Franklin Templeton is aiming to list $1.7bn of Uzbekistan’s state assets on international markets within a year, as part of a plan by the US investment group to put the central Asian country on the map for global investors.
The firm, which took over as manager of the Uzbekistan National Investment Fund, or UzNIF, on Thursday, is hoping to repeat a model of pro-shareholder reforms that made a similar Romanian fund one of the best investments in emerging markets in the last decade.
“We are not wasting any time . . . we are targeting as early as the first quarter of 2026” for a listing in Tashkent and abroad of 18 minority stakes in Uzbek state-owned banks, and other companies including Uzbekistan Airways, said Marius Dan, the manager of the Franklin Templeton mandate.
The Uzbek fund reflects an ongoing drive by developing nations to open up state assets to foreign investors to raise money and their international profile — although relinquishing political control is often difficult.
As well as realising value from companies, Dan said, “our work in the next few years . . . is to really make sure all institutional investors with potential to invest in emerging markets know what is going on in Uzbekistan”.
While the timing and international venue of a listing will be subject to market conditions and investment bank advice, “I think London would be a prime candidate for the listing of UzNIF,” given the UK market’s large number of listed investment funds, Dan said.
Uzbekistan’s President Shavkat Mirziyoyev decreed last month that the state will sell at least 25 per cent of the fund in a listing, as part of a dozen IPOs of key state assets that the government is planning over the next three years.
Mirziyoyev has made reforms in recent years to liberalise energy, banking and other sectors, but the economy is still largely state-owned. The UzNIF assets will include stakes of up to 40 per cent in companies.
Dan said that a UzNIF listing would help jump-start investor interest in Tashkent’s stock market, which in February reported less than $100mn in trades and a free float market value of $300mn versus an overall market capitalisation of nearly $19bn.
Franklin Templeton also helped to put Romania on the global market radar when it managed Fondul Proprietatea, a group of stakes in state firms that boosted returns through listings and increases in dividends.
From Fondul’s original Romanian listing in 2011 to 2024, when Franklin Templeton said it would step down as manager, its shares had made US dollar returns of over 600 per cent, beating most global stock markets. It also listed in London in 2015.
Originally set up as restitution for victims of communism, the fund returned more than $7bn in capital to shareholders, such as the $4.3bn listing of the country’s biggest energy producer in 2023.
Unlike Fondul, where Franklin Templeton had to fight for shareholder and government support for reforms, the minority stakes in the Uzbek fund will bring rights to appoint board members at every company.
“The fact that we have these rights is a clear sign of the government’s commitment to the reform process,” Dan said.
“The fact that the project will be managed by Franklin Templeton is extremely positive as it should improve governance and transparency within Uzbekistan. The flipside is that [$1.7bn] is not huge,” said Benjamin Godwin, partner at Prism Strategic Intelligence, an investment advisory firm.
Because of separate listing plans by the government, the fund will not include Uzbek state miners Navoi, the world’s fourth biggest gold producer, known as NGMK, and Almalyk or AGMK, which is developing one of the world’s largest copper deposits.
“The two primary assets that investors will want to get access to are not in this listing, Navoi and Almalyk,” Godwin said. “The crown jewels are still being held very closely by the Uzbek government, rightly or wrongly.”
Navoi has in recent years explored a listing in venues including London that could be worth around $5bn, a person familiar with the matter said. Navoi did not immediately respond to a request for comment.
Navoi sold $1bn in bonds in London last year and Almalyk is considering a debt issue of similar size this year, the government has said, in a sign of investor appetite for exposure to these companies.
The government’s dollar bonds have outperformed many emerging-market debts in the last month after a surge in the price of gold, Uzbekistan’s main export that also makes up three quarters of foreign reserves.
In Romania, Franklin Templeton was incentivised to raise the value of Fondul’s assets by earning a fee of 1.75 per cent on returns of capital to investors including the Romanian government.
Fee amounts for the Uzbekistan fund have not been disclosed ahead of its IPO, but will include fees for IPOs and dividends, Dan said.
While Mirziyoyev’s government is moving to attract western investors with governance reforms, it is also being courted by Gulf and Chinese investors that often pitch to work alongside existing state companies.
China’s BYD, the world’s biggest electric automaker, began production in Uzbekistan last year in a joint venture with UzAvtosanoat, a state firm that is not part of the Franklin Templeton-managed fund.
“Uzbekistan does enough to win the praise of some western investors and governments [and] some financial institutions but it still has a long way to go to deliver on genuine structural reform,” Godwin said.
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