Franklin Resources Inc. (BEN) reported earnings on Mon 1 Nov 21 (b/o)

** charts after earnings **

 

Franklin Resources announces agreement to acquire Lexington Partners for aggregate cash payments of $1.75 bln

• Franklin Resources, operating as Franklin Templeton, has entered into a definitive agreement to acquire Lexington Partners, a global manager of secondary private equity and co-investment funds. This acquisition will bolster Franklin Templeton's alternative asset capabilities at a time when investors are increasingly allocating capital across the full spectrum of alternative asset offerings.
  • With the addition of Lexington, Franklin Templeton's alternative assets under management are expected to be approx. $200 bln at the time of transaction close.
• Franklin Templeton is acquiring 100% of Lexington from its current owners, for aggregate cash payments of $1.75 bln, made up of $1 bln at close and additional payments totaling $750 mln over the next three years.
  • As part of the transaction, Lexington partners and employees will simultaneously be granted a 25% ownership stake in Lexington vesting over five years and $338 mln of performance-based cash retention awards to be paid out over approx. five years.
  • The transaction will be funded from Franklin Templeton's existing balance sheet resources and is expected to be immediately accretive to adj. EPS.
• The transaction is expected to close by the end of Q2 of 2022.

Franklin Resources beats by $0.40, reports revs in-line

• Reports Q4 (Sep) earnings of $1.26 per share, excluding non-recurring items, $0.40 better than the S&P Capital IQ Consensus of $0.86; revenues rose 27.9% year/year to $2.18 bln vs the $2.16 bln two analyst estimate.
• Total assets under management were $1,530.1 billion at September 30, 2021, down $22.0 billion or 1% during the quarter due to $11.7 billion of net market change, distributions and other, $9.9 billion of long-term net outflows and $3.9 billion of cash management net outflows, slightly offset by $3.5 billion from an acquisition.
• AUM increased $111.2 billion or 8% during the fiscal year due to $148.0 billion of net market change, distributions and other, and $3.5 billion from an acquisition, partially offset by $25.2 billion of long-term net outflows and $15.1 billion of cash management net outflows.