Mark Mobius, chairman of Templeton Asset Management Ltd., is seeking private equity or strategic investments in Sri Lanka after the end of the island’s civil war.
“The end of the war is a key positive factor,” Mobius, who oversees about $25 billion of emerging market assets, said
in a telephone interview from the capital Colombo. “We’ve been here for over 15 years and are pretty familiar with the situation.”Mobius said he planned new investments in Sri Lanka through Templeton’s Strategic and Frontier Markets funds, instead of setting up a private equity fund focused on the $41 billion island economy. Templeton had earlier this year made a “major purchase of government bonds,” he added.
Sri Lanka’s Colombo All-Share Index has risen 98 percent this year, making it Asia’s best performer, after the end of a 26-year civil war in May. The island-nation’s benchmark was the region’s third-worst performer in the past two years as record spending on defense strained government finances.
Sri Lanka’s economic growth may accelerate to between 7 percent and 8 percent next year, from 4 percent in 2009, as the island rebuilds after the Tamil Tiger rebels ended their quest for a separate homeland, deputy finance minister Sarath Amunugama said Nov. 9.
The International Monetary Fund said this week the release of a second payment in its $2.6 billion loan to Sri Lanka indicates a strong performance and fiscal commitment from the South Asian island economy.
Liquidity
“On the equity side, liquidity is not very good,” Mobius said, adding that he may not increase his stakes in Sri Lankan listed firms, including John Keells Holdings Plc, the island’s biggest diversified company.
Mobius said there are opportunities in Sri Lanka’s plantations, property, hotels and fast-moving consumer goods industries.
“We haven’t yet made any major decisions,” he added.
Emerging markets have become significant alternatives for global investors because they offer “potentially higher returns,” Mobius wrote in a report in September.
Calamander Group Pte, a Singapore-based investment company, said in June it plans to invest between $50 million and $75 million in the island nation’s rubber, tea, timber, coconut, bank and ceramics businesses, creating the first private equity fund focused on Sri Lanka. Leopard Capital LP, which manages a fund in Cambodia, plans to start investing in Sri Lanka, the private equity firm said in September.
Investor Jim Rogers, who correctly predicted a commodity price rally in 1999, said in June he sees “wonderful opportunities” in Sri Lanka, while HSBC Private Bank said the country could become the “Hong Kong of India,” after the war ended.
To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net
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