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Templeton Asset Management serves as the centre for Franklin Templeton InvestmentsÆ team of global emerging markets fund managers, headed by the globe-trotting Mark Mobius. The Singapore office manages around $51 billion in assets.
Stephen Grundlingh, country head of Templeton Asset Management in Singapore, spoke to AsianInvestor recently about the companyÆs business opportunities in Southeast Asia. Grundlingh has been in his current role for just under two years. Prior to that, he headed up Franklin Templeton InvestmentsÆ office in South Africa, where he managed the African region for four years prior to his relocation to Singapore.
Could you give us an overview of Templeton Asset ManagementÆs operations in Singapore?
Grundlingh: We set up the office in Singapore in 1990 when Dr Mark Mobius set up a research office for emerging market equities. We established more of a full presence here in 1996, with the establishment of a sales and marketing office. So over the past 12 years, we have increasingly built up our presence here and a number of years ago, Singapore became the hub for Franklin Templeton InvestmentsÆ business in Asia.
We currently have 109 employees stretching across all major functions from sales and marketing, portfolio management, investment operations, transfer agency to fund accounting, treasury accounting control, legal, compliance, IT, corporate accounting and tax. I think we are among the few, if not the only, foreign asset management company in Singapore that performs all its investment administration and operations in-house. Having in-house functions allow us to differentiate our service to clients and dealers and ensures that back office functions are closely aligned with the business objectives of the company.
On the investment management side, our global emerging markets group is headed up out of Singapore by Dr Mark Mobius.
What is your total assets under management?
The total assets under management of our Singapore entity, Templeton Asset Management Limited, is about $51 billion. The big bulk of these assets, around 80% is comprised of emerging market equities. 58 of our Sicav funds are registered for sale in Singapore with Singapore-sourced assets of around $2 billion.
How do you serve other Southeast Asian markets from the Singapore office?
The Singapore officeÆs jurisdiction includes sales and marketing and business development across the Southeast Asian region. This includes Malaysia, Thailand, Indonesia, Philippines and Vietnam.
Singapore is currently our only physical office in Southeast Asia. After Singapore, our second biggest market in terms of assets is Malaysia, where we act as a sub-advisor for a number of funds offered by institutions, as well as fund of funds.
We are looking more closely at a number of opportunities in Malaysia. The countryÆs economy is growing at an annual rate of close to 6% and has a gross national savings rate of around 35%. So, attractive opportunities exist for more rapid growth in the domestic and international mutual funds market.
We are also following the growth of the Malaysian Islamic finance industry with some interest. We will be launching our first Sharia funds this year in partnership with our Dubai-based asset management partner Algebra Capital, in which Franklin Templeton holds a 25% stake. Malaysia may prove to be an attractive base from which to launch a suite of Sharia products aimed at the Asian market.
What about what you are doing in other Southeast Asian markets?
We have been active in Indonesia on a limited basis for the past 12 months. We sell our offshore funds via various banks. However the private placement rules applicable on the sales of offshore funds prove to be restrictive and limit the extent to which funds can be marketed. ItÆs certainly a huge potential market, but it still represents a small opportunity for us at present.
What about the opportunities in Thailand?
Thai firms have been allowed to offer international investment products for a number of years now. However, the take up has been relatively low. There was a pick up in the second half of last year and we have in fact launched three funds since October with three different asset managers in Thailand. These funds are typically set up as feeder fund structures
We have also been focussing on the institutional opportunities in Thailand. We were recently awarded a $100m global fixed income mandate by the Social Security Office.
Is that where you see the main opportunities in Thailand, from the institutional side of the business?
We will continue to evaluate opportunities throughout the region. We have been involved in a number of successful JVs in developing markets, such as in India, Brazil and Korea, which have over time led to us acquiring full ownership of the businesses. That strategy has worked for us. We do not presently have plans to open an office in Thailand. However we are continuously on the lookout for opportunities and keep our pulse on market developments across the region. When attractive opportunities present themselves, we are always ready to take a closer look.
What kind of opportunities do you see in the Philippines?
In the Philippines, we are talking to a number of institutions. We may launch some products this year with one or two banks. However in many of the markets in the region, strengthening local currencies have weakened the appeal of US û or other international currency û denominate unds.
What are the opportunities that you see in Vietnam?
Vietnam is another amazing growth story and from a fund management perspective currently offers good opportunities in the area of private equity. (EditorÆs note: As previously reported by AsianInvestor, Franklin Templeton Investments bought a 49% stake in Vietcombank Fund Management, an asset management firm focused on private equity investments in Vietnam.)
What are your current initiatives in Southeast Asia?
We are looking to expand our investment professional presence and build out our existing teams. We currently have members of our emerging markets investment team based in Singapore, together with investment professionals our global equities group. We are in the process of establishing a fixed income team, which will form part of our global fixed income group based in San Mateo in California, New York and London.
We donÆt have targets, but we are looking to grow our assets to 15%-20% per annum.
Which market is contributing the most to your bottom line?
Across the whole of Asia, our biggest single market is Taiwan in terms of assets and market share. We have about $17 billion in assets from Taiwanese investors, and we enjoy approximately a 25% market share there.
In Southeast Asia, it would be in Singapore. Over $2 billion is sourced from Singapore investors.
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