US-based Franklin Resources, which operates under the brand Franklin Templeton Investments, has raised its equity stake in Algebra Capital, an asset management company specialising in the Middle East and North Africa (Mena) region, to 40% from the previous 25%.
The strategic relationship between the two companies was originally established in September 2007 when Franklin Resources acquired a 25% stake in Algebra Capital. With the increased stake, William Yun, an executive vice-president of alternative strategies for Franklin Templeton Investments, was appointed a director of Algebra Capital. That makes him the third Franklin Templeton director on the Algebra Capital board.
This investment reinforces Franklin Templeton's outlook for the long-term opportunities in the Mena region.
"We are seeing local and regional investors, including Mena-based sovereign wealth funds, refocusing on investment opportunities closer to home as a consequence of continued volatility in global markets," says Yun.
Right before the collapse of Lehman Brothers, the Mena theme was gaining popularity among investors worldwide and making the rounds of retail markets, following in the footsteps of pension funds, endowments, and hedge funds. The region's biggest draw is its oil-rich countries, where surpluses from oil receipts have been feeding economic growth and development for many years.
"While the credit crisis has not spared our markets, the Mena region remains one of the fastest growing regions in the world with substantial wealth and relatively low levels of leverage -- attractive attributes in this uncertain global economy," says Ziad Makkawi, CEO and founder of Algebra Capital. "For the long-term investor, we are seeing tremendous investment opportunities in this market environment and Algebra's local presence and expertise in the region make it well positioned to take advantage of these opportunities.
The Mena region, which includes Egypt, Jordan, Lebanon, Saudi Arabia, Qatar, Oman, the United Arab Emirates (UAE), Bahrain and Kuwait, is the world's eighth-largest economic bloc. The market capitalisation of the region was more than $750 billion as of December 2008.
Franklin Templeton and Algebra Capital have so far successfully launched and marketed five Mena equity funds worldwide. Franklin Templeton will continue to work with Algebra to develop products that will complement its diversified product range.
Algebra Capital, established in November 2006, operates out of the Dubai International Financial Centre (DIFC) and is regulated as a financial services provider by the DFSA. Algebra is one of the leading asset managers in the Mena region, offering listed equities, fixed income and private equity to both regional and international institutional investors. Services are packaged as fund solutions or advisory mandates.
Franklin Templeton established its presence in the Gulf in October 2000, and currently offers a range of investment funds to eligible retail and institutional investors through Franklin Templeton Investment Management Limited Dubai, which supports its distribution partners across the Mena region. The Dubai office serves also as Franklin Templeton's regional headquarters for the Ceemea region.