Uzbekistan’s government has launched an ambitious privatisation programme aimed at reshaping its economy and capital markets, handing US fund Franklin Templeton control of a $1.68bn portfolio of 18 state-owned companies that make up Uzbekistan National Investment Fund (UzNIF). The portfolio is being prepared for a dual listing of at least 25%, currently valued at $420mn, on the Tashkent Stock Exchange and a major international bourse in the first half of 2026.

“The establishment of the fund is a huge step in the ongoing economic reform program which has been undertaken by the president and the government of Uzbekistan,” Marius Dan, CEO for Central Asia at Templeton Global Investments and General Director of Franklin Templeton Asset Management in Uzbekistan, told bne IntelliNews in an exclusive interview.

"Our mandate is to focus on transforming the state-owned companies, increasing their efficiency, their profitability and attracting international investment into the country through the listing of the fund itself, as well as the listing of the underlying portfolio companies. Ultimately this will develop the local capital market significantly, because we are looking at a dual listing for the fund, both on the Tashkent Stock Exchange, as well as an international Stock Exchange,” Dan added. 

The fund is a renewed attempt to complete a major privatisation of the major state-owned enterprises and transform Uzbekistan into a modern market-based economy, as part of the Uzbek President Shavkat Mirziyoyev’s 2020 vison for Uzbekistan’s third renaissance.  

Since taking office in 2016, Mirziyoyev reform programme has seen the country flourish, growing by 6.5% a year since 2018 (with one year off for the pandemic), and the economy has doubled in size and incomes have tripled.

Now the country is ready to go to the next level – but to do that it needs to privatise its biggest companies, Macro Advisory CEO and bne IntelliNews columnist Chris Weafer argued in a recent column.

“The president has now set a target of again doubling GDP by the “early part of the next decade” and boosting incomes further. To achieve this, the country needs to move up a growth gear,” says Weafer. “That next gear will involve a greater effort to accelerate the long-talked about privatisation programme.”

Despite the fast growth and improving standards of living, privatisation has moved slowly as the government grapples with the problem of remaking huge former Soviet enterprises and turning them into modern companies that will appeal to international investors. But Mirziyoyev have nailed his flag to the mast: “There is no other way,” the president said in a speech in 2021 as the government got down to work. And some significant progress has already been made. As bne IntelliNews reported, the entire cotton sector – the backbone of the economy since Soviet times – has already been completely sold off and reorientated towards textiles. But there is a lot more to do.

That is where Franklin Templeton come in. The US fund belonging investment legend Mark Mobius, has already sold off a multibillion portfolio of Romania state-owned enterprises via the Fondul Proprietatea fund, and earned the government and people up to 1,000% return in what has been dubbed a “wild success” by the government and investors alike.

Looking for a way to accelerate Uzbekistan’s privatisation programme, Franklin Templeton first pitched the fund to the president at a Singapore investment forum in 2023.

“Uzbekistan is the only country where the leadership understood the benefits this can bring to the economy and capital markets,” says Dan. “Every equity investor globally should discover and invest in Uzbekistan.”

UzNIF

Dan has been one of the lead managers at the Fondul Proprietatea fund and is now in Tashkent to take over the management of the new Uzbek vehicle, UzNIF.

Mirziyoyev has outsourced part of the privatisation process to Franklin Templeton, according to Weafer, to improve the efficiency of the programme, bypass the bureaucracy and ensure vested interest are kept to one side. The success of Franklin Templeton’s mandate depends on three key pillars, says Dan.

The first is the transformation work at the state-owned companies. Dan says the fund managers get operationally involved in helping the companies transform their processes, becoming more transparent and improving their market disclosure.

The second pillar is focused on governance: appointing at least two members on the boards of all the state-owned companies in the portfolio.

“One will always be a member of my investment team. And then the second or third board member will be someone independent, because we have a very strong pool of candidates. We intend to make these appointments over the next six to eight weeks,” says Dan.

The third pillar is the IPOs themselves, both of the fund and the portfolio companies, with the debut slated to occur in the first half of 2026.

“We've started the process from day one. Effectively, we've already appointed equity advisors. We've also appointed the legal advisors at the end of last week. Now we are working on appointing the investment banks that will be working on this IPO,” says Dan.

The plan to offer stakes of at least 25% through dual listing on the Tashkent Stock Exchange (TSE) and a major international stock exchange in IPOs designed to attract institutional capital from the West, while also cultivating a domestic investor base.

“This will be a test of how much demand we will be able to attract from the retail investors in the local market, but from foreign institutional investors, I already see very strong interest,” Dan said. “We’ve already received cornerstone interest, anchor interest – and we’ve just started the process.”

There is also already a calendar of transactions of the portfolio companies over the next three years that will add some predictability to the process and increase demand.

“This is a terrific thing and a very powerful tool for investors. We've been trying to do to obtain such a calendar of IPOs in Romania for many years and we were never able to do so,” says Dan.

Romanian experience

The model is rooted in Franklin Templeton’s proven track record of already having successfully managed Romania’s Fondul Proprietatea, a restitution vehicle created in 2005 to compensate citizens dispossessed during the communist era. Dan described it as “wildly successful”, citing returns of over 1,000% in local currency and 600% for international investors. The fund distributed more than $7bn to shareholders in the form dividends, returns of capital, buy-backs and tender offers in an unprecedented model.

“We've been very focused on creating shareholder value. In this timespan, the performance of the fund in Romania outpaced the performance of S&P 500, MSCI World Index as well the local index in Romania,” says Dan. “I would expect even more for Uzbekistan.”

Unlike the Romanian case, Uzbekistan’s vehicle is a straightforward privatisation fund. Fondul Proprietatea was set up by the government as way of paying compensation and Franklin Templeton was brought into manage it after it was already running. In Uzbekistan’s case, Franklin Templeton is being brought in at the start of the process and is fully focused on getting the state-owned enterprises (SOEs) into private hands.  Amongst the companies in the portfolio are strategic assets in transport, energy and banking, including Uzbekistan Airways, Tashkent Airport, Uzbekhydroenergo and stakes in three banks – Xalq Bank, Microcreditbank and Business Development Bank – that currently make up 10% of the portfolio.

Notably, there are no mining assets in the portfolio, as entities such as the national champion gold mining giant, Navoi Mining and Metallurgical Company (NMMC), are planning their own IPOs in parallel, as are the other leading metallurgical companies.

Marketing and infrastructure

Franklin Templeton began managing the fund on May 1 this year and already has an office of some 25 people working on the project full time. The preparatory phase is now under way, including the appointment of investment banks and legal advisers, says Dan.

“We want to put together a consortium of banks that will significantly contribute to the success of this transaction,” Dan said. “We’ve done this before in Romania and Eastern Europe. We know who can deliver.”

Another pillar is governance. UzNIF has the right to appoint at least two board members in each portfolio company – one from Templeton and one or more independent directors.

“This will effectively shift the structure of most of the boards to majority independent,” Dan said. “That will significantly help in terms of operational transformation.”

To ensure international investors can access the IPOs, Uzbekistan is working to integrate its market infrastructure with the international payments and settlements system, Clearstream, which revolutionised both the Russian and Ukrainian capital markets after they were hooked up to the global financial system.

“We’re working on legislative changes required to facilitate the likes of Clearstream and global custodians,” Dan said. “It has to be done before the IPO. The timeline is three to four months.”

The government also plans to sell discounted shares to the Uzbek public, promoting domestic financial literacy and boosting local capital markets. “A transaction like this should incentivise a lot of retail investors to open accounts,” Dan said, pointing to Romania’s IPO of its hydroelectric champion Hidroelectrica, which spurred over 100,000 new retail accounts to participate in the IPO.

It’s the Romanian experience that make Franklin Templeton’s management so enticing. The Romanian Fund was listed on the London Stock Exchange, but Hidroelectrica was listed only on the local market: a $2.1bn transaction. It was the third largest IPO in the world and the largest IPO in Europe in 2023; Dan said the work they had done on building up the Romania Fund meant it was no longer necessary to have an international listing. “If we do our job right, Uzbekistan will follow the same path,” says Dan.

 “This is the big privatisation push,” Dan said. “There’s already a calendar of transactions from our portfolio companies through to 2028. It gives institutional investors visibility and comfort.

“Investors are following the reforms, the liberalisation of the economy, all the positive legislation changes that have been implemented by President Mirziyoyev and his government. There is a very strong interest, but the listing of UzNIF and ultimately the listing of NMMC are going to be really the first opportunities for institutional investors to gain exposure to Uzbekistan,” says Dan.