Temasek exits Policybazaar, sells minority stake in Manipal Hospitals

Temasek has exited Indian insurtech pioneer Policybazaar and sold a minority stake in Manipal Hospitals, but remains committed to India and is set to recycle the capital into new ventures.

Taking the lead in healthcare
Temasek sold an 8% stake in one of India’s leading private healthcare chains Manipal Health Enterprises to Abu Dhabi’s Mubadala, the California Public Employees’ Retirement System (CalPERS) and Novo Holdings. It retains a 51% majority stake, having acquired a 41% shareholding from the National Investment and Infrastructure Fund (NIIF) in April 2023 for more than INR163 billion (US$1.96 billion). At last year’s valuation, the stake would have been worth more than US$380 million, but it is now likely to be above US$500 million. For Mubadala and CalPERS, the investment represents an opportunity for exposure to India’s fast-growing healthcare sector – and taking their lead from long-standing India-backer Temasek.

Investing in India’s healthcare space since 2004, Temasek has been one of the sector’s early foreign investors. In 2022, it invested INR6 billion in Medica Superspecialty Hospital, replacing a consortium led by Asian private equity investor Quadria and Europe-based co-investors DEG and Swedfund. Temasek is also a longstanding backer of Chennai-based Dr Agarwal’s Healthcare, building its minority stake in the eye-care hospital chain which seeks to double in size in 2022-27.

Other investments in the Indian healthcare sector are focused on pharmaceuticals with Temasek backing pharmaceuticals-focused platform Integrace, e-pharmacy startup PharmEasy, Glenmark Pharmaceuticals, and physical fitness platform Curefit. Investments in FY2023 include subscription-based food retailer Country Delight, online wellness retailer Healthkart, smart appliances maker Atomberg, and credit card platform OneCard, while it also raised its stakes in e-commerce provider Shiprocket and insurance companies HDFC Life and ICICI Prudential Life.

Exiting Insurtech Firm, after over eight years
The Singaporean state-owned investor also sold its 5.42% stake in PB Fintech, the parent firm of insurance platform Policybazaar, for nearly US$290 million, according to a stock exchange filing by its subsidiary Claymore Investments Mauritius. The move came after the firm reported its first quarterly profit of US$4.4 million in Q4 2023, supported by a boost in demand for insurance; Temasek’s sale followed SoftBank’s divestment. Temasek first invested in Policybazaar in October 2015 when it acquired shares from Info Edge in an indirect transaction, acquiring around 10% of the company for nearly US$21 million.

Indian venture capital has endured a rocky period, with an arguably more challenging environment as problems emerged in some startups in relation to inflated valuations as well as risk aversion. At the height of the Covid-19 pandemic, venture capital investment in e-commerce and healthtech was a no-brainer. But there have been significant markdowns in the value of some Temasek investments, such as India’s PharmEasy, which it invested in at a peak value of US$5.6 billion in 2021 but saw its value slashed 90% in a US$300 million funding round last year; it was an early investor in PharmEasy, leading a US$220 million funding round in November 2019 that valued the e-pharmacy at US$700 million.

Temasek also had its fingers burnt with Indian ride-hailing app Ola, owned by Ani Technologies, with its stake diluted as it has opted out of funding rounds. Some of its targets have continued to raise funds at ever higher values, but exits slowed in 2023 as IPOs are delayed and markets were more challenging – this may change in 2024, as demonstrated by its divestment from Policybazaar.

With 6% of its portfolio in India, Temasek’s Indian assets total approximately US$17 billion, having backed startups like ride-hailing app Ola and online grocery delivery service Zomato. Temasek’s planned allocation to India over the next three years, with US$10 billion announced last year, would indicate a sustained pace of investment that is likely to surpass the rate of AUM growth and see India comprise 10% of Temasek’s assets by end-2026. Global SWF