Franklin Templeton Real Estate Advisors will begin investing in infrastructure, energy, water, agriculture and timber funds in six months to take advantage of growing demand for natural resources and new roads and bridges.
The property business of Franklin Templeton Investments will create a fund that will buy into real asset funds, particularly in Asia and Europe, and to a lesser extent in the Americas, said Jack Foster, who oversees $3.8 billion as global head of the unit. It will also invest in those markets separately on behalf of institutional clients, he said.
“Asia is going to have some of the most opportunities for two reasons,” New York-based Foster said in a telephone interview yesterday. “The growing population and the need for all the categories, and secondly, to a large extent, doing business in Asia in terms of building the large public projects is much more efficient than, say, in the United States.”
An expected surge in the global population to more than 9 billion by 2050, according to U.S. Census Bureau data, along with an increase in building as governments commission projects to boost their economies, are expected to drive demand for infrastructure financing.
Some $41 trillion will be needed to build and repair infrastructure globally, according to Booz Allen Hamilton Inc., a consulting company owned by the Carlyle Group. By 2050, for the first time, more than 50 percent of the world’s population will be living in metropolitan areas, Booz Allen said in a 2007 report.
Franklin Templeton said in May it will create a team to specialize in investments in real assets and appointed Joyce Shapiro, a former executive of Toronto-based Brookfield Asset Management, as managing director. It is now building up the group and is in the process of determining the amount it will seek to raise, Foster said.
The unit is expected to invest equally in infrastructure and energy, with smaller allocations for the other industries, Foster said.
The asset manager will announce this month that it has raised $50 million for its second Asia-Pacific property fund-of- funds from North American and European investors, Foster said. It aims to raise the remaining $250 million target for the fund, which will invest in both residential and commercial properties, in the next year, he said.
San Mateo, California-based Franklin Templeton Investments, manager of the Franklin and Templeton group of funds, has $586.8 billion in assets under management.