Transaction will double the size of Benefit
Street Partners’ assets under management to $77 billion and
increase Franklin Templeton’s alternative assets under management
to $257 billion
BNY Mellon and Alcentra will continue
distribution and asset servicing relationship
Franklin Resources, Inc. [NYSE:BEN], a global investment
management organization operating as Franklin Templeton, and The
Bank of New York Mellon Corporation [NYSE:BK] (“BNY Mellon”) today
announced that Franklin Templeton has entered into a definitive
agreement to acquire BNY Alcentra Group Holdings, Inc. (together
with its subsidiaries, “Alcentra”) from BNY Mellon. One of the
largest European credit and private debt managers, Alcentra has $38
billion in assets under management (“AUM”) with global expertise in
senior secured loans, high yield bonds, private credit, structured
credit, special situations and multi-strategy credit
strategies.
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Through this acquisition, Franklin Templeton’s U.S. alternative
credit specialist investment manager, Benefit Street Partners
(“BSP”), will expand its alternative credit capabilities and
presence in Europe, doubling its assets under management to $77
billion globally. The transaction will also continue to strengthen
the breadth and scale of Franklin Templeton’s alternative asset
strategies and brings firmwide alternative assets under management
to $257 billion after the transaction closes.
“We’re delighted to announce the acquisition of Alcentra and
look forward to welcoming its talented team to our firm,” said
Jenny Johnson, President and CEO of Franklin Templeton. “We have
been deliberate in building our alternative asset management
capabilities over recent years and the acquisition of Alcentra is
an important aspect of our alternative asset strategy – the
expansion into alternative European credit. Alternative investments
represent a significant diversification tool for our clients and an
area of increasing importance for both individual and institutional
investors. This acquisition expands our long-standing relationship
with BNY Mellon, and we are pleased that the structure of the
transaction achieves objectives for both Franklin Templeton and BNY
Mellon in the context of current market conditions.”
The transaction is expected to be completed early in the first
calendar quarter of 2023, subject to customary closing conditions,
including certain regulatory approvals. The acquisition will be
funded from Franklin Templeton’s existing balance sheet resources
and is expected to be immediately accretive to adjusted earnings
per share. Franklin Templeton will pay $350 million in cash at
close and up to a further $350 million in contingent consideration
dependent on the achievement of certain performance thresholds over
the next four years. In addition, Franklin Templeton has committed
to purchase all seed capital investments from BNY Mellon related to
Alcentra which, as of March 31, 2022, were valued at approximately
$305 million. The seed capital investments will be valued at the
time of close to determine the final seed capital purchase amount.
An investor presentation on the transaction is available via
investors.franklintempleton.com.
Upon closing, BNY Mellon Investment Management will continue to
offer Alcentra’s capabilities in BNY Mellon’s sub-advised funds and
in select regions via its global distribution platform, and BNY
Mellon will provide Alcentra with ongoing asset servicing support.
At close, BNY Mellon expects the transaction to increase BNY
Mellon’s Common Equity Tier 1 capital by approximately $0.5
billion.
Founded in 2002, Alcentra employs a disciplined, value-oriented
approach to evaluating individual investments and constructing
portfolios across its investment strategies on behalf of more than
500 institutional investors. Alcentra’s dedicated and highly
experienced team of approximately 180 professionals is based in its
London headquarters, as well as in New York and Boston.
Tom Gahan, CEO of BSP and Head of Franklin Templeton
Alternatives, added, “We believe the addition of Alcentra will
elevate Franklin Templeton and BSP to a leading position in global
alternative credit. Alcentra is highly complementary to our
existing U.S. capabilities, with no overlap in Europe. This
partnership will unlock new opportunities to offer broader global
credit solutions to our clients who are increasingly allocating
capital to this growing asset class. We look forward to working
closely with the Alcentra team.”
Hanneke Smits, CEO of BNY Mellon Investment Management, said,
“We’re extremely pleased to be strengthening the partnership with
Franklin Templeton and continuing to offer Alcentra’s credit
capabilities as part of the broad range of alternative solutions we
already offer today. We look forward to ongoing collaboration with
the combined institution through distribution and further building
on BNY Mellon's existing asset servicing arrangement.”
Jon DeSimone, CEO of Alcentra, added, “Today’s announcement is
the beginning of an exciting new chapter for Alcentra as a dynamic
credit partner for our investors. BNY Mellon has provided strong
support over the years and has contributed significantly to our
growth with assets under management doubling since 2014. The global
combination of Franklin Templeton and BSP’s highly complementary
capabilities will enable us to collectively provide clients with
solutions across the credit spectrum.”
Morgan Stanley & Co. LLC and UBS Investment Bank served as
financial advisors to Franklin Templeton and Willkie Farr &
Gallagher LLP served as legal counsel. Ardea Partners served as
financial advisor to BNY Mellon and Sullivan & Cromwell LLP
served as legal counsel.
About Franklin Templeton
Franklin Resources, Inc. [NYSE:BEN] is a global investment
management organization with subsidiaries operating as Franklin
Templeton and serving clients in over 155 countries. Franklin
Templeton’s mission is to help clients achieve better outcomes
through investment management expertise, wealth management and
technology solutions. Through its specialist investment managers,
the company offers boutique specialization on a global scale,
bringing extensive capabilities in fixed income, equity,
alternatives, and multi-asset solutions. With offices in more than
30 countries and approximately 1,300 investment professionals, the
California-based company has 75 years of investment experience and
approximately $1.5 trillion in assets under management as of April
30, 2022. For more information, please visit
franklinresources.com.
About Benefit Street Partners
Benefit Street Partners L.L.C. is a leading credit-focused
alternative asset management firm with approximately $39 billion in
assets under management as of March 31, 2022. BSP manages assets
across a broad range of complementary credit strategies, including
private/opportunistic debt, structured credit, high yield, special
situations, long-short liquid credit and commercial real estate
debt. Based in New York, the BSP platform was established in 2008.
BSP is a wholly owned subsidiary of Franklin Resources, Inc. For
further information, please visit
www.benefitstreetpartners.com.
About BNY Mellon
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial services for
institutions, corporations or individual investors, BNY Mellon
delivers informed investment and wealth management and investment
services in 35 countries. As of March 31, 2022, BNY Mellon had
$45.5 trillion in assets under custody and/or administration, and
$2.3 trillion in assets under management. BNY Mellon can act as a
single point of contact for clients looking to create, trade, hold,
manage, service, distribute or restructure investments. BNY Mellon
is the corporate brand of The Bank of New York Mellon Corporation
(NYSE: BK). Additional information is available on
www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our
newsroom at www.bnymellon.com/newsroom for the latest company
news.
About Alcentra
Founded in 2002, Alcentra is one of Europe’s largest and longest
tenured managers of private debt with $38 billion in assets under
management as of April 30, 2022 (including accounts managed by
Alcentra NY, LLC, Alcentra Limited, and assets managed by Alcentra
personnel for affiliates under dual officer arrangements).
Strategies include senior loans, high yield bonds, private credit,
structured credit, special situations, and multi-strategy credit.
Alcentra is a subsidiary of The Bank of New York Mellon Corporation
and is headquartered in London, with offices in New York and
Boston.
Forward-Looking Statements
Statements in this press release that are not historical facts
are “forward-looking statements” within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. When used in this
press release, words or phrases generally written in the future
tense and/or preceded by words such as “will,” “may,” “could,”
“expect,” “believe,” “anticipate,” “intend,” “plan,” “seek,”
“estimate,” “preliminary” or other similar words are
forward-looking statements.
Various forward-looking statements in this press release relate
to the acquisition by Franklin Resources, Inc. (“Franklin”) of
Alcentra from BNY Mellon, including regarding expected scale
opportunities, operating efficiencies and results, growth, client
and stockholder benefits, key assumptions, timing of closing of the
transaction, revenue realization, cost and expense synergies,
financial benefits or returns, accretion and integration costs, an
increase to BNY Mellon’s Common Equity Tier 1 capital and the
freeing up of seed capital.
These forward-looking statements are based upon current beliefs
and expectations and are subject to a number of known and unknown
risks, uncertainties and other important factors, some of which are
listed below, that could cause actual results and outcomes to
differ materially from any future results or outcomes expressed or
implied by such forward-looking statements. Important
transaction-related and other risk factors that may cause such
differences include, but are not limited to the following: (i) the
occurrence of any event, change or other circumstances that could
give rise to the termination of the acquisition agreement; (ii) the
transaction closing conditions may not be satisfied in a timely
manner or at all, including due to the failure to obtain Alcentra
regulatory and client approvals; (iii) the announcement and
pendency of the acquisition may disrupt Alcentra’s business
operations (including the threatened or actual loss of employees,
clients or suppliers); (iv) Alcentra could experience financial or
other setbacks if the transaction encounters unanticipated
problems; (v) anticipated benefits of the transaction, including
the realization of revenue, accretion, financial benefits or
returns, the expected increase to BNY Mellon’s Common Equity Tier 1
capital and the freeing up of seed capital, may not be fully
realized or may take longer to realize than expected; (vi) the
performance thresholds for the contingent consideration may not be
satisfied, in whole or in part; and (vii) Franklin may be unable to
successfully integrate Alcentra’s businesses with those of Franklin
or to integrate the businesses within the anticipated
timeframe.
Other important factors that may affect Franklin’s business or
the combined business’ future operating results, include, but are
not limited to the following: (i) volatility and disruption of the
capital and credit markets, and adverse changes in the global
economy, may significantly affect Franklin’s results of operations
and may put pressure on Franklin’s financial results; (ii) the
amount and mix of AUM are subject to significant fluctuations;
(iii) the significant risk of asset volatility from changes in the
global financial, equity, debt and commodity markets; (iv) harm to
Franklin’s, or Alcentra’s, reputation may negatively impact
revenues and income; (v) Franklin may review and pursue other
strategic transactions that could pose risks to Franklin’s business
operations; (vi) strong competition from numerous and sometimes
larger companies with competing offerings and products could limit
or reduce sales of Franklin’s products, potentially resulting in a
decline in their market share, revenues and income; (vii) the
ability to manage and grow Franklin’s business and the combined
business successfully can be impeded by systems and other
technological limitations; (viii) dependence on key personnel could
negatively affect financial performance; (ix) the businesses are
subject to extensive, complex, and frequently changing rules,
regulations, policies, and legal interpretations; (x) Franklin’s
contractual obligations may subject it to indemnification costs and
liability to third parties; (xi) any significant limitation,
failure or security breach of information and cyber security
infrastructure, software applications, technology or other systems
that are critical to operations could disrupt the businesses and
harm operations and reputation; and (xii) regulatory and
governmental examinations and/or investigations, litigation and the
legal risks associated with the businesses, could adversely impact
AUM, increase costs and negatively impact profitability and/or
Franklin’s future financial results.
For a detailed discussion of other risk factors regarding
Franklin and BNY Mellon, please refer to the risks, uncertainties
and factors described in Franklin’s and BNY Mellon’s recent filings
with the U.S. Securities and Exchange Commission, including,
without limitation, Franklin’s and BNY Mellon’s most recent Annual
Report on Form 10-K, Quarterly Report on Form 10-Q and subsequent
periodic and current reports.
All forward-looking statements in this press release speak only
as of the date on which such statement is made. Factors or events
that could cause actual results to differ may emerge from time to
time, and it is not possible for us to predict all of them. BNY
Mellon, Franklin and Alcentra undertake no obligation to update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
law.
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Franklin Resources, Inc. Investor Relations: Selene Oh, +1 650
312 4091, selene.oh@franklintempleton.com Corporate Communications:
Pholida Barclay, +1 212 632 3204,
pholida.barclay@franklintempleton.com; Dorine Johnson, +44 20 7073
8538, dorine.johnson@franklintempleton.co.uk
The Bank of New York Mellon Corporation Investor Relations:
Marius Merz, +1 212 298 1480, marius.merz@bnymellon.com Corporate
Communications: Stan Neve, +1 212 635 7314,
stan.neve@bnymellon.com; Vivi McCann, +44 798 502 9826,
vivianne.mccann@bnymellon.com
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