Franklin Templeton has agreed to acquire BNY Alcentra Group Holdings from BNY Mellon in a deal that will effectively double the assets of its U.S. alternative credit specialist Benefit Street Partners and expand its presence in Europe.
One of the largest European credit and private debt managers, Alcentra has $38 billion in assets across senior secured loans, high yield bonds, private credit, structured credit, special situations and multi-strategy credit strategies. Following the deal, set to close in the first quarter of 2023, Benefit Street Partners AUM will grow to $77 billion. The deal also boosts Franklin Templeton’s alternative asset management assets to $257 billion after the transaction closes.
“We have been deliberate in building our alternative asset management capabilities over recent years and the acquisition of Alcentra is an important aspect of our alternative asset strategy — the expansion into alternative European credit,” Jenny Johnson, president and CEO of Franklin Templeton, said in a statement. “Alternative investments represent a significant diversification tool for our clients and an area of increasing importance for both individual and institutional investors. This acquisition expands our long-standing relationship with BNY Mellon, and we are pleased that the structure of the transaction achieves objectives for both Franklin Templeton and BNY Mellon in the context of current market conditions.”
Franklin Templeton will be paying $350 million in cash at close and up to an additional $350 million that is contingent on the achievement of certain performance thresholds over the next four years. The firm has also committed to buying all seed capital investments from BNY Mellon related to Alcentra that were valued at approximately $305 million.
“We believe the addition of Alcentra will elevate Franklin Templeton and BSP to a leading position in global alternative credit, added Tom Gahan, CEO of Benefit Street Partners and head of Franklin Templeton Alternatives. “Alcentra is highly complementary to our existing U.S. 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.”
At the close of the deal, BNY Mellon Investment Management will continue to offer Alcentra’s capabilities in its sub-advised funds and in select regions via its global distribution platform. BNY Mellon will also provide Alcentra with asset servicing support.
“We’re extremely pleased to be strengthening the partnership with Franklin Templeton and continuing to offer Alcentra’s credit capabilities as part of the broad range of alternative solutions we already offer today,” said Hanneke Smits, CEO of BNY Mellon Investment Management. “We look forward to ongoing collaboration with the combined institution through distribution and further building on BNY Mellon’s existing asset servicing arrangement.”
Alcentra was founded in 2002 and has more than 500 institutional investor clients, including the Texas County & District Retirement System in Austin. The firm boasts a team of 180 professionals based in its London headquarters in addition to offices in New York and Boston.
In 2020, Jonathan DeSimone was appointed CEO at Alcentra, following David Forbes-Nixon’s decision to step down as CEO of the firm to focus on his investment responsibilities.
DeSimone, said of the pending deal, “BNY Mellon has provided strong support over the years and has contributed significantly to our growth with assets under management doubling since 2014. The global combination of Franklin Templeton and BSP’s highly complementary capabilities will enable us to collectively provide clients with solutions across the credit spectrum.”
