Mutual fund giant Franklin Resources has struck a deal to get into the fund of hedge funds business, buying a majority stake in K2 Associates.
Financial terms of the deal were not disclosed. San Mateo, Calif.-based Franklin will buy an unspecified majority stake in Stamford, Conn.-based K2, which will use the money to buy back a minority stake bought by TA Associates five years ago and to pay off its debt. Franklin will then have the option to acquire the rest of K2, which manages $9.3 billion, beginning in 2016.
K2's approach and day-to-day operations are not expected to change as a result of the deal.
"The new relationship with K2 is an important step in our overall plan to expand Franklin Templeton's alternative strategies and solutions platform," Franklin Templeton Investments CEO Greg Johnson said. Franklin bought a minority stake in hedge fund Pelagos Capital Management two years ago.
K2 has been on the market for more than a year. Last year, it was reportedly in talks with the Carlyle Group.