Franklin Templeton Completes Acquisition of Putnam Investments

Rhea-AI Summary

Franklin Resources, Inc. [NYSE:BEN] completes acquisition of Putnam Investments from Great-West Lifeco, Inc., accelerating growth in the retirement sector and increasing defined contribution AUM to over $100 billion.

Insights

Financial Analyst

The acquisition of Putnam Investments by Franklin Templeton represents a strategic expansion, notably enhancing Franklin Templeton's footprint in the retirement sector. The increase in defined contribution assets under management (AUM) to over $100 billion is a significant milestone, positioning the firm as a more dominant player in the retirement space. This move is likely to attract the attention of investors seeking to capitalize on the growing retirement market, which is expanding due to demographic shifts such as an aging population.

From a financial perspective, the addition of Putnam's $142 billion in AUM bolsters Franklin Templeton's total AUM to $1.55 trillion, underscoring the scale and diversification benefits of the acquisition. The resulting economies of scale could lead to cost synergies and potentially improved profit margins. Moreover, Great-West becoming a long-term shareholder in Franklin Resources, Inc. suggests a vote of confidence in the combined entity's future performance and strategic direction.

It is important to note that while the acquisition may provide immediate scale and diversification, integration risks should not be underestimated. The execution plan's focus on minimizing disruption is crucial to retaining client relationships and maintaining investment performance consistency.

Market Research Analyst

Franklin Templeton's acquisition of Putnam Investments significantly enhances its product offerings, particularly with the addition of a target date fund range, which is essential for serving the retirement sector. Target date funds have gained popularity as a default investment choice in many retirement plans due to their automatic rebalancing and age-based asset allocation. This move positions Franklin Templeton to capitalize on trends favoring such passive investment strategies.

The emphasis on complementary investment capabilities, including stable value and large cap value strategies, indicates a strategic approach to cater to a broad spectrum of investor preferences. The ability to offer a wider range of investment products can help Franklin Templeton attract and retain clients in a competitive asset management landscape.

Furthermore, the integration of Putnam's investment, risk management, operations and technology capabilities with Franklin Templeton's global infrastructure could enhance the overall service offering. This could result in improved operational efficiency and client satisfaction, which are key differentiators in the asset management industry.

Economist

The transaction between Franklin Templeton and Putnam Investments reflects broader economic trends within the asset management industry, where consolidation is becoming increasingly common. The competitive advantage often lies in the ability to offer a diverse range of investment products and manage large pools of assets efficiently. The acquisition's impact on the market could lead to further industry consolidation as firms seek scale to compete effectively.

Additionally, the growth in defined contribution AUM is an indicator of the shifting landscape from traditional pension plans to individual retirement accounts. This shift has significant implications for asset managers and investors alike, as it alters the dynamics of retirement savings and investment strategies. The emphasis on retirement and insurance assets by Franklin Templeton could be seen as an adaptive strategy in response to these macroeconomic and demographic changes.

Long-term, the success of such acquisitions will depend on the ability to integrate diverse corporate cultures and investment philosophies without compromising on the quality of investment management services provided to clients.

Adds Complementary Investment Capabilities with Scale and Strong Performance

Accelerates Franklin Templeton’s Growth in the Retirement Sector and Significantly Increases Franklin Templeton’s Defined Contribution AUM to Over $100 Billion

SAN MATEO, Calif.--(BUSINESS WIRE)-- Franklin Resources, Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton, today announced the successful completion on January 1, 2024 of its acquisition of Putnam Investments (“Putnam”) from Great-West Lifeco, Inc. (“Great-West”). Per the terms of the transaction, Great-West becomes a long-term shareholder in Franklin Resources, Inc., consistent with Great-West’s continuing commitment to asset management.

“With complementary capabilities and a track record of strong investment performance, Putnam expands our ability to offer more choice to more clients,” said Jenny Johnson, President and CEO of Franklin Templeton. “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.”

Founded in 1937, Putnam is a global asset management firm with $142 billion¹ in AUM as of November 30, 2023. The transaction adds a target date fund range and complementary investment capabilities with scale, including in the areas of stable value, ultra short duration and large cap value. Consistent with Franklin Templeton’s previous acquisitions, the execution plan is designed to minimize disruption to Putnam’s investment teams and client relationships. Franklin Templeton’s global infrastructure will enhance Putnam’s investment, risk management, operations and technology capabilities. The addition of Putnam brings Franklin Templeton’s AUM to $1.55 trillion as of November 30, 2023.

1. Excludes AUM from PanAgora, which was not a party to the transaction.

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 150 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 more than 1,300 investment professionals, and offices in major financial markets around the world, the California-based company has over 75 years of investment experience and over $1.4 trillion in assets under management as of November 30, 2023. For more information, please visit franklinresources.com.

Forward-Looking Statements

Statements in this press release that are not historical facts are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. When used in this press release, words or phrases generally written in the future tense and/or preceded by words such as “will,” “may,” “could,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” “preliminary” or other similar words are forward-looking statements.

Various forward-looking statements in this press release relate to the strategic relationship between Franklin Resources, Inc. (“Franklin”), Great-West, the Power Group of Companies and the acquisition by Franklin of Putnam from Great-West including regarding expected growth, client and stockholder benefits, key assumptions, revenue realization, financial benefits or returns. accretion and integration costs. Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Important transaction related and other risk factors that may cause such differences include: (i) the occurrence of any event, change or other circumstances that could give rise to the termination of the strategic relationship; (ii) Franklin, Putnam, Great-West or Power Group of Companies could experience financial or other setbacks if the transaction or strategic relationship encounters unanticipated problems; and (v) anticipated benefits of the acquisition or the strategic relationship, including the realization of revenue, accretion, and financial benefits or returns, may not be fully realized or may take longer to realize than expected.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that may cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements, including market and volatility risks, investment performance and reputational risks, global operational risks, competition and distribution risks, third-party risks, technology and security risks, human capital risks, cash management risks, and legal and regulatory risks. For a detailed discussion of other risk factors, please refer to Power’s and Great-West’s recent filings with Canadian securities regulators, which are available for viewing at www.sedarplus.com, and Franklin’s recent filings with the U.S. Securities and Exchange Commission (“SEC”), including, without limitation, those discussed under the headings “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk” in Franklin’s most recent Annual Report on Form 10-K and subsequent periodic and current reports.

Any forward-looking statement made in this press release speaks only as of the date on which it is made. Factors or events that could cause actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Franklin, Putnam, Great-West and Power Group undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240101741067/en/

Franklin Resources, Inc.

Investor Relations: Selene Oh, (650) 312-4091, selene.oh@franklintempleton.com

Corporate Communications: Stacey Coleman, (650) 525-7458, stacey.coleman@franklintempleton.com

Rebecca Radosevich, (212) 632-3207, rebecca.radosevich@franklintempleton.com

Source: Franklin Resources, Inc.

FAQ

What did Franklin Resources, Inc. [NYSE:BEN] announce?

Franklin Resources, Inc. announced the successful completion of its acquisition of Putnam Investments from Great-West Lifeco, Inc.

What is the impact of the acquisition on Franklin Templeton's growth?

The acquisition accelerates Franklin Templeton's growth in the retirement sector and significantly increases its defined contribution AUM to over $100 billion.

What is the AUM of Putnam Investments?

Putnam Investments has $142 billion in AUM as of November 30, 2023.

What are the complementary investment capabilities added through the acquisition?

The acquisition adds a target date fund range and complementary investment capabilities with scale, including in the areas of stable value, ultra short duration, and large cap value.

How does Franklin Templeton plan to minimize disruption to Putnam's investment teams and client relationships?

Franklin Templeton's global infrastructure will enhance Putnam's investment, risk management, operations, and technology capabilities while minimizing disruption to Putnam's investment teams and client relationships.

What is the total AUM of Franklin Templeton after the addition of Putnam?

The addition of Putnam brings Franklin Templeton's AUM to $1.55 trillion as of November 30, 2023.