Franklin Templeton takes Embark stake amid UK retirement expansion plans
First investment of its kind
Franklin Templeton has become retirement solutions provider Embark Group's second-largest investor as the asset manager eyes further expansion into the UK's long-term savings market over the next five years.
The deal represents a move to "diversify" Franklin Templeton's business model and take a foothold in the UK's "high growth" long-term savings market, as well as grow its brand among consumers, according to UK country head Martyn Gilbey.
Gilbey told Investment Week that the purchase was a "considered part" of Franklin Templeton's "strategy to diversify our business model and our revenue generation by participating in the long-term savings market".
He explained: "Over the next five to six years, it is important to our successes and to growing our franchise in the UK that we grow our understanding and participation in the growth of the retirement market.
"Providing better solutions to customers who are reaching or at retirement is a really important market for asset managers."
Gilbey added that it is an "acknowledgment of the long-term savings market, both on the wealth management side of that market and pensions, as one area of high growth for the industry over the medium term".
Gilbey also said there is "clearly an opportunity for the Franklin Templeton brand" within the long-term savings market, with the firm "arguably very focused on the on the manufacturing side of the industry".
He added: "There is definitely an opportunity for us to extend our brand with advisors and consumers into the wealth and pensions market
"Critically what it does for us in the UK is give us deeper insight into a really important part of the market, which is the retirement income space."
Subject to regulatory approval and for an undisclosed fee, Franklin Templeton will not take a seat on the board but will "partner with Embark to help them execute the right strategy", Gilbey explained.
In its first investment into the UK retirement market, Franklin Templeton joins existing investors BlackRock, Legg Mason and Merian Chrysalis who this year bought a combined 40% stake in rapidly expanding company.
This year has seen Embark purchase the advised book of the Alliance Trust Savings platform from Interactive Investor, and acquire Zurich's investment and retail platform business as well as its investment business.
Gilbey said Franklin Templeton's investment was key to raise capital for the Zurich transaction, and that his firm had been attracted by Embark's "use of technology to make the administration of pension assets more efficient" via a "streamlined platform".
He added: "It is a business that we see as being one of the key platform and asset aggregators in that space."
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