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Franklin (BEN) Closes Putnam Acquisition, Adds $142B in AUM
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Franklin Resources, Inc. (BEN - Free Report) completed the acquisition of Putnam Investments, a global asset management firm, from Great-West Lifeco on Jan 1, 2024. Putnam had $142 billion (excluding PanAgora) in assets under management (AUM) as of November 2023. Hence with the acquisition, Franklin’s AUM as of Nov 30, 2023, increased to $1.55 trillion from the $1.37 billion reported as of fiscal 2023 end.
At the time of deal announcement in May 2023, the acquisition of Putnam was valued at around $925 million in a stock-and-cash deal. Franklin was expected to pay $825 million in stock consideration to Great-West on deal closure and another $100 million in cash in 180 days post-closing.
With this, Great-West was expected to acquire a stake of approximately 6.2% in BEN. Now, with the deal closure, Great-West has become a long-term strategic shareholder in BEN.
The transaction is expected to accelerate Franklin’s growth in the retirement space by increasing its defined contribution AUM to more than $100 billion. The deal results in the addition of target date fund ranges. Further, it adds complementary investment capabilities in areas of stable value, ultra-short duration as well as large cap value.
At the time of deal announcement, this transaction was anticipated to be modestly accretive to run-rate adjusted earnings per share by first-year end after the deal closure, including cost synergies.
Jenny Johnson, president and chief executive officer of BEN, stated, “The addition of Putnam accelerates our growth in the retirement sector by increasing our defined contribution AUM and expands our insurance assets, further strengthening our presence in these key market segments to better serve all our clients. Putnam also shares our client-focused culture and emphasis on delivering strong investment results. We’re delighted to welcome the talented team at Putnam to Franklin Templeton and are pleased to have Great-West as an investor.”
Markedly, over the years, Franklin has been focusing on inorganic growth and enhancing its foothold through such strategic acquisitions. In 2022, the company closed the acquisitions of Alcentra and Lexington, expanding its presence in Europe as well as scaling up its alternative asset strategies.
These apart, several acquisitions of the past led to enhanced presence in the separately managed account space and bolstered its investment capabilities in private debt, real estate, hedge funds and private equity. Such efforts will help the company in improving and expanding its alternative investments and multi-asset solutions platforms.
Over the past three months, the stock has risen 24.7% compared with the industry’s growth of 22.5%.
Last month, SEI Investments Company (SEIC - Free Report) acquired Altigo in order to meet increasing investor demand and expand in the alternative investments space. Altigo is a cloud-based technology platform that provides inventory, e-subscription and reporting capabilities for alternative investments.
SEIC is a leader in supporting sponsor firms’ operational and information needs. With the integration of Altigo within SEIC’s capabilities across intermediary wealth channels, the company will be able to deliver a broader end-to-end solution.
LPL Financial Holdings Inc. (LPLA - Free Report) took a minority stake in Independent Advisor Alliance (“IAA”), which is a hybrid registered investment advisory (“RIA”) firm focused on empowering financial advisors to succeed as independent business owners. The deal is among a few transactions wherein LPLA has taken a minority stake in a hybrid RIA and office of supervisory jurisdiction.
LPLA purchased a 20% stake in IAA, which had $16.8 billion in client assets under supervision and 226 financial advisors.
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Franklin (BEN) Closes Putnam Acquisition, Adds $142B in AUM
Franklin Resources, Inc. (BEN - Free Report) completed the acquisition of Putnam Investments, a global asset management firm, from Great-West Lifeco on Jan 1, 2024. Putnam had $142 billion (excluding PanAgora) in assets under management (AUM) as of November 2023. Hence with the acquisition, Franklin’s AUM as of Nov 30, 2023, increased to $1.55 trillion from the $1.37 billion reported as of fiscal 2023 end.
At the time of deal announcement in May 2023, the acquisition of Putnam was valued at around $925 million in a stock-and-cash deal. Franklin was expected to pay $825 million in stock consideration to Great-West on deal closure and another $100 million in cash in 180 days post-closing.
With this, Great-West was expected to acquire a stake of approximately 6.2% in BEN. Now, with the deal closure, Great-West has become a long-term strategic shareholder in BEN.
The transaction is expected to accelerate Franklin’s growth in the retirement space by increasing its defined contribution AUM to more than $100 billion. The deal results in the addition of target date fund ranges. Further, it adds complementary investment capabilities in areas of stable value, ultra-short duration as well as large cap value.
At the time of deal announcement, this transaction was anticipated to be modestly accretive to run-rate adjusted earnings per share by first-year end after the deal closure, including cost synergies.
Jenny Johnson, president and chief executive officer of BEN, stated, “The addition of Putnam accelerates our growth in the retirement sector by increasing our defined contribution AUM and expands our insurance assets, further strengthening our presence in these key market segments to better serve all our clients. Putnam also shares our client-focused culture and emphasis on delivering strong investment results. We’re delighted to welcome the talented team at Putnam to Franklin Templeton and are pleased to have Great-West as an investor.”
Markedly, over the years, Franklin has been focusing on inorganic growth and enhancing its foothold through such strategic acquisitions. In 2022, the company closed the acquisitions of Alcentra and Lexington, expanding its presence in Europe as well as scaling up its alternative asset strategies.
These apart, several acquisitions of the past led to enhanced presence in the separately managed account space and bolstered its investment capabilities in private debt, real estate, hedge funds and private equity. Such efforts will help the company in improving and expanding its alternative investments and multi-asset solutions platforms.
Over the past three months, the stock has risen 24.7% compared with the industry’s growth of 22.5%.
Image Source: Zacks Investment Research
BEN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Expansion Efforts by Finance Firms
Last month, SEI Investments Company (SEIC - Free Report) acquired Altigo in order to meet increasing investor demand and expand in the alternative investments space. Altigo is a cloud-based technology platform that provides inventory, e-subscription and reporting capabilities for alternative investments.
SEIC is a leader in supporting sponsor firms’ operational and information needs. With the integration of Altigo within SEIC’s capabilities across intermediary wealth channels, the company will be able to deliver a broader end-to-end solution.
LPL Financial Holdings Inc. (LPLA - Free Report) took a minority stake in Independent Advisor Alliance (“IAA”), which is a hybrid registered investment advisory (“RIA”) firm focused on empowering financial advisors to succeed as independent business owners. The deal is among a few transactions wherein LPLA has taken a minority stake in a hybrid RIA and office of supervisory jurisdiction.
LPLA purchased a 20% stake in IAA, which had $16.8 billion in client assets under supervision and 226 financial advisors.