Temasek Strategic Divestment in India Yields Massive Gains
Temasek Holdings, the state investment company of Singapore, has successfully sold its 35% stake in a joint venture with French multinational Schneider Electric for a remarkable 5.5 billion euros (S$8.2 billion). This transaction represents an extraordinary tenfold gain on Temasek’s original investment, demonstrating the immense value created in a rapidly growing market. According to Schneider Electric, the deal is a “logical next step” in its long-term strategy for India, as acquiring full ownership will enable more rapid and streamlined decision-making. The joint venture was originally formed by combining Schneider’s low-voltage and industrial automation products business in India with the electrical and automation unit of Larsen & Toubro. This divestment follows earlier reports from July indicating that a deal was in the works, though the final price far exceeded initial estimates.
Building on a History of Strategic Partnerships
Temasek’s original investment in Schneider Electric India, valued at 530 million euros, was made back in 2020. At that time, it was a pivotal part of a larger strategic move by both companies to acquire and merge the electrical and automation business of the Indian conglomerate Larsen & Toubro into a new entity. This successful exit not only highlights Temasek’s astute investment strategy but also underscores its continued focus on the Indian market. In line with this, the Singaporean investor has recently shown a strong interest in backing more family-run businesses in India. A recent example of this is its US$1 billion investment in the major snacks maker Haldiram. This targeted investment approach suggests that Temasek is shifting its focus from being a minority stakeholder in large, established ventures to becoming a significant partner in high-growth, domestic-focused enterprises.
Broader Strategy of Global Portfolio Management
The divestment of the Schneider Electric stake in India is part of a broader, more diversified portfolio strategy by Temasek Holdings. The company, which is based in Singapore, is known for its long-term investment horizon and its ability to identify high-potential sectors and geographies. The sale of the Indian joint venture stake allows Temasek to re-allocate capital to new opportunities that align with its current strategic priorities. A separate and recent announcement further illustrates this strategy: Temasek has also disclosed its intention to increase its stake in the Italian luxury group Ermenegildo Zegna to 10%. This move into the luxury sector in Europe, combined with its continued focus on key markets in Asia, demonstrates Temasek’s ability to balance its portfolio between profitable exits from maturing ventures and new, strategic investments in diverse industries across the globe.
