Singapore-based investment firm with $9-billion Indian portfolio looks for new asset class
Temasek Holdings is for the first time considering investment in real estate as an asset class in India. Last year, private equity-owned real estate funds invested $5 billion in India, which is the highest since the 2008 financial crisis, according to investment advisory firm Venture Intelligence.
The Singapore government-owned company is one of the largest investors in India, with a net investment portfolio of about $9 billion, or five per cent of its $179-billion global portfolio.
“We are hopeful to tap real estate assets in India,” said Ravi Lambah, co-head India, Temasek International. “It is a more recent development that we have been looking at it. We have done a few such investments outside last year and now we are evaluating it in India.”
Temasek started investing outside its home country in 2002-03. It does not want to be called a fund, as it does not raise money from outside but has its own balance sheet and pays taxes like a company. It makes investments through its own divestments or earnings through dividends. In India, it started investing since 2004, to tap the opportunities that came with rising consumption. In the past five years, on an average, it has invested $1 billion annually.
Late last year it announced it would be buying a two per cent stake in life insurance company ICICI Prudential for $100 million following its investments worth over $1 billion across Sun Pharma, Glenmark, Crompton Greaves and Oberoi Realty in the quarter ended June.
Temasek’s plan to invest in the real estate space comes after sister concern GIC emerged as one of the largest investors for the asset class in the country in the last couple of years.
Last year the Singapore sovereign wealth fund manager formed a joint venture with DLF Home Developers to invest $300 million (Rs 1,990 crore) to develop projects in two land parcels acquired by DLF in Delhi. This followed a tie-up with global alternate assets giant KKR to set up a non-banking financial company to lend to real estate developers early in the year.
This was consistent with GIC’s strategy to form joint ventures for investment in residential projects in India. In 2014, it announced a joint venture with the Bengaluru-based Brigade Group to invest Rs 1,500 crore in residential development. And then followed it up with two joint ventures with the Delhi-based Vatika Group, to develop two residential projects in Gurgaon. In the commercial real estate space, it acquired the BSE-listed Nirlon — that owned an information technology park at Mumbai’s Goregaon — in 2014 for about Rs 800 crore.
Temasek is also considering both commercial and residential real estate for its investment plans.
“For the investments in real estate, we will look at both yield and asset appreciation, regardless of whether it comes from residential or commercial space,” Lambah said.