Just days after Embark Group fulfilled its own M&A ambitions, Franklin Templeton has acquired a “material stake” in the retirement solutions firm.
The global asset manager joins existing long-term investors Blackrock, Legg Mason and FNZ, as well as the Merian Chrysalis fund.
This is the first external investment Franklin Templeton has made into the UK’s retirement and wealth sector.
The US asset manager will not hold a seat on Embark’s independent board of directors.
As part of the deal, Franklin Templeton will become one of Embark’s largest stakeholders and is doing so to support its recent acquisition strategy.
Last week, Embark Group agreed to buy several businesses of insurance giant Zurich for an undisclosed sum, in a bid to increase its presence in the UK investment savings sector.
Diversify business interests
Martyn Gilbey, UK country head of Franklin Templeton, said: “The UK long-term savings market is undergoing significant disruption, driven by regulatory and demographic changes, technology innovation and market consolidation.
“As a result, the traditional barriers between manufacturing and distribution, and in particular, the demarcation between pensions and wealth products are being eroded with significant opportunities for asset managers to participate and secure long-term value in new operating models.
“This investment represents the first foray for Franklin Templeton’s UK business into the retirement and wealth space which is in line with our firm-wide objective of exploring acquisition-related growth opportunities in the fintech arena.
“Our efforts have been focused on opportunities with the potential to grow real scale, to diversify our business interests, and to offer the opportunity for innovation at both a consumer and distribution level.
“We have worked with Embark for some time as a research house and know well their ability to innovate and deliver asset growth.”
David Etherington, Embark Group chairman, added: “That our business is able to broaden our institutional shareholder base and attract another world leading global investor, such as Franklin Templeton, is testament to the strength of Embark’s proposition and strategy.
“We have now very firmly established Embark as a significant player in the UK retirement and savings market.”
The financial terms of the deal were not disclosed and completion of the investment is subject to regulatory approval.