Franklin Resources Inks Deal To Acquire FinTech Startup
Zacks Investment Research | Mar 20, 2018 10:10PM ET
Franklin Resources (NYSE:BEN) entered into an agreement with a San Francisco based, FinTech startup — Random Forest Capital, LLC. Though the financial terms of transaction were not disclosed, Franklin disclosed that the acquired firm’s employees would be joining Franklin Templeton Fixed Income Group investment’s team.
Founded in 2016, Random Forest Capital applies machine learning and statistical algorithms for analyzing gains in financial investments. Per the website, the company utilizes machine learning methods which apply successfully to real-life applications from medical diagnoses to sports analysis.
Moreover, it has a cloud infrastructure that enables the team to take a large amount of unstructured data for analyzing and finding investment opportunities.
This strategic move is likely to aid Franklin’s research abilities in fixed income areas. It is also in sync with the company’s aim to keep pace with technology which has become an important aspect in the investment management scenario.
Per Jenny Johnson, president and COO of Franklin Templeton Investments “We continue to make strategic investments and acquisitions in emerging investment-related technologies to augment and support Franklin Templeton’s global offerings.”
Further, Chris Molumphy, CIO of Franklin Templeton Fixed Income Group added that “The advanced pace of technological disruption is impacting the traditional investment landscape, providing new ways to identify and originate investment opportunities that generate value for investors. As a creative group of entrepreneurs, the Random Forest team brings an expanded tool set that enables us to further enhance our investment expertise and adapt to the ever-changing investment landscape.”
Prior to this, in January 2018, Franklin announced its acquisition of Edinburgh Partners Limited, an independent fund management company that invests globally with an emphasis on absolute returns over long-term. As of Dec 31, 2017, Edinburgh Partners had nearly $10 billion in global and emerging markets equities.
Franklin’s distribution platform will be further bolstered by the current deal. Moreover, these buyouts would greatly diversify product offerings. The company’s cost control measures continue to support bottom-line growth. However, declining investment management fees remains a concern for the company. Further, strict regulatory environment is a headwind.
Shares of Franklin have lost 10.5% over the past six months, compared with 8.1% industry ’s rally.
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