SINGAPORE (BLOOMBERG) - Temasek Holdings is in active talks to make its first direct investment in health care and education tech start-ups in South-east Asia, said the company's chief investment strategist.
The Covid-19 outbreak this year has fueled demand for digital health and education services, prompting the state investment firm to review potential targets to add to its US$227 billion (S$306 billion) portfolio. Temasek has been turning its attention to the two nascent sectors, though it has so far preferred to invest indirectly via venture capital funds that it backs in the region.
"We see multi-billion-dollar companies emerging from these sectors over the next few years," Rohit Sipahimalani, who also serves as head of South-east Asia at Temasek, said in an interview. "We are in active dialogue with some of them right now, and I wouldn't be surprised if we do make an investment." He declined to identify specific target companies.
The strategy underscores Temasek's bet on South-east Asia's digital economy, which is poised to triple to more than US$300 billion by 2025 after growth cooled during the pandemic, according to research it jointly compiled with Google and Bain & Co. The annual report, which primarily studies four key areas including e-commerce, dedicated a section to health and education tech for the first time when it was released on Tuesday.
During the pandemic, major digital health-care apps saw usage increase by four times, while leading education apps were used three times more, the study showed. That has led to growing investment in countries like Indonesia, where there isn't enough doctors and hospitals to meet the needs of the country's nearly 300 million people.
In education, a large portion of funds are going into online learning platforms. In December, Indonesia's Ruangguru raised US$150 million from investors including EV Growth, a venture capital fund backed by Temasek, marking one of the largest financing rounds for a Southeast Asian startup.
E-commerce will continue to be an attractive area for Temasek, Mr Sipahimalani said. Temasek and Google agreed to inject about US$350 million in Indonesian online marketplace Tokopedia, Bloomberg News reported last month.
The annual report showed that the region will see a 63 per cent increase in e-commerce gross merchandise value this year, as home-bound consumers pick up groceries and essentials from the likes of Lazada's RedMart and Sea Ltd's Shopee during the lockdowns. Online shopping is now forecast to hit US$172 billion by 2025 versus a previous US$153 billion estimate.