Franklin Resources Inc. [NYSE: BEN], a global investment management organization operating as Franklin Templeton Investments, has agreed to purchase Benefit Street Partners LLC, an alternative credit manager with approximately $26 billion in assets under management. The transaction is expected to close in the second quarter of 2019.
According to the company, the acquisition is expected to bolster Franklin Templeton’s alternative offerings and expand its fixed income capabilities to include an array of alternative credit strategies.
Benefit Street affiliates serve as the advisers to Business Development Corporation of America (BDCA) and Benefit Street Partners Realty Trust (formerly Realty Finance Trust), a business development company and non-traded REIT, respectively, both formerly managed by AR Global. Realty Finance Trust appointed Benefit Street Partners as its new advisor at the end of September 2016.
In connection with the Franklin Templeton transaction and with shareholder approval, Franklin Templeton plans to acquire Benefit Street’s 100 percent ownership interest in BDCA Adviser LLC. Franklin Templeton and Benefit Street plan to purchase $90 million of newly issued common stock in BDCA at the net asset value per share.
All investment professionals currently managing BDCA and its investments, and all members of the Benefit Street investment committee, are expected to maintain their current responsibilities. Benefit Street acquired all of the outstanding interests of BDCA’s adviser in November 2016 by purchasing $10 million of company common stock.
“We’re pleased to announce the acquisition of Benefit Street Partners and to welcome its seasoned and talented team,” said Greg Johnson, chairman and CEO of Franklin Templeton. “Benefit Street’s differentiated approach to investing within the alternative credit space has resulted in a thriving business over the course of the last decade. The percentage of institutional investors expected to allocate to alternative credit for the long term is substantial, and this acquisition positions us well in a growing market.”
Established in 2008 in partnership with Providence Equity Partners, Benefit Street offers a range of investment capabilities covering corporate performing and distressed private credit, structured credit and commercial real estate credit.
Following the acquisition, Franklin Templeton’s alternative offerings will represent more than $40 billion in assets under management.
Franklin Templeton provides global and domestic investment management to retail, institutional and sovereign wealth clients in more than 170 countries. The company’s alternatives capabilities include private equity, hedge, commodities, real estate, infrastructure and venture capital strategies from Darby Overseas Investments, Franklin Real Asset Advisors, Franklin Venture Partners, K2 Advisors, Pelagos Capital Management, Templeton Global Macro and Templeton Private Equity Partners. Franklin Templeton has more than $717 billion in assets under management as of September 30, 2018.