Asset manager consolidation wave continues as two deals announced in 24 hours

There seems to be no end in sight for the asset management M&A surge as Lansdowne Partners takes over Crux AM, while Franklin Templeton is set to acquire Putnam Investments.

The near-constant stream of mergers and acquisitions across both the sell- and buy-side appears to show no signs of abating as two asset management deals have been announced in the past 24 hours.

Franklin Resources and Power Corporation of Canada have entered into a strategic partnership, which includes the acquisition of global asset management firm Putnam Investments by the former.

The transaction is valued at more than $1 billion with Franklin Templeton set to make an initial payment of $925 million in cash and shares to Great-West – Power’s subsidiary and owner of Putnam.

The move comes as Franklin seeks to increase its assets under management and expand on its presence in other sectors. Jenny Johnson, president and chief executive of Franklin Templeton, said: “With outstanding investment performance, Putnam will add complementary capabilities to our existing specialist investment managers to meet the varied needs of our clients and will increase Franklin Templeton’s defined contribution AUM.”

As part of the same transaction, Great West will become a strategic shareholder in Franklin, holding a 6.2% stake in the company. Franklin’s specialist investment manager is set to receive an initial long-term asset allocation of $25 billion in the year following closing (the amount is expected to increase in coming years).

In addition, hedge fund Lansdowne Partners announced its plan to acquire UK equity investment manager, Crux Asset Management, dependent on regulatory approval expected within the next three months, the businesses confirmed.

Speaking to the decision to acquire the business, Brian Heyworth, co-managing partner of Lansdowne, said: “The acquisition of CRUX broadens and enhances our UCITS capabilities following the launch of Lansdowne’s first UCITS fund last year.”

The deals follow similar recent asset management M&A activity including UK asset manager Liontrust entering a conditional agreement to acquire Swiss asset management company, GAM Holding for £96 million.

The trend is not confined to the buy-side either. Other recent movements on the sell-side include last month’s (April 2023) Deutsche Bank acquisition of institutional broker Numis for £410 million. In the same week, Redburn merged with Atlantic Equities – creating a London-headquartered transatlantic broker.

Demonstrably, more and more, companies are looking to ‘fill the gaps’ in their offerings, not by growing but by incorporating those who are already primed.

A clear example is the Tradeweb and Yieldbroker deal – the definitive agreement allowed the former to grow its APAC footprint as users of its liquid, global multi-asset platform gained access to Australia and New Zealand, whilst Yieldbroker’s trading platform is set to benefit from the business’s international client base.

As institutions face mounting pressure during the ongoing M&A slump, intensified by the growing presence of the large US banking entities and shrinking commissions, it seems that businesses will be teaming up in order to fend off the risk of having to exit the market altogether for the foreseeable.

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