How Did Franklin Templeton Grow Putnam's Assets?

Jenny Johnson says Franklin took Putnam's equity team, or the total assets there, from about 136 billion to over 220 billion by bringing a high-performing team onto platforms Putnam was too subscale to join. Putnam had great performance. The problem was size.

Great West Life wanted Franklin stock. Great West Life had realized managers need to be a big-scale manager to get on platforms and could see the consolidation. The seller was looking to diversify, wanted to hold stock in an asset management company, and wanted to own a broader asset manager instead of having just Putnam. In most cases Franklin paid cash, maybe cash with debt. The Putnam deal was done with a bunch of Franklin stock.

Paying somebody in the private markets with carry creates unbelievably good natural retention that buying a traditional asset manager does not have. Carry is embedded and does not get paid for years. People have multiple years where they are waiting to get paid out for investments they made five years earlier or 10 years earlier.