Temasek Holdings bought shares in ICICI Bank, India's largest private-sector lender by assets, as the nation's central bank pushes lenders to clean up bad debts that have weighed on earnings.
The investment firm bought 2.55 million American depositary receipts (ADRs) of ICICI in the second quarter, worth US$18 million (S$24 million) at the end of June, according to a Monday filing with the United States Securities and Exchange Commission.
Temasek also acquired stakes in US aircraft parts manufacturer B/E Aerospace and emerged as a shareholder in biotech firm Intellia Therapeutics, which had its initial public offering in May.
It is also reported to be in discussions with Singtel about selling part of its nearly US$2.4 billion stake in Thailand's Intouch Holdings, according to a person with knowledge of the matter.
Temasek is Intouch's biggest shareholder with a 41 per cent stake, according to data compiled by Bloomberg.
Temasek added to its investments in India after outgoing Reserve Bank of India (RBI) governor Raghuram Rajan set lenders a March 2017 deadline to rid their balance sheets of bad debt, which has curbed their ability to extend loans.
The proportion of Indian banks' stressed assets, which include restructured and soured loans, to total advances surged to a 16-year high of 11.5 per cent as of March 31, RBI data shows.
"While ICICI is clearly not immune to the asset quality pressures afflicting the Indian banking sector at present, the bank's robust capital buffers and cleaner balance sheet relative to its public-sector peers leave it better positioned to take advantage of a potential economic revival in India," Mr Nicholas Yap, a credit strategist at MUFG Securities Asia, said via e-mail.
ICICI last month posted a 25 per cent drop in first-quarter profit as provisions for bad debts rose. In April, the bank reserved 36 billion rupees (S$721 million) for possible defaults by companies in sectors including cement, power and mining, an amount that came on top of the 33 billion rupees it put aside to cover soured loans in the March quarter.
Temasek had previously owned ICICI shares and had been reducing its stake in the Indian lender since 2009. It did not own shares before the purchase of the ADRs in the second quarter, according to Bloomberg data. ADRs in ICICI have lost 25 per cent over the past 12 months, and traded at US$7.33 on Monday.
Temasek has trimmed its exposure to traditional banks in favour of holdings in media, telecommunications and technology firms in more recent years, as it repositioned its portfolio to highlight long-term trends such as growing middle-income populations and transforming economies in countries such as China and India.
In India, which boasts the fastest expansion rate among the world's major economies, Temasek's assets include stakes in Godrej Consumer Products and car manufacturer Mahindra & Mahindra, data compiled by Bloomberg shows.
BLOOMBERG
