Franklin Templeton has entered into an agreement to buy alternative credit company Benefit Street Partners as part of a plan to broaden its fixed income offering.
Under the deal, the California-based asset manager will acquire the New York-based group, which has $26 billion (£20 billion) in assets, and increase its own alternative assets to $40 billion in the process.
The company said the deal came at a time when investors are increasingly allocating capital to less liquid and higher-yielding credit opportunities.
Commenting on the purchase, Greg Johnson, CEO of Franklin Templeton, said: ‘BSP’s differentiated approach to investing within the alternative credit space has resulted in a thriving business over the course of the last decade.
‘The percentage of institutional investors expected to allocate to alternative credit for the long term is substantial, and this acquisition positions us well in a growing market.’
BSP covers a wide range of investment capabilities, covering corporate performing and distressed private credit, structured credit and commercial real estate credit. Franklin Templeton said these areas are particularly interesting in light of rising rates.
This transaction is subject to customary closing conditions and we anticipate the transaction will close in Franklin Templeton’s second quarter of fiscal 2019.