Key Takeaways
- • Franklin Templeton has agreed to acquire Benefit Street Partners (BSP), a leading alternative credit manager with approximately $26 billion in assets under management as of September 30, 2018, for an undisclosed price.
- • The acquisition expands Franklin Templeton's alternative credit offerings and fixed income capabilities across multiple strategies, including corporate performing and distressed private credit, structured credit, and commercial real estate credit.
- • BSP, established in 2008 and headquartered in New York with five additional U.S. offices, offers differentiated investment approaches in a growing market where institutional investors are increasingly allocating capital to less liquid, higher-yielding credit opportunities.
- • CEO Greg Johnson cited BSP's decade-long track record and stated the acquisition positions Franklin Templeton to capitalize on substantial expected institutional allocation increases to alternative credit, while combining BSP's expertise with Franklin Templeton's global scale and resources in liquid credit investing.
- • The transaction reflects broader asset manager consolidation driven by investor demand for exposure to alternative credit strategies, which generate higher yields than traditional fixed income products.
Summary
Franklin Templeton Investments announced on October 25, 2018, that it has entered into an agreement to acquire Benefit Street Partners LLC, a prominent alternative credit manager, for an undisclosed amount. BSP holds approximately $26 billion in assets under management as of the transaction announcement date, positioning it as a significant player in the alternative credit space. The acquisition represents Franklin Templeton's strategic push to expand its alternative investment platform and enhance its fixed income capabilities with a diversified set of alternative credit strategies.
BSP was established in 2008 and operates from its New York headquarters, supplemented by five additional offices across the United States. The firm specializes in a broad spectrum of alternative credit investment capabilities, including corporate performing and distressed private credit, structured credit, and commercial real estate credit. This diversified product range addresses growing institutional demand for exposure to less liquid, higher-yielding credit opportunities—a market segment experiencing substantial growth as allocators rebalance portfolios toward alternative assets.
Greg Johnson, chairman and CEO of Franklin Templeton, emphasized that BSP's "differentiated approach to investing within the alternative credit space has resulted in a thriving business over the course of the last decade." Johnson noted that the percentage of institutional investors expected to allocate to alternative credit for long-term strategies is substantial, positioning the acquisition to capture significant market tailwinds. According to Johnson, the combination of BSP's specialized expertise and experience with Franklin Templeton's global scale, extensive resources, and established capabilities in more liquid credit investing will enhance origination capabilities and expand expertise across the leveraged finance market.
The transaction reflects a broader consolidation trend among large asset managers seeking to build competitive positions in the alternative credit market. As traditional fixed income yields remain constrained, institutional investors—including pension funds, endowments, and insurance companies—are increasingly deploying capital into alternative credit vehicles that offer both higher yield potential and diversification benefits. By acquiring BSP, Franklin Templeton aims to strengthen its competitive positioning while meeting elevated client demand for sophisticated alternative credit solutions.
BSP was established in 2008 and operates from its New York headquarters, supplemented by five additional offices across the United States. The firm specializes in a broad spectrum of alternative credit investment capabilities, including corporate performing and distressed private credit, structured credit, and commercial real estate credit. This diversified product range addresses growing institutional demand for exposure to less liquid, higher-yielding credit opportunities—a market segment experiencing substantial growth as allocators rebalance portfolios toward alternative assets.
Greg Johnson, chairman and CEO of Franklin Templeton, emphasized that BSP's "differentiated approach to investing within the alternative credit space has resulted in a thriving business over the course of the last decade." Johnson noted that the percentage of institutional investors expected to allocate to alternative credit for long-term strategies is substantial, positioning the acquisition to capture significant market tailwinds. According to Johnson, the combination of BSP's specialized expertise and experience with Franklin Templeton's global scale, extensive resources, and established capabilities in more liquid credit investing will enhance origination capabilities and expand expertise across the leveraged finance market.
The transaction reflects a broader consolidation trend among large asset managers seeking to build competitive positions in the alternative credit market. As traditional fixed income yields remain constrained, institutional investors—including pension funds, endowments, and insurance companies—are increasingly deploying capital into alternative credit vehicles that offer both higher yield potential and diversification benefits. By acquiring BSP, Franklin Templeton aims to strengthen its competitive positioning while meeting elevated client demand for sophisticated alternative credit solutions.
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