A new Middle East subsidiary of Franklin Templeton Investments, one of the world's largest independent asset managers, plans to launch two fixed income funds over the next year after completing merger formalities with Algebra Capital this month.
The merged local asset management company, to be known as Franklin Templeton Investments ME, is looking at the global sukuk space and intends to roll out a retail product close to year-end and also a GCC-focused fixed income fund within the next 12 months, CEO Andrew J. Ashton said in an interview yesterday. He is also regional head of Franklin Templeton for Central and Eastern Europe, Middle East and Africa.
Although the value of the deal was not disclosed, an industry insider says given that valuations in the industry slipped in the past two years amid the credit crisis, Algebra could have been valued at 2-3 per cent of total assets under management (AUM).
The total AUM of Algebra Capital by the end of Dec-ember 2010 was unavailable. Franklin Templeton increased its equity stake in Algebra to 40 per cent in March 2009.
Algebra launched an equity-based Alpha Mena Fund in 2007 and in 2008, Sukuk Fund and Beta Mena Fund. It also had four advisory mandates. The Sukuk Fund, opened with Elaf Bank of Bahrain, remain suspended and the Beta Mena Fund is inactive, though not suspended, according to Bloomberg.
The Alpha Mena Fund's one-year return (as of May 31) stands at 12.07 per cent, according to Reuters Lipper data.
Its three-year return stood at -58.88 per cent against the Mena average of -40.07 per cent. The current size of the fund is $47.10 million (Dh172 million) and its net asset value is $52.75.
The Alpha Mena Fund joins other Mena equity products under the Franklin Templeton umbrella. They include advisory portfolios such as the one in Korea, where it has a Mena product for the market there but managed from here.
"The intention is to consolidate the product line up, to try and bring up as much as possible under one portfolio, which gives you economies of scale and more efficiency," Ashton said, adding that long term, they are positive on the region with "great growth opportunity" and he expects the demand for Mena products will come back over time.
While Algebra's CEO Ziad Makkawi and heads of legal, operations and distribution have left the organisation on agreed terms, Joe Kawkabani and Mohieddine Kronfol will continue to head the equity and fixed income/sukuk businesses respectively.
The current employee strength is 18.
To retain key individuals, besides competitive salaries, the company offers bonus structures and invested stock plan, Ashton said.
From / Gulf News