Franklin Templeton Buys Putnam Investments What to Know

Franklin Templeton has acquired Putnam Investments, a move that's likely to have a significant impact on the financial industry. The acquisition was announced in 2007.

Putnam Investments was founded in 1937, making it a well-established player in the financial services sector. The company had a long history of growth and innovation.

The acquisition by Franklin Templeton was a strategic move to expand the company's presence in the US market. Franklin Templeton has a strong global presence, but Putnam Investments brought a significant presence in the US.

Great-West Lifeco has signed a deal to sell U.S.-based asset manager Putnam Investments to Franklin Resources Inc., and will retain a controlling interest in quantitative asset manager PanAgora.

The deal includes a payment of US$950 million to US$1.0 billion, consisting of 33.33 million shares at closing and US$100 million in cash six months after closing.

Franklin Templeton will also pay up to US$375 million between three and seven years after the deal closes, tied to the growth of the partnership.

Great-West Lifeco will distribute Franklin Templeton products and allocate an initial US$25 billion in assets under management to Franklin Templeton’s specialist investment managers within 12 months of the deal closing.

The company will retain shares representing about a 4.9% stake in Franklin Templeton for a minimum five-year period.

Barclays analyst John Aiken believes the divestiture will be viewed positively and that the capital will likely be deployed into Great-West Lifeco’s strategic growth avenues, such as Empower.

The acquisition of Putnam Investments by Franklin Templeton has significantly enhanced Franklin Templeton's footprint in the retirement sector.

This strategic expansion has led to a substantial increase in defined contribution assets under management (AUM) to over $100 billion, positioning the firm as a more dominant player in the retirement space.

The addition of Putnam's $142 billion in AUM has bolstered Franklin Templeton's total AUM to $1.55 trillion, underscoring the scale and diversification benefits of the acquisition.

The integration of Putnam's assets 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.

The resulting economies of scale could lead to cost synergies and potentially improved profit margins, making the acquisition a financially savvy move for Franklin Templeton.

The execution plan's focus on minimizing disruption is crucial to retaining client relationships and maintaining investment performance consistency, which is essential for long-term success.