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Rating:Franklin Makes a Not-So-Random Hedge Fund Shop Deal Not Rated 1.0 Email Routing List Email & Route  Print Print
Friday, March 23, 2018

Franklin Makes a Not-So-Random Hedge Fund Shop Deal

News summary by MFWire's editors

Franklin Resources (dba Franklin Templeton Investments [profile]) is acquiring again, this time in the Bay Area.

Jenny Johnson, president and chief operating officer of Franklin Templeton, confirmed on Tuesday that the San Mateo, California-based, publicly traded asset manager bought San Francisco-based Random Forest Capital, which was founded in 2016. The pricing and terms of the deal were not disclosed.

The Random Forest team specializes in applying machine learning to "non-bank marketplace lending" and will join Franklin's fixed income group's investment team. Prior to the deal, according to its latest ADV (filed in January), Random Forest was owned by three managing members: chief operating officer and co-founder Kevin Farrelly, chief technology officer and co-founder Austin Trombley, and advisor Aaron Travis. Random Forest runs a $4.89-million hedge fund, according to the filing.

Johnson puts the deal in the context of Franklin's continued "strategic investments and acquisitions in emerging investment-related technologies". Chris Molumphy, chief investment officer of Franklin's fixed income group, describes the Random Forest team "as a creative group of entrepreneurs."

"We have been researching the marketplace lending asset class, but have not invested yet ... We do not have any immediate plans to offer new products," Roger Bayston, senior vice president and director of fixed income at Franklin, tells P&I. "Our initial focus will be on incorporating Random Forest's data science and marketplace lending expertise into our existing capabilities."

Citywire and Fund Action also reported on the deal.

The Random Forest deal comes two months after Johnson unveiled an acquisition of an absolute return global equity specialist in Scotland. Franklin had more than $744 billion in AUM as of February 28, and its fixed income group of more than 150 people had more than $280 billion in AUM as of December 31. 

Edited by: Neil Anderson, Managing Editor

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