In a move aimed at growing assets as traditional fund managers face tough competition from low-cost index funds, Franklin Resources Inc. has announced the acquisition of Putnam Investments. The parent company of investment firm Franklin Templeton will purchase Putnam from its Canadian owners, Great-West Lifeco Inc., in a deal estimated to be worth between $1.7 billion and $1.9 billion.
The transaction will involve Franklin Resources acquiring Putnam's mutual fund and investment management businesses, as well as its retail, institutional and retirement businesses. Great-West Lifeco will retain its controlling interest in quantitative asset manager PanAgora and realize the value of Putnam's seed capital.
According to Franklin Resources CEO, Greg Johnson, the acquisition of Putnam will strengthen the company's presence in the U.S. and global markets, and give it access to new distribution channels. The deal is expected to close in the third quarter of 2020, subject to regulatory approvals.
Putnam Investments has struggled in recent years to keep pace with the growth of passive index funds, which have gained in popularity among investors due to their low fees and simplicity. The company has seen outflows of assets in its mutual funds and has been cutting jobs to reduce costs.
Great-West Lifeco said in a statement that the transaction unlocks the value of Putnam and facilitates the continued focus of Lifeco's U.S. strategy on retirement and personal wealth management. The company plans to use the proceeds from the sale to strengthen its balance sheet and invest in its core businesses.
Franklin Resources Inc., which operates as Franklin Templeton, is a global investment management firm with over $700 billion in assets under management. The company offers a range of investment products and services to clients in more than 170 countries.
Putnam Investments, founded in 1937, is a Boston-based asset manager with $171 billion in assets under management as of September 30, 2019. The company offers a range of investment solutions to individuals, institutions, and retirement plans.
The acquisition of Putnam by Franklin Resources is the latest in a series of mergers and acquisitions in the asset management industry. Firms are seeking to consolidate and grow assets as they face increasing competition from low-cost index funds.
