April 14, 2009 / 2:35 PM / 10 years ago

MENA asset management to grow amid global crisis

DUBAI (Reuters) - The Middle East’s asset management sector is set to grow 15 percent per year to up to $300 billion by 2014 as investors seek new avenues for investing their money, fund manager Algebra Capital said on Monday.

Mohieddine Kronfol, managing director of Algebra Capital, speaks during the Reuters Islamic Banking Summit in Dubai April 14, 2009. REUTERS/Ahmed Jadallah

Fixed-income, which contributes less than 2-3 percent of regional assets compared with a majority in equity investments, could provide a “tremendous growth” opportunity if regulators and governments focus on creating the domestic demand for new issues, Managing Director Mohieddine Kronfol said.

“The asset management industry for the region, we expect it to grow at a compound annual growth rate of 15 percent in the next five years from $80 billion to $100 billion to at least $200-300 billion in next five years,” he told the Reuters Islamic Banking and Finance Summit in Dubai.

Retail investors are eager to find alternatives to equity investments after regional stock markets slumped as much as 70 percent last year, but many are still just “contemplating” whether to invest in fixed income or equity.

“How much more pain can you take,” Kronfol said. “Things are improving but they could improve a lot more.”

The Dubai-based fund manager, in which Franklin Resources Inc (BEN.N) holds a 40 percent stake, set up an Islamic-compliant fund with an initial size of $100 million last year to invest in securities in the Middle East, North Africa and Asia with Bahrain’s Elaf Bank.

It has so far raised about $30 million to be invested in fixed income for financial services companies, some holding companies, and Dubai “related names.”

Algebra and Franklin, which have jointly set up five products on the equity side, are now looking at setting up fixed-income products.

“The Islamic universe is important to Algebra...we want to work in the fixed-income space and we want to work in Islamic,” Kronfol said, declining to be more specific.

(For summit blog: summitnotebook.reuters.com/)

Reporting by John Irish, editing by Sam Cage

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