Franklin Resources announced they are acquiring Legg Mason which will create an investment management firm with revenues approaching $9 billion annually.
Franklin Resources revenue for FY19 (their FY ends in September) was $5.7 billion. Legg Mason had 2018 revenue of $2.9 billion and their 3 quarters to date in 2019 showed flat revenues. Franklin’s revenue’s were in the $8 billion range in 2014 – 2016. Further, Franklin’s revenues have been shrinking 5 years in a row from 2014. Legg Mason revenue was fairly flat from 2013 thru 2016, a good up year in 2017 and then lower in 2018 and likely flat in 2019. Both these companies are in the Global 5000 database.
While this looks like another merger — as we have seen so many over the past couple of years — we need to look at this in light of all the FinTech activities and claims of impacting the existing financial infrastructure. So far, FinTech has seen billions of capital invested and thousands of companies popping up but not much evidence of markets moving and existing businesses being impacted. Neither of these firms have not been on a steep growth curve over the past few years, so their market challenges are deeper than just being impacted by a force like FinTech . . . still, the realization here that their respective markets in traditional funds is not going turn up any time soon does have some attribution back to FinTech.
As a related side note today, HSBC announced they are laying off 35,000 as part of a restructuring. More indicators of FinTech impact perhaps?