Temasek plans to invest up to US$10 billion in India over the next three years

Temasek Holdings plans to invest up to US$10 billion (approximately SGD 13.4 billion) in India over the next three years, with targeted investment areas including financial services and healthcare.

Reuters reported on Monday (15 July), citing information from Mohit Bhandari, Temasek’s Managing Director for India, during an interview.

As Temasek becomes more cautious about investing in China, it is leaning towards increasing its investments in India.

India’s economy is growing rapidly, with its stock market near historical highs, and there is a boom in initial public offerings and mergers and acquisitions.

Underperformance in China Investments

Bhandari stated that India currently accounts for 7% of Temasek’s global investments, and the company intends to increase this proportion.

“We are optimistic about India’s long-term prospects,” Bhandari said in an interview at Temasek’s Mumbai office.

He added, “We recognize the current economic and geopolitical tensions in China and will adjust our investment portfolio accordingly.”

Last week, Temasek noted that returns from investments in the US and India have helped mitigate the underperformance of its Chinese investments. The firm also stated that it has adopted a cautious approach towards investments in China amid trade tensions.

Approximately 22% of Temasek’s investments are in the US, while 19% are in China. In the last fiscal year, for the first time in a decade, Temasek’s investments in the Americas surpassed those in China.

During the fiscal year ending March 31, Temasek’s investments in India amounted to $3 billion, marking its largest annual investment in the country to date.

Potential Increase in Hiring Indian Professionals

Bhandari also mentioned that as the investment portfolio grows, Temasek will consider hiring more investment professionals in India, although he declined to provide specific details. Currently, Temasek employs 20 investment professionals in India.

Temasek’s current investments in India include HDFC Bank, soon-to-be-listed electric scooter manufacturer Ola Electric, and Manipal Hospitals.

In April 2023, Temasek invested $2 billion to increase its stake in Manipal Hospitals from 18% to 59%, marking the largest transaction in India’s hospital industry to date. Subsequently, it sold a minority stake in Manipal Hospitals to Novo Holdings, the parent company of Novo Nordisk, and Abu Dhabi’s sovereign investor Mubadala.

India’s hospital chains and healthcare groups are attracting increasing interest from foreign investors, as many companies expand into smaller cities, and the burden on public hospitals rises, driving demand for private healthcare.

Bhandari stated that Temasek will continue to seek more investment opportunities in the healthcare sector, as it believes the industry in India has growth potential spanning several decades.

Temasek has reported a S$7 billion (US$5.2 billion) increase in its net portfolio in 2023, buoyed by investment returns from the US and India that helped to offset underperformance in China.

The state investor’s net portfolio was valued at S$389 billion as of 31 March 2024, up from S$382 billion the previous year, according to its latest annual review released on Tuesday.

While Temasek posted a positive annual shareholder return of 1.6 percent, this modest gain follows last year’s dismal negative 5.07 percent, the worst since 2016. This raises questions about the consistency and resilience of Temasek’s long-term investment strategy. The 10-year total shareholder return remained steady at 6 percent, and the 20-year return dipped to 7 percent from 9 percent, a decline attributed to the exclusion of the post-SARS recovery year of 2004.

Retired banker Chris Kuan commented on his Facebook, “I try to be even-handed about this. But no matter how you view it, Temasek’s performance is between mediocre and ho-hum, the latter meaning nothing to shout about and for quite some time now. Down 5.07% last year, up 1.5% this year. Over 10 years just 6%, over 20 years 7%. Pedestrian for an all equity portfolio with a very large, in fact majority, unlisted (or private) assets and a sprinkling of high-risk high-return VCs. To be real, if these are the returns generated, so be it. Just don’t praise Temasek like some godsend to the world of asset management or praise the key people like they are masters of the universe.”

For context, Norway’s sovereign wealth fund, the world’s largest, reported a record profit of $213 billion in 2023, driven by strong returns on equity investments, particularly in tech stocks. The fund achieved a 21.3 percent return on its equity investments, highlighting a stark contrast with Temasek’s more modest performance​.