Franklin Resources execs tout 'significant' pipeline in alternative AUM

Alternative assets managed by Franklin Resources Inc. grew by over 20% on a year-over-year basis, and executives expect that growth to continue, according to a Feb. 1 earnings call.

In its fiscal first quarter, Franklin Resources' alternative assets under management grew by 6% from the prior quarter and by 21% from the prior-year period, reaching $154.3 billion, according to President and CEO Jennifer Johnson.

"With our announcement to acquire Lexington Partners, we now have leading specialist investment managers in key alternative asset categories," said Johnson during the call, adding that when that transaction closes, the company's pro forma alternative assets under management are expected to be about $200 billion.

Franklin Resources announced in November 2021 that it will acquire Lexington Partners LP, a global manager of secondary private equity and co-investment funds, for aggregate cash payments of $1.75 billion.

"What we're seeing in terms of the pipeline across alternative assets and wealth management, in particular, is very significant,” CFO Matthew Nicholls said during the call. "I don't think we've ever seen it as active. And I don't really see that changing going into 2022," he added.

Nicholls said out of the $140 million of performance fees that the company recently reported, $30 million was realizations. "I think the size of our performance fees reflects the potential of our larger alternatives business," he said.