US money manager Franklin Templeton sets up Israel office, eyes fintech talent
Company ‘open’ to scouting for local acquisitions, partnerships and talent, says Jenny Johnson, president and COO of firm, which manages $724 billion in assets
Shoshanna Solomon was The Times of Israel's Startups and Business reporter
Franklin Templeton Investments, a global investment management company, on Tuesday inaugurated its office in Israel to support sales of its investment products and to service existing clients in the country. The company, which in March set up a financial technology innovation hub in India, will also “be open” to scouting for acquisition, partnership and talent opportunities in the fintech sector in Israel, Jenny Johnson, president and COO, said.
The company’s “conservative” balance sheet, with cash of some $8 billion, allows the firm, which manages some $724 billion in assets, to seize opportunities for acquisitions when they present themselves, Johnson said at a press conference in Tel Aviv inaugurating the office, which will be set up in Herzliya.
“We certainly would be open to acquiring something if we find something interesting on the fintech space; maybe we’ll find talent, maybe we’ll do a partnership with somebody,” Johnson told The Times of Israel at the sidelines of the press conference.
During her three-day visit to Israel, Johnson will be meeting with local fintech firms. She has heard about “how wonderful” Israel’s fintech scene is, she said. “I see the companies that have been successful that came from here, I know the talents here.”
Franklin Templeton has been serving the Israeli market for the past 10 years, but is setting up its office now in Israel due to a change in local regulation that allows global investment managers to offer offshore products to Israeli customers directly and not, as previously required, via a local manager or a bank, which had increased fees and thus made their products more expensive.
The firm has appointed Uzi Yitzhak to spearhead its business locally.
The Herzliya office will serve institutional investors in Israel with tailor-made investment tools, said Yitzhak at the press conference. These investors “have a much higher level of sophistication and a much higher level for demand for service and tailor-made solutions and products, versus a decade ago, where these clients were buying a more generic product. ”
He said Franklin Templeton “truly believes in the long-term potential of the Israeli market,”
Franklin Templeton uses the fintech center it set up in Vizag, India, in March this year, to analyze and manage data, and work closely with the data scientists who work with the firm’s investment teams.
In light of how technologies are revolutionizing traditional markets, getting insight via data analysis into how industries may develop will give investment companies and money managers an edge, said Johnson. It is all about “finding that unique set of data that others don’t have,” she said.
The center in Vizag will also help Franklin Templeton upgrade its systems and its applications to better serve its products and clients, she said. “And, frankly, we are looking for other parts of the world where we think we can get technology talent,” she said at the press conference. There is “such a war for talent, to find really creative technology people. Israel is a market that is known for it and so by having a presence here we think it gives us an opportunity to a window of what is being developed here which we think could be relevant and exported to other places.”
The geopolitical situation in Israel is not a deterrent for the company, she said. “We were the pioneers in investing in emerging markets,” she said at the press conference. “If we were afraid of all the politics that went on in countries, it would be hard to ever make a decision.”
The opening of the office in Israel comes amid an escalation in fighting between Israel and the Hamas terror group that rules the Gaza Strip. Hamas operatives fired hundreds of rockets and mortar shells at Israeli cities and towns along the border starting Monday afternoon, with the Israeli military responding with airstrikes on strategic Gaza targets.
What Franklin Templeton looks at when making decisions about an economy is the country’s growth, its demographics, its regulatory environment and whether it encourages savings. If the country meets these requirements then “we want to have a presence there,” Johnso said. “So, this is really what drives us, not really short-term challenges in markets.”
Manraj Sekhon, chief investment officer for emerging markets equity, said that as investment managers, the firm takes a long-term view on the economies it invests in — a 5- to 10-year outlook, as opposed to a shorter-term view of 12 or even 36 months.
The fixed income director of the firm, John Beck, said Brazil, Mexico and Indonesia hold attractive investment opportunities.
Johnson added that she believes blockchain will be “hugely disruptive” to the financial services industry even if at the moment cryptocurrencies, of which the firm “is not a big fan,” have given blockchain “a bad name.”
On Tuesday, the firm also announced the registration of two mutual funds in Israel: Franklin U.S. Opportunities Fund and Templeton Global Total Return Fund.
