Franklin Resources Inc. is buying Putnam Investments from its Canadian owners in a consolidation of two asset managers that have struggled to find growth. 

Franklin will initially pay US$925 million in cash and stock to pry Putnam from Great-West Lifeco Inc., which is a part of the Desmarais family’s Power Corp. of Canada group.

The deal also includes as much US$375 million in contingent payments tied to revenue growth from a partnership between the two sides, Franklin Templeton said in a statement Wednesday. Great-West, one of Canada’s largest life insurers, will have a 6.2 per cent stake in Franklin, most of which it will be locked up five years. 

“This is a compelling transaction for Franklin Templeton, and we are excited about the numerous opportunities that will be unlocked by this long-term strategic partnership,” Jenny Johnson, chief executive officer of Franklin Templeton, said in a statement. 

For Montreal-based Power Corp., a sale would close the book on a long-term investment that didn’t work out.

Great-West acquired Putnam for about C$4.6 billion in a deal announced in 2007. At the time, it had nearly US$200 billion in assets under management, but the firm struggle to stem client redemptions. 

In this deal, Franklin Templeton is acquiring funds that manage $136 billion, according to the statement. PanAgora Asset Management Inc., a quantitative shop that manages about US$33 billion, is not included in the transaction.