Marius Dan - National Investment Fund in Mongolia by Franklin Templeton
https://www.youtube.com/watch?v=H1c4mzIKqvk
[00:04] Next, we are pleased to welcome Mr. Marius Dan, CEO for Central Asia at Franklin Templeton to present on National Investment Fund for Mongolia.
[00:14] With over 15 years at Franklin Templeton, Mr. Marius oversees the $1.9 billion National Investment Fund of Usbekistan, which holds minority stakes in 15 state-owned companies.
[00:26] He previously led corporate strategy and investor relations for Fondel proprietia, a $2.5 billion fund listed in London and Book Rest.
[00:35] Please put your hands together for Maria Stan.
[00:47] Thank you. Good morning everyone.
[00:49] Um thank you very much for the invitation to speak today about this um national investment fund uh model.
[00:55] This is a structure that uh we believe we as an organization believe that would be very suitable for Mongolia to mobilize uh uh investments into the local capital.
[01:06] investments into the local capital market, attract uh institutional investors into the country.
[01:10] I think Mongolia has done extremely well um in attracting debt investors but uh this is a way for global uh equity investors to get exposure to the country.
[01:23] Um I've been with a firm for 15 years managing uh fund proprieta in Romania and uh for the last uh uh year the national investment fund of Usbakistan which is a fund that we've set up uh in on May 1st 2025 and uh we are now in the IPO process.
[01:42] Two days ago uh 3 days ago we announced the intention to float.
[01:47] So the IPO is uh happening uh it will be completed by the middle of May and we've seen very strong uh institutional interest.
[01:55] We launched the transaction with Cornerstone Investors for $300 million uh um uh commitment.
[02:04] Uh Black Rockck, Franklin Templeton, Redwill and
[02:06] Rockck, Franklin Templeton, Redwill and the Foundation from South Africa are the Foundation from South Africa are backing us.
[02:11] But just a few words on Franklin Templeton.
[02:13] We are global asset managers.
[02:18] We have um $1.7 trillion under uh management and I am part of the group uh called Templeton Global Investments which manages equity investments uh in uh uh emerging and uh frontier markets as part of that group.
[02:32] We have about $90 billion under uh management.
[02:35] In terms of the track record, a few words of what we've done in Romania because this is where this entire model started.
[02:41] This was a vehicle set up by the Romanian government to compensate individuals that had their properties taken away by the communist regime.
[02:49] And because the government didn't have money to pay for the compensation claim, they set up this vehicle by injecting minority stakes and majority stakes in some of the largest stateowned companies uh in the country.
[03:02] This was in 2005.
[03:05] In 2010, we started managing the fund.
[03:08] managing the fund.
[03:10] we listed it within three months on the Bucharest stock exchange.
[03:14] Um and uh it has been uh a huge success for the country uh despite a lot of uh opposition from stateowned companies uh uh from boards of directors from management teams in reshaping, transforming uh uh improving efficiency and uh uh profitability.
[03:32] We did it anyway for them.
[03:35] Um the fund performed really well.
[03:37] The share price increased about 15 times uh over the past 15 years and we distributed around 7.1 billion dollars to the funds shareholders through dividends, capital returns, share buybacks and uh uh tender offers.
[03:53] But one of the biggest things that um we've done for the country is um changing the perception of international investors uh uh on Romania because we were very proactive in marketing the fund uh marketing the portfolio companies the capital market and this
[04:08] companies the capital market and this has led to a flurry of transactions both.
[04:11] has led to a flurry of transactions both from the stateowned company sector as well as from the private uh uh sector.
[04:16] So just in the fund shares, we were able to attract $1.5 billion uh in portfolio investments from foreign institutional investors.
[04:27] To date, since the fall of communism, this is still the largest foreign direct investment for any Romanian um company.
[04:37] Um we've uh uh basically boosted the activity on the capital market in the country.
[04:41] We've done around for 14 transactions on the capital market, $3.5 billion.
[04:48] We did a lot of M&A activities um about 35 uh transactions and that really uh contributed to attracting uh uh various investors in in Romania.
[05:01] So we were part of around 60 60% of all deals that happened in Romania uh for this period of time in which we were active.
[05:10] of time in which we were active.
[05:13] In terms of the SOES themselves, our focus and creating value was really in uh increasing efficiency and profitability making the sure that the companies are well positioned to capture future growth.
[05:22] And what this slide shows is that the profitability for our portfolio increased about 12 13 times over this period of uh of time.
[05:34] So a lot of stateowned companies went from being a drag on the budget deficit uh of the country to actually being a supporter through dividends uh uh our companies pay around 3 to 4% of Romania's GDP as uh uh dividends at this stage.
[05:51] Um and then because this template was so powerful uh in both uh transforming stateowned companies as well as opening capital markets um I set out to uh set up various uh uh funds like this around the world.
[06:07] Um the first one that we
[06:10] the world.
[06:13] Um the first one that we managed to uh set up recently was in Usbekistan.
[06:15] As I mentioned, the fund became operational on the 1st of May of uh uh last year and 12 months later we're in a position where the fund is going to go public on the Tashkan stock exchange as well as the London stock exchange.
[06:26] Our mandate in Usbekistan is um to transform the stateowned companies to change the governance and we've already achieved that.
[06:33] We've changed the entire structure of the boards of the assets that we have in the portfolio.
[06:39] I've appointed the members of my investment team as well as independent directors and then moved the structure of the boards from government controlled to independently controlled because that is the only way that assets stateown assets especially can really fulfill their uh potential and then the last part of our mandate is to really focus on uh uh bringing a lot of our portfolio companies to the market.
[07:04] So after we IPO the fund, we are going to IPO the underlying portfolio company.
[07:09] So we will have about six large state-own
[07:12] Have about six large state-own transactions over the next uh um 3 years.
[07:16] Transactions over the next uh um 3 years.
[07:18] How does the structure work?
[07:18] And this is the proposal that uh is uh tailored to Mongolia specifically.
[07:25] Um the government basically carves out a portion of uh its shareholding in the uh some of the largest stateowned companies.
[07:33] In the country uh up to 40% of the shares and includes them in the national investment fund of Mongolia.
[07:38] Appoints an independent fund manager like Franklin Templeton to manage the fund to list it on the stock exchange and then to work with the underlying portfolio companies.
[07:50] Uh to uh help them fulfill their potential tap into the global capital markets.
[07:54] bring them uh on the international stage uh as well.
[07:57] This is a chart showing how um this works.
[07:59] The beauty of this model is that the government is able to raise capital from international markets without selling a single share in any of the stateowned.
[08:13] single share in any of the stateowned companies because the government sells companies because the government sells shares uh in the uh fund uh structure.
[08:19] shares uh in the uh fund uh structure.
[08:19] And for investors, it is a powerful and very attractive model because they don't have to buy uh and take exposure to a telecom company, an oil and gas company, a mining asset.
[08:32] They take exposure to a diversified uh portfolio of assets and that makes it a lot more uh attractive.
[08:38] we've as we've seen in um uh Enosbakistan as well as in uh uh Romania and uh after the IPO of the fund itself the government also controls the fund.
[08:49] So uh there is no uh transfer of majority ownership from the government to the private sector unless of course there is a desire from the government to do that.
[09:01] This shows how the government how the shareholding structure changes post IPO.
[09:07] uh effectively the government goes from 100% ownership in the fund to 40 or 50% ownership.
[09:10] So remains the uh
[09:13] 40 or 50% ownership.
[09:13] So remains the uh controlling shareholder.
[09:15] And in controlling shareholder.
[09:15] And in situations like this, the way that we manage this type of national investment fund, we always uh open an office on the ground.
[09:23] We hire local uh talent.
[09:23] So there's they're not uh uh expatriots uh coming to uh the country and uh working on these assets.
[09:31] We invest uh in local talent in uh the transfer of uh uh knowledge because the lifetime of a fund like this may be 10 15 years but what remains behind after uh the structure is uh uh fulfills its objectives uh is a strong capital market uh ecosystem and a very strong uh uh talent pool.
[09:56] So uh I I'm a firm believer that uh for Mongolia this is also a structure that could really work uh uh very well in putting the country on the global stage for um equity investors.
[10:06] Uh uh once again, thank you very much.