November 19, 2010

Franklin Templeton Increases Stake in Alternatives Business

Acquisition of Pelagos and U.K. firm Rensburg announced this week

Franklin Resources, Inc., which operates as Franklin Templeton Investments, made back-to-back announcements this week that it has acquired stakes in two relatively small−yet strategic−alternative investment businesses.

On Wednesday, the San Mateo, Calif.-based mutual fund giant announced that it has acquired a 20% stake in Pelagos Capital Management. Pelagos, an independent investment advisor based in Boston, specializes in commodities, managed futures and hedge fund replication strategies.

"One of the ways that we have built Franklin Templeton's global business is by making strategic investments in small, yet highly experienced asset management companies whose expertise complements Franklin Templeton's global offerings and meets our world class standards," Greg Johnson, CEO of Franklin Templeton Investments, said in a statement. "This new relationship with Pelagos is an important step within our overall plan to expand Franklin Templeton's alternative strategies platform."

On Thursday, Franklin announced the acquisition of Rensburg Fund Management for $72 million. Based in Leeds, U.K. and founded in 1985, Rensburg specializes in managing unit investment trust management dating. The group has $1.4 billion in AUM as of Nov. 1.  

“We are best known in the U.K. for our global and specialist funds, and we are looking to develop core U.K. equity products, which are an important asset class for U.K. investors,” Jamie Hammond, managing director in Europe of Franklin Templeton Investments, said in a statement.  This is an exciting and important development, which underscores Franklin Templeton’s commitment to further enhancing its local presence in the UK.” 

Analysts contacted by Advisorone.com said they were watching the deals, but because of their small size, wouldn’t have much of an impact on Franklin’s overall operations.

“These deals add to a new asset class for Franklin, but they’re so small we really don’t know much about them other than what the company is telling us,” said Greg Warren, senior stock analyst with Morningstar. “If it was a $12 billion deal, that would be one thing, but when you’re talking about less than $1 billion, there’s just not much on the radar.”

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