Consumption Theme Is Intact In India, Says Temasek

Temasek Holdings Pvt. Ltd. is betting on the consumption theme despite a slowdown in the Indian economy.

That’s according to Ravi Lambah, India head and global head of telecom, media and technology, of the investment firm. The consumption theme is intact as that drives our long-term investment strategy, he said BloombergQuint in an interview. “And we’re investing in the long term.”

That comes as more Indians are cautious about spending on everything from soap to automobiles, with even GDP growth slowing to a 20-quarter low in the three months through March. Hindustan Unilever Ltd., the nation’s largest consumer goods maker, said last month the slowdown in domestic demand continues in the ongoing financial year.

Temasek has invested nearly $11 billion in India, including $1 billion a year in the nation’s startups in the last five years. The Singapore-based firm’s direct and indirect exposure to India is 5 percent of its total portfolio of 313 billion Singapore dollars (nearly $230 billion), over half of which is direct, he said.

Yet, its exposure to India has been only a fifth to China’s. And that may be changing.

India is unique for Temasek in that over half of its portfolio is in the financial sector—double its global average. The investment firm added AU Small Finance Bank Ltd. to its portfolio, increased its stake in payments gateway Billdesk and invested in National Investment and Infrastructure Fund in the year ended March 2019.

It invested in Dr Agarwals Eye Hospital Ltd.; and ride-hailing firm Ola, point-of-sales payment solutions firm Pine Labs Pvt. Ltd., and UST Global in the technology side. That apart, it divested stakes in Info Edge (India) Ltd. and GMR Infrastructure in the previous fiscal.

Lambah explained why Temasek has been bullish on startups. “In India in the last 4-5 years we’ve seen the startup economy getting to be a lot more interesting, so we are putting more capital there,” he said. We’re finding other ways to play the financial consumption theme and capital is invested in this opportunity, he said. That, according to him, would involve backing financial services firms that play the role of disruptors and help expand the sector’s reach.

Temasek is also betting on the shared economy in India, despite being a late entrant, said Lambah. Its portfolio includes in Asia includes Ola, Didi Chuxing and Go-Jek.

The shared economy has evolved into a very important platform and the question is how we take this to the next level, he said. “You can now put more products on the platform, more tools on this platform to increase chances of revenue or have payments coming out of it.”

Watch the full interview here: