Expansion through acquisition

As winner of Best Asset Management in Asia (25 Years) in Asia Asset Management’s (AAM) Best of the Best Awards 2022, Franklin Templeton has shown its commitment to the region over three decades, establishing its first Asian office in Hong Kong in 1987. Today, the company is one of the largest pure play asset managers in the region, with nine offices across Asia managing more than US$100 billion of clients’ assets. Two years ago, the firm had an AUM of US$60 billion across its private market ecosystem, a figure that has increased to $200 billion today. As such, Franklin Templeton is well placed to leverage the strengths of its boutique specialist managers to create value for its regional clients against identified outcomes. 

“Asia is a fast-growing region with increasing affluence. Against the macro backdrop of demographics, wealth creation, and increasingly sophisticated investors, as a firm we’ve been very bullish on Asia,” says Singapore-based Head of Asia Distribution, Tariq Ahmad.

Franklin Templeton has made a series of notable acquisitions over the last few years, including Legg Mason Asset Management, and more recently Lexington Partners, which have expanded the firms’ investment capabilities significantly. 

The acquisition of Legg Mason in July 2020, Ahmad says, has allowed the firm to diversify Franklin Templeton’s traditionally retail client base to include more institutional clients, and to extract the value proposition that comes with a platform that is both differentiated and complementary. 

“Any gaps in our capabilities were addressed by the acquisition in terms of differentiated approaches and access to private markets through specialist investment managers like Clarion Partners, Benefit Street Partners, Franklin Venture Partners and K2 Advisors. It helped us to reposition and re-strategise the business and to address our clients’ needs whether in terms of market valuations or investment opportunities through the market cycle. We are also able to offer clients more customisation, and access to a robust spectrum of investment products from ETFs down to private markets,” Ahmad says in an interview with AAM.

Private markets and alternatives

The acquisition of Lexington Partners illustrates Franklin Templeton’s recognition of private markets, including private equity, private credit, real estate, and infrastructure, as the fastest growing segment of the market. Forecasting double digit growth in these private market sectors, Ahmad is confident the acquisition will allow the firm to offer more bespoke solutions and to address any gaps in the firm’s current product offering relating to secondary private equity, of which Lexington Partners is a global leader. 

“We recognise that every manager that comes on board has a unique philosophy and approach. We also recognise that a manager specialising in and dedicated to one asset class or sector or segment of the market can bring very different propositions and outcomes. In turn, our investment managers can benefit from the global backing, global strength, and the global resources of Franklin Templeton.”

Ahmad also acknowledges the significant growth in demand for alternatives, especially among institutional investors wanting to diversify their portfolios in a bid to generate income and alpha. Amid rich valuations in public markets, demand for private equity, private debt, real estate and co-investment opportunities with asset managers have certainly grown across the Asia region. Investors, he says, are increasingly dipping their toes in private markets to address prevailing income needs and responding to this growing demand is also a key focus. 

“On the institutional side, we’re working with our market leading investment managers to create bespoke product solutions that meet the requirements of our regional investors in terms of matching, as closely as we can, the legal structures, liquidity, duration, and risk and return expectations that our clients require. On the retail end, we’re focused on innovations that help accelerate access to private market ideas,” he says. 

Retail and institutional

And while alternatives and private markets remain a key focus in the near term, Ahmad is clear that the value proposition Franklin Templeton has built, for both retail and institutional investors, positions the firm well as a market leader in the asset management space in the coming years. 

“Client expectations and their investment journeys are constantly changing, and over the longer term we need to look beyond investments. For us, it’s a question of providing thought leadership and insights, and providing access to a diverse mix of market leading ideas. We also recognise that technology is disrupting the industry in a positive way. The need to provide innovative solutions for clients both in the retail and institutional segments is vital.” 

Important Information

This document is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton. Investment involves risks.

Singapore: Issued by Templeton Asset Management Ltd. Registration No. (UEN) 199205211E., and Legg Mason Asset Management Singapore Pte. Limited, Registration Number (UEN) 200007942R. Legg Mason Asset Management Singapore Pte. Limited is an indirect wholly owned subsidiary of Franklin Resources, Inc. 

Malaysia: Issued by Franklin Templeton Asset Management (Malaysia) Sdn. Bhd. & Franklin Templeton GSC Asset Management Sdn. Bhd. This document has not been reviewed by Securities Commission Malaysia.

Hong Kong and Macau: Issued by Franklin Templeton Investments (Asia) Limited and Legg Mason Asset Management Hong Kong Limited. Legg Mason Asset Management Hong Kong Limited is an indirect wholly owned subsidiary of Franklin Resources, Inc. This document has not been reviewed by the Securities and Futures Commission of Hong Kong or Monetary Authority of Macao in Macau. 

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