By Ketki Saxena
Investing.com -- Great-West Lifeco (TSX:GWO) has reached an agreement to sell US-based asset manager Putnam Investments to Franklin Resources (NYSE:BEN), also known as Franklin Templeton, for up to $1bn. The primarily equity-based deal will see Great-West become a long-term strategic shareholder in Franklin Resources with a 6.2% stake.
Upon closing the deal, Franklin Templeton will pay $825m in stock, with an additional $100m in cash to be paid 180 days later. The California-based company will also pay up to $375m linked to revenue growth targets stemming from the partnership. Putnam Investments currently manages $136bn in assets.
As part of the transaction, Great-West Lifeco and Franklin Templeton will enter into a strategic partnership. Under this partnership, Great-West Lifeco will distribute Franklin Templeton products and allocate $25bn in assets under management (AUM) to Franklin Templeton's specialist investment managers within a year of the deal closing.
Great-West Lifeco will retain its controlling interest in quantitative asset manager PanAgora and certain deferred tax assets related to Putnam Investments. The sale of Putnam Investments is expected to enhance Great-West Lifeco's focus on its core businesses while providing a significant boost to Franklin Templeton's AUM.
The acquisition of Putnam Investments is expected to strengthen Franklin Templeton's position in the market by adding a well-established asset manager with a robust track record. The strategic partnership between the two companies is also expected to benefit both firms by providing access to each other's products and expertise.
The transaction is subject to regulatory approvals and customary closing conditions and is expected to be completed within the first half of 2023.