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Thursday, November 18, 2010

Franklin Does Back-to-Back Deals

Reported by Armie Margaret Lee

It has been a very busy week for the West Coast Johnsons. On Wednesday, San Mateo, California-based Franklin Resources unveiled a deal to buy a 20 percent stake in Pelagos Capital Management, a Boston-based alternative investment firm.

Then this morning brought news that Franklin has done another deal, this time abroad. Franklin's UK unit, Franklin Templeton Global Investors Limited, inked an all-cash deal to buy Rensburg Fund Management Limited, a subsidiary of Investec plc, for GBP 45 million (about $72 million). The transaction is expected to close early next year.
Press Release on Pelagos

Leading Global Asset Manager Acquires 20% Equity Stake In Alternative Investments Specialist

New York, November 17, 2010 – Franklin Resources, Inc. [NYSE: BEN], which operates as Franklin Templeton Investments, today announced that it has entered into a strategic relationship with Pelagos Capital Management, LLC, acquiring a 20 percent equity stake in the firm.

Pelagos, an independent investment advisor, was founded in 2005 and is based in Boston, Massachusetts. The firm's mission is to create alternative investment solutions that enhance overall returns and lower portfolio volatility. Pelagos manages three distinct alternative investment capabilities including a commodity strategy, a managed futures strategy, and a hedge fund replication strategy. The Pelagos team implements an investment process highlighted by a top-down approach to global macroeconomics, quantitative focused models based on fundamental analysis, disciplined multi-level risk controls, and institutional-quality implementation and transparency.

"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," said Greg Johnson, CEO of Franklin Templeton Investments. "This new relationship with Pelagos is an important step within our overall plan to expand Franklin Templeton's alternative strategies platform."

"Alternative investments are an important and growing part of our business," said William Yun, CFA, executive vice president, Franklin Templeton Alternative Strategies. "We see tremendous opportunity for growth in the alternatives space as investors look for added alpha and increased diversification from their portfolio through a wider range of asset classes."

Yun continued, "Pelagos' product line and its mission to create alternative investment solutions that enhance overall returns and lower portfolio volatility is closely aligned with our own vision for the alternatives business. Pelagos also integrates a conservative risk-based philosophy in each of its investment strategies, which is consistent with Franklin Templeton's well-established commitment to risk management."

"We look forward to leveraging Franklin Templeton's extensive global platform, product development expertise and established distribution network in bringing Pelagos' investment strategies to Franklin Templeton clients worldwide," said Stephen Burke, CEO of Pelagos Capital.

Established in 2008, Franklin Templeton Alternative Strategies encompasses:

  • The global asset allocation capabilities of Franklin Templeton Multi-Asset Strategies;
  • Franklin Templeton's asset management joint ventures in Vietnam, China and Dubai;
  • Its wholly-owned local asset management groups in Brazil, Canada, India, Japan and Korea;
  • The emerging market private equity, mezzanine, and infrastructure capabilities of Darby Overseas Investments, and;
  • The global REIT and private multi-manager real estate and real assets capabilities of Franklin Templeton Real Estate Advisors.

    Franklin Templeton Alternative Strategies is a unit of Franklin Resources, Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and over USD 664 billion in assets under management as of October 31, 2010. For more information, please visit www.franklintempleton.com.

    Press Release on Rensburg

    Franklin Templeton Investments Announces Agreement to Acquire Rensburg Fund Management

    London, 18 November 2010 - Franklin Resources, Inc. [NYSE:BEN], a global investment management organisation operating as Franklin Templeton Investments, today announces that its subsidiary Franklin Templeton Global Investors Limited (UK) has entered into a conditional agreement to acquire Rensburg Fund Management Limited, a subsidiary of Investec plc, in an all cash transaction for GBP 45 million (approximately USD 72 million (1)). The agreement is subject to regulatory approval and is expected to be completed in early 2011.

    Greg Johnson, CEO of Franklin Resources, Inc. said: "We are pleased to announce the planned acquisition of Rensburg Fund Management, an established UK Equity manager with over 25 years' experience of managing unit trusts. This acquisition makes strategic sense for us and fits very well with our overall corporate strategy of building the best investment products in markets such as the UK, where local asset management expertise is important to meet local investors' needs."

    Based in Leeds, UK, Rensburg Fund Management is a specialist UK Equity manager with a track record of managing unit trusts dating back to 1985. The team of six investment professionals is highly regarded within the UK asset management industry, with a combined tenure of 43 years managing six distinctive strategies: UK Equity Income; UK Blue Chip Growth; UK Midcap Growth; UK Select Growth; UK Smaller Companies and UK Managers' focus.

    The group manages approximately GBP 880 million (as of 01 November 2010) in UK equities and is well positioned to take advantage of favourable growth drivers in the local market with its broad range of UK equity funds.

    "Rensburg Fund Management possesses tremendous expertise and a proven track record in managing UK equities, a key area of focus for our UK clients and important complement to our existing capabilities," said John Lusk, Executive Vice President, investment management for Franklin Templeton. "We look forward to having them join our strong lineup of investment teams."

    Commenting on this acquisition, Alex Brotherston, Joint Chief Executive of Rensburg Fund Management, said: “The management and investment team of Rensburg Fund Management have been fully involved in discussions from the outset and are delighted with the company's acquisition by Franklin Templeton. Importantly, this transaction ensures complete continuity for clients in terms of investment team and process."

    Jamie Hammond, Managing Director Europe, Franklin Templeton Investments added: "We are best known in the UK for our global and specialist funds, and we are looking to develop core UK equity products, which are an important asset class for UK investors. Rensburg Fund Management brings a very strong track record and reputation and I am confident that this new partnership will strengthen Franklin Templeton's position in the UK market as we introduce Rensburg Fund Management's products to our key partners and clients, such as large cross-border banks and institutions. This is an exciting and important development, which underscores Franklin Templeton's commitment to further enhancing its local presence in the UK."

    Franklin Templeton Global Investors Limited (UK) is a subsidiary of Franklin Resources, Inc. [NYSE:BEN], a global investment management organisation operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and over USD 644 billion in assets under management as of 30 September 2010. For more information, please visit www.franklinresources.com.

    Investec plc is an international specialist bank and asset manager that provides a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia, as well as certain other countries. The group was established in 1974 and currently has approximately 6,600 permanent employees. Investec focuses on delivering distinctive profitable solutions for its clients in six core areas of activity, namely Asset Management, Wealth and Investment, Property Activities, Private Banking, Investment Banking and Capital Markets. In July 2002 the Investec group implemented a dual listed company structure with listings on the London and Johannesburg Stock Exchanges.

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