Franklin Templeton Investments has opened an office in Kuala Lumpur. The fund house was the fifth foreign fund manager to receive a license from the Securities Commission to operate in Malaysia.
Franklin Templeton Investments, which has around $416 billion in assets under management worldwide, joins Aberdeen Asset Management, Nomura Asset Management, BNP Paribas Asset Management and Credit Agricole Asset Management with on-the-ground operations that cater to institutional investors in Malaysia. The local presence also allows Franklin Templeton Investments to expand its sub-advisory and feeder fund business in the local market.
In line with opening its doors to foreign capital after an eight-year absence since the 1997 Asian financial crisis, Malaysia decided to offer a maximum of five foreign fund management licenses in March 2005. Aberdeen received the first license in November 2005, the three others got theirs around one year later, while Franklin Templeton Investments received its license last year.
Franklin Templeton Investments will operate in the local market under the corporate name of Franklin Templeton Asset Management Malaysia. So far, the fund house has one compliance officer and one analyst on-the-ground. The names cannot be disclosed as yet as their appointments have not been announced internally.
The initial plan is to have around three to five locally recruited staff in the Kuala Lumpur office, a number that is expected to grow as the fund house builds its business in the local market. The fund house will offer a full range of global investment capabilities.
Stephen Grundlingh, regional head for Southeast Asia at Templeton Asset Management, will be overseeing the operations in Malaysia from his Singapore office. Templeton Asset Management is Franklin Templeton's Singapore-based Asian entity and is the company's investment management subsidiary focused on emerging markets.
"Establishing an office in Malaysia is a key pillar of our investment management business in Southeast Asia," says Grundlingh. "This will allow us to deepen our participation in the Malaysian market and reach out to more institutional investors, including pension funds and government agencies."
Prior to receiving the fund management license, Templeton Asset Management already had several mandates from institutional investors in Malaysia. It also served as a sub-advisor for white-labelled funds that were distributed by local fund management companies.
Franklin Templeton Investments has big plans for Malaysia, which is already its second biggest market in Southeast Asia in terms of assets and is poised to become an important contributor to the company's growth globally. Grundlingh expects Franklin Templeton Investment's strengths in global equities, fixed income and emerging markets investing to serve it well in Malaysia.
"Malaysia has a maturing economy, an established investment management market and expertise in Islamic finance, making it a key market on our radar screen as we expand our business in the region," says Mark Browning, Franklin Templeton Investment's managing director for Asia.
The fund house is looking into the possibility of applying for an Islamic fund management license in Malaysia someday, but that is not a top priority at the moment. The main focus is to build its conventional asset management business in the local market.
Templeton Asset Management will also station a team of investment analysts in the new Malaysian office. These analysts will be supported by investment professionals from the emerging markets research team led by executive chairman Mark Mobius.
Dennis Lim, co-CEO and portfolio manager at Templeton Asset Management, says Malaysia's economy remains sound despite the global economic turmoil. This should keep growth projections for Malaysia's asset management industry intact.
"The country has a high national savings rate and a current account surplus, which should enable it to weather the current financial crisis," Lim says.
Franklin Templeton Investments is open to further expansion in Asia, depending on where opportunities arise. Last year, it bought a 49% stake in Vietcombank Fund Management (VCFB), an asset management firm focused on private equity investments in Vietnam. Franklin Templeton's strategic relationship with VCBF marks its first joint venture in Vietnam and while the focus for now is private equity investments, this provides an opportunity for the firm to build a local asset management presence.
Franklin Templeton established its presence in the Asia-Pacific region in the late 1980s and has offices in China, Hong Kong, India, Japan, Korea, Singapore, Malaysia, Vietnam and Australia.