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Franklin Resources (BEN) Agrees to Buy Alcentra From BNY Mellon
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Franklin Resources, Inc. (BEN - Free Report) , which operates as Franklin Templeton, has entered an agreement with The Bank of New York Mellon Corporation (BK - Free Report) to acquire BNY Alcentra Group Holdings, Inc. from the latter. Closing of the deal, subject to customary closing conditions, including certain regulatory approvals, is expected early in the first quarter of 2023.
Alcentra, with $38 billion in assets under management (AUM), is one of the largest European credit and private debt managers with global expertise in senior secured loans, high-yield bonds, private credit, structured credit, special situations and multi-strategy credit strategies.
Alcentra was founded in 2002 and employs a disciplined, value-oriented approach to evaluating individual investments and constructing portfolios across its investment strategies on behalf of more than 500 institutional investors.
Terms of the Deal and Financial Impact
Franklin Templeton is expected to fund the transaction from its existing balance sheet resources. Per the deal, Franklin Templeton will pay $350 million in cash upon the deal closure and up to a further $350 million in contingent consideration, dependent on the achievement of certain performance thresholds over the next four years.
Moreover, Franklin Templeton has committed to purchase all seed capital investments from BNY Mellon related to Alcentra, which were valued at $305 million as of Mar 31, 2022. The seed capital investments will be valued at the time of close to determine the final seed capital purchase amount.
Notably, through the acquisition of Alcentra, Franklin Templeton’s U.S. alternative credit specialist investment manager, Benefit Street Partners, will be able to expand its alternative credit capabilities and presence in Europe, doubling its AUM to $77 billion globally.
The transaction is expected to continue to strengthen the breadth and scale of Franklin Templeton’s alternative asset strategies, bringing the firm-wide alternative AUM to $257 billion.
The acquisition is projected to be immediately accretive to adjusted earnings per share.
Upon the deal closure, BNY Mellon Investment Management is expected to continue to offer Alcentra’s capabilities in BNY Mellon’s sub-advised funds and select regions via its global distribution platform, and will provide Alcentra with ongoing asset servicing support.
Once the deal is completed, it is expected to increase BNY Mellon’s common equity tier 1 capital by $0.5 billion.
Management Comments
Jenny Johnson, the president and CEO of Franklin Templeton, stated, “We’re delighted to announce the acquisition of Alcentra and look forward to welcoming its talented team to our firm. We have been deliberate in building our alternative asset management capabilities over recent years and the acquisition of Alcentra is an important aspect of our alternative asset strategy – the expansion into alternative European credit. This acquisition expands our long-standing relationship with BNY Mellon, and we are pleased that the structure of the transaction achieves objectives for both Franklin Templeton and BNY Mellon in the context of current market conditions.”
Tom Gahan, the CEO of Benefit Street Partners and head of Franklin Templeton Alternatives, informed, “We believe the addition of Alcentra will elevate Franklin Templeton and BSP to a leading position in global alternative credit. Alcentra is highly complementary to our existing U.S. capabilities, with no overlap in Europe. This partnership will unlock new opportunities to offer broader global credit solutions to our clients who are increasingly allocating capital to this growing asset class.”
The CEO of BNY Mellon Investment Management, Hanneke Smits, said, “We’re extremely pleased to be strengthening the partnership with Franklin Templeton and continuing to offer Alcentra’s credit capabilities as part of the broad range of alternative solutions we already offer today.”
Our Take
Franklin Resources continues to grow through acquisitions. This April, it completed the acquisition of Lexington, which boosted its alternative asset offerings. In December 2021, BEN closed the acquisition of OSAM, which is expected to further enhance the company’s presence in the separately managed accounts space.
Franklin Resources also concluded the all-cash acquisition of Legg Mason in July 2020. The strategic and financial benefits from the acquisition exceeded its targets, and augmented its growth opportunities. These deals, along with several other past acquisitions, are expected to support BEN in improving and expanding its alternative investments and multi-asset solutions platforms.
Over the past year, shares of Franklin Resources have lost 22.6% compared with a 26.2% decline of the industry.
With a view to help its clients build long-term financial wellness, Truist Financial Corporation (TFC - Free Report) acquired the award-winning gamified finance mobile app, Long Game. Long Game changes the way people engage with their banks. The mobile finance app uses prize-linked savings and casual gaming to motivate smart financial behavior.
Truist Financial is expected to use Long Game’s innovative technology to inspire and build better lives and communities.
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Franklin Resources (BEN) Agrees to Buy Alcentra From BNY Mellon
Franklin Resources, Inc. (BEN - Free Report) , which operates as Franklin Templeton, has entered an agreement with The Bank of New York Mellon Corporation (BK - Free Report) to acquire BNY Alcentra Group Holdings, Inc. from the latter. Closing of the deal, subject to customary closing conditions, including certain regulatory approvals, is expected early in the first quarter of 2023.
Alcentra, with $38 billion in assets under management (AUM), is one of the largest European credit and private debt managers with global expertise in senior secured loans, high-yield bonds, private credit, structured credit, special situations and multi-strategy credit strategies.
Alcentra was founded in 2002 and employs a disciplined, value-oriented approach to evaluating individual investments and constructing portfolios across its investment strategies on behalf of more than 500 institutional investors.
Terms of the Deal and Financial Impact
Franklin Templeton is expected to fund the transaction from its existing balance sheet resources. Per the deal, Franklin Templeton will pay $350 million in cash upon the deal closure and up to a further $350 million in contingent consideration, dependent on the achievement of certain performance thresholds over the next four years.
Moreover, Franklin Templeton has committed to purchase all seed capital investments from BNY Mellon related to Alcentra, which were valued at $305 million as of Mar 31, 2022. The seed capital investments will be valued at the time of close to determine the final seed capital purchase amount.
Notably, through the acquisition of Alcentra, Franklin Templeton’s U.S. alternative credit specialist investment manager, Benefit Street Partners, will be able to expand its alternative credit capabilities and presence in Europe, doubling its AUM to $77 billion globally.
The transaction is expected to continue to strengthen the breadth and scale of Franklin Templeton’s alternative asset strategies, bringing the firm-wide alternative AUM to $257 billion.
The acquisition is projected to be immediately accretive to adjusted earnings per share.
Upon the deal closure, BNY Mellon Investment Management is expected to continue to offer Alcentra’s capabilities in BNY Mellon’s sub-advised funds and select regions via its global distribution platform, and will provide Alcentra with ongoing asset servicing support.
Once the deal is completed, it is expected to increase BNY Mellon’s common equity tier 1 capital by $0.5 billion.
Management Comments
Jenny Johnson, the president and CEO of Franklin Templeton, stated, “We’re delighted to announce the acquisition of Alcentra and look forward to welcoming its talented team to our firm. We have been deliberate in building our alternative asset management capabilities over recent years and the acquisition of Alcentra is an important aspect of our alternative asset strategy – the expansion into alternative European credit. This acquisition expands our long-standing relationship with BNY Mellon, and we are pleased that the structure of the transaction achieves objectives for both Franklin Templeton and BNY Mellon in the context of current market conditions.”
Tom Gahan, the CEO of Benefit Street Partners and head of Franklin Templeton Alternatives, informed, “We believe the addition of Alcentra will elevate Franklin Templeton and BSP to a leading position in global alternative credit. Alcentra is highly complementary to our existing U.S. capabilities, with no overlap in Europe. This partnership will unlock new opportunities to offer broader global credit solutions to our clients who are increasingly allocating capital to this growing asset class.”
The CEO of BNY Mellon Investment Management, Hanneke Smits, said, “We’re extremely pleased to be strengthening the partnership with Franklin Templeton and continuing to offer Alcentra’s credit capabilities as part of the broad range of alternative solutions we already offer today.”
Our Take
Franklin Resources continues to grow through acquisitions. This April, it completed the acquisition of Lexington, which boosted its alternative asset offerings. In December 2021, BEN closed the acquisition of OSAM, which is expected to further enhance the company’s presence in the separately managed accounts space.
Franklin Resources also concluded the all-cash acquisition of Legg Mason in July 2020. The strategic and financial benefits from the acquisition exceeded its targets, and augmented its growth opportunities. These deals, along with several other past acquisitions, are expected to support BEN in improving and expanding its alternative investments and multi-asset solutions platforms.
Over the past year, shares of Franklin Resources have lost 22.6% compared with a 26.2% decline of the industry.
Image Source: Zacks Investment Research
Currently, BEN carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Growth Move by Another Firm
With a view to help its clients build long-term financial wellness, Truist Financial Corporation (TFC - Free Report) acquired the award-winning gamified finance mobile app, Long Game. Long Game changes the way people engage with their banks. The mobile finance app uses prize-linked savings and casual gaming to motivate smart financial behavior.
Truist Financial is expected to use Long Game’s innovative technology to inspire and build better lives and communities.