It was announced today that global asset management firm Franklin Templeton will acquire Putnam Investments from Canadian financial company Great-West Lifeco for approximately $925 million of primarily equity consideration.
As part of the multi-pronged deal, Great-West—which also owns recordkeeper Empower and is a part of Power Corporation of Canada—will become a long-term strategic shareholder in Franklin Resources, Inc., with an approximate 6.2% stake.
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.
“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.”
Franklin Templeton President and CEO Jenny Johnson
Franklin Templeton will pay approximately $825 million in stock consideration up-front at closing—expected to in the fourth quarter of 2023—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. The potential transaction consideration and retained value of the deal is estimated to be between $1.7 billion and $1.8 billion, Great-West Lifeco said Wednesday.
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, according to a press release announcing the deal, 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.”
Founded in 1937, Putnam is a global asset management firm with $136 billion in AUM as of April 2023. Great-West acquired Putnam for about $4.6 billion in a deal announced in 2007.
“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.”
Paul Mahon, President and CEO of Great-West, said the transaction furthers Great-West’s strategy of building strategic partnerships with best-in-class asset managers to support its 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.”
In early May, Franklin Templeton announced its acquisition of volScout LLC, an early stage startup that provides managed option solutions to advisers serving institutional clients and high-net-worth investors.
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• Franklin Templeton Acquires Managed Accounts Startup volScout