Franklin Resources (BEN) Q2 2016 Earnings Call

Franklin Resources (BEN) CEO Greg Johnson on whether consolidation is coming to the asset management industry

“I think any industry that is maturing and gets larger, you hit a point where consolidation makes sense. I mean, I’m not sure we’re there yet, but certainly you have some outside forces at work that we haven’t seen before. So I think that will contribute. I think the other point that I’ve stated when asked about this is that it’s not the easiest industry to do large mergers and consolidations, you have separate contracts and boards, and it’s very time consuming and difficult to do a merger. So I think for us, we again are open to anything that we think enhances the line-up and creates shareholder value over time. And we try to build as many relationships across our industry to be able to act on things that make sense, and that’s where we are today. And I wouldn’t state one way or another. I think we’re always out looking on behalf of shareholders and trying to create value and if that’s a merger, if that’s an acquisition, we’re open to any and all.”

Franklin Resources (BEN) CFO Lewis Johnson in what they look for in investment management acquisition candidates 

“I mean we’re pretty active every year and looking at properties and some of us come to us, some of us we’re proactive on, and for the ones that we haven’t done, it tends to be, they don’t really meet our criteria. So quality, repeatable investment process, culture, price – yeah, price could be an issue and it has been in some cases. As Greg mentioned earlier, it’s not the easiest industry to integrate. We think about that. And also, a lot of – we come across situations where there’s ownership structural challenges as well. So, it kind of runs the gamut of why a deal doesn’t go through. But those are some of the things that we found.”

Franklin Resources (BEN) CEO Greg Johnson

Franklin Resources (BEN) CEO Greg Johnson on fee compression in the asset management industry 

“In any business where margins are under pressure, there will be consolidation as a way of making efficiencies, and that is being accelerated by the secular shift to passive investments”

 

 

 

Source: Financial Times Article titled “Franklin CEO says Asset Management industry to consolidate”

June 6th, 2016