Templeton buys 49% of Vietcombank Fund Management

The fund management company focuses on private equity investments in Vietnam, but Templeton hopes to leverage on the partnership with Vietcombank for other areas of asset management.
Franklin Resources, which operates under the Franklin Templeton Investments corporate name, has bought a 49% stake in Vietcombank Fund Management (VCFB), an asset management firm focused on private equity investments in Vietnam.

Franklin Templeton bought the stake from Singapore-based investment company Viet Capital Holding. The remaining 51% of VCBF will continue to be owned by Vietcombank, the state-owned commercial bank. The value of the acquisition was not disclosed.

The acquisition is in line with Franklin TempletonÆs approach of entering new markets by building the business on the ground.

ôIn building Franklin TempletonÆs global business, a key approach we have employed has been to make strategic investments in local companies around the world in order to leverage the expertise of well-qualified investment and financial services professionals who have first-hand knowledge of their domestic markets,ö says Greg Johnson, president and chief executive officer of Franklin Resources. ôWe see tremendous opportunity to grow our business by extending our local asset management network to Vietnam.ö

Franklin TempletonÆs 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.

Although VietnamÆs funds industry is still small and in its early stages, fund management companies that have been among the early movers have held an advantage in terms of fund raising and building a performance track record. So far, there are only three retail mutual funds in Vietnam, the first having been launched in 2004. There are around 100 so-called member funds, but these are not widely available to the public and are mainly offered to private individuals or certain companies that may want to invest in these portfolios.

Franklin Templeton intends to partner with Vietcombank to make its investment funds available, in time, to Vietnamese investors. Vietcombank is one of the big four state-owned commercial banks in Vietnam that make up a combined 65% of the banking system, so the partnership will likely open many doors for Franklin Templeton.

ôWe see great opportunity in Vietnam with rising income levels among Vietnamese investors and a low penetration rate for mutual fund investments,ö says Mark Browning, co-CEO of Templeton Asset Management and managing director for Asia at Franklin Templeton International. ôWith VietnamÆs average growth rate of approximately 7% over the last 10 years, we see a bright future for expanding our pan-Asia business to serve investors in Vietnam.ö

Browing and Dennis Lim, co-CEO and portfolio manager of Templeton Asset Management, have been named members of VCBFÆs board of directors.

Approximately 9% of Franklin TempletonÆs assets under management are currently from investors in the Asia-Pacific region. It has no investments in Vietnam shares at the moment but the market will be a key area of focus in expanding the companyÆs penetration in Asia.

Mark Mobius, who heads Templeton Asset ManagementÆs global emerging markets team from Singapore, has been cautious about Vietnam in recent years, which is understandable because he's been burned by that market once before.

In September 1994, Mobius started the Templeton Vietnam Opportunities Fund, then the first US-listed Vietnam fund. That was just months after the US lifted its trade and investment embargo on Vietnam and Mobius expected the local stock exchange would be up and running within two years. He had no problems convincing investors and was able to raise $105 million, double his target. But after almost four years passed and no exchange appeared, the fund was restructured and renamed Templeton Vietnam and Southeast Asia Fund with a broader investment mandate. Templeton Asset ManagementÆs exposure in Vietnam has since then mainly been in the form of private equity investments.

VCBF was initially set up in 2005. Earlier this month, VCBF debuted its Vietcombank 3 portfolio, a closed fund with a registered capital of Vnd455 billion ($28.4 million), bringing to three the roster of private equity funds launched by the company.

Franklin Templeton established its presence in the Asia-Pacific region in the late 1980s and today has offices in China, Hong Kong, India, Japan, Korea, Singapore and Australia.
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