Temasek, an investment firm owned by the government of Singapore, recently said exposure of its portfolio to India grew to 7% in FY24 and India emerged as its third-largest investment destination. In an interview, Mohit Bhandari, managing director, investment (India), tells Raghavendra Kamath about the investor’s plans and strategies. Excerpts:

Last year, you had talked about investing $10 billion in India over the next three years, which is a substantial increase in the run rate over previous years? What is the progress on that?

We said last year we hope to deploy $9-10 billion over a three-year period.  We deployed $3 billion last year. It was the biggest year from deployment perspective. The $10 billion in a way is a directional number which indicates the firm’s aspiration, confidence and intent to step up. Ultimately, we are a bottom-up investor. If we get right opportunities for larger number, the firm will be supportive. The $10 billion is what we will do on our own. Subsidiaries will do more.

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Are valuations realistic? Do you expect an increase in down rounds going ahead?

Valuations are robust as the macro environment in India is very encouraging. That is reflecting in investor interest and appetite, which in turn, reflect in valuations. It is therefor our job to find right opportunities, stay disciplined and take calls when valuations make sense for us. With respect to down rounds, if a company has raised capital in recent times, I think it has enough capital to grow into that valuation. If a company raised money two to three years ago, valuations were different then.

Any new sectors which are showing potential?

In terms of new areas, we continue to scout for them. We want to be ahead of the curve. We invested in OIa two years ago in first tranche, we did the second tranche last year. We invested in Mahindra EV platform last year. We want to participate in sustainability and green energy space. In the broader energy transition space, due to the government commitment for net zero, the renewable space will continue to grow. As of now, we are not directly investing, but we have portfolio company Sembcorp and joint venture O2 Power which have more than 6GW capacity.

You said value of your investments rose mainly due to your investment returns from the US and India, offset by the underperformance of China’s capital markets. Do you expect India portfolio to outperform China in terms of performance this year also? If yes, why?

We look at longer-term horizon. While India has been the best-performing market in the last decade, China as a market has done exceedingly well for us for a longer period of time. Invariably, every market has cycles at different points in time. We can’t predict the outcome in next one year, but what I can say is that we have built a resilient portfolio in India.

A couple of your investee companies have lined up IPOs. Are you looking at more value unlocking?

Two of our portfolio companies – Ola and Niva Bupa –  have filed DRHPs. We are partially exiting Ola and not selling in Niva Bupa. But it does not mean we are exiting or reducing our portfolio. We invested in Godrej Agrovet in 2012 and it got listed in 2017. We came down from 20% to 12-13%. Even today, we have 12-13% in the company. We may look for exits from the risk management and discipline perspectives, which may allow us to go back to the same company if right opportunity comes in future. Also it will help us rebalance and reposition our portfolio.

Since homegrown startup landscape continues to grapple with a severe funding winter, how do you look at investment opportunity in this segment?

We think entire digitisation story has a long runway. The entire ecosystem is maturing, be it founders, investors or customers. Founders are more focused on profitable growth, investors are focused on unit economics and customer adoption has surprised us positively. We added Country Delight, Ola EV and Lenskart to our portfolio.