Asset management house Franklin Templeton Investments has acquired alternative credit specialist Benefit Street Partners (BSP).
An announcement ahead of Franklin Templeton’s fourth quarter results call today said it has agreed to buy BSP to expand its alternative assets offering and widen the array of credit strategies it offers.
The deal sees Franklin Templeton acquire 100% of BSP for a cash consideration of $683 million with €130 million of that used to retire BSP’s debt. Key investment team members will continue to accrue the majority of performance fees. Employees will continue to co-invest in BSP products and all existing staff will be offered new employment with Franklin Templeton.
Greg Johnson, chairman and CEO of Franklin Templeton, said: “BSP’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.”
Franklin Templeton said expanding its alternatives offering has been a strategic focus for the firm. It also noted investors are increasingly allocating capital towards less liquid, higher yielding credit strategies.
The deal is subject to customary closing conditions and is expected to close in the first quarter of 2019. Once the acquisition has completed, Franklin Templeton’s alternatives business will have over $40 billion of assets.
Tom Gahan, founder, CEO and CIO of BSP, said: “We believe Franklin Templeton is the perfect long-term partner for our business. Franklin Templeton’s pedigree, global reach and extensive investment capabilities will provide BSP with increased resources and investment opportunities.”
New York-based BSP was founded in 2008 and has five additional offices across the US. It offers private debt strategies including performing and distressed corporate private credit, structured credit and commercial real estate. It credit platform was founded in partnership with Providence Equity Partners. The firm has $26 billion of assets under management.
Morgan Stanley acted as financial advisor to Franklin Templeton and Willkie Farr & Gallagher provided legal advice. BSP received financial advice from Bank of America Merrill Lynch and Skadden, Arps, Slate, Meagher & Flom provided legal advice.