Franklin Resources, which operates as Franklin Templeton Investments, has agreed to acquire a majority stake in K2 Advisors, an independent fund of hedge funds manager.
The acquisition will enhance Franklin Templeton’s alternative investments and multi-asset solutions platforms.
The proceeds of the acquisition will be used by K2 to purchase all of the equity currently held by TA Associates and to retire all of K2’s debt obligations. The current management of K2 will not sell any of its interests at this time and will receive no up-front consideration in the transaction.
Beginning in 2016, Franklin Templeton will acquire the remainder of K2 over a multi-year period. The transaction is subject to certain conditions including regulatory approval and is expected to close in the calendar fourth quarter of 2012.
K2, co-founded in 1994 by William A. Douglass III and David C. Saunders, is a fund of hedge funds solutions provider.
Douglass and Saunders have entered into long-term employment arrangements in connection with the transaction and will continue to manage the business. No changes are planned for the K2 investment management processes.
K2 has a global presence with 115 employees in the US, UK, Japan, Australia and Hong Kong, and approximately USD9.3bn in assets under management as of 31 August 2012.
“One of the ways that we have built Franklin Templeton’s global business is by making strategic investments in smaller, highly experienced asset management companies whose expertise complements Franklin Templeton’s global offerings and meets our world-class standards,” says Greg Johnson (pictured), chief executive of Franklin Templeton Investments. “This new relationship with K2 is an important step in our overall plan to expand Franklin Templeton’s alternative strategies and solutions platform.”
Saunders says: “By joining forces with Franklin Templeton, we are solidifying our position as a leading fund of hedge funds manager in an evolving alternative investment landscape. This has been a management-led effort to seek out the best partner to replace TA. From the outset, we were attracted to Franklin Templeton’s established global presence and its extensive resources in distribution, operations and technology. Franklin Templeton’s network of portfolio managers, country heads on the ground and real-time information about global markets will be invaluable to K2 in executing our clients’ objectives.”