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Franklin (BEN) Strikes Joint Venture With Asia Alternatives


Franklin Resources BEN recently announced that it has entered into a joint venture with Asia Alternatives Management LLC, to form a new entity — Franklin Templeton Private Equity, LLC (“FTPE”) — which is expected to start operating from October 2018.

Asia Alternatives provides solutions to institutional investors that make investments in private equity across Asia. The firm had more than $11 billion in regulatory capital under management as of Jul 31, 2018.

Franklin Templeton will be the majority owner of the joint venture, while Asia Alternatives and members of the management team of the new entity will hold minority investments. FTPE is being launched to provide investors with “bespoke global private equity fund-of-funds solutions”.

The reins of this newly created entity will be in the hands of Arthur Wang, who will start gathering his team to work under the entity in October. Wang said, “I've experienced firsthand how global private investments can enhance portfolio returns and diversification characteristics, and our goal is to create customized solutions to provide these benefits to a broad range of institutional investors."

Further, president and chief operating officer of Franklin Resources eyes a lot of growth opportunities in the alternatives and private equity markets as investors may want to avoid volatile markets by better diversifying their portfolio. He also remarked that expansion of alternatives product ranges remains a “core strategic initiative” for the company.

Franklin Resources’ expense management and strong diversification strategies bode well for the long term. However, declining investment management fees and strict regulatory environment remain the near-term concerns for it.

The company’s shares have lost 21.6% over the past six months compared with the industry’s decline of 13%.

Currently, the stock carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Ameriprise Financial AMP, Lazard Ltd LAZ and SEI Investments Company SEIC. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameriprise has witnessed upward earnings estimate revision of 1.3% for the current year, in the past 60 days. Also, its shares have gained 4% over the past year.

Lazard’s Zacks Consensus Estimate for current-year earnings has been revised upward by 3.2%, in the past 60 days. Also, on a yearly basis, its shares have rallied 11.1%.

SEI Investments has witnessed slight upward earnings estimate revision for the current year, in the past 60 days. The company’s shares have gained 7.9% in a year’s time.

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