Franklin Templeton Investments has an agreement to buy $26 billion alternative credit manager Benefit Street Partners from private equity firm Providence Equity Partners, the firms announced Thursday.
The acquisition marks the latest in a series of moves by Franklin to offer alternative investments in addition to its traditional equity and fixed income funds. Alternative credit as an asset class exploded in the ten years after the financial crisis as banks stepped away from proprietary trading and lending. Institutional investors have since poured money into alternative credit, making it one of the hottest fund categories.
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Thomas Gahan, the former CEO of Deutsche Bank Securities, founded Benefit Street in September 2008 as the credit investment arm of Providence Equity Partners, a private equity firm specializing in the communications, education, information, and media industries.
Gahan brought together the key people who turned Deutsche Bank into a powerful player in U.S. leveraged finance. Among others, Gahan recruited Richard Byrne, who had succeeded Gahan as CEO of Deutsche Bank Securities; Michael Paasche, who had been global head of leveraged finance at the bank; and David Manlowe, former chief operating officer and head of global capital markets at Deutsche.
Benefit Street offers private and opportunistic debt, structured credit, high yield, special situations, long-short liquid credit, and commercial real estate debt.