Franklin Resources, Inc, a global investment management organization operating as Franklin Templeton, announced a strategic partnership with Power Corporation of Canada and Great-West Lifeco, Inc. The Power Group of Companies including Great-West and IGM Financial are leaders in the global insurance, retirement, asset management and wealth management sectors and have collective assets under management and/or administration of approximately $2.1 trillion1. 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 million2 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.
Founded in 1937, Putnam is a global asset management firm with $136 billion3 in AUM as of April 2023. Putnam has offices in Boston, London, Munich, Tokyo, Singapore and Sydney. Putnam’s complementary capabilities and track record of strong investment performance accelerates Franklin Templeton’s growth in the retirement markets by increasing its defined contribution AUM and expanding its insurance assets, while adding further scale and efficiency to Franklin Templeton’s mutual fund platform. Consistent with Franklin Templeton’s previous acquisitions, the execution plan is designed to minimize disruption to Putnam’s investment teams and client relationships.
“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,” said Jenny Johnson, President and CEO of Franklin Templeton. “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.”
“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,” said R. Jeffrey Orr, Chair of Great-West, and President and CEO of Power. “We are pleased to enter a partnership with Franklin Templeton that will be mutually beneficial to clients and our respective businesses.”
“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,” said Paul Mahon, President and CEO of Great-West. “Franklin Templeton’s scale and breadth, together with Putnam’s capabilities, will drive positive outcomes for our companies, our clients, and our investors.”
“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,” said Robert Reynolds, President and CEO of Putnam. “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.”
Transaction Details
The transaction is structured to maintain Franklin Templeton’s financial flexibility and enhance continued investment across the firm. Franklin Templeton will pay approximately $825 million2 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.
An investor presentation on the transaction is available via investors.franklintempleton.com.
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.
1. 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.
2. 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.
3. Excludes $33 billion AUM of PanAgora, which is not a party to the transaction.
Source: Franklin Templeton
