Temasek’s Cautious Approach in Turbulent Times: Insights from Ravi Lambah, Vishesh Shrivastav, and Mohit Bhandari

As global economic conditions face increasing uncertainty and central banks grapple with inflation, Temasek, the prominent global investment company owned by the Singaporean government, is adopting a cautious stance in its investment decisions across various geographies, including India. The company’s move reflects its prudence amid an evolving economic landscape. Temasek recently reported a lower return of 5.8 percent for FY22, a stark contrast to the robust 24.5 percent return during the corresponding period in the previous year. With its portfolio value standing at $297 billion, Temasek maintains an exposure of over 5 percent in India. Ravi Lambah, the Head of Temasek India, emphasized the need for prudence in the current economic climate. “We definitely see a slowdown and recession looming. Hence we are cautious. The pain in the emerging markets is due to what will play out in the West,” Lambah explained.

Amid this caution, Nomura has also revised its growth forecast for India to 4.7 percent in 2023, down from the earlier projection of 5.4 percent. These economic challenges necessitate a thoughtful approach in navigating the investment landscape. While economic headwinds prevail, Temasek’s strategic shift towards early-stage investments in new-age companies appears to be paying off. The company has been strategically investing in emerging Indian companies like Zomato, Licious, Lenskart, and PharmEasy, positioning itself as a key player in India’s evolving start-up ecosystem. Over the past five years, Temasek’s India portfolio has nearly doubled, reaching $16 billion.

Furthermore, the company continues to invest in India’s established private sector banks, including HDFC Bank, ICICI Bank, and Axis Bank, while also exploring newer entrants like AU Small Finance Bank. Temasek has extended its reach into the industrial sector, backing companies such as GMR Energy, Larsen & Toubro, and Maruti Suzuki, further diversifying its investment portfolio. Vishesh Shrivastav, the Managing Director of Temasek India, elaborated on this strategic shift. He emphasized that the transition began over the past decade, guided by an evaluation of customer spending patterns and the identification of innovative players in the healthcare, life sciences, and agri-tech sectors. Some of the portfolio companies, including Lenskart, PharmEasy, and Ola, are planning to enter the public markets with initial public offerings (IPOs), although the exact timeframe remains uncertain.

Ravi Lambah stressed that Temasek would continue to adopt prudent exit strategies for its investments. “We will hold onto investments if it makes sense. We are cautious right now but will act when it makes sense,” Lambah affirmed. The company has previously divested from select IPOs that entered the capital markets last year, demonstrating a disciplined approach to portfolio management. Tata Sky stands out as one of the rare companies where Temasek has maintained its investment since 2009, underscoring the company’s commitment to long-term partnerships and stability. Beyond India, Temasek is actively building its blockchain and AI infrastructure portfolio in Singapore, with investments in entities like the Bahamas-based FTX crypto exchange. This forward-thinking approach aligns with the rapidly evolving landscape of digital assets and technology.

A Positive Outlook for India’s Economic Growth:

Despite the challenges presented by the current economic landscape, Ravi Lambah remains optimistic about India’s economic growth story. He emphasized the predictability of the policy framework and the resilience of India’s broad macroeconomic potential. The one challenge that remains is the need for private capital expenditure to gain momentum, with the government playing a central role in driving investments. Once this transformation occurs, fresh investments are expected to flow into the Indian economy, sustaining its growth trajectory.

In conclusion, Temasek’s cautious approach in the face of economic uncertainty demonstrates a commitment to sound financial management and long-term vision. While challenges persist, the company’s strategic shift towards early-stage investments and its diversified portfolio position it well for the evolving economic landscape.