Franklin Templeton prepares for Vietnam funds

The launch will be contingent on Vietnam’s financial services regulator putting in place the regulatory framework necessary for the sale of mutual funds and similar investment products to the domestic market – something that the Vietnamese financial services industry has been eagerly anticipating ever since the country’s government committed to it more than four years ago.

“Six months ago they were saying it was going to happen before the end of this year, but now we are expecting those regulations to actually be published sometime towards the middle of next year,” said Greg Robinson-Kok, chief executive of Vietcombank Fund Management (VCBF), the joint venture Franklin Templeton has a 49% stake in with Hanoi-based Vietcombank.

“And it will probably be three to six months thereafter that we’ll see the first licences granted to fund managers, and products launched in this market.”

Robinson-Kok said the Vietnamese market was regarded as having considerable potential, since “probably only a couple of million” of the country’s population of 87 million currently have any investments beyond real estate, gold and/or cash.

For this reason, VCBF’s “initial thought” is to begin with uncomplicated products that investors unfamiliar with mutual funds will be able to understand, Robinson-Kok said.

“We would probably have some kind of fixed income product, leveraging off the knowledge and experience of Franklin Templeton’s expertise in this area, since it will be VCBF staff who will actually be running these funds; probably some kind of a balanced fund, and maybe some kind of equity product, such as an opportunities fund.”

At least initially the funds would all be denominated in the local currency, the dong, Robinson-Kok said.

Templeton acquired its stake in VCBF in February, 2008, when it bought a company called Viet Capital Holdings. VCBF had been established three years previously. Its main shareholder, with a 51% interest, is Ho Chi Minh Stock Exchange-listed Vietcombank, one of Vietnam’s three largest banking groups.

Franklin Templeton was among the earliest foreign fund investors in Vietnam, having launched its Vietnam Opportunity Fund in 1995, which was also the year it first opened an office in the country. Currently VCBF manages three private equity funds, with assets under management of around $160m, which invest in “well-run pre-listed companies”, according to its website.

News of Templeton’s plans for Vietnam coincide with a recent announcement by the Asian arm of Generali Group that it was granted a preliminary licence, in October, by the Ministry of Finance in Hanoi to operate in Vietnam. According to a new bilingual website it has launched to cater for its new Vietnamese clients, the insurer is marketing group term life, medical and disability products.

In a press release announcing its having been granted the licence to operate in Vietnam, Generali noted that the country is “one of Asia’s most promising markets”, with its population of nearly 87 million, average age of 27, average 8% GDP growth and a 15% increase in insurance premiums in 2009.

The launching of the Vietnamese operation brings the number of Asian markets in which Generali operates to eight, after China, Hong Kong, the Philippines, Indonesia, Thailand and Japan, Generali said.

Vietnam fact file