Thematically, like to focus on family-owned businesses, says Temasek's Ravi Lambah

In 2023, Temasek had announced a mega plan to invest $10 bn in India over a three-year timeframe. We are in 2025. How close are you to achieving that target ?

I think we recognize that the opportunity set in India was increasing for our investments, and therefore we didn't set a target really. We said we are targeting to deploy anything between 9 to 10 billion dollars over the next 3 years. And last year, for example, Ashwin, we deployed more than 3 billion dollars, and we had a similar outcome the first year from when we set that target. So, during the last 2 years, we have had that ability to deploy more than 3 billion, and we continue to be focused for this coming year as well. We are finding the opportunities and are finding an excellent climate for us to deploy capital into India, which is favourably positioned with our themes of investment. And therefore, we will keep looking for great opportunities. And by the way, while this is the target amount, we will only do it if we find the right opportunities. And if we find opportunities to deploy more than 3 billion, we will even consider those because we don't really allocate to geography or sector globally. We are very bottom-up driven.

Your direct investments in markets like India contributed to the uplift in the firm's net portfolio value over the year. India now accounts for 8 per cent of Temasek's $324 bn portfolio. How would you compare it currently as an investment destination to China, which has seen a fall in its share in recent years?

Historically, China was a large part of Temasek’s portfolio. As Singapore grew, Temasek grew with Singapore. China was one of the first few places that really, you know, we have increased our portfolio. And as the China opportunity matured, we have been reinvesting proceeds from China into other markets like the US, Europe, and India. So I think it’s really been a consequence of bottom-up opportunities that have presented themselves. Our portfolio value in India—you are right—I think that 8% is the correct number from a global perspective. But when we mark-to-market, our portfolio exposure in India now is 50 billion US dollars this year. It was 37 billion on a like-for-like basis last year. And that growth in India has happened obviously because of the growth in the value of our portfolio, as you pointed out earlier, and the new investments that we put to work.

Is there any impact on Temasek's India portfolio companies from the constantly evolving trade tariffs , those announced as well those in the works, like for instance pharma? What is your strategy to ringfence your portfolio and deal with the unpredictability factor ?

That’s a great question. The tariff deals are not done yet, but we would think that the peak tariffs are behind us. So, these deals will continue to get struck between the countries. From our perspective, we are very focused on our portfolio, and our portfolio in India more specifically is almost entirely focused on domestic consumption, which tends to be less impacted by some of these global shocks and global tariffs. So we don’t see much of an impact on what we own in India, and in fact globally, I think that also holds true.

Lets shift focus now to Temasek's most talked about Indian deal in the last year. A minority stake of around 9 per cent in top snacks maker Haldiram at a valuation of around 10 bn, making it the country's biggest ever private equity consumer transaction. Can you take us through the experience sealing that hotly contested deal, which saw interest from rival PE's too?

It’s not fair, Ashwin, for me to comment on any particular transaction or investment that we’ve done. But I would step back and say that we continue to be focused on doing investments with families, and this is not a new thing for Temasek, especially in India. You know, many, many years ago, Singapore Telecom and Temasek both did an investment with the Mittal family in Airtel. That continues to be a great investment and we still hold it. More than a decade ago, we did an investment with Godrej consumer with the family there, when they were looking for capital. As you know, Manipal Hospitals is a family-owned business and we invested with them.

So this is thematically something we like to focus on. We find families and us have a lot of alignment in certain things that come together quite well. One is the fact that families are very long-term in their outlook, and we have long capital. We are flexible; we don’t have a fund life. So we can invest for the long term. Families are looking for value beyond just capital. We have a large portfolio that we own in India and outside, so we can bring learnings from there, whether it’s processes, whether it’s governance practices and technology learning.

So there are things that we can bring to the table in a dedicated way over a long period of time that really helps us resonate with families. And I think the families see that. The Haldiram’s transaction was no different. We spent time with the family, we got to know them. We like what they’ve built; it’s an amazing company. And we see it as a business that will compound for many years going forward, and we certainly want to be part of the growth of any business like that in India. I think that really was the learning for us; that alignment is important, upfront, with families. And once you align, you realize that the journey will be a lot smoother.

Would you look to increase stake in Haldiram going ahead? It's a fast-growing company and a market leader. Can we perhaps expect an IPO in the next two to three years, when the time is right?

I think we are happy with what we own. The other investors also have come in alongside when we made the investment, as you know, and we’re comfortable with our position on the cap table right now. And the IPO really is a consequence of a decision that the family and the board will take, and we’ll be comfortable with that because, again, we view the IPO as just one event in the timeline of a company. It’s not the most important event for us. We are really focused on long-term value creation.

Your portfolio firm Manipal Hospitals, in which you hold a majority stake, has won the race to acquire Sahyadri Hospitals. Temasek is a majority investor, will Manipal continue to be on the prowl for more assets to expand its presence or will the focus now shift entirely to a widely anticipated blockbuster IPO?

I mean, the journey for expanding market share—to the extent it makes sense—will continue pre- and post-IPO. I don’t think that IPO is in any determination of that. The IPO is an incremental currency, so that makes a different lens on how you can do M&A. But I think, if I backtrack, Ashwin, when we first did this investment—when we increased our stake in Manipal—you may recall we had a business called Sheares Healthcare in India, which folded into Manipal Hospitals. So we said now Manipal will be our platform, and which continues to be the case.

Sahyadri Hospitals was a great fit. It’s a great business that’s been built and it’s been owned by two private equity firms. There’s a lot of alignment in the way the business has been pulled together. And it completes, as you rightly pointed out, another part of our national footprint, which is the West. And we’ll do more in the West as we find opportunities, because now we have the East quite well covered, the South as well, there’s a little bit in the North, and more in the West now. Ultimately, the entire platform now has 49 hospitals with 12,000 beds. The scale has improved a lot since we reinvested two years ago. So Manipal’s on a good track from that perspective. The IPO will happen when the timing is right. We don’t manage the business for an IPO; we manage the business for value creation. And when the appetite is there, we will decide as a board and then take the company public.

Right. And when it happens, it could potentially be one of Asia’s biggest healthcare IPOs, as and when the time is right.

Yes, that’s probably right. Because the size is there and the performance is good.

Temasek and co-investor EQT announced the sale of renewable energy platform 02 Power to JSW NEO Energy in December. You have an ambitious 2030 goal to halve your current portfolio emissions. In that context what kind of fresh deal activity can we expect from your end in this space in India going ahead?

We continue to look for opportunities in this space—and not just us, even our portfolio companies as well. So to us, it’s business as usual. The divestment of the O2 Power business was really a consequence of the fund life with our partner. And we’d always decided upfront when we invested that at the right time, when the fund needs to exit, we will exit with that. But we will look at more investments in this space. We like the fact that the clean energy demand is pretty significant in India, as it is elsewhere in the world. We are on track for our targets, as you pointed out earlier. And in India specifically, we see opportunities both in many parts of renewable energy and also energy transition.

Let's shift focus now to the startup space. There seems to be a clear goal to add consumer led and tech driven firms to your portfolio in India. Lenskart and Rebel Foods are two examples. Do you see opportunities to also bet on other startup sub-sets...fin tech, ed-tech, agri-tech, health tech and how do you think valuations are currently in the Indian tech space?

I think in the mid-part of the last decade, when money was quite cheap, rates were very low, growth was absolutely in favor, and all of us were investing in these high-growth, early-stage companies. And even at that point in time, we took a portfolio approach to that and said we’ll do several of these, and we will see the results of that portfolio as a portfolio, as against looking at individual performance. And some did well; some did not do that well. Out of that whole strategy sprung companies like Zomato, Policybazaar, that have matured and gone public, and some got stuck; some did not make it. But we look at that strategy as a success.

Now fast-forward to today: rates are high; capital is not cheap. So we’re more focused on the more mature aspect of growth because that’s where we think we can make a higher difference, because those companies are more mature, we can deploy more capital in one particular company, whereas in the old days, in the early-stage businesses, we had to do many to deploy capital. And as our portfolio is maturing—at $50 billion of portfolio value—we have limited bandwidth. So I think going forward, you will see us do a lower number of investments with higher dollars, where we find the right conviction.

In the listed space, you’ve taken a fancy to financials. That’s a sector where you have a lot of exposure: Axis Bank, SBI Cards, Kotak Mahindra Bank. What are some of the other pockets of the Indian capital markets listed space where Temasek could perhaps look at fresh opportunities, over and above financials?

I think you’re right. Banks were the early part of the bet because they were a good proxy of economic growth. They continue to be a good proxy, so we still hold our stakes in the banks. Last year, we invested in Kotak Mahindra Bank for the same reason. We saw an opportunity, given the bank’s trajectory and we added that to our portfolio. We have also invested in the past in insurance—both life and general.

And as we look forward, we see the maturity of the capital markets taking us to newer opportunities in wealth management and asset management. And there also, we’re looking at putting capital to work. So this is just the evolution of financial services investment and sort of the playbook that we have. So we continue to hold the banks because they are the proxy; they are probably slightly low returns but very stable, and they compound. Then it’s the growing areas of insurance, where, the penetration is still very low. And then the next layer, the wealth and asset management front, which is now beginning to get to a level where we think we can participate in their growth as well. So financial services is about a third of our portfolio in India and we continue to build that.

Recently, in a big-bang deal, Capgemini acquired WNS for $3.3 bn specifically for the latter's AI capabilities . How does Temasek view the AI revolution and what role do you see it playing in India and in your portfolio or investments?

AI is a very important part of our thinking today. And who knows what changes AI will bring? But we do know what change is happening. It’s happening at two levels: disruption, and then there’s value creation. We look at our current portfolio in India and say, where can this portfolio be disrupted by AI? And where it can be disrupted, what do we need to do to make sure we make it future-proof to the extent we can? Because AI changes, are no longer being measured in days and months, it’s being measured in days. So something that exists today, tomorrow it can be disrupted or tomorrow it can be improved.

So we’re seeing a lot of that activity in our portfolio, Ashwin, today in India. We’re not seeing it as much at the application level or at the research level or the deep tech level. We’re not seeing that as yet in terms of an opportunity to deploy capital, but globally we’re seeing that for sure. So from a Temasek strategy perspective, we are deploying money across AI. We have an AI port on the West Coast of the US near Los Angeles for the last five, six years now, which is being led primarily to build a capability set in AI. We are deploying capital through our emerging technologies team and our innovation team in AI opportunities. And in India specifically, we are seeing AI development in companies like VFS, which has got a lot of AI capability for improving it’s processes.

What are the top three sectors which you would pick in terms of deal activity in India, fresh investments, potential divestments and equity capital markets?

So healthcare I think is important to us; consumer continues to be important to us. I would say consumer with consumer -tech. And then, financial services.