Chakan in Pune; and Mapletree Logistics Park Talegaon in Pune.
Although the Indian market presents considerable opportunities for Temasek, it also comes with major risks. The Singaporean investor is looking to expand investments in India’s growing renewables sector, but project delays and problems with corporate governance have plagued the sector. The failure of Azure Power Global to disclose its financial results by the July 15 deadline prompted the New York Stock Exchange to suspend trading in its shares. The situation is concerning for Canadian public pension funds OMERS and CDPQ, which have stakes of 21.4% and 53.4% in the company.
The producer has been rocked by a whistleblower complaint over “potential procedural irregularities and misconduct by certain employees” in May, a delay in its company's annual report, and the sudden departure of CEO Harsh Shah after just two months in the post. The company’s own investigation revealed into the complaint found non-adherence to safety and quality standards and “evidence of the manipulation of project data and information by certain employees”.
Azure Power’s problems highlight the governance and regulatory weaknesses of the Indian market, which Temasek will be exposed to as it boosts its exposure.