Franklin Templeton Investments is eyeing Asia-wide expansion to build on a strong 2011, which saw its Asia-Pacific-sourced AUM soar by a fifth to $70.7 billion, and again to $75.8 billion in the first quarter of this year.
The US asset manager’s plans include tapping onshore opportunities in Indonesia and Taiwan and moving into retail markets in Malaysia and Vietnam.
In Taiwan – thus far an offshore market for Franklin Templeton’s Sicav products – the firm has $24 billion across institutional and retail clients and is building Taiwan dollar-denominated funds, which it aims to launch this year.
As for China business, Franklin Templeton is one of the top three managers in terms of the number of funds available to investors in the qualified domestic institutional investment (QDII) programme. The business is handled out of Hong Kong, with the help of a representative office in Beijing.
The firm also has an onshore joint venture in Shanghai – Franklin Templeton Sealand – with $2.5 billion in AUM, which recently launched its first QDII product investing in Asian equities. It is applying for its second qualified foreign institutional investment (QFII) quota. The first QFII quota it received was $200 million.
With regard to Korea, there has been a swing back towards domestic equities, which has benefited Franklin Templeton. It now has $8.1 billion in Korea AUM. That makes it the biggest independent asset manager in the country, says Asia managing director Mark Browning.
Turning to South Asia, the firm has been an investor in Indonesia’s capital markets for years, but does not yet have a presence there, confirms Browning.
But last year the securities regulator, Bapepam, started the fund-management licence approval process after a two-year hiatus, reigniting Franklin Templeton’s interest in the domestic market. Eastspring Investments was among the most recent recipients of a licence.
Browning points to Indonesia's attractive demographics, with sharia products one obvious selling point.
Meanwhile, the firm looks set to be able to expand its business to the retail market in Vietnam, as the government is set to approve rules for open-ended funds, allowing mutual funds to be launched. “This is finally the year,” says Browning.
Franklin Templeton already has a 49% holding in a joint venture in Vietnam with state-owned lender Vietcombank in Vietcombank Bank Fund Management (VCBF), which manages private-equity mandates and institutional accounts. VCBF is looking to launch its first such funds in the second half of 2012.
In a recent personnel change, Avinash Satwalekar took over on May 1 as chief executive of VCBF in Ho Chi Minh City. He succeeds Gregory Robinson-Kok, who had held the post since 2008 and takes up the newly created role of Asia head of Franklin Templeton Alternative Strategies in Singapore.
Satwalekar has been with Franklin Templeton since 1996, and before his current role was portfolio manager and research analyst for Franklin Portfolio Advisors at headquarters in California.
In Malaysia, the firm has $2.4 billion in AUM, around a third of which ($760 million) is in sharia-compliant strategies, following its opening there around three years ago.
“We are bedding down in Malaysia, offering mandates on an institutional level, and plan to expand our sharia capabilities on a global basis,” says Browning.
Franklin Templeton will offer its first retail – or ‘wholesale’ – conventional funds in the country in coming months. And later this year it will launch sharia-compliant funds as part of a global range of Luxembourg products that will include regional and global sharia equities and global sukuk.
Thailand is another market where Browning expects to put a bigger presence at some point, but he declined to give a likely time-frame. “We are gaining knowledge of the marketplace,” he says.
The Templeton Emerging Markets Group has a research office in Bangkok, manned by a couple of analysts, and the firm has close to S$1 billion sourced from Thailand via sub-advisory relationships with local asset managers and institutions.
In Singapore, the firm's retail fund business has been propelled by growth in private banking. The funds industry in the Lion City was, until five years ago, focused on selling products through the Central Provident Fund Investment Scheme (CPFIS). Now it is a lot more aimed at distribution via the private and consumer banking (ex-CPFIS), insurance and institutional channels.