Franklin Templeton Acquires Putnam Investments From Great-West Lifeco
Great-West Lifeco initially plans to invest $25 billion in Franklin Templeton strategies.
Franklin Templeton is acquiring Putnam Investments from Great-West Lifeco, a deal that will combine two of the largest asset management firms in the U.S.
The companies said Wednesday that Franklin Templeton has agreed to pay $925 million for Putnam — about $825 million in stock up-front, or 33.3 million shares, and about $100 million in cash when the deal closes. Great-West, which is a subsidiary of Power Corporation of Canada, will then own a 6.2 percent stake in Franklin Templeton. Great-West acquired Putnam in 2007.
PanAgora, a $33 billion investment firm owned by Putnam, is not part of the transaction and Great-West, will remain the owner.
Great-West also initially plans to invest $25 billion in Franklin Templeton’s investment managers within a year after the deal closes, and more in subsequent years, creating a strategic partnership between the Canadian financial services firm and the U.S.-based asset manager. Franklin Templeton will pay up to another $375 million in the deal, contingent on revenue growth targets from the partnership.
The addition of Putnam will significantly grow Franklin Templeton’s presence in the retirement sector, especially its defined contribution plan assets, which will total approximately $90 billion after the deal. The combination will also grow Franklin Templeton’s mutual fund platform, giving it more scale and efficiency, the companies said in the announcement.
“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.
Robert Reynolds, president and CEO of Putnam, said the two asset managers are well-aligned.
“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,” Reynolds said.
The deal is also an example of strategic partnerships that Great-West is interested in. “Franklin Templeton’s scale and breadth, together with Putnam’s capabilities, will drive positive outcomes for our companies, our clients, and our investors,” said Paul Mahon, president and CEO of Great-West.
But deals in which insurance companies purchase or partner with asset managers have a mixed history of success, according to Richard Bruyère, a managing partner and co-founder of INDEFI, a consultancy for asset management firms.
“I would characterize this as more of a love and hate relationship between insurance companies and asset managers,” Bruyère said generally about the different types of companies coming together. “Sometimes it works very well and it’s very profitable for both parties. And other times it’s too much friction and it just doesn’t work.”
But promising to invest $25 billion in any asset manager, like Great-West has in Franklin Templeton, is significant, Bruyère said. It’s enough capital to properly seed new strategies, which is “absolutely a key competitive advantage today for private market platforms.”
Boston-based Putnam, founded in 1937, had $136 billion in assets under management as of April 2023, excluding the $33 billion managed by PanAgora.
Franklin Templeton was founded in 1947. Today, the California-based company has 1,300 investment professionals in offices in more than 30 countries, and manages $1.4 trillion in assets.
Late last year, Boaz Weinstein, CEO of Saba Capital Management, launched a campaign for board seats at three Franklin Templeton closed-end funds that invest in pipelines and other energy infrastructure. In response, Franklin Templeton issued mountains of new preferred stock in the funds that Saba targeted, effectively diluting the voting power of the funds’ common stockholders, including Saba, and entrenching management.