Franklin Templeton buys BNY Mellon subsidiary Alcentra

Set to complete by Q1 2023

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Franklin Templeton confirms deal with BNY Mellon
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Franklin Templeton confirms deal with BNY Mellon

Franklin Templeton has confirmed it has entered into a definitive agreement to purchase BNY Alcentra Group Holdings from BNY Mellon.

Alcentra has been a subsidiary of The Bank of New York Mellon Corporation since 2006 and is one of BNY Mellon Investment Management's eight investment firms.

The transaction is expected to completed by the end of Q1 next year, customary closing conditions, including certain regulatory approvals.

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Franklin Templeton said that the deal will be funded from its "existing balance sheet resources" and is "expected to be immediately accretive to adjusted earnings per share".

The firm will pay $350m in cash at close and up to a further $350m in contingent consideration, dependent on the achievement of certain performance thresholds over the next four years.

The asset manager has also committed to "purchase all seed capital investments from BNY Mellon related to Alcentra, which, as of 31 March 2022, were valued at approximately $305m".

In a statement put out by Franklin Templeton, the acquisition will allow the firm's US alternative credit specialist investment manager Benefit Street Partners to expand its alternative credit capabilities and presence in Europe, as well as "strengthen the breadth and scale" of the firm's alternative asset strategies.

Jenny Johnson, president and CEO of Franklin Templeton, said this was acquisition was important for the company's "deliberate building" of the alternative asset management faction of the business.

"Alternative investments represent a significant diversification tool for our clients and an area of increasing importance for both individual and institutional investors," she said.

"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."

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