Sixteen years after buying Putnam Investments for approximately US$3 billion, Power Corporation is selling the US fund manager to Franklin Templeton in a deal valued at just under US$2 billion.
Power had completed the acquisition of Putnam in 2007 through its subsidiary Great-West Lifeco. Putnam’s assets under management were approximately $115 billion at the time.
Putnam’s assets under management hit $136 billion as of last month, but were down to $170 billion at the start of February.
The sale of Putnam to Franklin Templeton is presented as a strategic partnership with Power Corporation and Great-West where the latter become distribution partners and shareholders. Most of the transaction will be in shares.
Franklin Templeton will pay Great-West the equivalent of just over US$800 million in stock, US$100 million in cash, and up to US$375 million payable over three to seven years depending on the growth of the partnership.
Power retains its majority stake in quantitative asset manager PanAgora and will realize the value of Putnam’s seed capital valued at between US$375 million and US$425 million.
The deal gives Great-West Life 33.3 million shares of Franklin Resources, the parent company of Franklin Templeton.
Great-West has agreed to retain 4.9% of the outstanding shares of Franklin Templeton for a minimum period of five years and will initially allocate US$25 billion in assets under management to Franklin Templeton within 12 months of closing the transaction, with the possibility of increasing this amount in the coming years.
Putnam has offices in Boston, London, Munich, Singapore, Sydney and Tokyo.
Franklin Resources stock trades on the New York Stock Exchange under the symbol “BEN”.
Power Corporation is Great-West Life’s largest shareholder with an equity stake of over 70%.