Franklin Resources, Inc.
), operating as Franklin Templeton Investments, announced the
completion of the purchase of the remaining 80% stake in Pelagos
Capital Management, LLC, an independent investment advisor.
Franklin had previously purchased 20% stake in Pelagos in 2010.
Financial terms of the deal were undisclosed.
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The purchase of Pelagos will assist Franklin Templeton in
improving and expanding its alternative investments and
multi-asset solutions platforms. Such strategic initiatives would
help the company provide world-class investment solutions to its
clients and aid its global expansion.
Benefits of the Acquisition
Franklin is presently focused on innovative investment strategies
and awaits access to various channels in order to improve its
capabilities. Therefore, the Pelagos acqusition will
significantly aid in enhancing its services for investors who are
keen regarding new investment strategies.
Moreover, Pelagos's endeavor toward creating alternative
investment solutions would enhance overall returns and lower
portfolio volatility for investors. Further, Pelagos' association
with advanced risk management systems will aid Franklin in
maintaining its commitment to risk management.
On the other hand, managers of Pelagos have expressed their
pleasure in being a part of Franklin, based on the company's well
established global market share and widespread resources in
distribution, operations and technology.
Additionally, management is impressed by Franklin's constructive
relationship with acquired asset management firms and its
reputation of helping them operate as standalone businesses using
the resources of the company's diverse platforms.
Franklin has a history of making smaller strategic acquisitions
and purchasing highly experienced asset management companies. In
2012, Franklin acquired the controlling stake in K2 Advisors
Holdings LLC (K2), an independent fund of hedge funds solutions
provider. The purchase consideration included a $182.9 million
cash investment in K2, which was primarily used to retire $176.5
million of debt immediately following the acquisition.
Franklin's global footprint is an exceptionally favorable
strategic point as its assets under management is well
diversified. The company is also poised to benefit from its
strong balance sheet and the actions taken for its worldwide
expansion. However, the regulatory issues and sluggish economic
recovery could mar AUM growth and alleviate costs.
Shares of Franklin currently carry a Zacks Rank #3 (Hold). Some
better performing investment managers include
Virtus Investment Partners, Inc.
Artisan Partners Asset Management Inc.
) with a Zacks Rank #1 (Strong Buy), while
Noah Holdings Limited
) carries a Zacks Rank #2 (Buy).