Franklin Templeton is to acquire BNY Alcentra Group Holdings, Inc. from BNY Mellon. The deal will double assets under management by Franklin Templeton’s US alternative credit specialist manager, Benefit Street Partners, to $77bn (€72bn) globally.
One of the largest European credit and private debt managers, Alcentra has $38bn 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.
After the transaction closes Franklin Templeton’s firmwide alternative AUM will stand at $257bn.
Jenny Johnson, president and chief executive officer of Franklin Templeton, said the acquisition of Alcentra was an important aspect of its alternative asset strategy, namely the expansion into alternative European credit.
Tom Gahan, CEO of Benefit Street Partners and head of Franklin Templeton Alternatives, added: “Alcentra is highly complementary to our existing US 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.”
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. The asset manager 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.
Franklin Templeton 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.
Jon DeSimone, CEO of Alcentra, said the announcement of the acquisition was “the beginning of an exciting new chapter for Alcentra as a dynamic credit partner for our investors”.
He added: “BNY Mellon has provided strong support over the years and has contributed significantly to our growth with assets under management doubling since 2014.”