Franklin Templeton has closed on its purchase from The Bank of New York Mellon of BNY Alcentra Group Holdings, one of the largest European credit and private debt managers.
The transaction is valued at up to $700 million, according to a spokeswoman for Franklin Templeton. Half of that, or $350 million, was paid at closing. Another $350 million will be paid as contingent consideration over the next four years, based on performance thresholds.
The closing expands the European presence of Franklin Templeton’s U.S. alternative credit specialist manager, Benefit Street Partners. Alcentra will combine with BSP and report to BSP executives. BSP’s assets under management nearly double as a result, to $75 billion.
The acquisition brings the AUM of Franklin Templeton’s alternatives assets strategies to $260 billion.
Franklin Templeton’s parent company, Franklin Resources, announced the closing 1 November in a press release. This is somewhat ahead of time: when Franklin Resources and BNY Mellon agreed on this transaction in May, the parties did not expect the deal would close until the first quarter of 2023.
Alcentra had $35 billion in assets under management at the end of the third quarter 2022. It has expertise in senior secured loans, high-yield bonds, private credit, structured credit, special situations and multi-strategy credit strategies. Its Alcentra European Direct Lending Fund IV, with a senior debt strategy and a Western Europe focus, opened in August 2022.
There will be no change to Alcentra’s brand in Europe or to Alcentra’s investment strategies, the release said.
Alcentra has of late struggled to hit its funding targets, according to Private Debt Investor data. For example, its Alcentra Structured Credit Opportunities Fund IV closed in May 2021 on $484 million. That missed a target of $500 million. The Alcentra Strategic Credit Fund II closed December 2020 in December 2020 on €557 million against a target of €1 billion.
Alcentra, founded in 2002, is headquartered in London and has offices in New York and Boston. It takes a value-oriented approach to evaluating individual investments and constructing portfolios for its more than 500 institutional investors.
Franklin Resources is a global investment manager with approximately $1.3 trillion in AUM as of 30 September. BSP manages across a broad range of complementary credit strategies. BNY Mellon is a global investments company with $42.2 trillion in assets under custody and/or administration and $1.8 trillion AUM as of 30 September.