The Singapore government’s investment arm Temasek said its pace of investments in India will likely slow down this year.
“If macro is bad, we can’t divest, so we just won’t invest as much, because we have a balance sheet, we can only invest what capital we have. Our funding comes from investments and dividends, and when those go down, we don’t invest that much. It’s as simple on a year-to-year basis,” said Ravi Lambah, head-investment group; head-India at Temasek.
Temasek, which deployed over $1 billion in the country last year and counts new-age businesses such as PharmEasy, Licious, UpGrad, Unacademy, Shiprocket, and ShareChat in its portfolio, said returns for the latest fiscal year are down to 5.8% as of March 31 from 25% in the previous year, amid global macroeconomic headwinds and the Russia-Ukraine conflict.
“There are macro events that are beyond the control of anything that we do from an investment perspective,” Lambah said. “Of course, we will be cautious about how we invest because that’s the right thing to do in an environment of uncertainty. But long term, we are positive, and we will continue to invest in India,” he told ET.
Temasek has been active in India for more than a decade and has consciously reduced its exposure to traditional businesses even as it pushed the pedal on digital and tech-led businesses in the last two years, Lambah said.
With more than $16 billion invested in India, the country constitutes more than 5% of its global portfolio.
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“The theme at the heart of all our recent investments has been digitisation and we went big on that in India. We believe it (India) has all the ingredients – it is a large domestic market, there are large foreign exchange reserves in the country, so it gives you a good cushion against what’s happening, the policy framework is consistent, and it has been positive, that makes us believe in the India story,” he added.
This comes at a time when most big private equity and buyout funds have largely stayed away from new-economy investments and are only now investing in growth and late-stage ventures. Funds such as Warburg Pincus, General Atlantic, Carlyle, TA Associates among others are actively scouting for opportunities from the startup universe.
Last year, four of Temasek’s portfolio companies –
, PolicyBazaar, and Cartrade – listed on the Indian stock exchanges, creating liquidity events.
Some of its other portfolio companies such as
Lenskart, Ola and
PharmEasy are next in line to list on the bourses.
“Since we have a flexible mandate and are not time-bound as other funds, it does not matter much whether these companies will list this year or next, it is the outcome and the valuation at which we entered and exit is what matters,” Lambah added.
The firm, which has stayed away from investing in cryptocurrencies globally, will actively look at opportunities in blockchain and its back-end infrastructure providers, said Vishesh Shrivastav, managing director (India).
According to him, Temasek has constituted a central team that focuses on blockchain technology.
“We are taking the approach of venture building… so, there are multiple use cases that blockchain as a technology will have. We are focusing more on the infrastructure side of things,” Shrivastav said.
At a time when most blue-chip Silicon Valley venture funds, crossover investors and hedge fund investors are putting the brakes on investments in India, Temasek said it will continue to back its existing portfolio companies as they raise internal and bridge rounds.
According to Lambah, the firm will invest more money in follow-on rounds to help its portfolio companies weather the funding winter of 2022 by scouting for newer opportunities, as India continues to be one of the key markets for the firm globally.