Franklin Resources Inc. agreed to buy Bank of New York Mellon Corp.’s European credit and debt subsidiary, Alcentra, as the money manager bets bigger on alternative assets to boost performance.
The acquisition will increase Franklin’s alternatives assets under management to $257 billion, the San Mateo, California-based company said in a statement on Tuesday. Alcentra has $38 billion in assets and specializes in private and structured credit and other credit strategies.
“The acquisition of Alcentra is an important aspect of our alternative asset strategy — the expansion into alternative European credit,” Jenny Johnson, chief executive of Franklin Templeton, said in the statement. “Alternative investments represent a significant diversification tool for our clients and an area of increasing importance for both individual and institutional investors.”
Franklin Templeton will pay $350 million in cash at the close of the transaction and up to a further $350 million based on certain performance thresholds over the next four years, according to the statement.
The acquisition is the latest move by Franklin to expand into alternative assets after acquiring Lexington Partners, a private equity fund manager. Mutual fund managers like Franklin and T. Rowe Price Group Inc. are expanding into private and alternative assets to counter client defections from more traditional actively managed stock and bond funds.
Franklin shares fell 0.8% to $27.34 at 9:56 a.m. in New York trading Tuesday. The stock declined 18% this year through Friday.
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