Will invest in firms that reflect India's growth: Temasek Dy head, India

'India's public market has matured to accept new-age tech firms', says Promeet Ghosh

Singaporean investor Temasek’s India portfolio exposure has gone up from $9 billion in FY20 to $14 billion in FY21. In an interview, Temasek’s deputy head, India, Promeet Ghosh tells Raghavendra Kamath that the investor is optimistic about the long-term prospects in the country. Edited excerpts:

Where does Temasek see its India portfolio in FY22?

It was indeed an active year for us, and we look to continue increasing our exposure to India. We are not an asset allocator; we do not have a target geographic allocation for our capital. We evaluate each investment opportunity using a bottom up approach, based on their intrinsic value against our risk-adjusted cost of capital. We remain optimistic about India’s long-term growth potential and we will continue to invest in companies that reflect this.

How do returns look like in India in FY22 due to the prolonged pandemic and lockdown?

A prolonged pandemic and lockdowns will likely dampen and delay India’s near-term growth recovery prospects, impacting consumer sentiment, among others. Covid-19 had accelerated some of the trends we identified. Globally, and in India, our investments that are aligned with consumption and the digitisation trend have done well over the past year. There are also the underlying trends of formalisation and consolidation that have been further accentuated over the last one and half years. Many of our portfolio companies, which are market leaders in their respective sectors, have been benefiting from these trends.

What are the challenges you are encountering in identifying and executing deals in India now?

The tightened containment measures arising from the pandemic, such as international travel restrictions and localised lockdowns, can have a disruptive impact on deal sourcing. Our investment pace in India has been progressing steadily over the past few years across diverse sectors.

Markets regulator Securities and Exchange Board of India (Sebi) has introduced a couple of measures, which help in exits for PE firms. How do you look at it?

We welcome regulatory developments that continue to make India a favourable and attractive investment destination, including for global inve­stors. Despite the pandemic, India’s PE landscape remains robust, driven by surges in edtech, fintech, e-commerce and IT — sectors that benefitted from digitisation.

Will Temasek look at buyouts more actively in India due to regulatory changes and business environment?

We have the full flexibility to deploy capital based on the opportunities we see, and thus have the ability to take min­ority and controlling stakes, in both listed and unlisted companies.

Many tech companies are gearing up for initial public offerings (IPOs) in India. How do you look at these IPOs?

India’s public market has matured to accept new-age tech firms. We observed this trend several years ago when we started investing in early-stage companies in the tech space. These have since grown. Through an investor lens, IPOs are opportunities to exit. At Temasek, we are ultimately driven by bottom-up intrinsic value tests for each individual investment opportunity. We make our investment or divestment decisions based on these.

Despite initial interest, Temasek has largely stayed away from real estate. Why?

Despite Covid-19, the real estate sector in India is expected to remain a huge contributor to India’s GDP in the foreseeable future. Our portfolio companies, for instance CapitaLand, have material exposures to the real estate sector in India. We have also invested in the National Investment & Infrastructure Fund, which invests across asset classes, including infrastructure.