Temasek doubles its India portfolio in 5 years

It is said that there are few funds in the world where the fund managers rarely say not to a meeting with the fund. Temasek of Singapore is one of them. The investment arm of the Singapore government, it is a formidable investment player in equities across the world. Temasek Holdings has also been a very active investor in the Indian markets. Even amidst the volatility in the markets in the last 9 months, Temasek has grown its India portfolio to $16 billion, nearly doubling the portfolio value over the last 5 years.

According to the top management of Temasek Holdings, they have continued to build on their exposure to India, especially augmenting investments in technology firms and other listed companies. Just to give a comparative picture, Temasek’s India portfolio grew from $9 billion in FY20 to $14 billion in FY21 and to $16 billion in FY22. That is a doubling of the investment exposure of Temasek since 2017. On an macro basis, the overall portfolio of Temasek in equities touched a record level of $297 billion across all its global holdings.

Ironically, it has not always been a pleasant experience for Temasek. Last year, four of the key holdings of Temasek viz. Zomato, Policybazaar, CarTrade and Devyani International went public. Apart from Devyani International, the other 3 are digital plays. Back to the Temasek invested IPOs. Its key listings like Zomato, Policybazaar and CarTrade saw a sharp fall in their prices post the listing and this puts pressure on the portfolio of Temasek. Most of these stocks are down 30-50% from the previous lows.

Temasek has a fairly diverse holding pattern in the Indian markets. For instance, its exposure to India is an eclectic mix of direct investments in private and public companies and also some investments made through the Indian arms of its other global companies such as DBS and Sembcorp. For Temasek, India has been a value creator in the long run and this is a market they have also preferred since it offered choice, quality and also a robust market with scores of value creation opportunities in the market.

Ironically, Temasek continues to be positive on India at a time the fund has turned cautious globally amidst fears of a recession in the US. Its positivity about India is also a welcome shift from the scepticism of most of the long only FPIs which have seen selling of over $35 billion in the last 9 months. Temasek has a preference for the Indian economy which is relatively a lot more inward looking and focuses more on the domestic consumption rather than being export driven or global demand determined. This makes India a defensive bet. 

Normally, Temasek invests about $1 billion every year in India, but last year the fund saw a lot more of opportunities in the Indian and ended up being more aggressive. Temasek has also been very active in the Indian start-up space. Regarding the correction of the digital plays in India, Temasek held the belief that valuations of loss-making tech firms have particularly seen corrections though they have fallen across the spectrum. The impact on the big daddies is much smaller.