$1.4 Trillion Franklin Templeton Acquires $136 Billion Asset Manager Putnam Investments for $925 Million from Power Corporation of Canada with $2.1 Trillion AUM & AUA in Strategic Partnership, Subsidiary Great-West to Acquire 6.25% Stake in Franklin Resources & Allocate $25 Billion to Franklin Templeton as Initial Long-Term Asset Allocation
31st May 2023 | Hong Kong
Franklin Templeton with $1.4 trillion AUM (Asset under Management) has acquired $136 billion asset manager Putnam Investments for $925 million from Power Corporation of Canada ($2.1 trillion AUM & AUA, Asset under Administration) in a strategic partnership, with (Power Corporation of Canada) subsidiary Great-West acquiring a 6.25% stake in Franklin Resources and allocating $25 billion investments to Franklin Templeton as initial long-term asset allocation. The Power Group of Companies (Canada) include Great-West and IGM Financial, which are leaders in the global insurance, retirement, asset management and wealth management sectors and have collective assets under management and/or administration (“AUM/AUA”) of approximately $2.1 trillion. Great-West includes Empower in the US as well as Canada Life in Canada and Irish Life in Europe. IGM encompasses subsidiaries Mackenzie Financial and IG Wealth Management and also has investments in Rockefeller Capital Management and China Asset Management Co. Putnam Investments $136 billion AUM excludes $33 billion AUM of PanAgora, which is not a party to the transaction. More info below.
“ $1.4 Trillion Franklin Templeton Acquires $136 Billion Asset Manager Putnam Investments for $925 Million from Power Corporation of Canada with $2.1 Trillion AUM & AUA in Strategic Partnership, Subsidiary Great-West to Acquire 6.25% Stake in Franklin Resources & Allocate $25 Billion to Franklin Templeton as Initial Long-Term Asset Allocation “
Jenny Johnson, President & CEO of Franklin Templeton: “This is a compelling transaction for Franklin Templeton, and we are excited about the numerous opportunities that will be unlocked by this long-term strategic partnership with the Power Group of Companies including Great-West. Power and Great-West are global leaders across financial services, particularly in the wealth, insurance and retirement channels. With outstanding investment performance, Putnam will add complementary capabilities to our existing specialist investment managers to meet the varied needs of our clients and will increase Franklin Templeton’s defined contribution AUM. We are pleased to welcome Great-West as a strategic investor, along with the impressive team at Putnam.”
R. Jeffrey Orr, Chair of Great-West, President & CEO of Power: “Franklin Templeton is a leading global asset management firm, whose business model is well-positioned to build upon the investment and distribution strengths of Putnam. We are pleased to enter a partnership with Franklin Templeton that will be mutually beneficial to clients and our respective businesses.”
Paul Mahon, President & CEO of Great-West: “This transaction furthers Great-West’s strategy of building strategic partnerships with best-in-class asset managers to support our client’s retirement, insurance, and wealth management needs. Franklin Templeton’s scale and breadth, together with Putnam’s capabilities, will drive positive outcomes for our companies, our clients, and our investors.”
Robert Reynolds, President & CEO of Putnam: “Critical to this transaction is the strong alignment between our organizations. We share a client-centric culture, a core belief in active management, a collaborative and research-based investment approach, and a long-held commitment to fundamental investment principles. We look forward to joining Franklin Templeton in this next phase of our growth, as we come together to serve our clients, upholding our commitment to them and their needs.”
$1.4 Trillion Franklin Templeton Acquires $136 Billion Asset Manager Putnam Investments for $925 Million from Power Corporation of Canada with $2.1 Trillion AUM & AUA in Strategic Partnership
31st May 2023 – Franklin Resources, Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton, today announced a strategic partnership with Power Corporation of Canada (“Power” and, together with its subsidiaries, the “Power Group of Companies”) [TSX:POW] and Great-West Lifeco, Inc. (“Great-West”) [TSX:GWO]. The Power Group of Companies including Great-West and IGM Financial (“IGM”) [TSX:IGM] are leaders in the global insurance, retirement, asset management and wealth management sectors and have collective assets under management and/or administration (“AUM/AUA”) of approximately $2.1 trillion. Great-West includes Empower in the US as well as Canada Life in Canada and Irish Life in Europe. IGM encompasses subsidiaries Mackenzie Financial and IG Wealth Management and also has investments in Rockefeller Capital Management and China Asset Management Co.
As a foundation of the partnership, Franklin Templeton has entered into a definitive agreement to acquire Putnam Investments (“Putnam”) from Great-West for approximately $925 million of primarily equity consideration. Great-West will become a long-term strategic shareholder in Franklin Resources, Inc., with an approximate 6.2% stake, consistent with Great-West’s continuing commitment to asset management.
Great-West will provide an initial long-term asset allocation of $25 billion to Franklin Templeton’s specialist investment managers within 12 months of closing with that amount expected to increase over the next several years. The strategic partnership aligns with Franklin Templeton’s focus to further grow insurance client assets, and significantly broadens the relationship between Franklin Templeton and the Power Group of Companies in key areas of retirement, asset management and wealth management.
The transaction is structured to maintain Franklin Templeton’s financial flexibility and enhance continued investment across the firm. Franklin Templeton will pay approximately $825 million in stock consideration up-front at closing and $100 million in cash 180 days after closing for 100% of Putnam. Franklin Resources, Inc. will issue 33.3 million shares of its common stock to Great-West, 26.2 million of these shares, representing 4.9% of Franklin Resources, Inc.’s outstanding common stock, are subject to a 5-year lock-up, and the remaining shares are subject to a 180-day lock-up.
In addition, Franklin Templeton will pay up to $375 million in contingent consideration tied to revenue growth targets from the partnership. The transaction is expected to be modestly accretive to run-rate adjusted EPS by the end of the first year after closing, inclusive of cost synergies and is anticipated to close in the fourth calendar quarter of 2023, subject to customary closing conditions.
Ardea Partners LP served as lead financial advisor and Broadhaven Capital Partners LLC provided financial advice to Franklin Templeton. Willkie Farr & Gallagher LLP served as legal counsel.
As of 03/31/23 per Power Corp. of Canada 1Q 2023 Report, exchange rate between CAD / USD as of 03/31/23 per FactSet. Based on stock price as of close of May 30, 2023. Includes approximately $825mm of Franklin Resources common stock plus $100mm to be paid in cash 180 days after close.
Franklin Templeton History
The company was founded in 1947 in New York by Rupert H. Johnson, Sr., who ran a successful retail brokerage firm from an office on Wall Street. He named the company for US founding father Benjamin Franklin because Franklin epitomized the ideas of frugality and prudence when it came to saving and investing. The company’s first line of mutual funds, Franklin Custodian Funds, was a series of conservatively managed equity and bond funds designed to appeal to most investors. After Rupert Sr. retired, his son, Charles B. Johnson (Charlie), took over as president and chief executive officer in 1957 at age 24. There were only a handful of employees at that time and the funds had total assets under management of US$2.5 million. Franklin was swimming against the tide because insurance companies dominated the middle class investing markets, but Charlie was convinced that he had a good story to tell. Franklin went public in 1971, which gave Charlie and team the capital needed to grow the business and position it for the future. In 1973, the company acquired Winfield & Company, a San Mateo, California-based investment firm, and moved Franklin’s offices from New York to California. The combined organization had close to US$250 million in assets under management and approximately 60 employees. In 1979, Franklin Money Fund began a growth surge that made it Franklin’s first billion-dollar fund and launched the company’s tremendous asset growth in the 1980s. Strategic acquisitions in the 1990s helped Franklin diversify its investment management capabilities beyond fixed income and also expand its global footprint throughout Europe and Asia. In 1992, after striking a deal with famed global investor Sir John Templeton for the acquisition of Templeton, Galbraith & Hansberger Ltd., Charlie was named Fund Leader of the Year for spearheading what was then the largest merger of an independent mutual fund company in history. Templeton gave the company a strong portfolio of international equity funds as well as the expertise of emerging markets guru Dr. Mark Mobius, who, during his distinguished career, spent more than 40 years working in emerging markets all over the world. Then in 1996, in an effort to broaden its line of domestic equity products, Franklin Templeton bought Heine Securities Corporation, investment adviser to Mutual Series Fund, Inc., from Wall Street icon Michael Price.
Several more key acquisitions solidified the company’s position as a premier global investment management organization, including Bissett in 2000 and Fiduciary Trust in 2001. In 2005, Gregory E. Johnson (Greg), Charlie’s son, became chief executive officer, assuming overall responsibility for leading Franklin Templeton. Greg had grown up in the business and worked his way through the organization beginning on the trading desk at age 24 in 1985. Charlie retained his role as chairman and continued to provide guidance to Greg and his leadership team. In 2013, Charlie Johnson retired as chairman. During his distinguished career, Charlie successfully navigated Franklin Templeton through more than 50 years of growth and change. Charlie believed that success is built on hard work, dedication and persistence in service to our clients. In 2014, Franklin Templeton offered its first exchange-traded fund (ETF) to provide access to the firm’s investment expertise in a low-cost, transparent vehicle. The firm continues to expand its Franklin Templeton ETF line-up globally, which today includes active, passive and smart beta strategies. In 2019, Franklin Templeton acquired Benefit Street Partners, a leading alternative credit manager. The acquisition bolstered Franklin Templeton’s alternative offerings and expanded its robust fixed income capabilities to include an array of alternative credit strategies.
In November 2019, after 15 years as CEO, it was announced that Greg Johnson would become executive chairman of the board of Franklin Resources, Inc. Jenny Johnson was named the company’s next CEO, leading Franklin Templeton into its next phase of growth. Franklin Templeton began the decade under the leadership of Jenny Johnson, who became President and CEO in February of 2020 after more than 30 years with the company. Despite an unprecedented global pandemic, Jenny drove efforts and investments in key areas to create a more robust organization, one that combines the best of global strength and investment specialization. In 2020, the firm acquired two wealth management firms, Pennsylvania Trust and Athena Capital, to deepen and diversify the investment and servicing solutions offered through the company’s wealth management business that operates under the Fiduciary Trust brand.
The firm also acquired digital wealth management platform provider, AdvisorEngine, in 2020. The acquisition helps Franklin Templeton better serve wealth managers, financial advisors and registered investment advisors with goals-based financial planning tools, digital portfolio construction analytics and research-enabled practice management services. In July of 2020, Franklin Templeton completed the largest and most significant acquisition in its history with the purchase of Legg Mason and its specialist investment managers. The acquisition added differentiated capabilities to Franklin Templeton’s existing investment strategies, bringing notable added leadership and strength in core fixed income, active equities and alternatives. It also expanded the firm’s multi-asset solutions, a key growth area. Franklin Templeton acquired O’Shaughnessy Asset Management, a quantitative asset management firm and Custom Index provider through its Canvas® platform, in 2021. Custom Indexing represents a significant area of growth in asset management today, and Canvas allows financial advisors to build and manage Custom Indexes in separately managed accounts. In April 2022, the firm completed the acquisition of Lexington Partners, a global manager of secondary private equity and co-investments, and in November, completed the acquisition of Alcentra, a European alternative credit manager. After these acquisitions, Franklin Templeton is one of the largest managers of alternative assets globally.
About Franklin Templeton
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 155 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers specialization on a global scale, bringing extensive capabilities in fixed income, equity, alternatives and multi-asset solutions. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has over 75 years of investment experience and approximately $1.4 trillion in assets under management as of April 30, 2023.
About Power Corporation of Canada
Power Corporation is an international management and holding company that focuses on financial services in North America, Europe and Asia. Its core holdings are leading insurance, retirement, wealth management and investment businesses, including a portfolio of alternative asset investment platforms.
About Great-West Lifeco Inc.
Great-West Lifeco is an international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses. We operate in Canada, the United States and Europe under the brands Canada Life, Empower, Putnam Investments, and Irish Life. At the end of 2022, our companies had approximately 31,000 employees, 234,500 advisor relationships, and thousands of distribution partners – all serving over 38 million customer relationships across these regions. Great-West Lifeco trades on the Toronto Stock Exchange (TSX) under the ticker symbol GWO and is a member of the Power Corporation group of companies.
About Putnam Investments
Founded in 1937, Putnam Investments is a global money management firm with over 85 years of investment experience. At the end of January 2023, Putnam had over US$170 billion in assets under management. Putnam has offices in Boston, London, Munich, Singapore, Sydney and Tokyo.