Templeton reaches final close on fourth emerging markets fund
Franklin Templeton has reached a final close of more than $220 million on its latest emerging markets fund. The vehicle, which launched in March 2012 with a target of $300 million, has already made three investments.
Templeton Strategic Emerging Marketing Fund IV (TSEMF IV) is managed by a team within Templeton Asset Management. It seeks to capitalize on the favorable economic growth, strong long-term fundamentals and favorable demographics within emerging markets, principally China, India, Southeast Asia, Russia and Central and Eastern Europe.
The fund's predecessor reached a final close of $180 million in March 2010, with LPs including Pennsylvania State Employees' Retirement System and KWAP, the Malaysian pension fund. This followed the $132.5 million Fund II, a 2005 vintage vehicle that was fully divested at the end of 2012, generating a net IRR of 34.3% and a money multiple of 2.1x.
"Now that TSEMF IV is fully funded, we look forward to deploying more capital in what we believe is a highly attractive market for private equity, and continuing the fund's unique role in supporting growth in small- to mid-sized companies across emerging markets," said Dr. Mark Mobius, executive chairman of Templeton Emerging Markets Group.
The fund targets undervalued companies with good management and growth prospects and competitive advantages where there exists an opportunity to create value through an injection of growth capital and business improvement initiatives.
Companies producing discretionary and staple consumer goods are seen as particularly attractive and continue to account for the largest share of prospective deals under consideration. Other sectors of interest include those that are proxies for infrastructure spending, such as energy and industrial products.
A total of $59 million has been deployed across the three investments made so far. According to AVCJ Research, they include Indian alcoholic beverages specialist Globus Spirits and Tongda Group Holdings, a Chinese manufacturer of high-precision components used in consumer electronics products. Both are PIPE deals.
Templeton Asset Management has more than 50 investment professionals in 18 offices located throughout emerging market countries. The emerging markets group had more than $47 billion in assets under management as of year-end 2013.
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